TaxTMI Updates e-Newsletter
Feb 27,2026

Applicability of Section 122(1A) to non taxable employees - Requirement of retention of benefit and 'at whose instance' transaction u/s 122(1A) - Jurisdictional limits of penalty u/s 122 - Prohibition on retrospective penal liability under Article 20(1) of the Constitution - Vicarious liability not to be read into Sections 122 and 137 - HELD THAT:- On a plain reading of the provisions of sub-section (1) of Section 122, it is clear that it pertains to a ‘taxable person’ as defined under Section 2(107) (supra), who in the circumstances which may fall in sub-clauses (i) to (xxi) of Section 122 shall be liable to penalty as stipulated by such provision (supra). Thus, such penalty becomes imposable on the taxable person as defined under Section 2(107), namely who is liable to be registered under Section 22 or Section 24 of the CGST Act.

It is clear from the facts of the case that an action was initiated against a company namely M/s. Shemaroo Entertainment Ltd.. It appears to be not in dispute that the petitioners who for the period in question, were the Chief Financial Officer, Chief Executive Officer and Director & Joint Managing Director, being employees of the company could not be held liable for a penalty to be imposed under the provisions of Section 122(1A).

The Court in such context considering the rival contentions observed that the GST Council in its 38th meeting held on 18 December 2019 had proposed insertion of sub-section (1A) in Section 122, to specifically address the cases of fake invoices, and accordingly, with effect from 1 January, 2021.

Accordingly, the legislature has introduced the penal provision being sub-section (1A) in Section 122 of the CGST Act, by an amendment brought about by the Finance Act, 2020. The contentions as asserted on behalf of the petitioners in such context in assailing the show cause notice were quite similar, namely that the provisions of Section 122(1A) and Section 137 of the of the CGST Act did not apply to the petitioners therein, in the absence of retention of any personal benefit by the petitioners.

The contention as urged on behalf of the revenue was also quite similar to one as asserted in the present proceedings to contend that the show cause notice indicated that there was responsibility fastened on the petitioners, in regard to the affairs of the company, hence, the petitioners cannot disown the involvement in the loss of revenue in the manner as described in the show cause notice. It is in such context, the Court observed that as a jurisdictional issue on the validity of the show cause notice was raised, in the context of the only allegation as made against the petitioner in the show cause notice, which was to the effect that he was a Senior Tax Operations Manager cum Authorised Person of M/s Maersk.

The petitioner was called upon to show cause as to why penalty equivalent to the tax evaded by M/s Maersk amounting to 3731,00,38,326/- be not imposed as the petitioner had committed an offence. In the reply to the show cause notice, the petitioner had taken a clear position that they were employees of the company and hence, no penalty proceedings of that nature could be initiated against the petitioners.

In the absence of any such material and findings, we do not find, as to how the jurisdictional requirement of applicability of Section 122(1A) can at all be said to be present and applicable, in the designated officer passing the impugned order-in-original, against the petitioners. This is also clear from the reading of the reply affidavit which do not in any manner sets out as to how such basic ingredients of sub-section (1A) of Section 122 stood attracted and/or present in the designated officers passing the impugned order-in-original against the petitioners.

As a result, the only conclusion, which can be arrived at, is that the show cause notices and the consequent impugned order-in-original as passed against the petitioners would be required to be held to be illegal, being without jurisdiction.

Prohibition on retrospective penal liability under Article 20(1) of the Constitution - HELD THAT:- Admittedly, the period in question, subject matter of the show cause notice is the period from July 2017 to July 2023. Thus, according to the petitioners, the period from July 2017 to 1 January 2021 is the period, when such penal provision was not in existence. Thus, there could not have been any retrospective application of any penalty provision.

Thus, a person cannot be penalized under the law/provision which was not in force for the period in which such alleged acts are stated to have been committed. There could not have been any retrospective application of Section 122(1A) of the CGST Act in issuing the impugned show cause notice for the period July 2017 to 1 January 2021, and for such reason also the impugned order-in-original insofar as such period is concerned, cannot be sustained.

Thus, the petition needs to succeed.

Cancellation of GST registration - principles of natural justice / opportunity of hearing - failure to assign reasons - reconsideration and remand for fresh decision - consideration of subsequent registration / application for cancellation - HELD THAT:- As seen from the final order impugned before this Court cancelling the registration, no reasons have been assigned for such cancellation.

There is no reference to the reply submitted by the Petitioner or to the request for extension of time.

In such circumstances, the impugned order is not sustainable in law and requires reconsideration after properly adverting to the reasons stated by the Petitioner. The explanation offered by the Petitioner ought to have been taken into consideration.

The Petitioner further submits that valid reasons were explained for their absence from the declared place of business and several documents have been produced before this Court to establish that business activities were indeed being carried out. It is also submitted that the Petitioner has subsequently obtained fresh registration.

Thus, the impugned order has to be revisited after giving due opportunity of hearing to the Petitioner.

Writ petition disposed by directing reconsideration of the cancellation order.

Grant of regular bail - economic offences and bail jurisprudence - prima facie/reasonable ground to believe - documentary and electronic evidence not mandating custody - compoundability of offences u/s 132 - HELD THAT:- The alleged offences are punishable with maximum punishment up to 05 years and also keeping in view that in such circumstances, the further detention of the petitioners may not at all be justified since in case of this nature, the evidence to be rendered by the respondent would essentially be documentary and electronic, which will be through official witnesses, due to which, there cannot be any apprehension of tampering, intimidating or influencing the witnesses and further as it appears justified to strike a fine balance between the need for further detention of the petitioner when no custodial interrogation has been claimed at all by the department, this Court considers that the petitioners are entitled to be released on bail but subject to certain conditions.

As a result, the petitions moved by both the petitioners are hereby allowed and they are ordered to be released on regular bail on their furnishing personal bonds with two sureties in the like amount each to the satisfaction of the Court concerned/Duty Magistrate.

It is made clear that the observations made herein above are only for the purpose of deciding the present petitions and the same shall not be construed as an expression of opinion by this Court on the merits of the case.

Principles of natural justice - Right to fair hearing - Duty to furnish verification reports before adjudication - Verification of transitional input tax credit u/s 140 - Remand for de novo consideration - Opportunity to rectify TRAN-1/TRAN-2 entries - HELD THAT:- It is the Petitioner’s case that since the record was voluminous, the representative of Petitioner visited the office of Respondent No. 3 and had explained the case on different occasions. It is contended by the Petitioner that Respondent No. 3 decided to depute its officers to visit the premises of Petitioner for verification of invoices and records. In such context, our attention is drawn to the letter dated 10th January 2025 of the Petitioner’s Manager, Indirect Taxes to Respondent No. 3.

We find substance in the contentions, an opportunity of a fair hearing ought to have been granted to the Petitioner. It was necessary that copies of verification reports ought to have been furnished to the Petitioner, when the same were to be of relevance in coming to the conclusions as set out in the impugned order. Certainly furnishing of such verification reports, that too on the verification of documents furnished by the Petitioner, was imperative.

Non furnishing of verification reports and no opportunity of a fair hearing on the same, in our opinion, certainly amounted to breach of the principles of natural justice, as behind the back of the Petitioner, no opinion could have been formed and expressed in the impugned order without the Petitioner being granted an opportunity to deal with the verification reports.

On perusal of the impugned order, we are also inclined to agree with Mr. Shah that the entire exercise to pass the impugned order, was a hurried exercise, ex facie without verification of the entire record/invoices and other documents as noted in the impugned order. We fail to understand as to why such hasty actions would at all be resorted to by the concerned officials, upon whom an onerous duty is cast to pass an order only on complete verification of the record and in accordance with law.

Thus, we find substance in the contentions as urged on behalf of the Petitioner that it will be appropriate that a fresh process of a hearing, being granted to the Petitioner on the show cause notice needs to be the course of action by setting aside the impugned order.

Detention of goods u/s 129(1) - reliability and admissibility of laboratory test report - obligation to consider grounds raised in reply and appeal - non-speaking appellate order / failure to assign reasons - remand for fresh consideration by appellate authority - HELD THAT:- It is not in dispute that the writ petitioner sold Mixed Linear Alpha Olefins to M/s Rajesh Chemicals Pvt. Ltd., Ranchi, Jharkhand and invoice was prepared, E-way Bill was also prepared and the consignment was sent through transported route the subject tanker. The same was intercepted on 10.02.2025. MOV-02 came to be issued on 11.02.2025. Thereafter physical verification report was issued on 16.02.2025 GST MOV-04 and on 16.02.2025 the goods were detained by the respondent no. s2 under Section 129 (1) MOV-06. A show cause notice was issued to the writ petitioner on 18.02.2025 form GST TRC-01 accompany which the analytical report of Sri Ganesh Analytical Lab. The writ petitioner tendered its reply to the show cause notice on 18.02.2025.

As a matter of fact, once certain grounds are raised either in show cause notice or in the memo of appeal, then the adjudicating authority is under obligation to consider the same might be in its discussion and conclusion, it might not according to the submission but at least this much is expected that the contentions are to be dealt with.

Since the contentions have not been dealt with and only conclusions have been recorded without assigning reason in arriving to the same. Thus, the order cannot be sustained. Since the writ petitioner had taken several grounds in the memo of appeal which have not been considered, thus in the fitness of the matter, the matter needs to be revisited by the appellate authority.

While remitting back the matter to the appellate authority, the appellate authority shall deal with each and every contentions and pass an order with independent application.

The writ petition stands disposed of.

Sufficiency of statutory reply to ShowCause Notice - reconciliation of bank statements with GSTR-3B and annual returns - remand for fresh adjudication on merits subject to pre-deposit - conditional vacation of bank attachment upon pre-deposit - abeyance of recovery proceedings during compliance period - HELD THAT:- The replies filed by the petitioner to the respective notices issued in Form GST DRC-01 under Section 74 are skeletal in nature and do not adequately meet the allegations made against the petitioner in the respective Show Cause Notices. In particular, with respect to Defect No.8, the mere production of excessive documents is not sufficient to establish that there was no excess credit of the amount.

It is incumbent upon the petitioner to tabulate the entries under different categories and reconcile the amounts reflected in the bank statements with the monthly returns filed in Form GSTR-3B and the annual return filed in Form GSTR- 9/9C.

Since the replies submitted by the petitioner lack clarity, I am of the view that the petitioner may be granted one more opportunity to explain the case afresh.

Following the consistent view taken by this Court under similar circumstances, the cases are remitted back to the 1st respondent to pass a fresh order on merits, subject to the Petitioner depositing a sum of Rs. 35,00,000/- (Rupees thirty five lakhs) of the disputed tax confirmed in vide impugned Assessment orders, in cash from the Petitioner's Electronic Cash Register within a period of 30 days from the date of receipt of a copy of this order.

Within such time, the Petitioner shall also file a proper reply to the respective Show Cause Notices in Form GST DRC-01 all dated 13.05.2025 together with requisite documents to substantiate the case by treating the respective impugned Assessment Orders dated 22.07.2025 as an addendum to the respective Show Cause Notices dated 13.05.2025.

It is made clear that bank attachment shall be lifted subject to the Petitioner depositing a sum of Rs. 35,00,000/-(Rupees thirty five lakhs) of the disputed tax as ordered above and the Petitioner not being in arrears of any other amount for any other tax period barring the amount demanded under the impugned Order.

In case the Petitioner fails to comply with any of the stipulations, the 1st Respondent is at liberty to proceed against the Petitioner to recover the tax in accordance with law as if these Writ Petitions were dismissed in limine today.

Writ Petitions stand disposed of.

Remand for fresh consideration - pre-deposit condition for adjudication - effect of repeal of a statutory provision on past liabilities - reverse charge mechanism liability - input tax credit reversal - assessment to be re-determined on merits - bank attachment to be vacated on compliance - HELD THAT:- It is noticed that as far as excess claim on ITC is concerned, the Petitioner had sought time by filing a reply dated 17.01.2025 for a period of thirty days. However, the Petitioner failed to challenged the same and therefore the demand has been confirmed on 24.02.2025.

As far as the tax due on RCM liability is concerned, the Petitioner has admitted to the liability and undertaken to pay the amount. As far as ITC reversal under Section 42 is concerned, the demand has been confirmed.

Although it appears that Section 42 has been deleted by the Finance Act, 2022 with effect from 01.10.2022, this aspect also ought to have been considered as to whether the operation of the above provisions would have entitled the Department to levy tax under Section 42 or whether the Petitioner was entitled for retrospective benefit for the period in dispute.

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

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

Writ Petition stands disposed of with the above observations.

Interest on undue or excess claim of input tax credit u/s 50(3) - Section 42(10) - interest on wrongful availment of input tax credit - Recovery of self-assessed arrears without issuance of a separate show cause notice u/s 79 - Adjustment of refund from electronic cash ledger towards outstanding liability - Distinction between electronic credit ledger and electronic cash ledger for discharge of liabilities - Retrospective amendment to Section 50(3) and its non-application to avoid interest where excess claim is self-accepted - HELD THAT:- The petitioner has admitted that it has wrongly received excess credit of transitional credit amount Rs. 3,48,523/-. The petitioner was only entitled to claim Rs. 1,28,21,441/-, thereafter, the petitioner tried to reverse the amount of TRANS- 1 twice, but failed to do so. In September 2018, the GSTR-3 B return was submitted in order to reverse the amount of TRANS-1, but the same was not reflected in the GST portal. The petitioner finally reversed the Input Tax Credit of Rs. 1,31,07,632/- in monthly return April GSTR- 3B, therefore, the petitioner wrongly availed the excess credit of Rs. 1,31,07,632/- from electronic credit ledger from 28.08.2017 to 20.05.2019 i.e. total 630 days, therefore, a show cause notice was issued to pay the interest @ of 24% per annum under Section 42(10) and Section 50(3) of the GST Act, 2017 amounting to Rs. 54,29,792/-.

