TaxTMI Updates e-Newsletter
Mar 21,2022

Pre-show cause notice - principles of natural justice - blocking of input tax credit - negative electronic credit ledger - discretionary communication under Rule 142(1A) - interim relief permitting filing of returns upon deposit

Interim relief permitting filing of returns upon deposit - blocking of input tax credit - Petitioner permitted, as an interim measure, to file return upon deposit of tax for the relevant tax period. - HELD THAT: - Considering the facts and circumstances and without adjudicating the substantive controversy, the Court granted an interim measure enabling the petitioner to file the statutory return if the petitioner deposits the tax payable for the relevant tax period and produces proof of such deposit. The order preserves the parties' rights and allows the statutory compliance mechanism to operate pending final adjudication, while not addressing the merits of the challenge to blocking of input tax credit or any resultant negative balance in the electronic credit ledger. [Paras 10]

Interim permission to file return subject to production of proof of deposit of tax for the relevant tax period granted.

Pre-show cause notice - principles of natural justice - discretionary communication under Rule 142(1A) - negative electronic credit ledger - Court recorded prima facie view on the purpose of Form GST DRC-01A and directed respondents to file material and explain the position regarding amendment and negative credits; substantive questions remanded for further consideration. - HELD THAT: - The Court observed that Form GST DRC-01A under Rule 142(1A) functions as a pre-show cause intimation designed to offer the assessee an opportunity either to deposit the tax or to dispute the assessment before issuance of a show-cause notice, thereby advancing principles of natural justice and potentially reducing litigation. The respondents informed the Court that Rule 142(1A) had been amended to substitute mandatory language with permissive language; however, the Court required production of the Gazette notification and a clear explanation as to how an electronic ledger may reflect a negative input tax credit while input tax credit is being blocked. These matters were not finally adjudicated; the respondents were directed to file a counter-affidavit and the Gazette copy, and the court listed the issues for fresh consideration. [Paras 4, 5, 6, 8]

Recorded prima facie view on the remedial purpose of Form GST DRC-01A; directed respondents to file the Gazette notification of amendment and explain the mechanism for negative credit in the electronic ledger; substantive issues left for fresh consideration.

Final Conclusion: Interim relief granted permitting filing of return on deposit of tax with proof; court recorded that Form GST DRC-01A serves as a pre-show cause intimation promoting natural justice, directed respondents to file the Gazette notification evidencing amendment to Rule 142(1A) and to explain the treatment of negative credits in the electronic ledger, and listed the matters for further consideration.

Input Tax Credit entitlement under Section 16(4) - Adjudication and show-cause proceedings under Section 73(1) - Penalty under Section 73(8)/(9) - Interest under Section 50 - Garnishee/recovery proceedings under Section 79(1)(c) - Principles of natural justice

Adjudication and show-cause proceedings under Section 73(1) - Garnishee/recovery proceedings under Section 79(1)(c) - Principles of natural justice - Whether coercive recovery steps pursuant to the garnishee notice could be taken pending adjudication when the petitioner disputed the liability and alleged non-issuance of a show-cause notice - HELD THAT: - The petitioner challenged an adjudication order demanding tax, interest and penalty and contended that no show-cause notice under Section 73(1) had been issued and that principles of natural justice and the statutory procedure were not followed. The petitioner further argued that recovery by way of garnishee under Section 79(1)(c) could not be lawfully initiated in respect of amounts (notably interest) which were disputed and not adjudicated. The Court did not finally adjudicate these contentions on merits; instead it recorded the parties' positions, granted the State time to file a counter-affidavit and, as an interim measure, restrained the respondents from taking any coercive steps pursuant to the garnishee notice dated 25.02.2022 until the next listed date.

Respondents restrained from taking coercive steps pursuant to the garnishee notice; counter-affidavit directed to be filed and matter listed for further hearing.

Final Conclusion: The High Court granted interim protection against coercive recovery under the garnishee notice and directed filing of a counter-affidavit, adjourning the matter for further consideration; no adjudication on the merits was undertaken in this order.

Cancellation of GST Registration - Revival of Registration subject to conditions - Exercise of writ jurisdiction under Article 226 - Filing of returns and payment of tax with interest and penalty as a condition for relief - Restriction on utilisation of Input Tax Credit pending departmental scrutiny - Equitable relief in cases of non-operation/closure of business

Cancellation of GST Registration - Exercise of writ jurisdiction under Article 226 - Equitable relief in cases of non-operation/closure of business - Impugned order cancelling the petitioner's GST registration is liable to be set aside and the writ petition is to be allowed subject to safeguards. - HELD THAT: - The Court found that the cancellation order (dated 16.07.2019) preceded the show cause notice and that the petitioner had ceased business activity and would, in any event, have filed nil returns. Considering precedents in a batch of similar matters where relief was granted to assessees who had ceased operations or filed belated appeals/petitions, the Court exercised its jurisdiction under Article 226 to prevent disproportionate exclusion of taxpayers from the GST regime. The Court applied the same protective regime and conditions as laid down in the referenced batch order, requiring compliance by the petitioner with specified safeguards (including filing of returns and payment of tax, interest, fines/fees, and restrictions on utilisation of Input Tax Credit pending departmental scrutiny) before revival of registration. The Court observed that refusing relief would serve no useful purpose and could harm revenue policy by driving businesses out of the tax net, and therefore equitable relief was appropriate subject to strict conditions to prevent misuse. [Paras 7, 8]

Writ petition allowed; impugned cancellation set aside and registration to be revived subject to the conditions and safeguards specified in the earlier batch order; no costs.

Filing of returns and payment of tax with interest and penalty as a condition for relief - Restriction on utilisation of Input Tax Credit pending departmental scrutiny - Revival of Registration subject to conditions - Relief is conditional: petitioner must file outstanding returns and pay tax, interest, fines/fees; Input Tax Credit cannot be adjusted or utilised except as scrutinised and approved by the department; upon compliance registration shall be revived. - HELD THAT: - Relying on the directions reproduced from the earlier batch order, the Court made the grant of relief conditional. The petitioner must file returns for periods prior to cancellation and pay the tax defaulted along with interest and prescribed fines/fees within the stipulated time. Any unutilised Input Tax Credit cannot be used to make these payments and any claimed ITC already available is to remain subject to departmental scrutiny and approval before utilisation. The respondents are directed to take necessary steps (including portal modifications) to enable filing and payment and to impose restrictions as necessary to prevent improper passing of ITC or bill-trading. These measures are intended to balance equitable relief to the petitioner with safeguards against revenue abuse. [Paras 7, 8]

Petitioner permitted to regularise tax liabilities and have registration revived only after compliance with the enumerated conditions; respondents to implement necessary administrative measures; no costs.

Final Conclusion: The writ petition is allowed; the order cancelling the petitioner's GST registration is set aside and revival is directed on payment/filing and subject to the safeguards reproduced from the earlier batch order; respondents to implement necessary administrative measures; no costs.

Pre-show cause consultation - show cause notice - mandatoriness of pre-show cause consultation for demands above Rs. 50 lakhs - Master Circular non-compliance - interim relief in writ proceedings

Interim relief in writ proceedings - show cause notice - Application for interim relief restraining the respondent from proceeding on the impugned show cause notices - HELD THAT: - The Court considered the request for interim protection against the show cause notices dated 05th July, 2018 and Statements of Demand dated 21st August, 2019 and 21st October, 2019. Having regard to the vintage of the notices (pertaining to the years specified in the petition), the Court held that no interim order was called for and declined to grant interim relief. The order records that the matter will proceed on the normal course with the respondent filing a counter affidavit within the time allowed and the petitioner permitted to file rejoinder, with the matter listed for further hearing.

Interim application dismissed; no interim stay granted on the impugned show cause notices.

Pre-show cause consultation - mandatoriness of pre-show cause consultation for demands above Rs. 50 lakhs - Master Circular non-compliance - Allegation that pre-show cause consultation was mandatory and was not conducted prior to issuance of the impugned notices - HELD THAT: - The petitioner alleged that because the demand exceeded the stated threshold, a pre-show cause consultation was mandatorily required under the relevant Master Circular and instructions. The Court did not adjudicate this substantive contention on the merits in the present order. Instead it issued notice to the respondent to file a counter affidavit and fixed the matter for further hearing, thereby leaving the contention for adjudication on merits at the next stage of proceedings.

Substantive challenge regarding omission of pre-show cause consultation left undecided and directed to be considered in course of the writ petition after filing of affidavits.

Final Conclusion: Notice issued in the writ petition; respondent directed to file counter affidavit within four weeks and matter posted for further hearing. Interim relief was refused and the substantive contention regarding pre-show cause consultation remains to be adjudicated in the pending proceedings.

Scope of supply - lease, tenancy, easement, licence to occupy land treated as supply of services - agreeing to an obligation to do an act treated as supply of services - supply by a government company to government departments and attribution of recipient - exemption for services to State/Central/Local Authorities in relation to functions under Article 243G / 243W

Lease, tenancy, easement, licence to occupy land treated as supply of services - agreeing to an obligation to do an act treated as supply of services - supply by a government company to government departments and attribution of recipient - Transfer (relinquishment) by the lessee of its lease right in favour of the implementing agency amounts to a supply of service by the applicant. - HELD THAT: - The Authority found that the land is owned by the MSFR Department and leased to the applicant; the applicant has agreed to relinquish its lease right in favour of the Irrigation Department on the directions of the owner. Under the GST Act's scope of supply and Schedule II, any lease/easement/licence to occupy land is treated as supply of services, and agreeing to an obligation to do an act is likewise a supply of services. The applicant's act of relinquishing its lease right pursuant to the owner's directions is therefore a supply of service by the applicant to MSFR Department (with compensation procured via the implementing agency). The Authority also recorded that the applicant's factual assertion that payment is received from the Irrigation Department is accepted for the purposes of the ruling, but noted that if payments are from any other person the ruling would not bind. [Paras 5]

Answered in the affirmative: the transfer/relinquishment constitutes a supply of service by the applicant.

Exemption for services to State/Central/Local Authorities in relation to functions under Article 243G / 243W - supply by a government company to government departments and attribution of recipient - Applicability of exemption under Entry No.3 of Notification No.12/2017 CTR to the compensation received could not be decided. - HELD THAT: - The Authority observed that the applicant did not produce requisite details to show the impugned supply is provided to the MSFR Department as an activity in relation to any function covered under Article 243G or 243W. Because the applicant failed to demonstrate that the services were rendered to a local authority or that the activity falls within the scope of the Notification, the Authority refrained from answering whether the exemption applies. The question therefore remains undecided for want of material linking the supply to the statutory exemption. [Paras 5]

Not answered: applicability of the exemption under Notification No.12/2017 CTR left undecided for lack of supporting particulars.

Final Conclusion: The Authority ruled that the applicant's relinquishment of its lease right in favour of the implementing agency is a supply of service under the GST law. The question whether the compensation is exempt under Entry No.3 of Notification No.12/2017 CTR was not answered because the applicant did not establish that the supply was to the owner/local authority or that it falls within the functions covered by Article 243G/243W; the ruling is confined to the factual premise that payments are received from the Irrigation Department and will not bind if that premise is untrue.

Exemption under Notification No. 12/2017 (Entry No. 3) - Pure services provided to a local authority - Functions entrusted to a Municipality under Article 243W of the Constitution

Exemption under Notification No. 12/2017 (Entry No. 3) - Pure services provided to a local authority - Functions entrusted to a Municipality under Article 243W of the Constitution - Whether the applicant's supply of pure security services to Municipal Corporations is exempt from GST under Entry No. 3 of Notification No. 12/2017 - HELD THAT: - The Authority found that the impugned security services are in the nature of "pure services" as no material is supplied (5.5). Municipal Corporations fall within the expression "local authority" used in the notification and exemption is available only where services are provided "in relation to any function entrusted to a Municipality under Article 243W of the Constitution" (5.4, 5.6). The applicant, however, did not specify or substantiate the particular functions of the Municipal Corporations to which its security services relate, nor did it furnish transaction- or activity-wise documents despite being asked to do so (5.7). Because Municipal Corporations perform a variety of activities (some of which may not be functions entrusted under Article 243W), the exemption cannot be applied blanketly to all services provided to a Municipality; exemption depends on whether the particular service is rendered in relation to a function entrusted under Article 243W (5.8, 5.9). [Paras 5]

Exemption under Entry No. 3 of Notification No. 12/2017 is available to the applicant for its pure security services supplied to Municipal Corporations only if those services are provided in relation to functions entrusted to such Municipal Corporations under Article 243W of the Constitution; otherwise no exemption is available.

