TaxTMI Updates e-Newsletter
Mar 24,2021

Lift and escalator installation services - classification under SAC 995466 - applicability of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST at 18% on erection and commissioning of lifts/escalators - admissibility under Section 97(2)(e) of the CGST Act (determination of liability to pay tax)

Lift and escalator installation services - classification under SAC 995466 - applicability of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - rate of GST at 18% on erection and commissioning of lifts/escalators - Rate of GST applicable to erection and commissioning of lifts and escalators installed for domestic use. - HELD THAT: - The Authority examined classification and rate applying the Explanatory Notes to the Scheme of Classification of Services and the relevant rate notification. The installation and erection services in question fall within the description of "Lift and escalator installation services" and are classifiable under SAC 995466. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended, prescribes a tax rate of 18% for services covered under SAC 995466 (Sl. No. 3(xii)). The notification does not distinguish by place of installation or by the intended use (domestic or commercial); consequently the 18% rate applies irrespective of whether the lifts/escalators are installed in a residence or a commercial premises. [Paras 10, 11, 12]

Erection and commissioning of lifts and escalators installed for domestic use are classifiable under SAC 995466 and taxable at 18% as per Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: Advance ruling: The erection and commissioning services for lifts and escalators installed for domestic use are covered by "Lift and escalator installation services" (SAC 995466) and are taxable at 18% under the applicable rate notification.

Classification of goods - interpretative rules of the Customs Tariff adopted for GST - exclusion in Section XI Note 1(h) - classification under Chapter 39 versus Chapter 63 - HSN 39232990 - HSN 63059000 - GST rate applicable on polypropylene woven and non-woven bags - Advance Ruling on classification

Classification of goods - exclusion in Section XI Note 1(h) - classification under Chapter 39 versus Chapter 63 - HSN 39232990 - HSN 63059000 - GST rate applicable on polypropylene woven and non-woven bags - Whether Polypropylene (PP) Non woven bags are classifiable under HSN 39232990 (Chapter 39) and liable to GST at 18% or under HSN 63059000 (Chapter 63) and liable to GST at 5% - HELD THAT: - The Authority applied the Rules of interpretation of the Customs Tariff as adopted for GST classification. Note 1(h) to Section XI excludes from Section XI those woven, knitted or nonwovens and articles thereof that are of Chapter 39 (i.e., goods of plastics); consequently articles of plastics specified in Chapter 39 are not to be classified under Chapters falling in Section XI, including Chapter 63. Chapter 39 contains specific tariff provisions for polypropylene sacks and bags (tariff heading 3923 and sub heading 39232990), and the presence of a clear sub heading for PP sacks and bags precludes classifying identical goods under Chapter 63. The Authority also relied on clarifications in the GST rate notifications and the GST Council/CBEC circular, which treat polypropylene woven and non woven bags under HS code 3923 attracting 18% GST, as well as on prior advance rulings and judicial decisions (including the Odisha AAR, the West Bengal appellate AAR outcome and the Madhya Pradesh High Court decision cited) that held woven/plastic strip bags to be classifiable under Chapter 39. The applicant's submissions about technical characteristics and the origin of the fabric (HSN 5603) do not alter the tariff classification where Chapter notes and specific headings in Chapter 39 govern classification. For these reasons PP Non woven bags must be classified under HSN 39232990 and not under HSN 63059000, with the GST rate corresponding to Chapter 39. [Paras 7, 10]

Polypropylene Non woven Bags are classifiable under HSN 39232990 (Chapter 39) and not under HSN 63059000 (Chapter 63); they attract GST at 18%.

Final Conclusion: The Authority ruled that polypropylene non woven bags are to be classified under HSN 39232990 (Chapter 39) and taxed at 18%; the applicant's classification under HSN 63059000 at 5% was rejected and the advance ruling application is disposed of, with a right of appeal to the State Appellate Authority for Advance Ruling.