All the grounds raised by the petitioner have been duly considered by the Assistant Commissioner, CGST & Central Excise Division, Chhindwara vide order dated 10.02.2020. Thereafter, the Appellate Authority vide Order-in-Appeal dated 21.04.2021 had considered all the three objections of the petitioner; firstly, that the interest cannot be recovered under GST Act, 2017 without issuing SCN; secondly, interest on delayed payment of tax to be calculated on the net tax payable only and; thirdly, mere reflection of transitional credit could not be treated as availment or utilisation unless such availment or utilisation of credit reduce tax liability. All three grounds have been met by quoting appropriate sections of the GST Act, 2017.

The petitioner is admitting that the aforesaid amount was wrongly availed as input tax credit and retained for 630 days and finally returned. Therefore, the interest is mandatory under Section 50(3) read with Section 42(10) of the CGST Act, 2017.

No case for interference is made out to interfere with the order dated 10.02.2020 passed by the Respondent No.3 - Commissioner, Central GST, Custom & Central Excise Office, Jabalpur and the order dated 21.04.2021 passed by the Respondent No.4 - Joint Commissioner (Appeals) Central GST, Bhopal (M.P.).

Thus, the present petition is dismissed.

Power under Rule 86-A to block electronic credit ledger - recording and communication of reasons for blocking - principles of natural justice - opportunity to be heard after reasons communicated - investigation report and issuance of show cause notice in fake invoice cases -HELD THAT:-According to the petitioner Company, their electronic credit ledger has been blocked and hence, they are not in a position to utilize the ITC available in their credit to the extent of Rs. 4,10,94,906/- and to that extent they have been suffering with financial burden.

This Court is of the view that with regard to the above issue, the respondent can issue show cause notice, after receipt of the investigation report and take a decision is accordance with law.

In the present case, subsequent to the blocking of the electronic credit ledger, the petitioner has made a representation on 06.01.2026 to substantiate their case.

While passing orders to block the electronic credit ledger in terms of Rule 86-A of Central Goods and Services Tax Rules, 2017, the respondent should communicate the reasons recorded in writing to the appellant therein and subsequent to the receipt of objections, shall pass orders either for revocation or otherwise a speaking order, stating as to why the request of the appellant therein cannot be considered.

In the event, if the petitioner is inclined to file any reply along with additional documentary evidence to substantiate their case, they are permitted to file the same before the respondent within a period of one week from the date of receipt of a copy of this order.

In the event, if the petitioner is inclined to file any reply along with additional documentary evidence to substantiate their case, they are permitted to file the same before the respondent within a period of one week from the date of receipt of a copy of this order.

Thereafter, the respondent is directed to fix a date for personal hearing, issue notice to the petitioner, and after hearing the petitioner, take a decision on the petitioner's representation dated 06.01.2026, either to revoke the blocking of electronic credit ledger or otherwise pass speaking orders as to why the request of the petitioner cannot be acceded to. The said exercise shall be completed within a period of two weeks from the date of reply by the petitioner, and in event if no reply is filed, within a period of three weeks from the date of receipt of a copy of this order.

General Penalty u/s 125 - Late Fee u/s 47 - Concessional Late Fee under Notification No.7/2023 and Notification No.25/2023 - Bar on imposing General Penalty in addition to penal Late Fee -HELD THAT:-As far as payment of late fee is concerned, proposal has been dropped since the Petitioner opted to pay the late fee of Rs. 20,000/- (10,000 each for CGST and SGST) in accordance with Notification No.7/2023- Central Tax dated 31.03.2023 as amended by Notification No.25/2023- Central Tax dated 17.07.2023.

The challenge in the present Writ Petition is also confined to the imposition of “General Penalty” under Section 125 of the respective GST enactments.

In the light of the law laid down by this Court in Ms.Kandan Hardware Mart, Represented by its Proprietor E.Palani Vs. The Assistant Commissioner (ST)(FAC), Park Town Assessment Circle, Chennai [2026 (1) TMI 383 - MADRAS HIGH COURT], impugned order is quashed insofar as it relates to the levy of General penalty under Section 125 of the respective GST enactments.

Writ Petition stands allowed with the consequential relief to the Petitioner.

Setting aside and remitting order for fresh adjudication on merits - Consideration of overlapping State assessment order for the same tax period - Obligation on assessee to particularize pre-GST transactions and substantiate with annexures - Direction to afford personal hearing before final order - HELD THAT:-If it is the case of the petitioner that tax was demanded for the services rendered prior to 01.07.2017 for which the petitioner was liable to pay Service Tax and VAT under the provision of Value Added Tax Act, 1994 and Tamil Nadu Value Added Tax Act, 2006 and were exempted partly in terms of Notification No.25/2012-ST dated 20.06.2012 as amended from time to time, the petitioner shall particularize each of the transactions in the reply and substantiate the same with annexure. Mere filing of the annexure is not sufficient.

Having considered the submissions made by the learned counsel for the petitioner and the learned Senior Panel Counsel for the respondent and perusing the records before this Court and the replies dated 30.01.2023 and order dated 17.02.2025 passed by the State Authority for the tax period 2020-2021, the impugned order is liable to be set aside.

It is accordingly set aside and the case is remitted back to the respondent to pass a fresh order on merits, taking note of the order passed by the State Authority dated 17.02.2025 for the tax period 2020-2021.

Since it has been decided to remit the case back, there shall be a direction to the petitioner to file a proper reply to the Show Cause Cum Demand Notice No. 109/2022-GST dated 30.09.2022 by treating the impugned Order-in-Original No.Sl.No.03/2023-GST (JC) dated 28.03.2023 as an addendum to the said Show Cause Notice within a period of (30) thirty days from the date of receipt of a copy of this order.

Writ Petition stands disposed of.

Writ petition challenging assessment order - no interference with impugned order - pre-deposit for filing statutory appeal - adjustment of recovered amounts against pre-deposit - vacation of bank attachment on compliance - appellate disposal without reference to limitation - consequences of non-compliance with stipulations -HELD THAT:- No reasons to interfere with the impugned order. It is open for the Petitioner to agitate all the issues before the Appellate Commissioner.

Considering the above submission, liberty is granted to the Petitioner to file an appeal before the Appellate Authority together with pre-deposit of 50% of the disputed tax in cash or from the Petitioner's Electronic Cash Register within a period of thirty (30) days from the date of receipt of a copy of this order.

In case the Petitioner files such appeal, the Appellate Authority shall dispose of the appeal without further reference to the limitation. Subject to the Petitioner complying with the above stipulations, the attachment of the bank account of the Petitioner shall also stand automatically vacated.

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

Writ Petition stands disposed

Classification of goods - paddle wheel aerators used exclusively in aquaculture -residual entry - specific heading prevails over general / ejusdem generis and noscitur a sociis - popular / ordinary meaning of "agriculture" - notification definitions confined to that notification - press release not binding for tariff classification - HELD THAT:- We find that Tribunal in the case of Suyog Agro Poultry Products Pvt. Ltd. [2015 (12) TMI 998 - CESTAT CHENNAI] has also relied upon the definition of farmer in the National Policy for Farmers, 2007 to hold that paddle wheel aerators used in aqua farming are agricultural machineries and classifiable under HSN 8436.

We find that the purpose of the entry at HSN 8436-Other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery is specific to these machineries i.e. those used in agriculture, horticulture, forestry, poultry or bee keeping. Further, the very fact that the entry covers horticulture, forestry, poultry and bee-keeping only means that the intention of the legislature was to include the machineries used in these activities only. The contention of the applicant that it is an inclusive definition and would cover fish/shrimp farming equipment as well is, therefore, not correct. Further, it is well settled that where the definition of a word has not been given, it must be construed in its popular sense, if it is a word of everyday use. Popular sense means “that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it”. Also, the very fact that the terms horticulture, forestry, poultry-keeping and beekeeping has been separately mentioned along with agriculture shows that the intention was to keep the term agriculture in its popular sense and not an all-encompassing one.

The definition mentioned in the Notification No. 12/2017-CT(R) dtd. 28.06.2017 cannot be used for interpreting the term agricultural machinery in Notification No. 1/2017-CT(R) dtd. 28.06.2017 as well the terms mentioned in the HSN 8436.

A similar issue came up before the Bombay High Court in the case of Schulke India Pvt. Ltd Vs Union of India [2024 (11) TMI 522 - BOMBAY HIGH COURT] wherein the Revenue relied upon a Press release dated 15.07.2020 to classify alcohol-based hand sanitizers as disinfectants like soaps, antibacterial liquids, Dettol etc., which attracted GST at the rate of 18% whereas the petitioner wanted to classify it as ‘medicament’. It was also contended that the Press release is an executive instruction under Article 73 of the Constitution read with Article 77 of the Constitution.

Having held that Paddle Wheel Aerators used in fish/shrimp do not fall under HSN 8436, we find that there is no specific entry in the GST Tariff, which covers Paddle Wheel Aerators. Therefore, we are of the opinion that the Paddle Wheel Aerators would rightly fall under the residual entry HSN 8479: “Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter.

Consequently, Paddle Wheel Aerators would attract GST @ 18% in terms of SI. No. 366 of Schedule III to Notification No. 1/2017-Central Tax, as amended, w.e.f. 01.07.2017 to 21.09.2025 and in terms of Sl. No. 464 of Schedule-II of Notification No. 9/2025-CT(R) dtd. 17.09.2025 w.e.f. 22.09.2025.

Consideration under the CGST Act - mobilisation advance treated as deposit applied as consideration - works contract treated as supply of service - time of supply of services - invoice issued within the period prescribed u/s 31 - HELD THAT:- As per the terms of the contract, the advance received by the applicant is adjusted in the R.A. bills raised by the applicant from time to time, for the supply made to AUDA. By adjusting the advance in the R.A. bills, the applicant is applying it as a consideration for the supply. Therefore, the advance would be considered as a payment made for the supply and as an extension fall under the ambit of ‘consideration’ made for such supply.

Time of supply of services - invoice issued within the period prescribed under Section 31 - HELD THAT:- Having held that the advance is a consideration for the supply to be made by the applicant, we move on to the next question as to when the GST would be payable on the said Advance. The applicant is of the view that it would be payable when the same is adjusted in the R.A bills. The time of supply, at which the liability to pay tax arises, is prescribed under Section 12 and Section 13 of the Central Goods and Services Tax Act, 2017, Section 12 relating to goods and Section 13 relating to services. As mentioned earlier, the applicant is providing works contract service. As per Schedule-II of the CGST Act, works contract shall be treated as a supply of service. Therefore, the relevant Section in the applicant’s case would be Section 13.

As per Section 31(2) of the CGST Act, 2017, a registered person supplying taxable services shall before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value of tax charged thereon and such other particulars as may be prescribed. Thus, an invoice for the advance can be raised before the provision of service.

From the submissions of the applicant, it does not appear that any invoice is being issued by the applicant when the advance is received by the applicant, because as per their view, they are not liable for payment of GST on the advances received. The advance is being adjusted during the issue of R.A. Bills and the GST is being proposed to be paid by the applicant on the advance during this stage. This means that the invoice for the advance is raised in the R.A. Bill, at a much later stage from the date of receipt of advance. Therefore, the time of supply of services would be date of receipt of payment of the advance and consequently, liability to pay tax would be on the date of receipt of payment.

We also find that a similar issue was decided by this Authority in the case of Re: S.P. Singla Constructions P. Ltd [2022 (3) TMI 1146 - AUTHORITY FOR ADVANCE RULING, GUJARAT], wherein it was held that time of supply of advances received for supply of services is the date of receipt of the said advance. The said ruling was carried into appeal before the Appellate Authority by S.P. Singla Constructions P. Ltd. which rejected the appeal [2025 (1) TMI 393 - APPELLATE AUTHORITY FOR ADVANCE RULING, GUJARAT].

GST is liable to be paid on the advance payment received and the liability to pay tax shall arise on the date of receipt of payment of advance. However, in case an invoice is issued for the advance received, within the period prescribed under Section 31 of the CGST Act, 2017, the liability to pay tax would be the date of issue of invoice or the date of receipt of payment of advance, whichever is earlier.

Restaurant services - Supply of goods vs supply of services - Composite supply - Place of manufacture/retail outlet preparation as determinative of character of supply - Business-to-business supply treated as supply of goods - GST at 5% for restaurant services without eligibility of input tax credit - GST at 5% for ice-cream as goods with eligibility of input tax credit - HELD THAT:- There is no definition of restaurant in the GST Act, but in common parlance, it is understood as a place where the food is prepared and served to diners, who sit and have their food for a price.