Final Conclusion: The Authority answered that the exemption in Entry No. 3 of Notification No. 12/2017 applies to the applicant's pure security services supplied to Municipal Corporations only when the services are rendered in relation to functions entrusted to those Municipal Corporations under Article 243W; the applicant must demonstrate that the specific services relate to such entrusted functions to claim the exemption.

Indefeasibility of pre-GST input tax/CENVAT credit - transition of credit by filing Form TRAN-1 - failure of electronic portal / technical impediment as not defeating substantive right - rectification of TRAN-1 or manual acceptance / direct credit to Electronic Credit Register - remand to jurisdictional authorities for verification of unutilised credit as on 30.06.2017

Indefeasibility of pre-GST input tax/CENVAT credit - failure of electronic portal / technical impediment as not defeating substantive right - transition of credit by filing Form TRAN-1 - Pre-GST input tax/CENVAT credit validly availed and unutilised as on the cut-off date cannot be denied merely because of inability to upload or rectify Form TRAN-1 on the GST portal due to technical reasons. - HELD THAT: - The Court held that credits legitimately earned under the erstwhile enactments are indefeasible and meant to be carried forward into the GST regime. Where a taxpayer made substantial compliance or attempted to file TRAN-1 within the prescribed framework but was prevented by technical errors on the portal, such procedural difficulty cannot be allowed to defeat the substantive right to transition unutilised credit. The architecture of the web-portal is only a facilitation mechanism; inability to rectify or re-upload TRAN-1 because of portal limitations cannot justify denial of credit. The Court relied on established precedent that credits validly availed under prior statutes are not liable to lapse for want of procedural perfection and that procedures are handmaids of justice, not its mistress.

Petition allowed to the extent that the petitioner's entitlement to transition legitimately availed unutilised credit is recognised and cannot be denied solely for portal-related technical failures.

Rectification of TRAN-1 or manual acceptance / direct credit to Electronic Credit Register - remand to jurisdictional authorities for verification of unutilised credit as on 30.06.2017 - The matter is remitted to the jurisdictional authorities to examine the petitioner's returns and records and, if satisfied that the claimed input/capital goods credit existed and remained unutilised on 30.06.2017, to allow rectification of TRAN-1 or accept manual filing or credit the proportionate amount into the petitioner's Electronic Credit Register within a specified timeframe. - HELD THAT: - Rather than adjudicating the quantum or existence of specific credits on merits in rem, the Court directed a verification process by the competent authorities. The authorities are to examine whether the amounts claimed were genuinely available in the petitioner's pre-GST accounts/returns as on the cut-off date and, upon independent satisfaction, to effect the appropriate remedy - permitting TRAN-1 rectification, accepting manual submission, or making a direct credit entry in the Electronic Credit Register. The Court imposed a timeline for completion of this exercise to prevent indefinite denial caused by procedural delay.

Case remitted to the jurisdictional authorities with a direction to verify and, if justified, to allow transition of the unutilised credit by rectification/manual filing or direct credit into the Electronic Credit Register within 90 days from receipt of the order.

Final Conclusion: Writ petition allowed; petitioner's entitlement to transition legitimately availed pre-GST credits recognised and the matter remitted to the concerned authorities to verify the existence of unutilised credit as on 30.06.2017 and to permit rectification of TRAN-1 or accept manual filing or credit the Electronic Credit Register within 90 days; no costs.

Re-opening of assessment - Approval under Section 151 - Validity of notice under Section 148 - Non-application of mind - Safeguards in Sections 147 and 151 - Bonafide/inadvertent mistakes in approval form - Mechanical grant of approval

Re-opening of assessment - Approval under Section 151 - Non-application of mind - Bonafide/inadvertent mistakes in approval form - Validity of notice under Section 148 - Validity of the notice dated 31st March 2019 under Section 148 for Assessment Year 2012-2013 - HELD THAT: - The Court found that the Form for approval under Section 151 contained incorrect answers in Column 8 and Column 9 and that the officers who granted approval (the then DCIT who submitted the form and the Additional CIT and Principal CIT who recommended and granted approval) admitted those errors. The Additional CIT and Principal CIT either failed to read the reasons recorded or acted mechanically in granting approval, leading to non-application of mind when authorising reopening. The admitted incorrect information in the approval form, coupled with the lack of proper verification by the authorities, vitiates the approval process and the statutory safeguards in Sections 147 and 151 were not properly observed. Reliance on the reasons recorded could not cure the procedural lapse because the approving authorities did not apply their minds to the correctness of the information furnished in the Form. Having regard to these findings and the authorities relied upon by the Court, the notice issued under Section 148 was held to be invalid. [Paras 3, 4, 5, 6]

The notice dated 31st March 2019 issued under Section 148 for Assessment Year 2012-2013 is quashed and set aside.

Re-opening of assessment - Validity of notice under Section 148 - Mechanical grant of approval - Disposition of writ petitions Nos. 3181 of 2019 and 3615 of 2019 which raised facts nearly identical to Writ Petition No.3023 of 2019 - HELD THAT: - The Court observed that the facts in these petitions were almost identical to those in Writ Petition No.3023 of 2019 and, having quashed the reopening in that petition for lack of proper application of mind in the approval process, allowed these petitions as well for the same reasons. The Court noted figures differed but the legal defect in the approval process was common to all matters. [Paras 8, 9]

Writ Petitions Nos. 3181 of 2019 and 3615 of 2019 are allowed and disposed of for the same reasons as Writ Petition No.3023 of 2019.

Final Conclusion: The approval for reopening was vitiated by admitted errors in the approval form and by the approving officers' non-application of mind; the reopening notice dated 31st March 2019 for Assessment Year 2012-2013 is quashed and set aside, and two other petitions with substantially identical facts are allowed; liberty granted to the Revenue to issue a fresh notice if permissible in law.

Reopening of assessment - change of opinion - tangible material for reopening - reasons to believe - Section 54 exemption for capital gains - assessment completed under Section 143(3)

Reopening of assessment - change of opinion - tangible material for reopening - Validity of reopening the assessment for AY 2016-2017 where the Assessing Officer had completed assessment and the same subject-matter had been considered earlier - HELD THAT: - The Court held that where an assessment has been completed under Section 143(3) and the Assessing Officer possessed and had called for material on a particular claim during those proceedings, reopening the assessment within four years cannot be sustained if it is founded on a mere change of opinion. The assessment record shows that specific queries relating to capital gains and the claimed exemption were raised and replied to during assessment; the material relied upon by the officer proposing the reopening was available and had been considered earlier. Absent any new tangible material justifying a belief that income had escaped assessment, the reopening notice dated 11th March 2021 is impermissible. [Paras 4, 5, 6, 9]

Reopening of assessment quashed as being based on change of opinion and lacking fresh tangible material.

Reasons to believe - assessment completed under Section 143(3) - Whether the reasons recorded for reopening relied upon any material not earlier before the Assessing Officer - HELD THAT: - The Court observed that the reasons for reopening referred to the same documents and facts which had been placed before the Assessing Officer during the assessment proceedings. A specific notice under Section 142(1) had been issued and the assessee had furnished sale agreements, computations and property details; these materials were available to and were considered in the assessment that culminated in the order dated 15th December 2018. Consequently, the statement in the reasons for reopening that purportedly founded a belief of escaped income is belied by the record which shows no additional material was obtained post-assessment. [Paras 5, 6, 10]

Reasons for reopening do not disclose any new material; reopening cannot be sustained on that basis.

Section 54 exemption for capital gains - Whether the property purchased (Villa Orb) consisted of multiple residential flats such as would disentitle the assessee from claiming exemption under Section 54 - HELD THAT: - Petitioner contended, and furnished documentary evidence, that the acquisition at auction was of a single residential unit/flat of approximately 7,500 sq. ft. with common areas, and not multiple independent residential houses. The Court recorded that these factual averments and supporting documents were not disputed by the Assessing Officer in the impugned order. The Court also noted the legal proposition that Section 54 requires acquisition of a residential house and that a building configured in several units does not necessarily defeat the exemption so long as it constitutes an acquired residential house. The respondent did not contest that principle before the Court. [Paras 11, 12]

Claim of exemption under Section 54 on the ground of acquisition of a single residential unit stood on the record and was accepted for the purpose of quashing the reopening.

Final Conclusion: Writ petition allowed; the notice under Section 148 dated 11.03.2021 and the order disposing objections dated 08.12.2021 are quashed and set aside as the reopening was premised on a mere change of opinion and no fresh tangible material was shown to exist, and the factual contention that the acquisition was of a single residential unit was accepted.

Re-opening of assessment - reasons to believe - reassessment notice under Section 148 - information subsequent to assessment - standard procedure for recording satisfaction - approval under Section 151 - authentication of documents under Section 282A

Reassessment notice under Section 148 - reasons to believe - information subsequent to assessment - standard procedure for recording satisfaction - Validity of the notice issued under Section 148 for reassessment on the ground that the Assessing Officer had requisite reasons to believe that income chargeable to tax had escaped assessment. - HELD THAT: - On the material placed on record the Assessing Officer supplied the recorded reasons and those reasons refer to information received from the Deputy Director of Income Tax (Investigation) and to summons issued under Section 131 to the bank and summons to the assessee. The DDIT found part of the cash deposits to be unexplained and forwarded that information to the Assessing Officer who verified PAN details and recorded that Rs. 22,17,720/- remained unexplained, treating the case under clause (b) of Explanation to Section 147. Applying the settled tests in Kalyanji Mavji and Phool Chand Bajrang Lal, the Court held that at the stage of issuance of a reopening notice the judicial review is limited to whether there was prima facie material from which an AO could form a reason to believe, not to the sufficiency or correctness of that material. Since summons were issued, replies found unsatisfactory, and the AO recorded reasons linked to that information, the notice survives legal challenge and the petitioner's contention that no prima facie material existed was rejected. [Paras 7, 8, 12]

The notice under Section 148 is valid as the Assessing Officer had prima facie material and recorded reasons to believe that income had escaped assessment.

Approval under Section 151 - Whether the approval for issuance of the Section 148 notice under Section 151 was accorded by the competent authority. - HELD THAT: - The approval record (Annexure P-5) shows that the Joint Commissioner of Income Tax recommended the proposal and recorded that he was satisfied that it was a fit case for issuance of notice; the proposal was then approved by the Principal Commissioner. The Court found that the Joint Commissioner had applied his mind and recorded satisfaction as required by Section 151(2), and that the fact that the approving entry bears the Principal Commissioner's designation does not invalidate the approval where the Joint Commissioner has recorded his satisfaction. The decision in Ghanshyam K Khabrani was distinguished on the basis that there the Joint Commissioner had not applied his mind. [Paras 13]

Approval under Section 151 is valid because the Joint Commissioner applied his mind and recorded satisfaction, and the subsequent approval entry does not vitiate the sanction.

Authentication of documents under Section 282A - approval under Section 151 - Whether the absence of a digital signature on the approval under Section 151 renders the approval invalid. - HELD THAT: - The note on the approval mentioned digital signing where applicable, but the Court relied on Section 282A which deems notices or documents authenticated if the name and designation of the income-tax authority are printed or stamped thereon. The approval bears the name, designation and office and also contains a DIN and document number. In these circumstances the Court held that lack of a digital signature does not invalidate the approval. [Paras 14]

The approval under Section 151 is not rendered invalid by absence of a digital signature where the name, designation and authentication details (including DIN/document number) appear as provided by Section 282A.

Final Conclusion: Writ petition dismissed; the reassessment notice under Section 148 was held to be valid, the sanction under Section 151 was held to have been validly accorded, and absence of a digital signature on the sanction did not invalidate it.