Exemption under SI.No.54(e) of Heading 9986 - services of loading, unloading, packing, storage or warehousing - agricultural produce - primary market

Exemption under SI.No.54(e) of Heading 9986 - services of loading, unloading, packing, storage or warehousing - primary market - Whether the applicant's services of loading, unloading, packing, storage or warehousing in respect of imported wheat are eligible for exemption under SI.No.54(e) of Heading 9986 of Notification No.12/2017 - Central Tax (Rate). - HELD THAT: - The Authority examined the scope of SI.No.54(e) read with the definition of "agricultural produce" in the Notification and concluded that the exemption applies only where the services relate to cultivation or rearing and are rendered in respect of produce taken to the primary market for disposal. "Primary market" was treated in ordinary meaning as the market or mandi where farmers directly sell to buyers. The services rendered by the applicant commence after the imported cargo of milling wheat reaches the port and, on the material on record including the agreement and invoices, the imported wheat is destined to the importer's factory for further processing and not for disposal in the primary market. Consequently those services are beyond the stage contemplated by the Notification and do not fall under Service Accounting Code 9986 for the purpose of the exemption. The Authority noted consistency with a prior AAR decision to the same effect and applied that interpretation to the facts before it. [Paras 5, 6]

The services of loading, unloading, packing, storage or warehousing rendered by the applicant in respect of imported wheat after arrival at Karaikal Port are not eligible for the exemption under SI.No.54(e) of Heading 9986 of Notification No.12/2017.

Final Conclusion: The Advance Ruling holds that the applicant's port services in relation to imported wheat destined for the importer's factory for further processing are not covered by the exemption in SI.No.54(e) of Heading 9986 of Notification No.12/2017, and the application is disposed of accordingly.

Grant of regular bail - Custody not required where investigation complete and challan presented - Evasion of GST - Payment of GST and penalty proceedings under CGST Act are independent - Prevention of Corruption Act - Conditions of bail including personal/surety bond and surrender of passport

Grant of regular bail - Custody not required where investigation complete and challan presented - Evasion of GST - Payment of GST and penalty proceedings under CGST Act are independent - Conditions of bail including personal/surety bond and surrender of passport - Whether the petitioner should be released on regular bail in FIR No.9 of 2020 alleging evasion of GST and offences under the Prevention of Corruption Act and IPC, having regard to payment of GST (minus penalty), completion of investigation and presentation of challan. - HELD THAT: - The Court noted that the primary allegation against the petitioner concerns alleged evasion of GST in respect of goods carried by a seized truck, and that ownership of the goods is disputed. It was recorded that GST (excluding penalty) has been paid and that the investigation is complete with the challan having been presented. The Court observed that the penalty demand under the CGST regime is being independently contested and that proceedings under the CGST Act constitute a separate code, such that non-payment of penalty would not, by itself, require continued custody in the criminal matter. In view of these facts, and since custody was no longer necessary for the purposes of investigation, the Court concluded that continued detention would serve no useful purpose and granted regular bail subject to conditions. The Court made clear that its observations do not constitute any expression on the merits of the case.

Petitioner released on regular bail on execution of personal/surety bond in the sum of Rs. 10 lakh each to the satisfaction of the trial Court/Duty Magistrate; petitioner to surrender passport and not leave India without prior permission of the Court; observations not to be treated as expression on merits.

Final Conclusion: Bail granted: petitioner to be released on regular bail on furnishing the specified bonds and complying with conditions (surrender of passport; no exit from India without Court's permission); decision premised on payment of GST (minus penalty), completion of investigation and presentation of challan, with penalty proceedings under the CGST Act remaining independent and without prejudice to merits.

Consideration - advance versus deposit - time of supply under Section 13(2)(a) - services of membership association - taxability of sinking/corpus fund as advance for future services

Advance versus deposit - consideration - Whether amounts collected towards the sinking fund constitute advances/consideration for future supply of services or are deposits not constituting consideration. - HELD THAT: - The Authority examined the bye-laws, the resolution authorising annual collection towards the sinking fund and the proviso to the statutory definition of consideration. The bye-laws are silent about refund of any unutilised balance and the management resolution mandates non-returnable collection for future planned or unplanned capital outlay. On these facts the amounts are not refundable and hence are not mere deposits. Applying the proviso to the definition of consideration, a deposit is treated as payment for supply only when it is applied as consideration for that supply. Here, since the amounts collected are non-returnable advances for future services and not refundable deposits, they amount to advances/consideration. [Paras 11]

The amounts collected towards the sinking fund are advances (and thus constitute consideration) and not deposits.