We find that the applicant prepares foods in his retail outlets and also provides the option of dine-in facility in his retail outlets. Thus, the retail outlets can be considered as a restaurant. As per the definition of restaurant service laid down in Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended, we find any supply by way of or as part of any service of goods, being food provided by a restaurant whether for consumption on or away from the premises of the restaurant will fall under Restaurant Services. The appellant aims to supply the ice-cream from his retail outlets, which are either manufactured in his retail outlet or is manufactured in another manufacturing unit.

As regards the ice cream prepared in the applicant’s retail outlet and supplied to dine in or retail customers, we feel that the same would partake the character of foods prepared in the restaurant and hence fall under the definition of ‘restaurant services’, even if they are taken away without consuming in the retail outlet. However, when such ice cream is supplied as a part of business-to-business transactions, whether it is manufactured outside and brought to the outlet or manufactured at the retail outlet itself, it shall be treated as a supply of goods as no service is involved.

We have already elaborated the situations where the supplies would be considered as restaurant services or supply of goods. As per SI. No. 7 (ii) of Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended, the applicable rate of GST for restaurant services is 5% provided that credit of input tax charged on goods and services used in supplying the service has not been taken. Further, as per S.No. 141 of Notification No. 9/2025-CT(R) dtd. 17.09.2025, the applicable GST rate for supply of ice creams would be 5%. In case where a separate GST registration is obtained for the ice cream manufacturing unit and supplies made both on a business-to-business (B2B) and Business to consumer (B2C) basis, we hold that since it is purely a supply of ice cream with no service involved, the same would be considered as supply of goods for which the applicable GST rate would be 5%.

Two separate provisions for rural and non-rural advances are permissible u/s 36(1)(viia), for the purpose of set off of bad debts incurred u/s 36(1) (vii) - Interest income on securities held by the assessee accrues on the due date of payment of interest and not on every day basis

HELD THAT:- No good ground and reason to interfere with the impugned judgment/order passed by the High Court.

The special leave petition is, accordingly, dismissed.

Scope of RTI Act - harmonious construction of Section 22 of the RTI Act with Section 138 of the Income-tax Act - Personal information under Section 8(1)(j) of the RTI Act - Disclosure of information respecting assessees u/s 138 (1)(a) of income tax act - appropriate mechanism for obtaining income tax returns and financial records of a spouse in the context of maintenance proceedings - competent court for the production of the income tax returns and related financial records of the assessee, in accordance with the provisions of Section 138 of the Income-tax Act, 1961

Whether the income tax returns, assessment particulars and related financial details of an assessee constitute “personal information” under Section 8(1)(j) of the Right to Information Act, 2005, and/or information held in a fiduciary capacity under Section 8(1)(e) of the said Act? - HELD THAT:- Relationship between the Income Tax Department and an individual assessee does partake of the nature of a fiduciary relationship to the extent that the assessee furnishes detailed personal financial information under statutory compulsion with a reasonable expectation that the same will be utilised solely for the purposes of tax administration.

Department receives and retains such information in a position of trust. However, this Court recognises that the characterisation of this relationship as “fiduciary” in the strict legal sense has not been conclusively settled by the Hon'ble Supreme Court. The decision in Subhash Chandra Agarwal's case [2019 (11) TMI 895 - SUPREME COURT] shows that the concept of fiduciary relationship under Section 8(1)(e) is to be applied with circumspection and on a case-by-case basis.

Income tax returns, assessment particulars and related financial details of an assessee do constitute “personal information” within the meaning of Section 8(1)(j) of the Right to Information Act, 2005, as authoritatively held by the Hon'ble Supreme Court in Girish Ramchandra Deshpande [2012 (10) TMI 218 - SUPREME COURT]

The exemption, however, is qualified and not absolute; it may be overridden where a larger public interest warrants disclosure. As regards Section 8(1)(e), while the relationship between the Income Tax Department and an individual assessee partakes of the nature of a fiduciary relationship to a considerable extent, it is not necessary to render a conclusive finding on this point, inasmuch as the protection under Section 8(1)(j) is sufficiently broad to encompass the information sought in the present case.

Whether the husband of Respondent No. 1 qualifies as a “third party” within the meaning of Section 2(n) of the RTI Act in the context of the RTI application filed by his spouse, and whether the matrimonial relationship has any legal bearing on that characterisation? - Husband of Respondent No. 1 does qualify as a “third party” within the meaning of Section 2(n) of the RTI Act. The statutory definition is unambiguous and does not admit of any exception based on matrimonial or familial relationship. However, while the characterisation as a “third party” triggers the procedural requirements under Section 11 of the RTI Act, the matrimonial relationship may have a bearing on the assessment of whether larger public interest warrants disclosure under Section 8(1)(j). The marital relationship does not alter the statutory characterisation but may be a relevant factor in the overall evaluation of the competing interests.

Whether the disclosure sought by Respondent No. 1, in connection with her claim for maintenance in pending matrimonial proceedings, satisfies the test of “larger public interest” so as to override the exemptions under Section 8 of the RTI Act? - The concept of “larger public interest” cannot be so expansively interpreted as to encompass every private dispute, however genuine or sympathetic the case of the applicant may be. There is a distinction between a matter of public interest and a matter of individual interest, howsoever legitimate. The RTI Act is a legislation designed to promote transparency and accountability in the working of public authorities.

In the present case, however, the Central Information Commission did not undertake any analysis of whether the larger public interest test under Section 8(1)(j) was satisfied. The Commission appears to have directed disclosure by placing reliance upon an earlier order without applying its mind to the specific question of larger public interest. This, in the view of this Court, is a material infirmity in the impugned order.

Disclosure sought by Respondent No. 1, while connected to a legitimate concern in pending maintenance proceedings, does not, by itself, satisfy the statutory test of “larger public interest” under Section 8(1)(j) of the RTI Act so as to override the exemption protecting personal information. The expression “larger public interest” postulates an interest that extends beyond the individual dispute. An individual maintenance dispute, however meritorious, primarily remains a private matter between the spouses. The Central Information Commission erred in not applying the larger public interest test to the facts of the case. However, this finding does not leave Respondent No. 1 without remedy, as the appropriate mechanism for obtaining such information is through the competent court in the pending maintenance proceedings.

Whether Section 138 of the Income-tax Act, 1961, being a special provision governing disclosure of assessee information, restricts or regulates disclosure under the RTI Act, and how it is to be harmoniously construed with Section 22 of the RTI Act? - Section 138 of the Income-tax Act, 1961, being a special provision governing disclosure of assessee information, does regulate and restrict disclosure of income tax information. While Section 22 of the RTI Act gives the Act overriding effect, the exemptions under Section 8 of the RTI Act, particularly clauses (e) and (j), provide sufficient protection for income tax information.

The two provisions can be harmoniously construed: the RTI Act applies to information held by the Income Tax Department, but the exemptions under Section 8 protect confidential tax information from unwarranted disclosure. Section 138 of the Income-tax Act reinforces the confidential character of assessee information and supports the conclusion that such information is ordinarily exempt from disclosure under Section 8(1)(j), unless the larger public interest test is satisfied.

Whether, the appropriate course for Respondent No. 1 was to seek production of the income tax returns through the competent matrimonial court, rather than by invoking the provisions of the RTI Act? - The appropriate course for Respondent No. 1 was to seek production of the income tax returns through the competent matrimonial court, rather than by invoking the provisions of the RTI Act. The RTI Act is not the appropriate mechanism for obtaining income tax returns of a spouse in the context of maintenance proceedings. The courts adjudicating maintenance claims have ample powers to summon documents and compel disclosure of financial information, and the procedural safeguards available in judicial proceedings are far more appropriate than the relatively blunt instrument of an RTI application. However, Respondent No. 1 is at liberty to approach the competent court in the pending maintenance proceedings to seek a direction to the Income Tax Department to produce the income tax returns and related financial records of her husband.

Whether the order dated 12.04.2019 passed by the Central Information Commission directing disclosure of the information calls for interference under Article 226 of the Constitution of India? - The order dated 12.04.2019 passed by the Central Information Commission directing disclosure of the income tax returns and related information of the husband of Respondent No. 1 calls for interference under Article 226 of the Constitution. The Commission erred in:

(a) directing disclosure without applying the larger public interest test under Section 8(1)(j);

(b) failing to follow the binding pronouncement of the Hon'ble Supreme Court in Girish Ramchandra Deshpande; and

(c) relying on an earlier order without independent application of mind. The impugned order is accordingly liable to be set aside. However, Respondent No. 1 is granted liberty to approach the competent court in the pending maintenance proceedings to seek appropriate directions for the production of income tax returns and related financial records.

Income voluntarily offered by the assessee during survey - scope of reversion or withdrawal of income voluntarily admitted by the assessee in a duly filed return of income - chargeability of the additional income at the special rate of 60% under Section 115BBE OR taxability of the additional income per se

HELD THAT:- When a return of income is selected for scrutiny, the scope of scrutiny is ordinarily confined to the verification and disallowance of claims made by the assessee. A scrutiny assessment to examine the correctness of such claims cannot be extended or enlarged to reduce the income voluntarily admitted by the assessee. The Assessing Officer is not vested with the power to reduce the admitted income. If any erroneous admission is made, the statute provides a specific mechanism to correct such an error. The assessee, however, has chosen not to avail the remedies provided under the Act.

Reliance placed by assessee on the circulars is of no assistance. None of the circulars mandates the reversion or withdrawal of income voluntarily admitted by the assessee in a duly filed return of income. The various judgments relied upon do not deal with a situation akin to the present case. Those decisions were rendered in the context of admissions made during the course of a survey which were not corroborated, and it was held that such unsubstantiated admissions could not, by themselves, form the sole basis for assessment.

In the case on hand, as noticed above, the return of income was filed nearly 14 months after the survey. The letter dated 29.09.2016, volunteering to offer additional income, is not the sole basis of the return of income; rather, the income was consciously declared in the return subsequently filed. It is difficult to accept the contention that even after a lapse of 14 months from the date of survey, the assessee continued to be under coercion or pressure while offering the additional income.

Assessee had the statutory opportunity to revise the return under Section 139(5) of the Income-tax Act, which was not availed. Significantly, the letter dated 29.09.2016 was never retracted. Apart from this, as observed hereinabove, no claim was made before the Assessing Officer seeking exclusion of the additional income. Even in the appeal before the CIT(A), no such contention was raised.

On the contrary, throughout the proceedings, the assessee consciously canvassed that the additional income be taxed at the normal rate instead of the special rate of 60% under Section 115BBE of the Act. Such conduct clearly demonstrates that the assessee entertained no doubt regarding the taxability of the additional income voluntarily and consciously offered in the return of income after due verification.

We further find no justifiable grounds to support the contention that the additional income offered was not based on evidence. In the case of admitted income, it is not for the Assessing Officer to establish the evidentiary basis thereof. The income is admitted by the assessee on the basis of self-assessment, and such burden cannot be shifted to the Assessing Officer.

The findings recorded by the Tribunal are based on the facts of the case and constitute findings of fact - Appeal of assessee dismissed.

Certificate u/s 197 - withholding tax rate determination - NIL withholding or @15% - Competent Authority practically rejecting the petitioner's application and issuing a certificate at 15% - HELD THAT:- Since no authority including the Assessing Authority has so far considered the nature of transactions and other relevant material, as an Adjudicating Authority, we are not inclined to issue direction to issue a certificate at ‘NIL’ rate, as prayed.

The writ petition is, therefore, partly allowed. While quashing the order dated 04.03.2025 and the certificate dated 20.08.2025, we hereby direct the Competent Authority to issue a certificate at 2% so that the assessee is required to file its return and the petitioner's case may be taken up for scrutiny if the same falls within the ambit of the scrutiny criteria as set by the Central Board of Direct Taxes (CBDT) from time to time. The requisite certificate be issued within a period of 15 days from today.

Taking note of the extant facts, we find that the petitioner had filed the application for grant of certificate on 04.03.2025 and the certificate came to the issued on 20.08.2025, even though there is a guideline for issuing the certificate within a period of 30 days.

We, therefore, direct that in case the petitioner files an application u/s 197 for subsequent year(s), and the nature of the transaction remains the same, the Competent Authority shall consider the application within a period of 30 days from the day when the application is filed and shall issue the certificate, as deemed expedient.

Assessment u/s 153C - satisfaction note as recorded within the time frame contemplated by law or not? - HELD THAT:- The Hon'ble Supreme Court in Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT] has laid down the law regarding the stage at which satisfaction must be recorded.

The term “immediately” implies a sense of urgency and proximity in time and is often understood to be as soon as possible or without delay. Therefore, the Respondents are not correct when they say that the satisfaction has to be recorded within a “reasonable time”. The Supreme Court has consciously used the term “immediately” and due meaning should be given to the said term.

CBDT Circular No. 24/2015 dated 31st December 2015 explicitly states that the guidelines in Calcutta Knitwears (supra) apply to proceedings u/s 153C of the IT Act. Therefore, the AO of the searched person was required to record satisfaction, at the latest, immediately after the completion of the assessment of the searched person. We find support in the decision of Bharat Bhushan Jain [2015 (1) TMI 705 - DELHI HIGH COURT] where a delay of 10 months was held to be fatal. Similarly, the Gujarat High Court in Jitendra H. Modi HUF [2018 (2) TMI 673 - GUJARAT HIGH COURT] held that a period of 9 months could not be termed as “immediate”.