Re-opening of assessment - proviso to Section 147 - bar after four years unless failure to disclose fully and truly all material facts - onus on Revenue to prove failure to disclose - cancellation of registration under Section 12AA and consequent ineligibility for exemption under Section 11

Re-opening of assessment - proviso to Section 147 - bar after four years unless failure to disclose fully and truly all material facts - onus on Revenue to prove failure to disclose - cancellation of registration under Section 12AA and consequent ineligibility for exemption under Section 11 - Validity of notice dated 29 March 2014 under Section 148 (re-opening) insofar as it relied on cancellation of registration and asserted failure to disclose material facts. - HELD THAT: - The notice to re-open was issued after expiry of four years from the end of the relevant assessment year and after completion of assessment under Section 143(3); accordingly the proviso to Section 147 applies and bars re-opening unless the Revenue proves failure by the assessee to disclose fully and truly all material facts. The reasons recorded for re-opening merely assert that the petitioner became ineligible for exemption under Section 11 by virtue of an order cancelling registration with effect from 1 April 2002; they do not allege or demonstrate that the petitioner had in fact failed to disclose any material fact at the time of the original assessment. The use of the phrase that the assessee "failed to disclose fully and truly material facts" in the reasons is an attempt to escape the statutory bar; absent a specific finding or evidence of nondisclosure, the proviso precludes action. The Revenue's contention that the cancellation order was a new fact not available to the Assessing Officer at the time of assessment does not suffice where the statutory requirement for proving failure to disclose has not been met. Consequently, the notice and the order rejecting objections cannot be sustained. [Paras 5, 6, 8, 9]

Impugned notice dated 29 March 2014 and the order dated 16 February 2015 rejecting objections are quashed for want of satisfaction of the proviso to Section 147; re-opening not sustainable.

Final Conclusion: Writ petition allowed; the re-opening notice and the order rejecting objections are set aside and the petition is disposed accordingly.

Re-opening of assessment under Section 147/148 of the Income-tax Act - Failure to disclose truly and fully all material facts - Change of opinion - Consideration of issues during original assessment - Quashing of reassessment notice

Re-opening of assessment under Section 147/148 of the Income-tax Act - Failure to disclose truly and fully all material facts - Assessment beyond four years - Change of opinion - Validity of the reassessment notice issued to reopen assessment for A.Y. 2008-09 on the ground that amounts received on issue of debentures were actually sale consideration and had escaped assessment. - HELD THAT: - The Court held that reopening after the four year period required the Revenue to demonstrate failure by the assessee to disclose truly and fully all material facts. The reasons recorded relied on the balance sheet and did not establish any such failure to disclose material facts by the petitioner. Further, the very question whether amounts received on issue of debentures were consideration for sale of flats had been raised and considered during the original assessment proceedings (the petitioner had responded to specific queries and furnished notes on debentures), and therefore the proposed reopening was based on a mere change of opinion of the Assessing Officer. Reopening on the same primary facts already considered in the original assessment is impermissible and cannot be sustained as a reason to believe that income chargeable to tax has escaped assessment.

Reassessment notice quashed as the Revenue failed to show non disclosure of material facts and the reopening was a change of opinion based on matters already considered in the original assessment.

Consideration of issues during original assessment - Quashing of reassessment notice - Validity of the order rejecting the petitioner's objections to the reopening and whether that order addressed the merits. - HELD THAT: - The Court observed that the order rejecting the petitioner's objections did not deal with those objections on merits. Given that the reassessment notice itself was invalid for the reasons stated, and that the objections were not substantively considered, the order rejecting objections could not stand. The Court relied on the principle that where a query is raised in assessment proceedings and the assessee replies, that issue is to be regarded as having been considered by the Assessing Officer even if the assessment order does not expressly record consideration; consequently, a superficial rejection without merit analysis was inadequate.

Order rejecting objections set aside and quashed for failure to deal with objections on merits in circumstances where reopening itself was unjustified.

Final Conclusion: The reassessment notice dated 17th February, 2014 and the order dated 25th February, 2015 rejecting objections are quashed and set aside because the Revenue failed to establish non disclosure of material facts required for reopening beyond four years and the proposed reassessment amounted to a prohibited change of opinion; objection order did not deal with merits.

Issuance of notice - digital signature - time of dispatch/despatch of electronic record - limitation under Section 149 - authentication and communication of notices in electronic form - interpretation of 'issue' in statutory and common law

Digital signature - issuance of notice - authentication and communication of notices in electronic form - Digitally signing a notice is a distinct act from issuing or dispatching the notice; mere digital signing does not constitute issuance. - HELD THAT: - The Court examined the Act, 1961 (Sections 149, 282, 282A), Rule 127A of the Rules, 1962 and Section 13 of the Information Technology Act, 2000, and authoritative dictionary and judicial authorities interpreting the word 'issue.' Sub-section (1) of Section 282A contemplates that a notice must be signed and issued in paper form or communicated in electronic form in accordance with prescribed procedure, and Rule 127A prescribes issuance by transmission from the designated e-mail address. Section 13(1) of the IT Act identifies dispatch of an electronic record as occurring when it enters a computer resource outside the control of the originator. The combined statutory scheme therefore recognises signing (authentication) and actual issuance/dispatch as separate acts; signing alone does not complete issuance for the purpose of Section 149's limitation. [Paras 16, 17, 18, 19, 20]

Digitally signing a notice is not the same as issuing it; issuance requires dispatch/communication in accordance with the prescribed procedure.

Time of dispatch/despatch of electronic record - limitation under Section 149 - interpretation of 'issue' in statutory and common law - For an electronically communicated notice, the time of issuance for computing limitation under Section 149 is the time when the electronic record enters a computer resource outside the control of the originator (i.e., when dispatched from the originator). - HELD THAT: - Applying Section 13(1) of the IT Act, the Court held that dispatch of an electronic record occurs when it enters a computer resource outside the originator's control. Read with Section 282/282A and Rule 127A, the moment a digitally authenticated notice is transmitted from the designated e-mail (or otherwise entered into a computer resource beyond the originator's control) is the point of issuance. The Court relied on dictionary meanings and precedent (including Gujarat High Court and Supreme Court decisions) that define 'issue' in the context of process and notices as the act of sending out or placing it in a channel for service, rather than mere signing. [Paras 24, 25, 27, 28, 29]

The date and time of issuance of an electronically sent notice is when the electronic record enters a computer resource outside the originator's control (i.e., when dispatched), and that moment alone determines compliance with Section 149's limitation.

Limitation under Section 149 - issuance of notice - The impugned notice issued by e-mail on 06.04.2021 was beyond the limitation period prescribed by Section 149 for AY 2013-14 and is therefore time barred. - HELD THAT: - The Court applied its conclusions on the distinction between signing and issuance and on the time of dispatch for electronic records to the facts: although the notice was digitally signed on 31.03.2021, it was issued to the assessee by e-mail and received on 06.04.2021. Since issuance (dispatch) occurred on 06.04.2021, after the expiry of the limitation (31.03.2021), the notice offended Section 149. Consequently, the notice and reassessment proceedings founded on it could not be sustained. [Paras 29, 30]

The notice under Section 148 issued by e-mail on 06.04.2021 is barred by limitation and is quashed.

Final Conclusion: The Court held that digital signing is distinct from issuance; an electronically communicated notice is issued when it is dispatched (i.e., enters a computer resource outside the originator's control). Applying this to the facts, the reassessment notice for Assessment Year 2013-14, issued by e-mail on 06.04.2021, was time barred under Section 149 and is quashed; the writ petition is allowed.

Conditional stay of demand - lifting of bank-account attachment upon compliance - prior deposit / payment as condition for interim relief - leave to approach appellate or assessing fora for stay - automatic vacatur of interim order on non-compliance

Conditional stay of demand - lifting of bank-account attachment upon compliance - prior deposit / payment as condition for interim relief - Whether attachments of the petitioner's bank accounts should be lifted and interim stay of recovery granted subject to payment of a portion of the assessed demand - HELD THAT: - The Court directed that interim relief would be granted only on the petitioner making specified payments as a condition precedent. Having regard to the pendency of appeals and the absence of earlier stay applications before appropriate fora, the Court exercised its discretion to order a conditional stay: payment of 20% of the demand in respect of Assessment Years 2015-16, 2016-17 and 2017-18 and 30% of the demand for Assessment Year 2012-13 within four weeks. On compliance with this payment condition, the revenue is directed to lift the attachments of the bank accounts and grant a stay for a limited period to enable the petitioner to seek statutory relief from the appropriate appellate or assessing authorities. [Paras 15, 16, 20]

Attachments to the bank accounts shall be lifted and a limited stay granted on the petitioner making the stipulated payments within the time directed.

Leave to approach appellate or assessing fora for stay - prior deposit / payment as condition for interim relief - Whether the petitioner must approach the ITAT, CIT(A) or Assessing Authority for stay applications and how those applications are to be considered - HELD THAT: - The Court required the petitioner, within the two-month stay period, to approach the relevant forum (ITAT, CIT(A) or the Assessing Authority as applicable) and file stay applications. It directed that any stay petitions so filed shall be considered on merits by taking into account that the petitioner has complied with the conditional payment ordered by this Court. The Court noted that stay applications could have been filed earlier before the Assessing Authority under the statutory provision empowering that authority to impose conditions. [Paras 15, 20]

Petitioner must, within two months of compliance, file stay applications before the appropriate forums, which shall be considered objectively in light of the petitioner's compliance with the Court's conditional order.

Automatic vacatur of interim order on non-compliance - Consequences of non-compliance with the Court's payment and filing directions - HELD THAT: - The Court made it clear that failure to comply with the payment schedule or to approach the concerned authorities within the stipulated period will result in automatic vacatur of the interim stay granted by this order, without further reference to the Court. Non-compliance will entitle the Revenue to proceed with recovery measures as if the assessee were a defaulter in respect of the demands for the four Assessment Years. [Paras 20]

The conditional stay shall stand automatically vacated on non-compliance, and the Revenue may proceed with recovery.

Treatment of Assessment Year 2012-13 - Procedure permitted in respect of Assessment Year 2012-13 where an earlier stay application before the ITAT was dismissed - HELD THAT: - Although the petitioner's earlier stay application before the ITAT in respect of AY 2012-13 was dismissed, the Court permitted the petitioner to pursue appropriate remedies afresh, including filing a Tax Case Appeal or such other relief as available, subject to the same conditional payment and the requirement to approach the relevant forum. The Court recorded that the same interim arrangement (conditional payment and limited stay) may be adopted while the petitioner seeks appropriate appellate relief. [Paras 8, 20]

Petitioner may, subject to the conditional payment, pursue appellate remedies in respect of AY 2012-13 and the interim arrangement shall apply while such remedies are instituted.

Final Conclusion: Writ petition disposed by granting a conditional interim stay and directing lifting of bank-account attachments on stipulated payments (20% for AYs 2015-16, 2016-17, 2017-18; 30% for AY 2012-13), with a two-month window to approach the appropriate forums; the stay shall automatically lapse on non-compliance and the Revenue may resume recovery.

Depreciation on leased vehicles - entitlement to higher rate where leasing forms mode of business - broken period interest - treatment as revenue expenditure - depreciation in value of securities held as stock-in-trade - allowance for fall in market value - application of precedent where method of valuing closing stock varies - relevance of prior consistent acceptance - interest under Section 234D - applicability determined by date of completion of regular assessment

Depreciation on leased vehicles - entitlement to higher rate where leasing forms mode of business - Assessee entitled to claim higher rate of depreciation on vehicles given on lease where leasing is a mode of carrying on business. - HELD THAT: - The court held that the question as to higher depreciation on vehicles given on lease is covered in favour of the assessee by the Supreme Court authority relied upon by the parties, which recognises that where leasing of machinery (or vehicles) is a mode of carrying on business and the actual use is in a hire business, higher depreciation is allowable. The bench accepted the parties' concession that this principle applies to the facts of the present appeals and answered the substantial question accordingly.

Answered in favour of the assessee; higher depreciation allowable.