Time of supply under Section 13(2)(a) - services of membership association - taxability of sinking/corpus fund as advance for future services - Consequences of treating the sinking fund collections as advances - the time of supply and the classification/tax rate applicable. - HELD THAT: - Having held the collections to be advances/consideration, the Authority applied the time of supply under Section 13(2)(a), which fixes time of supply of services as the earlier of invoice date (if within prescribed period) or receipt of payment. The applicant received the amounts earlier; therefore the time of supply is the date of receipt of the sinking fund amounts. For classification, the services to be provided by the association to its members fall within services of membership association (SAC 9995). Notification No.11/2017 (Rate) prescribes the applicable rate for such services. Consequently, the advance receipts are taxable at the notified rate, with tax liability arising on receipt. [Paras 12, 13]

The sinking fund collections are taxable as advances for future supply of services; the time of supply is the date of receipt and the services are classifiable under SAC 9995 as "services of membership association", taxable at the notified rate.

Final Conclusion: The Authority ruled that amounts collected by the applicant towards the sinking/corpus fund are non refundable advances (constituting consideration) for future supply of services, the time of supply is the date of receipt of such amounts, and the services are classifiable as "services of membership association" (SAC 9995) and liable to GST at the prescribed rate.

Regular bail - interim bail - parity - joining the investigation - no apprehension of tampering with evidence - documentary evidence - conditions of bail - public health consideration (Covid-19 surge)

Regular bail - parity - interim bail - joining the investigation - no apprehension of tampering with evidence - documentary evidence - conditions of bail - public health consideration (Covid-19 surge) - Grant of regular bail to the accused who was on interim bail. - HELD THAT: - The court examined the request to convert interim bail into regular bail. The accused had been on interim bail earlier granted on medical grounds of his father and had joined the investigation whenever called, save one occasion, with documentary support of such attendance. Co-accused had already been granted regular bail on earlier dates; parity was pressed but the prosecution opposed parity pointing to differing roles and allegation of fraudulent ITC transactions. The court found no specific apprehension of tampering with evidence - the evidence in the case is primarily documentary - and noted that the accused had already suffered custody for about one month. The court also took into account the recent surge in Covid-19 cases and the accused's family responsibilities. Balancing these factors and subject to safeguards, the court concluded that continued custody would not serve any further purpose.

Accused enlarged on regular bail on furnishing a personal bond and one surety, subject to conditions including joining the investigation when required, surrender of passport, and not leaving the country without trial court permission.

Final Conclusion: Application for regular bail allowed; accused directed to be released on conditions (personal bond and surety) with obligations to cooperate with investigation, surrender passport and not leave the country without permission; order disposed.

Re-opening of assessment under Section 147/notice under Section 148 - reason to believe - mere change of opinion - tangible material / live link to escapement of income - disclosure of material facts in return and revised return - deduction under Section 35(1)(ii) vis-a -vis Section 80GGA

Re-opening of assessment under Section 147/notice under Section 148 - reason to believe - mere change of opinion - tangible material / live link to escapement of income - Validity of the notice under Section 148 read with Section 147 for A.Y.2013-14 - HELD THAT: - The Court examined whether the Assessing Officer had recorded 'reason to believe' supported by tangible material and a live link to escapement of income so as to justify reopening the assessment. It noted that during the original scrutiny the Assessing Officer had issued enquiries under Section 142(1) and, having considered the petitioner's replies and documentary material, framed the assessment under Section 143(3) without making the additions now proposed. The reasons recorded for reopening relied upon recharacterisation of certain receipts as deemed dividend and reduction of a donation deduction, but the material in the reasons did not establish a fresh tangible basis to displace the earlier conclusion. Applying the principle that reopening cannot be predicated on mere change of opinion, the Court held that absent new tangible material or a live link showing escapement, the notice under Section 148/147 is unsustainable. The Court expressly relied on the statutory and judicial limitation on reassessment powers which requires more than a mere change of opinion by the Assessing Officer. [Paras 11, 12, 13, 15, 16]

Notice under Section 148 read with Section 147 for A.Y.2013-14 quashed as issued without tangible material and amounted to mere change of opinion.