In the present case, the search was conducted in February 2021 - there is a delay of approximately 15 months from the last date for assessment of the searched person. Furthermore, the satisfaction note of the AO of the Petitioner is undated, which further casts doubt on the timeline of events. Regarding this objection raised in the Petition, the Reply Affidavit merely states that not writing of a date on the satisfaction note by Respondent No. 1 is a procedural irregularity.

Notice u/s 153C is issued after a gap of about 2 years. We are of the considered view that a delay of 15 months cannot be construed as “immediately” after the assessment proceedings. The argument of the Respondents that the volume of data seized was massive, requiring time for analysis, and therefore, the delay should be condoned cannot be accepted.

AO has been granted sufficient time by the Hon'ble Supreme Court that he can record satisfaction either at the time of, or along with the initiation of proceedings against the searched person, or along with the assessment proceedings, or immediately after the assessment proceedings are completed of the searched person. Further, this is also clarified by the Circular No.24/2015 issued by the Board itself. Accordingly, we hold that the proceedings are barred by limitation.

Absence of DIN on the satisfaction note - Satisfaction note, being without a DIN, is treated as invalid and deemed to have never been issued as per CBDT Circular No. 19/2019.

In view of the above findings on limitation, as well as the absence of a DIN, the impugned notice and the consequential proceedings cannot be sustained.

Disallowance u/s. 43B - outstanding interest payment on loan overdraft facility taken by the assessee from Punjab and Maharashtra Co-operative Bank - definition of the “Scheduled bank” and the “Co-operative bank”

HELD THAT:- Clause (e) to section 43B of the Act was introduced by the Finance Act No. 2, 1996 w.e.f. 01-04-1997 and which was amended to include interest payable to Co-operative Banks by the Finance Act, 2017 w.e.f. 01-04-2018. Therefore, for the impugned assessment year i.e., A.Y. 2017-18, wherein the assessee qualifies as a scheduled bank it would be covered by clause (e) of Section 43B, where, however, the assessee qualifies as a Co-operative bank alone (and not a scheduled bank), then given that the said amendment has been made effective from 01-04-2018, the same would not be applicable for the impugned assessment year 2017-18.

For the purposes, it is necessary to examine the definition of the “Scheduled bank” and the “Co-operative bank” which are provided in explanation-4 to section 43B of the Act.

Even though the Co-operative Banks were specifically included in terms of clause (e) to section 43B for the first time by the Finance Act, 2017 w.e.f. 01-04-2018, the scheduled banks and the assessee which has been notified as a scheduled bank is covered by the provisions of section 43B of the Act even prior to amendment by the Finance Act, 2017 w.e.f. 01-04-2018. We, therefore, find force in the contentions advanced by the Ld. DR that since the assessee has not paid the interest due to Punjab and Maharashtra Co-operative Bank on or before the due date of filing of the return of income u/s. 139(1) of the Act, the same shall be liable to be disallowed u/s. 43B of the Act.

Decision in the case of Vipin Madanlal Thapar [2023 (1) TMI 818 - ITAT MUMBAI] relied upon by the assessee observed that since the assessee has not claimed these expenses as revenue expenses during the year under consideration and the same were capitalized as work-in-progress, any disallowance if it is to be made will be made to reduce the work-in-progress since the expenses were capitalized in work-in-progress and accordingly, the additions made by the AO were deleted. We find that in the instant case, the said decision rather support the case of the Revenue rather than the assessee as the AO has not made any separate addition in the hands of the assessee and has only reduced the amount on account of disallowances u/s 43B from the capital work-in-progress.

Decided in favour of revenue.

Disallowing deduction u/s. 54F - treating the deposit made in the Capital Gains Account Scheme as not fully forming part of the cost of the new asset -Proportionate application of statutory formula for exemption - whether the assessee is entitled to deduction of the entire amount claimed or only to a proportionate deduction as computed by the AO? - HELD THAT:- We find that the AO has neither denied the benefit of section 54F of the Act nor disputed the eligibility of the assessee. The disallowance is purely arithmetical and arises from the application of the statutory formula.

CIT(Appeals) has rightly held that mere deposit in the Capital Gains Account Scheme does not automatically entitle the assessee to deduction of the entire amount claimed, unless such deposit is translated into actual or irrevocably committed investment towards the new residential house.

The legal position on this aspect is well settled. As decided in K Ramachandra Rao [2015 (4) TMI 620 - KARNATAKA HIGH COURT] has held that section 54F is a beneficial provision, but the benefit is subject to fulfilment of statutory conditions. The Court held that while deposit in the Capital Gains Account Scheme preserves the exemption, the quantum of deduction must still be computed in accordance with the formula prescribed under the Act.

Also in case of Humayun Suleman Merchant [2016 (9) TMI 70 - BOMBAY HIGH COURT] has held that where assessee had filed return of income and entire amount which was subjected to capital gain tax had not been utilized for purpose of construction of new house, nor were unutilized amounts deposited in notified Bank Accounts before filing return of income, AO rightly restricted exemption u/s 54F of the Act proportionately to amount invested.

In the present case, the assessee has failed to bring on record any material to demonstrate that the excess amount claimed over and above Rs. 2,54,44,944/- represents actual or committed cost of construction as on the relevant date. The proportionate disallowance of Rs. 3,91,661/- is thus fully in accordance with law and cannot be said to be arbitrary or unjustified. Appeal of the assessee is dismissed.

Validity of action of the AO in referring the case to TPO for determining the ALP of specified domestic transaction - Omission of Section 92BA(1) - effect of omission of the provision

HELD THAT:- It is pertinent to note that section 92BA(i) was omitted w.e.f. 01-04-2017 and there was no saving clause. Thus, the CIT(A) while taking cognizance of the same has categorically held that the provisions never existing in the statute book and hence the reference to TPO was bad in law and the consequential order passed by the TPO is also invalid.

As decided in case of PCIT vs. Texport Overseas Pvt. Ltd. [2019 (12) TMI 1312 - KARNATAKA HIGH COURT] that since the effect of omission of the provision tantamount to non-existent of such provision in the Act, the action of the AO in referring the case to TPO for determining the ALP of specified domestic transaction is without jurisdiction and therefore not valid. Thus, the CIT(A) has rightly deleted the addition. Appeal of the Revenue is dismissed.

Unexplained money u/s 69A r.w.s. 115BBE - unaccounted business income derived from seized documents against cash seized during search - seized documents as mentioned in the assessment order considering the transactions as unexplained money of the assessee applying the principle of telescoping - establishing a clear and direct nexus between the alleged unaccounted income determined by the CIT(A) and the specific cash seized during the search.

HELD THAT:- Once there is adequate documentary proof available showing the receipts of cash, the assessee cannot be allowed to go scot free with respect to alleged unaccounted cash receipts.

Also the provisions of Section 292C make it very clear that the incriminating material belongs to the assessee and the contents of the document are true. In view of above discussion and facts of the case, as the documents are clear that cash has been earned by the assessee, the additions made by the AO on the basis of above documents was rightly sustained u/s 69 of the Act, which does not need any interference on our part, hence, we uphold the same;

Cash seizure we find that the contentions of the assessee on the issue of cash seizure have been examined.

The assessee has submitted during the assessment proceedings a cash book wherein the source of cash has been ascribed to the commission income of the assessee. AO has disregarded the said cash book without giving justifiable reasons for the same. Once the assessee had available cash in hand as per the cash book, the benefit of the same should have been given to the assessee.

Similarly, the assessee has stated that cash can be ascribed as pin money of his wife and gifts received on various functions of his son. The assessee has also stated that his wife is providing tuition to student and regularly earns income from there. It is a normal practice in Indian families that women of the house keep cash in hand as in their personal savings.

it is abundantly clear that the Hon'ble Courts have endorsed the view that the ladies in a house do have personal savings maintained over a number of years and reasonable benefit of the same should be allowed to them. Keeping in view the status of the family of the assessee, CIT(A) rightly observed that a benefit to the extent of Rs. 2,00,000/- can be given on account of savings of his wife and money received on account of gifts from relatives on functions of his son.

As far as the contentions of the assessee that money to the extent of Rs. 22,00,000/- is out of the saved rental receipts of parents, the same cannot be accepted as it is not possible to save money as cash in hand since FY 2013-14 as has been projected by the assessee. Moreover, demonetization also happened during FY 2016-17 and any available cash in hand in currency denomination of Rs. 500/- and Rs. 1,000/- should have been deposited in the bank accounts. The. cash flow statement of rental receipts since FY 2013-14 does not take into account this critical factor. Hence, the above contentions of the assessee were rightly rejected by the Ld. CIT(A).

Assessee stated that the cash of Rs. 17,45,000/- belongs to Sh. Pankaj Rawat. The cash was seized from the assessee and the assessee has failed during the assessment proceedings to provide any documentary evidence to prove that the cash belonged to Sh. Pankaj Rawat. In view of the discussion carried out above, Ld. CIT(A) correctly held that cash can be considered explained only to the extent of Rs. 6,71,000/-. The unexplained cash accordingly is Rs. 43,44,000/-.

CIT(A) has adopted the telescopic theory which means identifying an income and its application, so that ultimately tax is levied either only on the income or only on its application.

In case where an assessee has certain undisclosed income and also certain undisclosed investments/expenditure, then it could be reasonably presumed that the undisclosed investments / expenditure have been sourced out of the undisclosed income, so that only the income may be taxed or only the investment may be taxed and not both, in the hands of the assessee under the provisions of the Act.

In view of the aforesaid factual matrix, the addition was rightly sustained by the Ld. CIT(A) with respect to the unaccounted business income and addition was also correctly sustained u/s 69A on account of notings on the seized documents. Also the addition with respect to excess cash to the extent of Rs. 4,15,110/- was rightly sustained u/s 69A by the Ld. CIT(A). Revenue’s appeal is dismissed.

Rejecting the claim of exemption u/s 11 - as per revenue exemption u/s 11 cannot be claimed in an updated return if no original return is filed -time limit for filing return u/s 139(1) and 139(4) -what if the assessee had filed return of income after due date of filing of return u/s. 139(1) of the Act but before due date prescribed u/s 139(4)?

HELD THAT:- As the assessee admittedly has filed its updated return of income u/s 139(8A) of the Act on 18.12.2023 for the assessment year 2022-23 by claiming exemption u/s 11 of the Act which is within the time permissible u/s 139(4) of the Act, therefore, respectfully following the decision of Bishnupur Public Education Institute [2025 (3) TMI 445 - ITAT KOLKATA] we hold that the assessee cannot be denied the exemption u/s 11 of the Act on account of filing of the updated return. We, therefore, set aside the order of the Ld. Addl / JCIT(A). The grounds raised by the assessee are accordingly allowed.

Deduction claimed u/s 80IC - profits derived by its Uttarakhand Unit /‘UTK Unit’ - 'manufacture' or 'production' - integrated engine cooling system module - formation by splitting-up or reconstruction of the existing business - AO was of the view that, the assessee did not meet the requirements of Section 80-IC(2)(a) i.e., the assessee was not manufacturing any product in the UTK Unit and that, the assessee was also in violation of Section 80-IC(4)(i) of the Act as it was formed by splitting up of its existing business

HELD THAT:- As decided in the case of CIT vs. Gemini Communication [2013 (9) TMI 971 - MADRAS HIGH COURT] had held that, where the assessee imported the critical networking components and designed and developed it into a radio frequency identification device, such activity would qualify as ‘manufacture’ and therefore the assessee would be entitled to deduction u/s 80IC of the Act.

In the instant case, the assessee would procure electrical steel which would be assorted and converted as per their grade, size, thickness, etc. into lamination. According to the AO, the raw material and the final product was the same and that there was no change in the product and hence cannot be regarded as manufacture.

Following the ratio laid down in the case of India Cine Agencies [2008 (11) TMI 15 - SUPREME COURT] it was held that, what is sufficient to be seen is whether a different commodity having a distinct name emerges from the raw material and since, the laminations was a different commodity to the electrical steel, it was held that the assessee was engaged in ‘manufacture’.

Assessee was undertaking ‘manufacture’ or ‘production’ of an integrated cooling system module in a scientific manner with use of machinery and the activity resulted in a commercially distinct product having distinct end use. We thus have no hesitation in holding that the assessee was engaged in manufacture or production of an article or thing, in terms of Section 80- IC(2)(a).

Whether the UTK Unit was a consequence of reconstruction / splitting up of the existing Chennai Unit? - AR reasoned with us that, since the customer (Ashok Leyland) had expanded its business / capacity, the assessee being their component supplier had evidently undertaken expansion by setting up the UTK Unit, which was meant to serve the needs of the UTK factory of Ashok Leyland, over and above, the existing capacity and supply requirements of Ashok Leyland at Chennai. There is merit in the Ld. AR’s plea that, though the UTK Unit was manufacturing the same item as was being manufactured at the Chennai Unit, it was not a case of ‘splitting up’ or ‘reconstruction’ of their business already in existence as alleged by the lower authorities, but ‘expansion’ of their existing business.

It is not the Revenue’s case before us that the inter-unit transfers were at low prices and not at arm’s length. Rather we find that, such inter-unit transactions were permissible as long as it was being undertaken at arm’s length value in terms of Section 80-IA(8)/(10) of the Act. We find that, there is no material or any evidence brought on record by the AO which would show that, the radiators and inter-coolers were not being procured at arm’s length price by the UTK Unit. Hence, we are unable to countenance this line of reasoning propounded by the lower authorities.