Broken period interest - treatment as revenue expenditure - Expenditure towards broken period interest forming part of purchase price of securities held as stock-in-trade is to be treated as revenue expenditure and allowed. - HELD THAT: - Following this Court's earlier decision in the assessee's own case for earlier years and authoritative High Court precedent, the Tribunal's conclusion that broken period interest is revenue expenditure was affirmed. The Court accepted that securities were held as stock-in-trade and that income from their sale was revenue in nature; on that basis expenditure incurred as broken period interest is deductible as revenue expenditure.

Answered in favour of the assessee; broken period interest allowable as revenue expenditure.

Quantification of enhancement on account of broken period interest - correctness of amount enhanced - Enhancements made by the Revenue relating to broken period interest are not sustained to the extent challenged; Tribunal's relief on the broken period interest issue is upheld. - HELD THAT: - The Court noted the parties' agreement and prior rulings in the assessee's earlier appeals which decided the broken period interest issue in the assessee's favour. On that footing the Court accepted the Tribunal's allowance and answered the related substantial question(s) in favour of the assessee, effectively rejecting the Revenue's contention on enhancement.

Answered in favour of the assessee; enhancements disallowed to the extent determined by the Tribunal.

Depreciation in value of securities held as stock-in-trade - allowance for fall in market value - application of precedent where method of valuing closing stock varies - relevance of prior consistent acceptance - Claim for depreciation (fall) in the value of securities held as stock-in-trade is allowable and the Tribunal's deletion of the enhancement made by the Commissioner is sustained. - HELD THAT: - Relying on this Court's earlier judgment in the assessee's own case and other High Court decisions, the bench held that where the bank has consistently treated government securities as stock-in-trade and the Revenue had accepted that position earlier, a fall in market value is deductible. The Tribunal's deletion of the enhancement on this ground was followed and the related substantial questions were decided for the assessee.

Answered in favour of the assessee; depreciation in value of securities allowable and enhancement deleted.

Interest under Section 234D - applicability determined by date of completion of regular assessment - Section 234D applies where the regular assessment is completed on or after 1.6.2003; assessee liable to interest under Section 234D for assessments completed after that date notwithstanding the assessment year involved. - HELD THAT: - The Court followed earlier Co ordinate Bench decisions which held that applicability of section 234D depends on the date on which the regular assessment order is passed and not on the assessment year. Where the amended provision came into force before completion of the assessment, interest under section 234D is leviable. Applying this principle, the Court decided the question in favour of the Revenue and against the assessee and directed remand to the assessing officer for recomputation and passing of appropriate orders after hearing the assessee.

Answered in favour of the Revenue; matter remitted to the assessing officer to rework and pass orders as per law.

Final Conclusion: The Court disposed the Revenue's appeals by answering substantial questions 1-5 in favour of the assessee and question 6 in favour of the Revenue; the Tribunal's order is set aside only insofar as it relates to interest under Section 234D, and the matter is remitted to the assessing officer for recomputation and fresh orders within eight weeks.

Requirement of personal hearing - faceless assessment scheme under Section 144B - mandatory nature of discretion where civil consequences arise - principles of natural justice - non-est order under Section 144B(9) - invalid classification by administrative circular

Requirement of personal hearing - faceless assessment scheme under Section 144B - principles of natural justice - mandatory nature of discretion where civil consequences arise - Impugned assessment order was passed without affording the petitioner a personal hearing as requested and whether such omission vitiates the assessment under the faceless scheme. - HELD THAT: - The Court held that where a quasi judicial authority exercises discretion resulting in civil consequences, the use of the word "may" in the faceless scheme must be read as imposing a mandatory duty to afford a reasonable opportunity of personal hearing. Reliance was placed on the prior decision in Bharat Aluminium Company Ltd. which construes the discretion as obligatory in such circumstances. Failure to grant the petitioner a virtual personal hearing despite a specific request and without adequate consideration of the need for hearing was found to be in breach of the principles of natural justice and the procedural requirements of the faceless assessment scheme, rendering the assessment infirm under the scheme's safeguards.

Assessment order quashed for failure to afford personal hearing; assessment rendered non est in view of mandatory hearing requirement.

Invalid classification by administrative circular - faceless assessment scheme under Section 144B - Validity of the Respondents' classification between matters requiring personal hearing and those not, as embodied in the Circular dated 23rd November, 2020, insofar as it displaces the mandatory hearing requirement. - HELD THAT: - The Court observed that the administrative classification seeking to deny personal hearing in certain matters is legally unsustainable to the extent it negates the mandatory duty to afford a reasonable opportunity of personal hearing where civil consequences follow. The Circular's delineation between disputed questions of fact and law and other matters cannot override the statutory and constitutional requirement of fair opportunity to be heard when discretion affecting civil rights is exercised.

Classification by the Circular to dispense with personal hearing in categories of matters was held not legally sustainable in so far as it conflicts with the mandatory duty to afford hearing.

Remand for fresh decision after hearing - Appropriate relief and course of action following invalidation of the assessment order. - HELD THAT: - In view of the quashing of the impugned assessment and associated notices for demand and penalty, the Court directed remand to the assessing authority (Respondent No.2) for a fresh decision. The remand is conditional upon affording the petitioner a personal hearing in accordance with law; the rights and contentions of the parties were left open for reconsideration by the authority after hearing.

Matter remanded to Respondent No.2 for fresh decision after giving opportunity of hearing; notices of demand and penalty quashed subject to fresh adjudication.

Final Conclusion: The assessment order dated 22nd April, 2021 and consequential notices for demand and penalty for assessment year 2018-19 are quashed; the matter is remanded to the assessing authority for fresh consideration after affording the petitioner a personal hearing in accordance with law.

Supply of reasons recorded under section 148(2) - Validity of reassessment framed under section 147 read with section 143(3) - Right to file objections to reopening of assessment - Obligation to dispose of objections by a speaking order

Supply of reasons recorded under section 148(2) - Validity of reassessment framed under section 147 read with section 143(3) - Right to file objections to reopening of assessment - Assessment framed without furnishing the copy of reasons recorded for reopening is invalid and quashed. - HELD THAT: - The undisputed facts show reopening notice was issued and the assessee filed a return and specifically requested the reasons recorded, but the Assessing Officer did not supply those reasons and proceeded to complete the reassessment. The Tribunal proceeded on the assumed factual position that reasons were never supplied and applied binding precedent that where a notice under section 148 is issued and the assessee requests the reasons, the AO must furnish the copy within a reasonable time so that the assessee may file objections; the AO must dispose of such objections by a speaking order. In the absence of supply of reasons and disposal of objections, the reassessment is vitiated. Applying that principle to the present facts, the reassessment under section 143(3) read with section 147 could not be sustained and was held to be invalid and therefore quashed. [Paras 7, 8]

Reassessment quashed as invalid for non-supply of reasons recorded for reopening; legal grounds allowed.

Validity of reassessment framed under section 147 read with section 143(3) - Merits of the additions were not adjudicated and are left open for decision if required. - HELD THAT: - Because the appeal was allowed on the legal ground of invalid reopening, the Tribunal did not decide the substantive merit issues raised by the assessee. Those substantive grounds are therefore not finally adjudicated and remain open for consideration at a later stage if required. [Paras 9]

Merits not adjudicated and reserved for future consideration; left open.

Final Conclusion: The assessee's appeal is allowed: the reassessment completed under section 143(3) read with section 147 for AY 2013-14 is quashed for failure to furnish the reasons recorded for reopening; substantive merits are left open for future adjudication if necessary.

Penalty under section 271CA - short collection of TCS - TCS collection obligation under section 206C - credit of taxes paid to be verified from TRACE database - remand to assessing officer for verification and allowance of credit - condonation of delay in filing appeals pursuant to Hon'ble Supreme Court order dated 23-09-2021

Penalty under section 271CA - short collection of TCS - credit of taxes paid to be verified from TRACE database - Validity of confirmation of penalty under section 271CA for alleged short collection of TCS (Assessment Year 2016-17). - HELD THAT: - The Tribunal examined the assessing officer's spot verification and the TRACE/TCS return data. The CIT(A) had directed the AO to verify records and allow credit as the assessee's TCS return reflected taxes paid in excess of the AO's computation. Having regard to the CIT(A)'s direction and the TRACE data showing that the assessee had filed TCS returns with amounts exceeding the AO's assessed tax, the Tribunal held that once the quantum appeal was allowed by the CIT(A) (for statistical purposes) there was no justification for imposition or confirmation of penalty under section 271CA by the AO or by the CIT(A). The Tribunal therefore allowed the assessee's appeal. [Paras 4]

Appeal allowed; confirmation of penalty under section 271CA set aside for Assessment Year 2016-17.

Penalty under section 271CA - short collection of TCS - condonation of delay in filing appeals pursuant to Hon'ble Supreme Court order dated 23-09-2021 - Whether the reasoning and result in ITA No.131/JP/2021 apply to the appeal in ITA No.192/JP/2021 (penalty under section 271CA) and whether delay in filing is to be condoned. - HELD THAT: - The Tribunal applied the decision in ITA No.131/JP/2021 to the appeal at hand. The bench also considered the delay in filing the appeal and, relying on the Hon'ble Supreme Court order dated 23-09-2021, allowed the delay of 25 days. Given the parity of issues and the earlier finding that the quantum appeal had been allowed and credits were to be verified, the Tribunal held that the same conclusion applied and allowed the appeal. [Paras 6]

Appeal allowed by applying the decision in ITA No.131/JP/2021; delay condoned.

TCS collection obligation under section 206C - short collection of TCS - remand to assessing officer for verification and allowance of credit - condonation of delay in filing appeals pursuant to Hon'ble Supreme Court order dated 23-09-2021 - Validity of demand (TCS and interest) under section 206C(6)/(7) for Assessment Year 2017-18 and appropriate relief. - HELD THAT: - Although the AO and the CIT(A) had confirmed demand for short collection of TCS and interest, the Tribunal observed that a similar issue had been decided in favour of the assessee for an earlier year with a direction to verify and allow tax credits from records/TRACE. In the interests of equity and justice the Tribunal restored the appeal to the file of the AO with a direction to verify the records and allow the credit of taxes paid by the assessee; the Tribunal also allowed the applicant's delay in filing pursuant to the Supreme Court order. Thus the substantive issue was not finally adjudicated on merits but remitted for verification and credit adjustment. [Paras 8]

Appeal restored to the assessing officer for verification and allowance of tax credits (allowed for statistical purposes); delay condoned.

TCS collection obligation under section 206C - short collection of TCS - remand to assessing officer for verification and allowance of credit - condonation of delay in filing appeals pursuant to Hon'ble Supreme Court order dated 23-09-2021 - Validity of demand (TCS and interest) under section 206C(6)/(7) for Assessment Year 2018-19 and appropriate relief. - HELD THAT: - As with the 2017-18 appeal, the Tribunal noted parity with the earlier favourable decision and the assessee's contention that TRACE records show no short collection. Rather than deciding the quantum on merits, the Tribunal in the interest of equity directed restoration of the appeal to the AO to verify records and allow the credit of taxes paid; the Tribunal also allowed the delay in filing the appeal consistent with the Supreme Court direction. The substantive demand was therefore remitted for fresh verification. [Paras 10]

Appeal restored to the assessing officer for verification and allowance of tax credits (allowed for statistical purposes); delay condoned.

Final Conclusion: The Tribunal allowed the appeals: ITA Nos. 131 & 192/JP/2021 were allowed (penalty under section 271CA set aside/apply decision in ITA 131), and ITA Nos. 326 & 327/JP/2021 were restored to the file of the AO for verification and allowance of TCS credits (allowed for statistical purposes); delays in filing were condoned in accordance with the Hon'ble Supreme Court order dated 23-09-2021.