Thus, UTK Unit of the assessee was engaged in production or manufacture and therefore satisfied the condition laid down in Section 80IC(2)(a) of the Act and also, the said eligible unit was not formed by splitting up or reconstruction of the business already in existence and thus, the condition precedent in Section 80IC(4)(i) was also met. We thus are of the view that the lower authorities were unjustified in denying the benefit of deduction in respect of the profits derived by the eligible UTK unit u/s 80IC of the Act and direct the AO to allow the same and delete the impugned disallowance. Assessee appeal allowed.

Validity of reopening of assessment - approval from the Competent Authority for reopening of assessment -return filed under section 139(4) - HELD THAT:- A perusal of the proforma seeking approval from the Competent Authority for reopening of assessment reveals that the AO has recorded incorrect facts by stating that no return of income was filed by the assessee. On the other hand, records show that the assessee had filed her return of income u/s. 139(4) of the Act on 05.10.2009.

Further, in the reasons recorded for reopening, there is no reference to the return filed by the assessee. While passing the reassessment order, the AO himself acknowledges that the return was filed under section 139(4) of the Act. This clearly demonstrates non-application of mind at the stage of recording reasons and seeking approval.

A bare reading of the above Form would show that against Column No.8(a) whether any voluntary return has already been filed? The AO has mentioned- ‘No’ and the PCIT has approved the same in a perfunctory manner, without calling for the records. When the substratum for reopening of assessment is based on incorrect facts, the assumption of jurisdiction u/s. 148 of the Act cannot be sustained. Decided in favour of assessee.

Validity of initiation of re-assessment proceedings by issuing notice u/s 148 for want of fulfilment of the prescribed conditions laid down u/s 148 - Validity of sanction/approval u/s 151/148B - approval from the DGIT for complying the conditions laid down in section 149(1)(b) r.w.s.151 of the I.T. Act because the notice u/s 148 of the Act was issued beyond 3 years.

HELD THAT:- The Co-ordinate Bench of this Tribunal [2025 (10) TMI 936 - ITAT HYDERABAD] under identical set of facts and on identical arguments of both sides has held that the reopening of the assessment on the basis of notice u/s 148 of the Act, without satisfying requirements of section 148 and explanation provided thereon is invalid and quashed the notice u/s 148 of the Act and consequent assessment order passed by the AO, because the notice u/s 148 of the act issued by the AO failed to fulfil the mandatory conditions provided u/sec.149(1)(b) of the Act.

As respectfully following the Order passed in the case of M/s. ACE Tyres (P) Ltd. [2025 (10) TMI 936 - ITAT HYDERABAD] we are of the considered view that notice issued by the Assessing Officer u/sec.148 of the Act, in consequence to search operation conducted u/sec.132 of the Act on 04.01.2023 is bad in law, void abinitio and liable to be quashed because, the Assessing Officer has issued notice without fulfilling the conditions prescribed for issuance of such notice beyond three years from the end of the relevant assessment years which is evident from the reasons recorded by the AO for reopening of the assessment, where the AO has failed to make out a case of income escaped assessment in excess of Rs. 50 lakhs which represents an asset, expenditure in respect of transaction or in relation to an event or occasion or an entry or entries in the books of accounts.

Therefore, the notice issued by the AO on the basis of reasons recorded for issuing of such notice without satisfying the mandatory conditions can be said to be a vague notice and hence, the same is bad in law, void abinitio and liable to be quashed. Thus, we quash the notice issued by the Assessing Officer u/sec.148 of the Act and consequently, the assessment order passed by the AO for the assessment years 2014-2015 to 2018-2019 are quashed.

Validity of the second notice u/s 148 issued after the earlier reassessment proceedings were dropped without following section 148A procedure - On identical set of facts in the case of M/s. ACE Tyres (P) Ltd. [2025 (10) TMI 936 - ITAT HYDERABAD] has held that after dropping the notice issued u/sec.148 of the Act dated 18.03.2023, the AO cannot issue 2nd notice u/sec.148 of the Act dated 14.11.2024, without following procedure provided u/s 148A of the Act, and thus, second notice issued u/s 148 dated 14.11.2024 is invalid and liable to be quashed.

In the present case, there is no dispute with regard to the fact that the Assessing Officer has issued notice u/sec.148 of the Act on 18.03.2023 in response to which the assessee has filed return of income on 15.11.2023. Further, the Assessing Officer dropped the re-assessment proceedings initiated vide notice issued u/sec.148 of the Act dated 18.03.2023 and had issued a fresh notice u/sec.148, without issuing notice u/s 148A(b), calling for explanation if any, from the assessee and passing an order u/sec.148A(d) of the Act disposing of the objections if any, filed by the assessee before issuing the notice u/sec.148 of the Act. In our considered view, the 2nd notice issued by the Assessing Officer u/sec.148 of the Act dated 14.11.2024 is not in conformity with the Scheme of Re-Assessment provided u/sec.148A of the Act and thus, the same cannot be upheld.

AO cannot get a second chance to revive otherwise bad or illegal assessment for not issuing notice u/a 143(2) of the Act, by issuing second notice u/s 148 on same set of reasons and without fulfilling mandatory conditions provided u/s 148A of the Act. Therefore, in our opinion, second notice issued u/s 148 of the Act, dated 14.11.2024 is bad in law and liable to be quashed. Thus, we quash second notice issued u/s 148 of the Act, dated 14.11.2024 and consequent assessment order passed by the Assessing Officer for the assessment year 2019-2020.

Reopening of assessment u/s 147 - materials seized from a third person (employee of company) - satisfaction as pre-requisite before issue of notice - cash receipts recorded in FOCUS 5.5 software were found in the DELL Laptop and copied to the Pen Driver before taking printout during the course of search - AO has relied upon the seized material found during the course of search in the case of employee/Sr. Accounts Manager, for framing the assessment of the assessee - HELD THAT:- AO is bound to record satisfaction as per clause (iii) of Exp. (2) to Section 148 of the Act. The provisions of Section 148 of the Act is pari materia to section 153C of the Act.

Therefore, satisfaction is pre-requisite before issue of notice u/s 153C when the seized material pertains to the other person. In the same manner, when the AO has found the material which was seized in the premise of the other person which pertains to the appellant, he has to write satisfaction and take approval from the Pr. CIT for acquiring jurisdiction.

Since, the AO has proceeded on the basis that search is conducted in the case of the assessee and clause (i) of Exp. (2) of Section 148 is applicable and recorded reasons, in our considered view, the reasons recorded by the AO for issue of notice u/s.148 is not in accordance with provisions of Section 148 and consequently, the notice issued by the AO u/s.148 and consequent assessment order is without any jurisdiction and ;liable to be quashed.

In the instant case, the A.O has made 2 additions, i.e. one addition by relying on the material seized from the residential premises of Shri Ramesh Kumar Sanaka, Sr. Accounts Manager i.e. FOCUS 5.5 software and the other addition by relying on the Pen Drive seized from the factory premises.

On observation of the reasons recorded, AO has not demonstrated escapement of income as envisaged in the 1st proviso to section 148 of the Act. AO failed to prove any nexus between the material seized and the escapement of income while invoking the provisions of section 148 of the Act, which is evident from the relevant reasons recorded for reopening of the assessment.

Therefore, notice issued by the AO u/s 148 of the Act on the basis of the reasons recorded for reopening of the assessment is invalid and consequently, the assessment order passed by the A.O is bad in law and liable to be quashed.

Since the A.O has recorded reasons on the premise that there was a search action in the case of the assessee under section 132 of the Act, even though the material available on record clearly shows that the addition made by the A.O is not on the basis of material found in the search proceedings of the assessee, but based on the material found during the search proceedings in the residential premises employee/Sr. Accounts Manager, in our considered view, the reasons recorded for reopening of the assessment and consequent notice issued under section 148 of the Act is invalid and consequently, the assessment order passed by the A.O becomes void ab initio and liable to be quashed - Appeal of the assessee is allowed.

Assessment order passed u/s 143(3) - period of limitation in view of Section 153 - period not exceeding 180 days - initiation of search and date of handing over of the books of account and other valuable materials and the date of the assessment order in light of clause (xii) of explanation (1) of section 153 - HELD THAT:- The time taken by the AO for handing over books of accounts to the AO of the assessee starting from 4/1/2023 to 31/03/2023 is not included in the above limitation period. Since, in the present case, the time taken by the A.O for handing over the books of account is not fully included in the limitation period, in our considered view, the period lost by the A.O in the process of receiving the books of account from the A.O and included in the limitation period alone should be excluded.

Therefore, if we exclude the period lost by the AO in the process of search and handing over the books of account, which is covered in the limitation period, then only the period starting from 1/4/2023 and up to 22/08/2023 shall alone be excluded for computing the limitation period.

In the present case, the time limit for completion of the assessment is up to 31/03/2024 and the time lost by the A.O in the process of handing over the books of account by the A.O is 144 days from 1/4/2023 to 22/08/2023 and if we add 144 days from 31/03/2024, then the A.O shall get the time limit for passing the assessment order up to 22/08/2024, whereas the AO passed Assessment order on 27-09-2024. Since the AO passed the assessment order on 27/09/2024, in our considered view, the assessment order passed by the A.O is clearly barred by limitation in view of specific provisions of clause (xii) of Explanation (1) to section 153 of the Act - Appeal of the assessee is allowed.

Challenge to orders under Benami Act before IBC tribunals - Benami Act as a self-contained code and exclusive adjudicatory mechanism - applicability of moratorium u/s 14 of IBC to sovereign attachment proceedings - residuary jurisdiction u/s 60(5) - inclusion of benami property in the liquidation estate - Whether, the legality and validity of an order of attachment under Benami Act can be challenged before the statutory tribunals under IBC. -HELD THAT:-In its post-amendment avatar, Benami Act, by virtue of Section 2(9) defines a benami transaction. While Section 3 prohibits entering into benami transactions and renders such conduct punishable, Section 4 bars any suit, claim or defence to enforce rights in respect of property held benami. The definition clause further defines ‘beneficial owner’ under Section 2(12), ‘property’ under Section 2(26) and ‘transfer’ under Section 2(29).

The Benami Act represents a sovereign exercise aimed at identifying and extinguishing benami transactions. The attachment and eventual confiscation of property thereunder operate in rem and culminate in vesting of the property in the Central Government free from encumbrances. Such consequences are penal and deterrent, rooted in statutory illegality, and are enforced through a distinct adjudicatory hierarchy whose jurisdiction is expressly insulated from ordinary civil fora.

Section 5 declares that property which is the subject matter of a benami transaction is liable to confiscation by the Central Government. The statutory intent is thus to invalidate both the transaction and any derivative civil claims, while exposing the property itself to State action.

Chapter IV embodies the machinery provisions of the enactment and delineates the course to be followed before property is divested. Section 24 empowers the Initiating Officer, upon forming a reasoned belief that a person is a benamidar, to issue notice and, with the requisite approval, provisionally attach the property so as to prevent its alienation pending inquiry. The matter is then placed before the Adjudicating Authority under Section 26, which, after notice and hearing to the concerned parties, records a finding as to whether the property is benami in nature.

Benami Act is a complete and self-contained code governing identification, provisional attachment, adjudication and confiscation of benami property, supported by a distinct appellate hierarchy. Exclusive jurisdiction over such determinations is conferred upon authorities constituted under the Benami Act. The IBC neither displaces this statutory mechanism nor empowers the NCLT to reopen findings rendered thereunder.

It is, hence, evident that the IBC constitutes a self-contained and exhaustive code governing all facets of insolvency resolution and liquidation of corporate persons. The legislative intent is to ensure that issues relating to the insolvency estate, its preservation, management and distribution are determined within the framework and hierarchy contemplated by the Code.

The present controversy arises at the point where property subjected to proceedings under the Benami Act is asserted to form part of the liquidation estate under the IBC. The issue, therefore, is not one of abstract supremacy, but of determining whether the two enactments can be harmoniously construed, and, if not, which statutory regime must prevail in the limited sphere of conflict. It is in this backdrop that the apparent inconsistency between the two statutory regimes requires examination.

Permitting the NCLT to examine the correctness of attachment or adjudication under the Benami Act by invoking Section 60(5) of the IBC would amount to elevating it to the status of a judicial review forum over sovereign action, a course expressly disapproved in the line of authority commencing from Embassy Property (supra) and consistently reiterated thereafter. The IBC, concerned as it is with insolvency resolution and value maximisation of lawfully owned assets, cannot be employed as a mechanism to dilute or override statutory proceedings undertaken in the public law sphere for confiscation of tainted property.

A more fundamental objection is raised with reference to Section 36 of the IBC. The liquidation estate comprises only assets beneficially owned by the corporate debtor. Property held benami is, by definition, held in a fiduciary or representative capacity for the real owner. Section 36(4)(a)(i) excludes assets held in trust for third parties from the liquidation estate. In Controller of Estate Duty, Lucknow v. Aloke Mitra [1980 (10) TMI 59 - SUPREME COURT] this Court reiterated that a benamidar possesses no beneficial interest and that title vests in the person who provided consideration. Where the corporate debtor is merely an ostensible holder, the property never forms part of its estate and cannot be administered in liquidation.

Section 36(3)(e) further recognises that property “subject to determination by a court or authority” forms part of the estate only to the extent of such determination. Once the Adjudicating Authority under the Benami Act has concluded that the corporate debtor is a benamidar, beneficial ownership stands negated. The legality and validity of such determinations are subject matter of appeal under the provisions of Benami Act alone. Insolvency proceedings cannot be utilised to convert property held for another into distributable assets for creditors. The IBC contemplates distribution of the debtor’s estate, not assets impressed with a trust or held on behalf of a third party.

We are of the opinion that the appellants could not have challenged the attachment order passed under the Benami Act before the statutory authorities under the IBC. We have no doubt in our mind that such invocation is not bona fide and is actually intended to circumvent and interdict the procedures contemplated under the Benami Act. Further, filing of appeal before NCLAT, despite the finding that the appropriate forum is not NCLT, but the statutory authorities under the Benami Act, leaves no doubt that it is a complete abuse of the process. The appellants have taken the precious time of the NCLT, NCLAT and also of this Court when the position of law is amply clear and there was no doubt whatsoever about the availability of the statutory remedies under the Benami Act.

Thus, the appeals have to be dismissed with exemplary costs.

Functus officio - issue estoppel / res judicata in quasi judicial proceedings - duty drawback entitlement upon reversal/adjustment of input tax credit - binding effect of an appellate authority's order on subordinate authorities - power of an appellate authority to review or revisit its earlier appellate order - HELD THAT:- No provision of the Customs Act could be brought to notice by the counsel for the opposite parties that the Commissioner (Appeals) at the stage of giving consequential relief arising out of Appellate Order is authorized under law to revisit the Appellate Order and nullify the effect thereof in the garb of challenging the consequential Order-in-Original in the appeal, particularly when the findings and observations adjudicating entitlement of the petitioner in the Appellate Order was accepted by the Department.

Though provisions of res judicata as envisaged in Section 11 of the Code of Civil Procedure, 1908 and provisions of estoppel enshrined in Section 121 of the Bharatiya Sakshya Adhiniyam, 2023 (corresponding to Section 115 of the Indian Evidence Act, 1872) do not stricto sensu apply to the quasi judicial proceedings, the principles thereof can be adhered to.

In Dredging Corporation of India Vrs. State of Orissa [1994 (5) TMI 250 - ORISSA HIGH COURT], it has been enunciated that the Evidence Act has no statutory application to the Tribunals discharging quasi-judicial function though for better adjudication they are to be guided by the principles of the Evidence Act. Unless contrary intention appears the procedures and principles of the Evidence Act can be adopted to the proceedings under taxing statutes.

Perusal of the record and after hearing the counsel for respective parties, no reply could be given nor could the counsel for the opposite parties demonstrate with plausible reason deducing from the Orders of the Appellate Authorities and the Original Authorities. It could not be gainsaid that the entitlement or eligibility of the petitioner for availing benefit of drawback upon reversal of already availed input tax credit with regard to Central Goods and Services Tax and Integrated Goods and Services Tax, which in fact the company had done in obeisance of Appellate Order dated 30.09.2023, was subject-matter in earlier appeal and the same was adjudicated upon by the Principal Commissioner (Appeals) (In-Situ). Rather indubitably it is admitted that the Revenue has never challenged said Appellate Order. Such fact has candidly been placed in the impugned Order at paragraph 5.3. Nonetheless, the Commissioner (Appeals) proceeded to refuse to grant such relief allowed by the Appellate Authority in Order-in-Appeal dated 30.09.2023.

Upholding the Order-in-Appeal dated 30.09.2025 (Annexure-1) apropos the present set of facts and circumstances would not only contradict established precedents but would also facilitate the Authorities to revise/review/recall/revisit the findings and observations made in earlier round of litigation.

Giving quietus to the issue already decided/adjudicated upon is the policy, or else it would incentivise never-ending/ perpetual litigation on the same issue. The policy described is central to the stability of the legal system, ensuring protection of individuals from ‘double jeopardy’ that once a competent Court has rendered a decision on a specific set of facts qua the parties, the matter is laid to rest permanently. In the wake of above discussions and analysis of legal perspective, the Order-in-Appeal dated 30.09.2025, (Appeal Nos. 123/CUS/CCP/ 2023 and 02/CUS/CCP/2024), issued on 08.10.2025 (Annexure-1) passed by the Commissioner (Appeals), Bhubaneswar cannot withstand judicial scrutiny and hence, it is liable to be set aside. This Court, therefore, does so.

Having thus set aside the impugned Order, further order is felt necessary to be given. The matter is now remitted to the Commissioner (Appeals), Bhubaneswar to consider the merit of the grounds of respective appellants before him in Appeal Nos.123/CUS/CCP/ 2023 and 02/CUS/CCP/ 2024 and after affording opportunity of hearing to them may pass appropriate orders keeping in view the observations made hereinabove.

Provisional release of goods - provisional assessment u/s 18 - security by bond and bank guarantee to cover differential duty - Section 28DA of the Customs Act, 1962 - verification of origin / preferential tariff treatment - CAROTAR, 2020 -HELD THAT:- It is not in dispute that in respect of the consignments supplied by the same foreign supplier, namely M/s. Bahru Stainless SDN. BHD., clearance of the goods for domestic consumption was granted to Amanat Stainless Steels Pvt. Ltd., as also it was granted to Merino Inox Engineering Company. Whether such clearance was inadvertent or otherwise is not germane to the limited issue before us, suffice it to observe, that there is no material to indicate that such imports in any manner were declared to be not entitled to preferential rate of duty, on the ground of any demand in regard to the said foreign exporter.

Further the supplier (foreign exporter) M/s. Bahru Stainless SDN. BHD., has addressed a communication dated 15th January 2026 to the Central Board of Indirect Taxes and Customs, confirming its full cooperation for verification and certifying the origin of the goods. The said supplier inter alia recorded that the Petitioners are entitled to the benefits under the ASEAN-India Trade in Goods Agreement entered between the Republic of India and Malaysia. A similar communication, as noted hereinabove, was addressed by the supplier in favour of the Petitioners furnishing requisite origin-related details for compliance with CAROTAR, 2020.

In the present case, the Petitioners have unequivocally expressed their willingness to secure the entire differential duty by furnishing a Bank Guarantee. Thus even assuming that further proceedings are required to be undertaken on the basis of any bona fide material that the Department may have against the supplier, and even if the Department is ultimately of the opinion that the Petitioners are disentitled to the benefit of Notification No. 46/2011-Cus. claimed under the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of Member States of the Association of Southeast Asian Nations (ASEAN) and the Republic of India) Rules, 2009 read with CAROTAR, 2020, the Department’s claim would ultimately be for recovery of the full customs duty. Such potential liability if any is, in fact, being adequately secured by the Petitioners through the proposed Bank Guarantee.

Thus, we are of the opinion that provisional release of the goods would serve the interest of justice. Failing such release, serious prejudice would be caused to the Petitioners, particularly as the goods are incurring demurrage due to continued detention. It is also relevant, that as of date, no adjudicatory proceedings have been initiated by issuance of a show cause notice to any of the Petitioners.

Section 28DA of the Customs Act, 1962 - verification of origin / preferential tariff treatment - In the present era of modern modes of communication, it would not have been impossible for the Department to obtain appropriate information within a reasonable time, particularly when issues concerning the said supplier are stated to have been under consideration since the year 2018. However, it appears that from 2018 till date no conclusive material has been gathered, and the impugned action has been taken merely on an apprehension of possible non-cooperation.

Thus at such stage, we find no sufficient justification for such approach of the designated officer, when Indian importers seek to avail benefits flowing from international trade arrangements entered by the Government of India. This more particularly when the foreign supplier has bona fide approached not only the concerned departmental authorities but also the Central Board of Indirect Taxes and Customs, expressing willingness to fully cooperate in any verification process.

Except for the different dates of import and the details of the Bills of Entry and the import documents and details, the material facts necessary for the adjudication of the other Writ Petitions are not different.

Thus, we are of the clear opinion that the Petitioners deserve appropriate reliefs on these Writ Petitions. - Writ Petitions stand disposed of.

Interest u/s 27A - compensatory interest for delayed refund - commencement of interest from expiry of three months from receipt of refund application - deeming fiction in Explanation does not postpone commencement of interest - prohibition on departmental inconsistency and requirement of fairness in tax administration - HELD THAT:- It is admitted that the Appellant filed refund applications in respect of 28 Bills of Entry during the period January–March 2003 pursuant to issuance of Essentiality Certificates by the Directorate General of Hydrocarbons and in terms of the directions of the Hon’ble Delhi High Court dated 11.03.2003. It is further undisputed that refund in respect of 15 Bills of Entry was ultimately sanctioned only on 26.11.2015, i.e., after a lapse of more than twelve years from the date of filing of the original refund applications.

We note that the entitlement to interest on delayed refund is governed by Section 27A of the Customs Act, 1962. The provision is unambiguous and mandatory in nature and provides that where any duty ordered to be refunded under Section 27(2) is not refunded within three months from the date of receipt of the refund application under Section 27(1), interest shall be paid from the date immediately after the expiry of three months till the date of refund. The language of the statute leaves no discretion with the authorities once the conditions stipulated therein are satisfied.

Since the refund claims were initially rejected by the adjudicating authority in 2005–06 and refund was granted only after the matter was remanded by this Tribunal in 2015, the refund became “due” only after the appellate order and, therefore, interest cannot be computed from 2003. We find this reasoning to be wholly untenable and directly contrary to the settled position of law.

The fact that the refund claims were wrongly rejected by the Department and the Appellant was compelled to pursue appellate remedies cannot be used to deny statutory interest. The Department cannot take advantage of its own erroneous actions or prolonged adjudicatory process to defeat the Appellant’s entitlement under Section 27A.

We also find force in the Appellant’s contention that the rejection of refund claims on the ground that assessments were not challenged was itself held to be unsustainable by the Hon’ble Supreme Court in the Appellant’s own case in RBF Rig Corporation [2011 (2) TMI 1 - SUPREME COURT] wherein it was held that in the peculiar facts of the case, especially in view of the directions of the Hon’ble Delhi High Court, the refund could not be denied for want of appeal against assessment. Therefore, the delay in granting refund was entirely attributable to the Department and not to any lapse on the part of the Appellant.

We hold that interest under Section 27A of the Customs Act, 1962 is payable to the Appellant from the expiry of three months from the dates of receipt of the original refund applications filed during January–March 2003, till the date of actual refund. The denial of interest on the ground that refund was sanctioned only pursuant to appellate orders is legally unsustainable and contrary to binding judicial precedents.

Thus, we hold that the Appellant is entitled to interest under Section 27A of the Customs Act, 1962 on the refund amount sanctioned vide Order-in-Original dated 26.11.2015, with effect from the expiry of three months from the respective dates of filing of the original refund applications in the year 2003 till the date of actual refund. Consequently, the impugned Order-in-Appeal dated 29.09.2016 is set aside. The appeal is accordingly allowed, with a direction to the adjudicating authority to compute and pay the interest payable in terms of Section 27A of the Customs Act, 1962 within a period of three months from the date of receipt of this order.

Amendment of pleadings and joinder of parties under Order I Rules 9, 10 and 13 CPC - Right to adjudication on merits as facet of Article 21 - Principles of natural justice guiding tribunals u/s 424 of the Companies Act, 2013 - Relief against dismissal for non joinder by allowing rectification of cause title - HELD THAT:- Though we are in agreement with the observation made by the Learned Tribunal in the impugned order dismissing the Company Petition due to the non-joinder of necessary parties, we are of the view that exclusively in the interest of justice and particularly in context of what has been observed by us in the light of Article 21 of the Constitution of India, the Appellant should have been granted an opportunity, to carry out necessary amendment in the cause title of the Company Petition pending before Learned Tribunal, qua the persons to be impleaded as the parties, as against whom he has sought the relief in the principle Company Petition.

Since, we have to balance the equities and ensure that effective opportunity is provided to all the parties for enabling the lis to be decided on merits and more particularly owing to the amendment, which has been permitted by us to be carried, by adding the party to the proceedings, we make it clear that the decision taken in the earlier Company Appeal (AT) (CH) No. 147/2025, will not in any way create an impediment for the right of the Respondents to file their counter to the Company Petition, after the necessary amendment is carried by the Appellant, as directed by the today's order.

Subject to the aforesaid, the Impugned Order would stand modified to the extent that, the Appellant is granted permission to carry out the amendment by impleading the necessary party, M/s. Al-Sami Food Exports Pvt Ltd, non- joinder of whom has resulted in the dismissal of the company petition itself. The necessary amendment is to be carried out by the Appellant, within a period of two weeks from today.

Transactions affecting liquidation estate - void ab initio dealings during moratorium - restoration of funds to liquidation estate - jurisdiction u/s 60(5) IBC - section 66 IBC - avoidance of fraudulent transactions - related party transaction / family nexus - allegations of forgery in insolvency proceedings - separate legal personality and limited liability - HELD THAT:- It is an admitted position on record that the Agreement to Sell is dated 13.12.2019. It is also not disputed that pursuant to this Agreement, a sum of Rs. 1 crore was received, by the M/s SSMP Agro Export Private Limited, a company controlled by Mr. Sagar Kunwar and Mr. Shrey Kunwar, the sons of Mr. Manoj Kunwar, the promoter and ex-director of the Corporate Debtor, M/s SSMP Industries Ltd. These facts are not denied by the Appellants.