Capital gain on transfer of immovable property - co-ownership and evidentiary requirement for transfer of immovable property - definition of "transfer" under section 2(47) including part performance - compulsory registration under the Registration Act and effect of non-registration - effect of the 2001 amendments removing part performance as constituting transfer - obligation to refer valuation to a Valuation Officer under section 50C(2) - effect of Tenancy/Agricultural Lands Tribunal order on validity of registered sale deed and timing of transfer

Co-ownership and evidentiary requirement for transfer of immovable property - Assessee was a co-owner of the property at the time of the registered sale deed and not merely a consenting party. - HELD THAT: - The Tribunal found no registered instrument, court decree or other legal document establishing that the assessee had earlier received three other properties in lieu of his share; affidavits alone were insufficient to effect transfer of immovable property given the mandatory registration regime. The registered sale deed of 07-12-2010 shows the assessee signing as one of five co-owners, and the Tehsildar/Agricultural Lands Tribunal record also records the assessee as a successor. On these facts the contention that the assessee was not a co-owner was rejected. [Paras 5, 6, 7, 8, 9]

Contention that the assessee was not a co-owner is rejected; assessee held to be a co-owner at the time of the registered sale deed.

Definition of "transfer" under section 2(47) including part performance - effect of the 2001 amendments removing part performance as constituting transfer - compulsory registration under the Registration Act and effect of non-registration - The transfer for capital gains purposes occurred on registration of the sale deed on 07-12-2010 and not on the earlier unregistered agreement of 2001. - HELD THAT: - Prior to the 2001 amendments, part performance under section 53A of the Transfer of Property Act could amount to transfer for capital gains by operation of section 2(47)(v). The 2001 amendments changed this position by requiring registration of documents referring to part performance and by removing proviso permitting unregistered documents to be evidence of part performance. Consequently, an unregistered agreement executed in 2001 cannot be treated as effecting a transfer after the amendments; the registered sale deed of 07-12-2010 is therefore the operative act of transfer for AY 2011-12. No material was shown to indicate the capital gain was offered earlier. [Paras 10, 11, 12, 13]

Transfer took place on execution and registration of the sale deed on 07-12-2010; the 2001 unregistered agreement did not constitute transfer for capital gains purposes.

Effect of Tenancy/Agricultural Lands Tribunal order on validity of registered sale deed and timing of transfer - The consequences of the order of the Tehsildar and Agricultural Lands Tribunal declaring the 07-12-2010 sale deed invalid could not be finally determined on the record and require fresh consideration by the Assessing Officer. - HELD THAT: - The Tribunal's translated order records the registered sale deed dated 07-12-2010 as legally invalid and directs surrender of the property to the State Government unless appealed. The factual and legal consequences depend on whether the Tribunal's order stands, whether any appeal was filed and disposed of, and whether the property in fact vested in the State Government. These matters were not placed before the AO or the CIT(A) and the contention about the Tribunal order was raised for the first time before the Tribunal. Given these unresolved and material consequences for liability and timing of capital gains, the issue must be examined afresh by the AO. [Paras 14, 15, 16]

Issue remanded to the file of the Assessing Officer for fresh consideration in light of the Tenancy/Agricultural Lands Tribunal order and any consequent facts or appeals.

Obligation to refer valuation to a Valuation Officer under section 50C(2) - The Assessing Officer failed to refer the valuation to the Valuation Officer despite the assessee's request; the matter is to be re-decided after such reference and opportunity of hearing. - HELD THAT: - The assessment order records the assessee's contention that the stamp valuation exceeded fair market value and a request to refer valuation to the DVO. Section 50C(2) permits such reference and judicial interpretation treats the Assessing Officer's discretion in this context as mandatory when the assessee requests a reference. The AO did not make any reference and proceeded to adopt stamp duty value; accordingly the Tribunal set aside the assessment on this point and directed restoration to the AO to act in accordance with law, including making the DVO reference and recomputing capital gains after hearing the assessee. [Paras 17, 18]

Impugned computation set aside; matter restored to the Assessing Officer to refer valuation to the Valuation Officer if requested and to recompute capital gains after affording the assessee a reasonable opportunity.

Final Conclusion: Appeal partly allowed. The Tribunal holds the assessee to have been a co-owner and that the transfer occurred on registration of the sale deed on 07-12-2010 for AY 2011-12, but sets aside the impugned order and restores the matter to the Assessing Officer for (i) fresh consideration of the consequences of the Tehsildar and Agricultural Lands Tribunal order and related appellate history, and (ii) referral to the Valuation Officer and recomputation of capital gains after affording the assessee a reasonable opportunity of hearing.

Exemption under RFCTLARR Act from income-tax - Applicability of CBDT Circular 36/2015 dated 25.10.2016 - Section 96 of the RFCTLARR Act - no income-tax on awards or agreements - Scope of revision under section 263 of the Income-tax Act

Exemption under RFCTLARR Act from income-tax - Applicability of CBDT Circular 36/2015 dated 25.10.2016 - Section 96 of the RFCTLARR Act - no income-tax on awards or agreements - Whether the compensation of Rs. 1,33,88,000 received under the RFCTLARR Act is taxable as long term capital gains or is exempt from income tax. - HELD THAT: - The Tribunal found it was an undisputed fact that the assessee received compensation under compulsory acquisition governed by the RFCTLARR Act. The assessee relied on CBDT Circular 36/2015 dated 25.10.2016 which states that income tax shall not be levied on awards or agreements made under the RFCTLARR Act except those under section 46 of that Act. The Tribunal examined section 96 of the RFCTLARR Act which provides that no income tax shall be levied on any award or agreement made under the Act, except under section 46. The compensation in the present case was not covered by section 46. Applying the statutory provision and the CBDT circular, the Tribunal concluded that the compensation received was exempt from income tax and therefore could not be subjected to capital gains taxation. [Paras 7]

Compensation received under the RFCTLARR Act in this case is exempt from income tax and is not liable to be assessed as long term capital gains.

Scope of revision under section 263 of the Income-tax Act - Application of section 263 where assessment is not erroneous or prejudicial - Whether the Pr.CIT was justified in invoking section 263 to set aside the assessment for not treating the compensation as exempt under the RFCTLARR Act. - HELD THAT: - The Pr.CIT invoked section 263 on the ground that the Assessing Officer had not examined the issue of taxability of the compensation and had failed to bring it to tax as long term capital gains. The Tribunal, however, having held that the compensation is exempt under section 96 of the RFCTLARR Act and the CBDT circular, concluded that the Pr.CIT's exercise of revision was erroneous because it proceeded on the premise that the amount was taxable. Since the correct legal position is that the compensation is not chargeable to income tax, the order passed under section 263 was unsustainable. [Paras 2, 7]

Order under section 263 setting aside the assessment is erroneous and is set aside.

Final Conclusion: The appeal is allowed; the Pr.CIT's order under section 263 is set aside because the compensation received under the RFCTLARR Act for compulsory acquisition is exempt from income tax (per section 96 and CBDT Circular 36/2015), and therefore not assessable as long term capital gains for A.Y.2016 17.

Penalty under section 271B for failure to furnish tax audit report - tax audit obligation under section 44AB - discretionary nature of penalty (use of 'may') - reasonable cause defence under section 273B

Penalty under section 271B for failure to furnish tax audit report - tax audit obligation under section 44AB - reasonable cause defence under section 273B - Whether the penalty imposed under section 271B for failure to furnish the tax audit report should be sustained in view of the assessee's explanation that books and records were seized in a search making audit impossible. - HELD THAT: - The Tribunal noted that the statutory scheme treats the imposition of penalty under the relevant provisions as discretionary (use of the word "may") and that section 273B precludes imposition of certain penalties where the assessee proves "reasonable cause" for the failure. On the facts, the assessee's books of accounts and relevant documents were seized in a search and the assessee filed the return on provisional accounts; the return (including the disclosed additional income) was accepted by the Revenue. The Assessing Officer invoked his discretion to levy penalty without adequately considering the explanation that finalisation of accounts and obtaining an audit report was practically impossible due to the seizure. Applying the established principle that penalties under the provision are not mandatory and must not be levied where reasonable cause is shown, the Tribunal found the assessee's explanation to be sufficient and that the AO ought to have accepted it instead of mechanically imposing penalty. [Paras 7, 8]

Penalty imposed under section 271B deleted.

Final Conclusion: The appeal is allowed and the penalty levied under section 271B is cancelled on the ground that the assessee established a reasonable cause for non-furnishing the tax audit report due to seizure of books and documents; the return filed on provisional accounts was accepted by the Revenue.

Exemption under section 54B - purchase of new agricultural land in the name of a third person - application of binding precedent of the jurisdictional High Court

Exemption under section 54B - purchase of new agricultural land in the name of a third person - application of binding precedent of the jurisdictional High Court - Whether exemption under section 54B is allowable where the assessee's sale proceeds were applied to purchase agricultural land in the names of her sons instead of in the assessee's name. - HELD THAT: - The Tribunal examined rival High Court decisions: some High Courts have allowed exemption where sale proceeds were invested in agricultural land purchased jointly or in the name of the assessee's son, while the jurisdictional Bombay High Court in Prakash v. ITO has held that exemption cannot be claimed where the new property is not purchased in the name of the assessee. The Tribunal emphasised that where High Courts are divided, the authority and lower courts must follow the decision of the jurisdictional High Court. No subsequent contrary decision of the Bombay High Court favouring the assessee was placed before the Tribunal. Applying the principle that a subordinate authority is bound by its jurisdictional High Court's ruling, the Tribunal held itself bound to follow the Bombay High Court's decision and upheld the denial of exemption. [Paras 4, 7]

Exemption under section 54B is not allowable because the new agricultural land was not purchased in the assessee's name and the Tribunal is bound to follow the jurisdictional High Court authority which so holds.

Final Conclusion: The appeal is dismissed; the denial of exemption under section 54B is upheld because the new land was not purchased in the assessee's name and the Tribunal is bound to follow the jurisdictional High Court precedent.

Exemption under Section 87 of the Customs Act, 1962 - foreigngoing vessel - maintainability of appeal under Section 130(1) of the Customs Act, 1962 - appeal to the Supreme Court under Section 130E(b) of the Customs Act, 1962 - dispute as to rate of duty versus dispute as to exemption - appellate jurisdiction of the High Court in customs matters

Exemption under Section 87 of the Customs Act, 1962 - foreigngoing vessel - maintainability of appeal under Section 130(1) of the Customs Act, 1962 - appeal to the Supreme Court under Section 130E(b) of the Customs Act, 1962 - dispute as to rate of duty versus dispute as to exemption - Whether the appeal against the CESTAT's order is maintainable before the High Court under Section 130(1) of the Act or lies to this Court under Section 130E(b) of the Act. - HELD THAT: - The Court held that the principal question arising from the CESTAT's decision is whether the vessel AE is a foreigngoing vessel and consequently whether the exemption under Section 87 of the Act applies to stores consumed on board. A controversy concerning entitlement to an exemption is a distinct legal issue and cannot be equated with a dispute about the rate or valuation for assessment. The submission that the dispute is effectively about the rate of duty (since exempt stores would attract nil duty) was rejected as lacking substance; exemption and rate-of-duty questions are different, distinct and mutually exclusive. Reliance was placed on this Court's earlier decision in Commissioner of Customs v. Motorola (India) Ltd., where it was observed that questions of exemption do not amount to questions of rate or valuation for assessment. Applying that reasoning, the High Court correctly concluded that the principal question is one of exemption (status of the vessel and applicability of Section 87) and therefore the appeal against the CESTAT's order is maintainable before the High Court under Section 130(1) of the Act. [Paras 4, 5, 6]

The High Court's conclusion that the appeal against the CESTAT's order is maintainable under Section 130(1) of the Act is correct.

Final Conclusion: Special Leave Petition dismissed; the High Court was correct in treating the principal question as one of exemption under Section 87 and in holding the appeal against the CESTAT order maintainable before the High Court under Section 130(1) of the Customs Act, 1962.

Service of show cause notice - uploading of notice on web portal - personal hearing - ex parte adjudication - remand for fresh consideration

Service of show cause notice - uploading of notice on web portal - ex parte adjudication - Impugned ex parte order set aside because the show cause notice and notice for personal hearing were not effectively served on the petitioner who had closed business and did not receive the web-portal upload. - HELD THAT: - The Court found that the Revenue's case rested on issuance of a show cause notice and a personal hearing notice which, however, were uploaded on the web portal and were not received by the petitioner. The petitioner had closed the business prior to the alleged online issuance and did not get the notices either electronically or at the registered address. In these circumstances the impugned order passed ex parte on the available records was vitiated by absence of effective service, and therefore could not be sustained.