It is also relevant to note that the Corporate Debtor had already entered CIRP and subsequently entered in liquidation w.e.f. 31.07.2019. The liquidator was in charge of the CD during the period when the aforesaid agreement to sell was executed by the Respondent No.2. At the relevant point of time, Respondent No.2 had no authority to sell or dispose of any asset of the CD which was in moratorium.

The Liquidator, in the course of discharging his statutory duties, examined transactions affecting the liquidation estate and filed I.A. No. 3827 of 2022 before the Learned NCLT questioning the legality of the Agreement to Sell and the receipt of Rs. 1 crore. Even at this stage, while contesting the application before the Adjudicating Authority, the Appellants did not contemporaneously pursue any criminal remedy alleging forgery with urgency or seriousness.

From a reading of the police complaint dated 12.12.2023 (Annexure- F), it is clear that the grievance raised therein relates to alleged coercion, intimidation, and forcible extraction of cheque and cash amounts by the accused persons. The complaint refers to offences under Sections 384/386/34 IPC and narrates allegations of threats, forced signatures on a cheque of Rs. 20,00,000, seizure of mobile phones, and removal of cash. Importantly, there is no specific allegation in the complaint that the Agreement to Sell dated 13.12.2019 was forged or fabricated, nor is there any averment stating that the Agreement itself is fraudulent. The complaint does not even refer to the Agreement to Sell as being void, manipulated, or forged. The entire narration is confined to alleged coercive acts on 12.12.2023 and the demand for money. Thus, the police complaint does not contain any explicit assertion that the Agreement of Sale is a forged document, which further weakens the subsequent plea that the Agreement itself is fraudulent.

We are conscious that allegations of forgery are serious and fall within the domain of criminal courts. However, in insolvency proceedings, the conduct of the parties, their timing, and their consistency are crucial factors in evaluating the credibility of such defences. The Adjudicating Authority was not called upon to decide criminal guilt, nor has it done so. It confined itself to examining whether an unauthorised transaction affecting liquidation estate property had resulted in receipt of money which ought to be restored to the estate.

It is also important to emphasise that the impugned order of Ld. Adjudicating Authority does not get into the matter of determination of fraud if any. The Ld. AA proceeded on a simpler and legally correct premise that once liquidation has commenced, no person, whether related or otherwise, can deal with property of the liquidation estate, without authority of the Liquidator. Any money received pursuant to such a transaction cannot be retained, irrespective of whether the underlying document is valid or forged.

Therefore, even if the criminal complaint ultimately results in an independent inquiry or prosecution, it does not dilute the statutory consequence under the Insolvency and Bankruptcy Code. The post-order filing of a criminal complaint cannot be permitted to undermine the liquidation process or to defeat the protection afforded to creditors. Accepting such a course would allow parties to frustrate insolvency proceedings by raising criminal allegations only after adverse orders are passed.

It is also to note here that the appellants have now claimed that the amount of Rs. 1 Crore was received as initial funding and shown as an unsecured loan in the books of account. However, if this was the case, they should have taken this plea before the Adjudicating Authority in the first place. The records on the contrary shows that no such plea was taken by the appellant in their submissions/ reply before the Adjudicating Authority. This plea has been taken for the first time before us.

It is true that learned counsel for the Appellants has submitted that the amount of Rs. 1 crore is reflected in their balance sheet as an unsecured loan. However, a mere accounting entry cannot by itself determine the true nature of a transaction. No loan agreement with the creditor, no board resolution, no repayment schedule, no interest clause, and no correspondence have been placed on record to show that the amount was advanced as a genuine unsecured loan. In the absence of supporting documentation, a subsequent book entry cannot override the surrounding facts, which consistently connect the payment with the Agreement to Sell dated 13.12.2019 relating to the Corporate Debtor’s land. Therefore, the plea that the amount was merely an unsecured loan appears to have been developed subsequently in this Appellate Forum.

Thus, we note that the transaction under question is related party transaction, as CD is a family business of Father, Mother and grandmother of the appellant No. 2 and 3, who are the owners of Appellant No.1. We further note that the allegation of forgery, raised belatedly, lacks credibility at this stage and appears to be an afterthought adopted as a defensive measure. The Learned AA was therefore justified in proceeding on the material before it and in directing restoration of Rs. 1 crore to the liquidation estate in order to safeguard creditor interests.

The impugned orders of the Adjudicating Authority directing deposit of Rs. 1 crore with interest into the liquidation estate were upheld. The Tribunal found no jurisdictional infirmity in ordering restorative relief to protect the liquidation estate; the NCLT did not determine criminal guilt or conclusively decide forgery and acted within the Code to safeguard creditors.

Exclusion of limitation period from 15.03.2020 to 28.02.2022 - computation of limitation post SMWP No. 3 of 2020 - invocation of a corporate guarantee by issuance of notice - acknowledgement of debt and extension of limitation u/s 18 of the Limitation Act - Section 7 petition maintainability on limitation grounds - HELD THAT:- As per the contention of Ld. Counsel for the Respondent, we take the notice given to the borrower under Section 13(2) on 04.09.2018 as the date on which, by issuing this notice, guarantee has been invoked, the period till 03.09.2021 was available to the Financial Creditor for preferring any application in this regard and as the limitation period has expired between 15.03.2020 to 28.02.2022 (the period highlighted by the Hon’ble Supreme Court in the aforesaid order) then, as argued by Respondent, only 90 days would be available more to the Appellant/FC for preferring any application under Section 7 of the Code in view of the direction no. 1 of the order of the Hon’ble Supreme Court which would end on 28.05.2022 and as the petition has been filed on 20.08.2023 the same would be barred by limitation.

It is evident that there are certain facts which are not in dispute. It is not in dispute that the Respondent had stood corporate guarantor to the CD and the Financial Creditor has assigned the debt / loan to the Appellant on 15.05.2019. It is also not in dispute that the demand notice under Section 13(2) was issued by the original lender DNS Bank Ltd. to the borrower and corporate guarantor/Respondent on 04.09.2018 and other demand notices were issued by the FCs to the borrower and CD on 04.11.2019 and 18.02.2022 and ultimately the application under Section 7 of the Code was filed by the Appellant on 20.08.2023.

Exclusion of limitation period from 15.03.2020 to 28.02.2022 - The date of default in petition has been shown as 19.11.2019 and it is concluded by the Adjudicating Authority that the date of default is 19.11.2019 as the time, as per the notice given on 04.11.2019 was available to the CD to pay the outstanding dues till 18.11.2022. In this scenario 3 years’ limitation would have expired on 18.11.2022. Since the last date of the limitation period was falling beyond the date stipulated in the order of the Hon’ble Supreme Court i.e. 28.02.2022 the whole of the period provided in direction no. 1 of the order of the Hon’ble Supreme Court i.e. from 15.03.2020 till 28.02.2022 would be excluded and thereafter the whole period which was available to the Appellant for filing of the appeal, on 15.03.2020 would be available to the Appellant and thus by assuming the date of default as 19.11.2019, which has been endorsed by the Adjudicating Authority, the petition of the Appellant was within the period of limitation.

Invocation of a corporate guarantee by issuance of notice - acknowledgement of debt and extension of limitation under Section 18 of the Limitation Act - If we take the limitation as canvased by the Ld. Counsel for the Respondent No. 1 from the notice given under Section 13(2) of date 04.09.2018, than the acknowledgment made vide OTS dated 10.11.2019 (within three years from 04.09.2018) has further extended the limitation period till 10.11.2022, by virtue of section 18 of the Limitation Act and in this scenario also since the last day of limitation period was falling beyond the stipulated period as highlighted by the Hon’ble Supreme Court (from 15.03.2020 to 28.02.2022) this whole period would be fully excluded from computation of limitation and the petition filed on 20.08.2023 would be within the period of limitation. Need not to say that acknowledgement by the principal debtor is the acknowledgement by the guarantor as responsibility to pay the outstanding debt of the principal and guarantor is coextensive and the liability of the guarantor depends upon the default committed by the principal borrower.

Therefore, the factual and legal position would suggest that the Adjudicating Authority has not considered the law laid down by the Hon’ble Supreme Court in Suo Motu Writ Petition (c) No. 3 of 2020 in its correct prospective and has also failed to take into cognizance Section 18 of the Limitation Act as also the averments made by the financial creditor with regard to acknowledgment of debt by principal borrower, which has been duly recorded by the Adjudicating Authority in para 2.7 of the impugned order. Therefore, in our considered opinion, the judgment passed by the Adjudicating Authority may not with stand the test of the law and therefore is liable to be set aside.

There is no material before us with regard to the acknowledgment made by the principal borrower vide OTS proposal dated 10.11.2019 and in this scenario a fresh exercise is required to be done by the Adjudicating Authority wherein the contention of the Respondent No. 1 with regard to the invocation of guarantee from the notice given under Section 13(2) may also be considered by the Adjudicating Authority, the matter is required to be remanded back to the Ld. Adjudicating Authority for afresh consideration.

However, it is clarified and has also been held by this Court in catena of judgments that whether the guarantee may be invoked by issuing a notice under Section 13(2) would depend on the facts and circumstances of each and every case, keeping in view the provisions stipulated in this regard in the guarantee deed and it is also to be considered that in a particular case the guarantee may be deemed to have been invoked by giving notice under Section 13(2), but in another case where notice under Section 13(2) of the SARFAESI Act has been given as well as a specific notice for invoking the guarantee has been issued whether in that case also the notice issued under Section 13(2) of the SARFAESI Act can be deemed to have invoked the guarantee, would be for the Adjudicating Authority to explore and to arrive at just and reasonable conclusions.

Thus, the impugned Judgment passed by the Adjudicating Authority is hereby set aside. The Appeal filed by the Appellant is allowed.

Default u/s 7 - interpretation of loan agreement - default by the corporate debtor under the loan agreements - monthly interest payable in advance as event of default - construction of Clauses 7 and 9 - term of loan vis-a -vis payment obligation - admission of petition u/s 7 - remand for further proceedings -HELD THAT:- Admittedly there has been a default in payment of the monthly interest after three months. Now the simple question that arose is if the respondent failed to make payment of monthly interest will then the appellant be bound to wait till completion of 30 months to seek payment of his principal. The answer would be emphatic NO. The simple interpretation of documents above reveals as soon as there is default in payment of interest by the Respondent, the default shall occur. Clause 9 only refers to the fact if unpaid interest along with principal is still not paid within 30 months then after 60 days the lenders/appellant shall get right to sell the mortgaged property.

Nevertheless, admittedly the interest was never paid since March, 2019, thus even if the loan was sanctioned for a term of 30 months yet on default the lender had every right to cancel the agreement(s) and to demand the entire principal amount with interest. Hence there was no reason to dismiss the petition under Section 7 IBC as the agreement(s) notes the amounts were lent and were for time value of money. Admittedly there was failure on the part of Respondent to repay the loan (or interest after the notice; hence there existed a cause for the appellant to file a petition under Section 7 of IBC. On reasons aforesaid the appeal is admitted and the impugned order is hereby set aside. Petition under Section 7 of IBC thus stands admitted. Matter be now listed before the Ld. NCLT on 24-02-2025 for further proceedings.

Right to be heard / audi alteram partem - impleadment of necessary party - entitlement to surplus profits earned during CIRP - effect of approved resolution plan on distribution of receivables - remand for fresh consideration -HELD THAT:- The Resolution Plan having approved by the CoC on 24.02.2021 much prior to filing of the application, we are of the view that Appellant was necessary party to be heard before passing any order on the application. We, thus, are of the view that the submission advanced by learned counsel for the Appellant that order has been passed without giving opportunity to the Successful Resolution Applicant has substance and we are of the view that the order impugned need to be set aside and the I.A. be revived before the Adjudicating Authority for fresh consideration. We permit the Appellant to be impleaded as Respondent No.2 in the application and also grant opportunity to the Appellant to file reply to the application within two weeks.

Both the parties are given liberty to file an application before the Adjudicating Authority for fixing a date for fresh consideration of the I.A.. We also request the Adjudicating Authority to decide the application expeditiously as early as possible. Appeal is disposed of accordingly.

We make it clear that we have not expressed any opinion on the merits of contentions of either of the parties and it is for the Adjudicating Authority to consider the same and take a decision in accordance with law.

Debt and default within the meaning of the IBC, 2016 - admission of Section 7 application - date of default and limitation - reliance on NeSL records - offer of one-time settlement as evidence of default - mandatory admission where debt and default established - HELD THAT:- The fact that the Corporate Debtor is in default is clearly proved by various offers of the OTS as relied by the Appellant in this appeal. As noted above, Appellant even after passing of the order dated 03.12.2025 have submitted OTS proposal on 30.12.2025, which has not been accepted by the Bank. Prior to aforesaid OTS proposal, the Corporate Debtor has earlier also submitted several OTS proposals which are detailed in the affidavit which were not accepted by the Bank. Submission of OTS proposal is clear proof of default by the Corporate Debtor.

The claim of the Corporate Debtor is that it deposited huge amount before the Financial Creditor but no statement of account or reconciliation has been produced. The Adjudicating Authority has rightly placed reliance on the judgment of Hon’ble Supreme Court in “M. Suresh Kumar Reddy [2023 (5) TMI 570 - SUPREME COURT]” that once the Tribunal is satisfied that an outstanding debt exists and a default has occurred, the Adjudicating Authority had to admit the Section 7 application. We, thus, are of the view that no grounds have been made out in this appeal to interfere with the impugned order. Appeal is dismissed.

Liability of a company struck off the register - continuing liability of directors after striking off - pre-deposit requirement u/s 19(1) - penalty u/s 13(1) - mens rea not required for imposition of civil penalties - power of appellate forum to reduce penalty in the interests of justice -

Liability of a company struck off the register - pre-deposit requirement under Section 19(1) of FEMA - HELD THAT:- It is clear that Sub- Section (6) of Section 248 read with Section 250 of the Act of 2013 that the liabilities and obligations shall continue and for the purpose sufficient provision has to be made for the discharge of its liabilities. We therefore find that the Appellant Company after imposition of cumulative penalty of Rs. 60,00,000/- vide Impugned Order dated 28.09.2018 continues to be liable for the payment of penalty, even after having been struck off.

In view of the failure of the Appellant Company to comply with the statutory provisions of Section 19(1) of FEMA, we dismiss the Appeal filed by M/s Skanda Marines Pvt. Ltd.

Penalty under Section 13(1) of FEMA - There is nothing in the Section which can indicate directly or indirectly requirement of mens rea. Words like “willful”, “deliberately”, “intentionally” etc. are missing.

The present appeal deals with provisions which are strictly civil obligations and penalty for the contraventions of these provisions are imposable under Section 13(1) of FEMA which provides for penalty only, up to thrice the sum involved in such contravention.

The individual Appellants have also pleaded to make the penalties proportionate. Since on evaluation of the gravamen of the charges, it is argued that the penalty has been imposed for the inadvertent failures.

Thus, the ends of justice shall be met on reduction of the penalty on the individual Appellants to Rs. 30,000/- each. The amounts of pre- deposit already made shall be adjusted towards the reduced penalties.

Voluntariness and admissibility of statements - Retraction of confession and its treatment - Corroboration of retracted statement by independent evidence - Section 3(c) of FEMA contravention - Confiscation of seized currency - Penalty reduction and pre-deposit adjustment - HELD THAT:- The claim of the Appellant is falsified because 24 carat gold cannot be from gold ornaments, which are never made from 24 carat gold. Ld. AA has also rejected the retraction dated 09.05.2012 of the Appellant as the same was made after almost 1½ month. Moreover, no supporting evidences for the retraction have been advanced.

It is also matter of record that the statement tendered by Shri Shihab was never retracted and brings out the corroboration of the statements made by the Appellant and Shri Abhilash on 19.03.2012. The recovery of Rs. 56,30,000/- and its seizure from the residential premises of Shri Shihab has not been denied. The Appellant has failed to produce evidences to establish that he legally imported gold to India while he was living abroad.

This Tribunal vide Order dated 15.03.2018 disposed of the Application for waiver of pre-deposit of penalty amount with direction to the Appellant to deposit 20% of the penalty viz Rs. 2,01,000/- within three months of the Order. Keeping in view that the amount of Rs. 56,25,000/- stands confiscated to the Central Government and the same has been claimed by the Appellant in Appeal, we find that the ends of justice will be met with the reduction of penalty to Rs. 2,01,000/-. The pre-deposit already made, subject to verification, shall be adjusted against the reduced penalty. We uphold the confiscation of Rs.56,25,000/- to the Central Government.

Thus, we partly allow the Appeal filed by Shri K. V. Abdul Khader. Applications pending, if any, are disposed of accordingly.

Twin conditions for bail u/s 45 - definition of "proceeds of crime" - presumption u/s 24(b) - predicate offence requirement for PMLA proceedings - prima facie assessment on broad probabilities at bail stage - disclosure u/s 66 - HELD THAT:- It is evident that any property being derived or obtained directly or indirectly as a result of criminal activity which is a scheduled offence, would be termed as proceeds of crime, under PMLA. In other words, for any property to be termed as proceeds of crime, it must be obtained from the commission of a scheduled offence.

In Pavana Dibbur [2023 (12) TMI 49 - SUPREME COURT] it was explained that on plain reading of Section 3, an offence under this Section can be committed after a scheduled offence is committed. In case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of proceeds of crime or knowingly assists the use of proceeds of crime, would be guilty under Section 3 of PMLA. It was thus, concluded that it is not necessary that a person against whom the offence under Section 3 of PMLA is alleged, must have been shown as an accused in the scheduled offence. “The condition precedent for attracting offence Section 3 PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in Clause (u) of sub-section (1) of Section 3 of the PMLA.”

In the present case, the Prosecution has relied upon a figure of approximately Rs. 311 crores as the alleged proceeds of crime routed through M/s Ranjan Moneycorp Pvt. Ltd. and M/s KDS Forex Pvt. Ltd. However, the material placed on record prima facie indicates that this figure represents the cumulative gross transactions in certain Accounts over a period of time and not the specific amount directly traceable to the scheduled offence in question. This figure is also a culmination of more than 200 Complaints with allegations of cyber fraud through similar as well as different modus operandi.

The Complaint in the predicate offence pertains to an alleged cheating of Rs. 1.16 lakhs, which stands compromised. Even assuming that similar Complaints were clubbed, the ED is required to prima facie demonstrate the nexus between the alleged proceeds of crime and the Applicant. As already noted, the Applicant is not named in the FIRs. Moreover, the figure of money arrived at, is by adding the Accounts of all other accused, when there is prima facie no case against the Applicant, showing his complicity, except Statements of co-accused persons. There is nothing to show that he is likely to commit the offence in future.

Thus, it is significant to note that ED has already supplied all the relevant material to the predicate Agency, in compliance with Section 66(2) of PMLA. However, despite sharing and communicating all the information with the agency, no coercive steps have been taken against the Applicant by the Hyderabad Police. Infact, at the cost of reiterating, the FIR in the predicate offence, has been quashed on the ground of compromise between the parties.

The Respondent/ED had filed an Application placing on record the subsequent developments arising from Order dated 16.02.2026, passed by Ld. Special Judge (PC Act) (CBI), taking on record the Application for bringing additional facts relating to 24 New FIRs and the addendum incorporating the said FIRs.

It is well settled that at the stage of consideration of bail, the Court is not required to conduct a mini-trial or render findings on the evidence. The inquiry is confined to a prima facie assessment on broad probabilities. The addition of 24 new FIRs, none of which name the Applicant, does not strengthen the ED’s case against grant of Bail. The conclusion arrived at by this Court in the preceding paragraphs, therefore, remains unaffected.

It is made clear that any observations made hereinabove, are not an expression on the merits of the case. It is further clarified that these observations shall not, in any manner, influence the trial before the learned Trial Court, as they have been made solely for the purpose of examining the Bail Application of the Applicant.

Accordingly, the present Bail Application is allowed.

Disproportionate assets - provisional attachment - burden of proof u/s 24 - valuation of property as on date of acquisition - treatment of unexplained cash deposits as proceeds of crime - standard for confirmation of provisional attachment - HELD THAT:- It is a case where an FIR was registered by the Vigilance Police Station, Bhubaneswar, Odisha for the offence under Section 13(2) read with Section 13(1)(b)/12 of the Prevention of Corruption Act, 1988 against Shri Ajay Kumar Das and Smt. Sanghamitra Das. Shri Ajay Kumar Das was found in possession of the assets disproportionate to his known sources of income and thus committed misconduct as a public servant.

The salary of the three daughters has been taken to be Rs. 75,46,379/- as against the salary taken by the respondents to a sum of Rs. 25,00,000/-. The burden of proof was on the appellant in the light of Section 24 of the Act of 2002 which they utterly failed. He has failed to produce documents to show monthly or yearly income of the daughters so as to take total value to be of Rs. 75,46,379/-. There is a small discrepancy in the car loan amount but not so relevant because the difference is only of Rs. 19,000/-.

The appellant has taken income from other sources for the family members at a sum of Rs. 12,63,808/- without disclosure of the source and proof of its receipt since the calculation in the statement quoted above was just to demolish the case of the respondents without any material to stand. Similar is the position for income on maturity of the insurance policies. In the light of the discussion made above, we do not find any reason to cause interference in the impugned order because the total income of the appellant Ajay Kumar Das and his family was properly determined. If that would have been so, cognizance would have been taken by the predicate offence agency or the court on filing of the charge sheet but no order has been placed on record to show determination of the amount in the hands of the appellant’s, demonstrating higher income. The discrepancy in the income has been taken for the sake of it and that too without producing all relevant documents and to illustrate we have referred to the salary bank account which has been produced but only of few years leaving others to quantify the amount of salary.

The allegation of discrepancy in the calculation is also not made out. In fact, there is no inconsistency in the valuation of the immovable property as reflected in the FIR and the Provisional Attachment Order. Even assuming, for the sake of argument, that any discrepancy exists, the assessment of disproportionate assets contained in provisional Attachment Order would prevail for the purpose of scrutiny of the order under the Act of 2002.

The facts on record further shows many cash deposit in the bank account of the appellants’ family member, which include even in the bank account of Ajay Kumar Das. No explanation for deposit of amount in cash has been given along with the disclosure of the source. The appellants have raised issues about calculation of the assets and the expenditure but failed to give source for deposit of cash in the bank accounts from time to time. It is even if the cash amount was deposited by the close relative of the main accused Ajay kumar Das, then their source for acquisition of cash. It is more so when the cash deposited was not on one or two occasions but many occasions and that has been taken note by the respondents to find out disproportionate assets to the known sources of income.

It is alleged that value of few properties has been taken on a lower value while causing Provisional Attachment Order. If value of certain properties has been taken on lower side, then the amount of disproportionate assets would increase on taking their higher value, because allegation against the appellant is for holding assets disproportionate to the source of income and if value of the properties is taken on a higher side, the amount of disproportionate assets would also go up.

Valuation of property as on date of acquisition - disproportionate assets. - HELD THAT:- According to the appellant, the value of the property should be as on the date of acquisition and not at the time when the Provisional Attachment Order was caused meaning thereby the appellant was paying for taking lesser value of the properties by taking it as on the date of acquisition and not subsequently. The argument is in contrast to the arguments earlier dealt with in preceding paras where the allegation has been made that certain properties have been valued at a lower cost in the Provisional Attachment Oder.

The counsel for the appellants while making reference of the defect in calculation to determine assets disproportionate to the known sources of income furnished the amount towards the income but as has been stated by us earlier, it remains without proof.

Thus, we do not find a case to cause interference in the impugned order. Accordingly, appeals fail and are dismissed.

Personal liability of directors on company tax dues - attachment of property of a third party - transfers made to defeat revenue and bona fide purchaser protection - statutory conditions for sustaining a prohibitory/attachment order - timing of crystallisation of tax liability for invoking anti-avoidance transfer provisions -HELD THAT:- Admittedly, the property originally belonged to Mr. Kittu @ Krishnan Pillai, Director of Tvl. Cape Engineering Private Limited. The property was settled in favour of his daughter under Document No.344/2018. Thereafter, it was sold to Mr. M. Dhanuskodiya Pillai on 20.02.2024. The attachment order was passed only on 21.01.2025. Under Section 37 of the VAT Act, the personal liability of Directors arises only if the Company is wound up and the tax dues cannot be recovered from the Company. In the present case, the Company is still in existence. Therefore, the question of joint and several liability of the Director does not arise at this stage.

As regards Section 43 of the VAT Act and Section 82 of the GST Act, those provisions would apply where a dealer transfers property to defraud revenue after tax dues have become payable and crystallized. In the present case, as on the date of settlement and subsequent sale in favour of Mr. M. Dhanuskodiya Pillai (20.02.2024), there was no attachment order over the property. The attachment was made only on 21.01.2025, i.e., after the property had already been transferred. Therefore, on the date of attachment, the property was no longer owned by the Director or by the Company. In such circumstances, the attachment over the subject property cannot be sustained in law.

Unless statutory conditions are strictly satisfied, the property of a third party cannot be attached.

Thus, the impugned communication in Na.Ka.No.A3/1237/2015 dated 21.01.2025, passed by the State Tax Officer, Nagercoil Rural Assessment Circle, Nagercoil, Kanyakumari District, insofar as it relates to the subject property, is set aside.

Accordingly, the writ petitions are allowed.

Compounding of offences - quashing of criminal proceedings - recording of compromise by Legal Services Committee - conditional quash subject to compliance - HELD THAT:- Since the parties were willing to enter into compromise, they were given a chance to settle the matter by appearing along with their respective counsel before the High Court Legal Services Committee for the State of Telangana vide orders dated 23.12.2025 passed by this Court. The Secretary, High Court Legal Services Committee shall identify the parties and submit a report to that effect.

Pursuant to the above said direction issued by this Court, the parties along with their respective counsel have appeared before the High Court Legal Services Committee for the State of Telangana and the Secretary of the above said Authority identified the parties and submitted a report dated 09.01.2026 stating that the parties were identified and they have willfully, without any coercion, entered into compromise.

The Court allowed the compromise petitions and quashed the related criminal proceedings in F.I.R., subject to the petitioner making the prescribed payments to the High Court Legal Services Committee and the Director.