Impugned order set aside for lack of effective service and resultant ex parte adjudication.

Personal hearing - remand for fresh consideration - Matter remitted to the respondent to issue fresh show cause notice to the address in the writ petition, fix a specific date for personal hearing and reconsider the matter on merits. - HELD THAT: - The Court directed that on remand the Revenue shall issue a fresh show cause notice to the address furnished in the writ petition and specify a date for personal hearing. The petitioner or its representative must appear on that date and may file supporting documents to establish realisation of export proceeds. If the petitioner fails to appear or file a reply, the Revenue is permitted to proceed and pass orders based on the available records. The directions restore the opportunity of hearing before any final adjudication on merits is made.

Remitted for issuance of fresh notice with a fixed personal hearing date and reconsideration; respondent permitted to proceed if petitioner does not appear.

Final Conclusion: The writ petition is allowed to the extent that the impugned order is set aside and the matter is remitted to the Revenue for issuance of a fresh show cause notice at the address in the writ petition with a specific personal hearing date; the Revenue may thereafter decide the matter on merits, and if the petitioner fails to appear or reply the Revenue may proceed on the available records.

Preparation of fake TR-6 challans - penalty under the Customs Act for submitting forged payment challans - admission in statement recorded under section 108 - misappropriation of government revenue - absence of leniency where appellant shared proceeds of duty evasion

Preparation of fake TR-6 challans - admission in statement recorded under section 108 - misappropriation of government revenue - absence of leniency where appellant shared proceeds of duty evasion - Whether the penalties imposed for preparation and submission of fake TR-6 challans are sustainable against the appellant who claimed to have acted at the direction of another and sought leniency. - HELD THAT: - The Tribunal found that the appellant, in statements recorded under section 108, admitted knowledge of the scheme and that he shared money generated by submission of fake TR-6 challans with the principal actor. The recorded statements describe the appellant's receipt and use of the proceeds and his awareness of the modus operandi. Given this corroboration of guilt and the appellant's sharing of amounts foregone to government revenue, the Tribunal concluded that the appellant misappropriated government money and is not entitled to leniency. On this basis the imposition of penalties in the impugned order was held to be free from infirmity and was upheld. [Paras 5, 6]

Penalties imposed for preparing and submitting fake TR-6 challans are upheld and the appellant is not entitled to leniency.

Final Conclusion: Appeals dismissed; the impugned order imposing penalties for fabrication and submission of fake TR-6 challans is upheld.

Admission of claim in liquidation process - liquidator's fee payable on realization of security - interpretation of Regulation 21A of the Liquidation Regulations - compliance with Liquidation Regulations and Sections 52/53 of the Code

Admission of claim in liquidation process - The admitted claim of the secured creditor required no further adjudication by the Adjudicating Authority. - HELD THAT: - The Appellate Tribunal noted that the State Bank of India's claim for Rs. 29,34,54,879.59/- had been admitted by the Liquidator in the liquidation process and that the Bank did not challenge that admission. Consequently, no separate adjudication of the admitted claim was required. The Tribunal treated the admission as an accepted claim in the liquidation proceedings and found no merit in interfering with the Adjudicating Authority's disposition insofar as it declined to enter into the merits of the claim. [Paras 6]

The Adjudicating Authority's omission to adjudicate the admitted claim does not warrant interference; the admitted claim stands as recorded by the Liquidator.

Liquidator's fee payable on realization of security - interpretation of Regulation 21A of the Liquidation Regulations - compliance with Liquidation Regulations and Sections 52/53 of the Code - The secured creditor is liable to pay the Liquidator's fees as directed, including where the creditor proceeds to realise securities stated to be out of the liquidation process, and must comply with the specified liquidation regulations and Code provisions. - HELD THAT: - The Tribunal examined the Adjudicating Authority's direction that the applicant must make payment of the Liquidator's fees and ensure compliance with Regulations 2(ea), 2A, 21A, 37 of the Liquidation Regulations and Sections 52/53 of the Code. Relying on the extract of Regulation 21A (as set out in the impugned order), the Tribunal held that Regulation 21A contemplates liability to pay fees even if the secured creditor proceeds to realise its security interest. The appellate court found no error in directing compliance with the Liquidation Regulations and the Code and refused to disturb the requirement to pay the Liquidator's fees. [Paras 3, 6, 7]

The direction to pay the Liquidator's fees and to comply with the cited liquidation regulations and Code provisions is upheld and not interfered with.

Final Conclusion: The appeal is dismissed: the admitted claim requires no further adjudication and the Adjudicating Authority's direction that the secured creditor pay the Liquidator's fees and comply with the specified Liquidation Regulations and Sections 52/53 of the Code is affirmed.

Undervalued transaction under Section 45 read with Section 46 - preferential transaction - reversal of effect of void transaction and restoration of assets to the resolution professional - principles of natural justice in adjudicatory proceedings - competence of the Adjudicating Authority to declare transactions void and direct possession - effect of conditional NOC of mortgagee on valuation of sale

Undervalued transaction under Section 45 read with Section 46 - effect of conditional NOC of mortgagee on valuation of sale - The sale/assignment dated 05.08.2019 was an undervalued transaction falling within the ambit of Section 45 read with Section 46 and liable to be declared void. - HELD THAT: - The Adjudicating Authority relied on the Transaction Audit Report which recorded that Yes Bank's conditional NOC required sale at not less than Rs.17.86 crore while the Agreement of 05.08.2019 recorded consideration of Rs.11 crore and only about Rs.0.63 crore was actually paid and possession was handed over. The transaction occurred within the one year relevant period preceding the insolvency commencement date. The disparity between the bank's conditioned value and the consideration actually paid, the handing over of possession on receipt of only a nominal amount, and absence of payment schedule timing for the balance together demonstrate that the consideration was significantly less than the value provided by the corporate debtor and that the transaction was undervalued. The Adjudicating Authority correctly treated the transaction as voidable under the statutory scheme and found no error in that conclusion. [Paras 6, 8, 9, 10, 11]

Transaction dated 05.08.2019 held to be an undervalued transaction and voidable under Section 45 read with Section 46.

Preferential transaction - reversal of effect of void transaction and restoration of assets to the resolution professional - The transaction also constituted a preferential transaction entered into to defeat creditors' rights and consequent reversal of its effect and handing over possession to the resolution professional was permissible. - HELD THAT: - The factual findings-possession handed over on receipt of a small advance, cessation of payment of the balance, and timing shortly before initiation of CIRP-indicate that the transaction favoured the assignee and undermined creditors. The Code permits the resolution professional to seek declaration of such transactions as void and to reverse their effect; accordingly, directing possession to be handed over to the resolution professional was a consequential and permissible remedy to restore the asset to the insolvency estate. [Paras 9, 11, 12]

Transaction characterised as preferential and reversal of its effect with direction to hand possession to the resolution professional upheld.

Principles of natural justice in adjudicatory proceedings - The Adjudicating Authority did not violate principles of natural justice in passing the impugned order. - HELD THAT: - The appellant had notice of and participated in proceedings before the Adjudicating Authority and had filed an interlocutory application seeking restraint; the record indicates the appellant (or its representatives) was heard on 30.09.2021 and the suspended directors who executed the impugned transactions were also served and heard. The assignee (appellant) cannot be placed in a better position than the corporate debtor whose actions were under scrutiny. On these facts the contention of non hearing was rejected. [Paras 13]

No breach of natural justice found; appellant was aware of and had opportunity to be heard.

Competence of the Adjudicating Authority to declare transactions void and direct possession - The Adjudicating Authority acted within its power under Section 45(1) in directing handing over possession to the resolution professional and did not exceed jurisdiction by treating the transaction as void. - HELD THAT: - Section 45(1) empowers the resolution professional to apply for declaration of undervalued transactions as void and to reverse their effects. The impugned order directed possession to be handed over to the resolution professional as a consequential action of declaring the transaction void. The Adjudicating Authority did not itself purport to cancel a registered instrument beyond declaring the transaction void in effect; the pendency of other interlocutory applications (I.A. No.1304/2020 and I.A. No.699/2020) did not preclude adjudication of the application under Sections 43 and 45, and the pendency had no bearing on the power to reverse the effect of the transaction. [Paras 12]

Adjudicating Authority's direction to hand possession to the resolution professional is within the remedial power under Section 45(1) and not beyond jurisdiction; pendency of related applications did not preclude the order.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly held the 05.08.2019 transaction to be undervalued and preferential, and its consequential direction to hand possession of the plant to the resolution professional was within its statutory power; there was no breach of natural justice warranting interference.

Debt and default under section 7 - admission of petition under section 7 - Corporate Insolvency Resolution Process - moratorium under section 14 - appointment of Interim Resolution Professional - public announcement of CIRP

Debt and default under section 7 - admission of petition under section 7 - The Company Petition under section 7 of the IBC is admissible and is to be admitted as debt and default stand established. - HELD THAT: - The Tribunal found that the Financial Creditor proved the loan agreement, the accrual of interest and payments received, and that the Corporate Debtor had admitted the liability. Applying the principle in Swiss Ribbons that where debt and default are established the Adjudicating Authority is obliged to admit a section 7 petition, the application was held complete and the statutory threshold under section 4(1) was met. No disputed question precluded admission. [Paras 9, 11, 12]

Petition under section 7 is admitted and CIRP is initiated against the Corporate Debtor.

Corporate Insolvency Resolution Process - moratorium under section 14 - A moratorium under section 14 is to operate from the date of the order until completion of CIRP or further order. - HELD THAT: - On admission of the petition and initiation of CIRP, the Tribunal directed the statutory moratorium to apply, restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property occupied by the Corporate Debtor. Exceptions and continuance of essential supplies as contemplated by the IBC were recorded, and the temporal scope of the moratorium was fixed to the CIRP period or until approval of a resolution plan or liquidation order. [Paras 12]

Moratorium under section 14 is declared with the specified scope and duration.

Appointment of Interim Resolution Professional - An Interim Resolution Professional (IRP) is appointed to take custody of management and perform CIRP functions. - HELD THAT: - The Financial Creditor proposed a named professional who filed written consent in Form 2 and produced his certificate of registration. The Tribunal appointed the proposed person as IRP, directed that he perform functions under the IBC (including sections 15, 17-21) and that management of the Corporate Debtor vest in the IRP during the CIRP. Officers and managers were directed to furnish documents to the IRP within one week. [Paras 10, 12]

The proposed IRP is appointed and vested with management and powers to conduct the CIRP.

Public announcement of CIRP - Public announcement of the CIRP is directed to be made immediately in accordance with the IBC and applicable regulations. - HELD THAT: - Following admission, the Tribunal ordered immediate public announcement as specified under section 13 read with the Insolvency Resolution Process Regulations, to invite claims and constitute the process for creditors' participation in the CIRP. [Paras 12]

Public announcement of the CIRP shall be made immediately as directed.

Expenses for public notice and claims - The Financial Creditor is directed to deposit an amount to meet initial CIRP expenses subject to CoC approval. - HELD THAT: - As part of initiating CIRP, the Tribunal required the Financial Creditor to deposit a specified sum with the IRP to cover costs of issuing public notice and inviting claims; such expenses remain subject to approval by the Committee of Creditors formed during the CIRP. [Paras 12]

Financial Creditor shall deposit the directed sum with the IRP to meet initial CIRP expenses, subject to CoC approval.

Final Conclusion: The section 7 petition is admitted, CIRP is initiated against the Corporate Debtor; a moratorium under section 14 is declared, public announcement shall be made, the proposed IRP is appointed and vested with management, and the Financial Creditor is directed to deposit funds to meet initial CIRP expenses.

Pre-existing dispute - initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016 - service of demand notice under Section 8 - quality defects as a basis for bona fide dispute - effect of debit note on existence of dispute

Pre-existing dispute - quality defects as a basis for bona fide dispute - effect of debit note on existence of dispute - Whether a pre-existing bona fide dispute regarding quality of goods exists between the parties and whether that dispute precludes admission of the Section 9 petition. - HELD THAT: - The Tribunal found on the record that the corporate debtor had contemporaneously raised objections about the non-compliance of the goods with requirements of the Legal Metrology Act and about defects, as evidenced by an email dated 23.10.2020 and a debit note issued by the corporate debtor. The applicant did not deny the debit note and admitted that goods were re-supplied/replaced because of quality issues. The inability of the corporate debtor to resell goods due to lack of required markings was accepted on record. These materials established the existence of a bona fide, pre-existing dispute as to the quality and conformity of the supplied goods. In view of that established dispute, the statutory requirement for admission of an application under Section 9 was not satisfied, and the petition could not be admitted for initiation of CIRP. [Paras 4, 5]

The Section 9 application is rejected and dismissed on the ground of a pre-existing bona fide dispute regarding quality of goods.

Final Conclusion: The petition under Section 9 of the IBC, 2016 was dismissed because the corporate debtor proved a pre-existing bona fide dispute concerning the quality and statutory non-compliance of goods (supported by email correspondence and a debit note), which precluded admission of the insolvency application.

Petition under section 9 of the Insolvency and Bankruptcy Code, 2016 - liquidator continuing proceedings on behalf of an insolvent company - requirement of directions from the Adjudicating Authority under section 35 - pre-existing dispute between creditor and corporate debtor - payment already made extinguishing operational debt - maintainability of corporate insolvency resolution process application

Payment already made extinguishing operational debt - maintainability of corporate insolvency resolution process application - The petition under section 9 was not maintainable because the Corporate Debtor had already paid the claimed operational debt and no outstanding liability existed. - HELD THAT: - The Tribunal examined the pleadings and documentary material and found that payments had been made by the Corporate Debtor in respect of the invoices relied on by the Operational Creditor. The Adjudicating Authority accepted the Corporate Debtor's case that amounts were paid (including bank transfers, TDS adjustments and adjustments towards Marketing Development Funds) and that certain invoices had been paid in advance. On the factual finding that the payment as per the invoices had already been received by the Operational Creditor, the Tribunal held there was no outstanding operational debt to support initiation of corporate insolvency proceedings. Because the debt claimed in the petition was thereby extinguished and the Corporate Debtor had raised disputes in its reply, the petition did not deserve further consideration and was rejected. [Paras 17, 18, 19, 20]

Petition rejected as there was no outstanding liability; the claimed operational debt had been paid.

Liquidator continuing proceedings on behalf of an insolvent company - requirement of directions from the Adjudicating Authority under section 35 - The Liquidator of the Operational Creditor had continued the present petition without seeking directions or permission from the Adjudicating Authority as envisaged by section 35. - HELD THAT: - The Tribunal observed that after the Operational Creditor company went into liquidation, its Liquidator continued pursuing this section 9 petition but had not applied for or obtained any directions from the Adjudicating Authority authorising continuation of the proceedings. The Tribunal noted that section 35 vests the Liquidator with powers and duties subject to directions of the Adjudicating Authority and that no such directions were on record. While recording this procedural deficiency, the Tribunal proceeded to decide the petition on the merits and rejected it because the debt was found to have been paid; it further observed that had the Liquidator sought permission earlier, the Adjudicating Authority would have considered that aspect at the appropriate stage. [Paras 12, 13, 17]

Proceedings were continued by the Liquidator without seeking directions from the Adjudicating Authority; no permission was on record.

Final Conclusion: The section 9 petition filed by the Operational Creditor (now in liquidation) was rejected: the Tribunal found the claimed operational debt had already been paid and the Corporate Debtor had raised pre-existing disputes; additionally, the Liquidator had pursued the petition without recorded directions from the Adjudicating Authority under section 35.

Existence of debt and default under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational creditor and operational debt - running account and application of limitation - pre-existing dispute and admissibility of Section 9 petition - appointment of Interim Resolution Professional and Form 2 / Form 5 compliance - declaration of moratorium under Section 14 of the Code - public announcement and interim funding for resolution process

Existence of debt and default under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational creditor and operational debt - The Section 9 petition is maintainable as the applicant has established existence of operational debt and occurrence of default. - HELD THAT: - The Tribunal found that the corporate debtor had admitted receipt of goods and liability to the applicant, and the Form 5 filed under Section 9 read with the Rules was complete with no infirmity. For petitions filed before 24.03.2020, a default of Rs. 1 lakh or more suffices; once default of that threshold is shown, the petition to trigger CIRP is maintainable. The corporate debtor failed to demonstrate absence of debt or default which could oust the application. [Paras 10, 11, 12]

Section 9 petition admitted as debt and default are established and no infirmity in the application.

Running account and application of limitation - The plea that part of the claim is barred by limitation is rejected. - HELD THAT: - The Tribunal accepted that there was a running account between the parties and that the corporate debtor had not paid amounts in respect of individual invoices. The corporate debtor's admissions in correspondence/demand notice negated the contention that specific invoices were time barred so as to defeat the claim in the Section 9 petition. [Paras 9]

Limitation objection with respect to certain invoices is not a bar to the petition.

Pre-existing dispute and admissibility of Section 9 petition - The alleged mutual settlement and handing over of cheques did not constitute a pre existing dispute to bar the petition. - HELD THAT: - The corporate debtor failed to produce any settlement agreement or demonstrate a pre existing dispute regarding the applicant's claim. Mere handing over of cheques and a contention of payment by installments, without documentary evidence of a binding settlement, was insufficient to establish a dispute precluding admission under Section 9. [Paras 8]

Alleged mutual settlement/dispute not established; petition not liable to be dismissed on that ground.

Appointment of Interim Resolution Professional and Form 2 / Form 5 compliance - public announcement and interim funding for resolution process - Interim Resolution Professional appointed, public announcement directed, and interim funding ordered; moratorium declared. - HELD THAT: - The Tribunal accepted the proposed IRP's written consent in Form 2 and appointed him subject to the stated condition. The applicant was directed to deposit an interim amount with the IRP to meet expenses, with adjustment by the Committee of Creditors. The IRP was directed to make the public announcement within the prescribed period. The Tribunal also declared the moratorium and specified the statutory prohibitions and that the moratorium exceptions as per amendments would apply. [Paras 14, 15, 16, 17, 18]

IRP appointed, interim deposit directed, public announcement ordered, and moratorium imposed in terms of the Code.

Final Conclusion: The Section 9 petition by the operational creditor is admitted: debt and default are established, limitation and alleged settlement/dispute do not defeat the petition; an Interim Resolution Professional is appointed, interim funding and public announcement are directed, and moratorium is declared.

Interest on delayed refund of amount deposited under Section 35F - Applicability of amended Section 35FF vis-a -vis proviso for pre-commencement deposits - Retrospective/clarificatory effect of statutory amendment - Compensatory character of interest and entitlement from date of payment - Reasonableness of rate of interest on refunded pre-deposit

Interest on delayed refund of amount deposited under Section 35F - Applicability of amended Section 35FF vis-a -vis proviso for pre-commencement deposits - Amended Section 35FF applies to the refund of the pre-deposit made on 06.10.2015 and not the pre-amendment provision. - HELD THAT: - The deposit in question was made on 06.10.2015 pursuant to Section 35F and therefore after the Finance (No.2) Act, 2014 amendment to Section 35FF. The proviso to the amended Section 35FF preserves the un-amended regime only for amounts deposited prior to the commencement of the 2014 Act. Because the appellant's pre-deposit was made after the amendment took effect, the amended provision governs the entitlement to interest. The Tribunal held that reliance by the Commissioner (Appeals) on the erstwhile Section 35FF was incorrect and that the original adjudicating authority correctly sanctioned refund along with interest under the amended provision. [Paras 5, 6, 7, 8]

Amended Section 35FF governs the refund of the pre-deposit made on 06.10.2015; the Commissioner (Appeals) erred in applying the pre-amendment provision.

Compensatory character of interest and entitlement from date of payment - Reasonableness of rate of interest on refunded pre-deposit - Appellant is entitled to interest on the refunded pre-deposit from the date of payment and a rate of 12% per annum is reasonable in the circumstances. - HELD THAT: - The Tribunal observed that the deposited sum was not duty but a pre-deposit under Section 35F required to prosecute an appeal and thus, upon successful appeal, must be refunded with interest. Citing settled authority that interest is compensatory, the court held that interest should run from the date of payment. Although the amended Section 35FF provides a range of rates (not below 5% and not exceeding 36%), the original adjudicating authority had applied the minimum 5% without reasons. On the facts and circumstances of the case the Tribunal found 12% per annum to be a reasonable rate of interest and directed sanction of refund with interest at that rate. [Paras 9]

Refund to be sanctioned with interest from date of payment at the rate of 12% per annum.

Final Conclusion: The appeal is allowed: the amended Section 35FF applies to the pre-deposit made on 06.10.2015 and the appellant is entitled to refund of the pre-deposit with interest from the date of payment at 12% per annum; the Commissioner (Appeals) order is set aside.

Sanction of refund - mistake apparent on record - power to amend order under Section 74 of the Finance Act, 1994 - appealability of adjudicating authority's order under Section 84 of the Finance Act, 1994 - restoration of original order

Sanction of refund - appealability of adjudicating authority's order under Section 84 of the Finance Act, 1994 - power to amend order under Section 74 of the Finance Act, 1994 - mistake apparent on record - restoration of original order - Validity of the adjudicating authority's subsequent amendment reducing the sanctioned refund and the consequent restoration of the original sanction. - HELD THAT: - The Tribunal found that the adjudicating authority had, after verification by the Range Officer, sanctioned the refund claim by order dated 15.10.2020 based on the Range Officer's calculation and recommendation. Such a sanctioning order is appealable and, if aggrieved, must be challenged before the Commissioner (Appeals) under Section 84 of the Finance Act, 1994. The later order dated 17.12.2020, which reduced the refund on the ground that the appellant had claimed a longer limitation period, was held to be an amendment of the earlier sanctioning order. The Tribunal observed that the reduction could not be sustained as an amendment under Section 74 of the Finance Act, 1994 because the earlier order was passed after the Range Officer's verification and could not be characterised as suffering from a "mistake apparent on record." Consequently, the impugned amendment lacked legal sustainability. Applying these principles, the Tribunal restored the original order dated 15.10.2020 and directed compliance therewith within 30 days. [Paras 4, 5]

The amendment by order dated 17.12.2020 is not sustainable; the order dated 15.10.2020 is restored and the adjudicating authority is directed to comply with it within 30 days.

Final Conclusion: Appeal allowed; the reduction of the sanctioned refund by the subsequent order is set aside and the original sanctioning order dated 15.10.2020 is restored with a direction for compliance within 30 days.

Quashing of show cause notice for inordinate delay - statutory time-limit in Section 11A(11) of the Central Excise Act, 1944 - where it is possible to do so - temporal obligation on adjudicating authority - effect of pendency of appeals on computation of limitation - administrative transfer to Call Book under CBIC circular not a substitute for adjudication

Quashing of show cause notice for inordinate delay - statutory time-limit in Section 11A(11) of the Central Excise Act, 1944 - where it is possible to do so - temporal obligation on adjudicating authority - Show Cause Notices issued in 2009-2010 were liable to be quashed for having remained unadjudicated for more than a decade notwithstanding the words "where it is possible to do so" in Section 11A(11). - HELD THAT: - The Court held that Section 11A(11) prescribes temporal limits for determination of duty (six months for cases under sub-section (1); one year for cases under sub-section (4)/(5)) and that the phrase "where it is possible to do so" does not permit perpetual extension of those periods. Authorities are duty-bound to adhere to the statutory timeframe and must offer a plausible explanation to justify any extension. In the present cases no such explanation was furnished for the failure to adjudicate the Show Cause Notices issued in 2009-2010. Reliance placed on judicial precedents which set aside belated adjudications and on the Supreme Court's pronouncement regarding the significance of the date of issuance of the Show Cause Notice for reckoning limitation reinforced the view that delay of over a decade, without adequate justification, rendered continuation of the proceedings unreasonable and liable to be quashed. The Court therefore quashed the Show Cause Notices issued more than eleven years earlier. [Paras 11, 12, 13, 15]

Show Cause Notices issued in 2009/2010 quashed for failure to adjudicate within the statutory period prescribed by Section 11A(11).

Effect of pendency of appeals on computation of limitation - administrative transfer to Call Book under CBIC circular not a substitute for adjudication - Pendency of appeals filed in 2018 and administrative transfer of matters to a Call Book category pursuant to the CBIC circular did not justify the decade-long non-adjudication of Show Cause Notices issued in 2009/2010 in the absence of any explanation showing why adjudication could not be completed prior to 2018. - HELD THAT: - The Court noted that the appeals before the Jammu & Kashmir High Court were filed in 2018 and that no explanation was placed on record to show why the Show Cause Notices issued in 2009/2010 could not have been adjudicated before those appeals were filed. The respondents' reliance on the CBIC Circular transferring matters to Call Book was insufficient to cure the inordinate delay; administrative shelving does not amount to a legally adequate reason for not complying with statutory time-limits. Earlier decisions of this Court addressing similar facts were held to be applicable, and the pendency of later-filed appeals did not operate retrospectively to justify delay already occasioned. Consequently, the Court rejected the contention that pendency of appeals or administrative transfer prevented quashing of the stale Show Cause Notices. [Paras 6, 14, 15]

Pendency of appeals filed in 2018 and transfer to Call Book under the CBIC circular do not validate the decade-long non-adjudication; the Show Cause Notices were quashed.

Final Conclusion: Writ petitions allowed; Show Cause Notices dated 31.12.2009, 23.02.2010 and 12.03.2010, issued more than eleven years prior and left unadjudicated without plausible explanation, are quashed.

Refund under Section 142(3) and (6) of the CGST Act - CENVAT credit not available under GST regime - regularisation of advance licence imports - Advance Authorisation scheme - interest under Section 11BB of the Central Excise Act

Refund under Section 142(3) and (6) of the CGST Act - CENVAT credit not available under GST regime - regularisation of advance licence imports - Advance Authorisation scheme - interest under Section 11BB of the Central Excise Act - Whether refund of CVD and SAD paid for regularisation of Advance Licence imports (imports made prior to 30.06.2017) after implementation of GST is allowable where CENVAT credit is no longer available under GST. - HELD THAT: - The Tribunal found that the inputs were imported under the Advance Authorisation scheme prior to 30.06.2017 and that the appellant subsequently paid CVD and SAD in May 2018 and May 2019 for regularisation on being pointed out by the Revenue. Since CENVAT credit of such duties is not available under the GST regime w.e.f. 01.07.2017, but was available under the erstwhile Central Excise regime, the amounts paid for regularisation do not become ineligible merely because credit cannot now be availed under GST. The Tribunal held that the lower authority erred in requiring production of duty-paid invoices showing incorporation of inputs in dutiable final products as a precondition for refund. Applying the provisions conferring refund in the CGST Act, the Tribunal concluded that the appellant is entitled to refund under Section 142(3) and (6) of the CGST Act. The Tribunal further directed payment of interest under Section 11BB of the Central Excise Act and mandated grant of refund within a specified period, thereby setting aside the impugned orders. [Paras 7, 8]

Refund of the CVD and SAD paid for regularisation of Advance Licence imports (payments made in May, 2018 and May, 2019) is allowable under Section 142(3) and (6) of the CGST Act; the impugned orders are set aside and the jurisdictional Assistant Commissioner is directed to grant refunds with interest under Section 11BB of the Central Excise Act within 45 days.

Final Conclusion: Appeals allowed; refunds of the CVD and SAD paid on regularisation of Advance Licence imports (made prior to 30.06.2017) are to be granted with interest, and the impugned orders are set aside.

Extended period of limitation - stock verification by eye-estimation - evidentiary requirement of calculation sheet for stock verification - clandestine removal - insignificance of apparent shortage as a basis for adverse inference - entitlement to refund under Section 35 FF with interest

Stock verification by eye-estimation - evidentiary requirement of calculation sheet for stock verification - clandestine removal - insignificance of apparent shortage as a basis for adverse inference - Validity of the show cause notice and allegation of clandestine removal based on the inspection and stock verification dated 10.01.2001. - HELD THAT: - The Tribunal examined the Panchnama of inspection dated 10.01.2001 and found absence of any calculation sheet explaining how the quantities of finished goods were arrived at, demonstrating that the stock figures were based on eye estimation. The apparent aggregate difference of about 8 MT in the three items was treated as insignificant and not warranting an adverse inference of clandestine removal. In light of the evidentiary deficiency (no calculational basis) and the triviality of the discrepancy, the show cause notice invoking the extended period and alleging clandestine removal was held to be misconceived. The Tribunal therefore allowed the appeal and set aside the impugned order. [Paras 5, 6]

Show cause notice and the allegation of clandestine removal set aside; appeal allowed.

Entitlement to refund under Section 35 FF with interest - Whether the appellant is entitled to consequential refund and interest following allowance of the appeal. - HELD THAT: - Having set aside the impugned order, the Tribunal held that the appellant is entitled to consequential refund, if any, under Section 35 FF with interest. The Tribunal applied the principle as enunciated by its Division Bench in the case of Parle Agro Pvt. Ltd., and directed that consequential refunds and interest be granted in accordance with that ruling. [Paras 6]

Appellant entitled to consequential refund, if any, under Section 35 FF with interest.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order on grounds that the stock figures were based on eye-estimation without a calculational basis and the discrepancy was insignificant, and directed consequential refund, if any, under Section 35 FF with interest in accordance with the Division Bench ruling in Parle Agro Pvt. Ltd.

Input Tax Credit on evaporation/handling losses of petroleum products - Interpretation of Schedule E - petroleum products excluded from Entry 5 circumstances - Section 8 - exclusion of input tax for goods used or disposed of in the circumstances mentioned in Schedule E - Explanation (v) to Section 2(1)(zg) - deeming of sale price of retail outlets as amount received by oil companies

Input Tax Credit on evaporation/handling losses of petroleum products - Section 8 - exclusion of input tax for goods used or disposed of in the circumstances mentioned in Schedule E - Interpretation of Schedule E - petroleum products excluded from Entry 5 circumstances - Explanation (v) to Section 2(1)(zg) - deeming of sale price of retail outlets as amount received by oil companies - Dealers are entitled to Input Tax Credit on approved evaporation/handling losses of petrol and HSD. - HELD THAT: - Section 8 treats input tax as the tax paid to the State on goods sold to a VAT dealer but expressly excludes tax paid on goods specified in Schedule E when used or disposed of in the circumstances mentioned against those goods. Entry No.1 of Schedule E specifically deals with petroleum products and natural gas and negates ITC only when such products are "used as fuel" or "exported out of State". Entry No.5, which contains the circumstance "disposed of otherwise than by sale", applies to goods other than those mentioned at Entries 1 and 2 and therefore cannot be read into Entry No.1. Explanation (v) to Section 2(1)(zg) merely deems the retail outlet sale price to be the amount received by oil companies and was not decisive of reversal of ITC on evaporation. The Division Bench decision in All Haryana Petroleum Dealers Association's case did not adjudicate the specific language of Entry No.1 and Section 8 on this point; consequently, the Court here followed the statutory text and concluded that authorised/allowed evaporation/handling losses (within prescribed limits) do not fall within the circumstances specified against petroleum products in Schedule E and therefore do not attract reversal of input tax. For these reasons the Tribunal was correct in allowing ITC on evaporation losses. [Paras 16, 17, 18, 19, 20]

Answered in favour of the dealer; ITC is available on evaporation/handling losses of petrol and HSD within the prescribed limits.

Final Conclusion: State appeals dismissed on merits; dealers entitled to Input Tax Credit on authorised evaporation losses of petroleum products for the assessment(s) in question and pending applications (including condonation) disposed of.

Service of notice - demand notice - certified copy - curable defects in appeal - rejection of appeal for non-curable defect - assessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 - penalty under Section 47

Service of notice - demand notice - certified copy - curable defects in appeal - Whether rejection of the appeal for failure to produce the original demand notice was justified where there is no proof that the original or certified copy of the demand notice was served on the petitioner. - HELD THAT: - The Court found that the original assessment order had returned to sender with the endorsement "not known", indicating non-service of the original order and demand notice. Although a certified copy of the assessment order was issued to the petitioner and was the basis of filing the appeal, there is no record that the original or certified copy of the demand notice was served. The petitioner applied for a certified copy of the demand notice (Ext.P5) and no reply has been issued to that application. In these circumstances the failure to produce the original demand notice before the appellate authority did not arise from the petitioner's default but from non-service and pending certification; accordingly, such failure cannot be treated as a defect curable by the petitioner that justifies rejection of the appeal. The Court therefore held that the rejection of the appeal on that ground was incorrect and contrary to law. [Paras 6, 7, 8]

Rejection of the appeal for failure to produce the original demand notice set aside; petitioner entitled to certified copy of the demand notice and the appeal must be taken on file and considered on merits on production of that certified copy.

Certified copy - demand notice - rejection of appeal for non-curable defect - Remedial directions to be given where demand notice was not proved to have been served and petitioner has applied for a certified copy. - HELD THAT: - Given the absence of proof of service of the demand notice and the pending application for a certified copy (Ext.P5), the Court directed issuance of the certified copy of the demand notice attached to assessment order No.FAR 1687/2017 dated 28.03.2018 within ten days of receipt of the judgment. Upon receipt, the petitioner shall produce the certified copy before the appellate authority within two weeks, whereupon the appellate authority is to take the appeal back on file and decide it on merits in a time bound manner. These directions remediate the procedural deficiency without penalising the petitioner for non-service. [Paras 7, 9]

Directing issuance of the certified copy of the demand notice within ten days, production before appellate authority within two weeks, and restoration of the appeal for merit consideration.

Final Conclusion: Ext.P6 rejecting the appeal is set aside. The assessing authority is directed to issue the certified copy of the demand notice attached to assessment order No.FAR 1687/2017 dated 28.03.2018 within ten days; on production of that certified copy the appellate authority shall take the appeal back on file and decide it on merits in a time bound manner.

Summoning of documents under Section 91 Cr.P.C. - Discretion of the trial court in ordering production of documents - Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof on the complainant in prosecutions under Section 138 of the Negotiable Instruments Act - Accused's right (or lack thereof) to compel production of prosecution documents

Summoning of documents under Section 91 Cr.P.C. - Discretion of the trial court in ordering production of documents - Accused's right (or lack thereof) to compel production of prosecution documents - Validity of the trial Court's refusal to summon documents sought by the accused under Section 91 Cr.P.C. - HELD THAT: - The Court held that the trial Court did not commit any legal error in rejecting the accused's application under Section 91 Cr.P.C. The accused cannot dictate the manner in which the complainant prosecutes his case or compel the complainant to lead particular evidence or produce documents at the accused's behest. Exercise of discretion by the trial Court not to summon the documents for the accused's convenience is permissible, and such exercise did not warrant interference under Section 482 Cr.P.C. The court further observed that the accused may still rely on defence evidence at the appropriate stage, but that does not convert into a right to compel pre-trial production by the complainant. [Paras 8, 9]

Order refusing the application under Section 91 Cr.P.C. is not vitiated and does not call for interference under Section 482 Cr.P.C.

Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof on the complainant in prosecutions under Section 138 of the Negotiable Instruments Act - Whether the complainant is under an obligation to produce supporting documents before the accused can cross-examine or insist on production. - HELD THAT: - Relying on precedent, the Court reiterated that the complainant bears the initial burden to establish the facts necessary to attract the presumption under Section 139 of the Negotiable Instruments Act, but the manner in which the complainant discharges that burden is for the complainant to decide. The accused cannot compel the complainant to produce documents or postpone cross-examination until such documents are produced. The Court accepted authorities indicating that the complainant's choice of mode of proof cannot be controlled by the accused and that questions such as tax compliance of the complainant are matters for appropriate authorities and not grounds to compel document production in the criminal trial. [Paras 6, 7, 8]

Complainant is not obliged to produce the requested documents at the accused's instance and the accused cannot insist on such production as a precondition to cross-examination; the initial burden remains on the complainant.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C., holding that the trial Court did not err in rejecting the accused's application under Section 91 Cr.P.C.; the complainant's mode of proving the cheque dishonour offence and discharge of the initial burden under Section 139 NI Act is for the complainant to decide and cannot be compelled by the accused.