Disclosure of material facts in return and revised return - deduction under Section 35(1)(ii) vis-a -vis Section 80GGA - Whether the petitioner failed to disclose material facts so as to justify reopening in relation to the claimed deduction - HELD THAT: - The Court observed that the petitioner filed a revised return disclosing the claim under Section 35(1)(ii) and that the assessment order under Section 143(3) was passed after considering the revised return and the supporting documents (including donation receipts). The Assessing Officer's reasons treated the claim as if under Section 80GGA and suggested the revised return was filed to secure an enhanced deduction, but the record showed the deduction was claimed under Section 35(1)(ii) and that necessary particulars had been placed before the Assessing Officer during scrutiny. In that factual backdrop the Court concluded there was no failure to disclose truly and fully the material facts that would justify reopening. [Paras 11, 12, 13]

No failure to disclose material facts in relation to the claimed deduction; reopening on that ground is not sustainable.

Final Conclusion: The notice under Section 148/147 in respect of A.Y.2013-14 is quashed for lack of tangible material and for being founded on a mere change of opinion; the Writ Application is allowed and the rule is made absolute with no order as to costs.

Proceedings under Sections 201(1) and 201(1A) initiated without determining chargeability - jurisdictional facts - chargeability to tax - personal hearing - speaking order - Authority for Advance Rulings - interference under Article 226

Proceedings under Sections 201(1) and 201(1A) initiated without determining chargeability - jurisdictional facts - chargeability to tax - speaking order - personal hearing - Authority for Advance Rulings - Whether the authority could proceed with show-cause proceedings under Sections 201(1) and 201(1A) without first determining whether the remittances in question were chargeable to tax. - HELD THAT: - The Court held that exercise of statutory powers by the revenue without first determining the jurisdictional fact - namely whether the remittances are chargeable to tax - may warrant interference. Given that a significant proportion of the remittances were to BT Plc and that an application before the Authority for Advance Rulings had been pending, the Court directed that the impugned show-cause notices be adjudicated afresh. The adjudicating authority is required, as a threshold step, to decide whether the jurisdictional facts establishing chargeability exist, and to pass a reasoned (speaking) order after affording a personal hearing to the petitioner or its authorised representative (including counsel). The authority may, if it deems fit, take the AAR proceedings into account. The Court also provided limited interim protection by directing that any adverse order, if passed, shall not be given effect to for four weeks from service to enable the petitioner to pursue remedies. [Paras 5, 7]

The show-cause notices must be adjudicated after a threshold determination on chargeability; the authority shall afford personal hearing, pass a speaking order, may await the AAR decision if necessary, and any adverse order shall not be given effect for four weeks from service.

Final Conclusion: Writ petitions disposed by directing fresh adjudication of the show-cause notices with an initial determination on whether the remittances are chargeable to tax, after personal hearing and by a speaking order; limited four-week interim protection granted for any adverse order and liberty reserved to the petitioner to pursue statutory remedies.

Reopening of assessment under section 148 read with section 147 - reason to believe that income has escaped assessment - clause (a) to Explanation 2 to section 147 (non-filer premise) - application of mind / adequacy of reasons recorded - sanction/approval for issuance of notice

Reopening of assessment under section 148 read with section 147 - reason to believe that income has escaped assessment - application of mind / adequacy of reasons recorded - Validity of the notice dated 29.3.2018 reopening assessment for Assessment Year 2011-2012. - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer and the materials on record and found that the reasons do not prima facie establish that any income had escaped assessment for AY 2011-2012. Paragraph 3 of the reasons wrongly refers to transactions pertaining to AY 2010-2011 (accepted as a typing error), and there is no material on record showing that the petitioner earned the alleged profit through the identified counterparty in the previous year relevant to AY 2011-2012. The report annexed to the affidavit indicates sharing of data for AY 2010-11 and dissemination for AY 2011-12 and AY 2012-13, but no live link or specific evidence was shown to justify formation of a reason to believe in respect of AY 2011-2012. The Assessing Officer nowhere demonstrated how the alleged profit figure was attributable to the petitioner for AY 2011-2012; instead the reasons proceeded on assumption and presumption. Consequently, the Court concluded that the Assessing Officer failed to apply his mind and the notice under section 148 could not be sustained. [Paras 14, 16, 17, 19]

Notice under section 148 read with section 147 for AY 2011-2012 quashed for absence of valid reasons and lack of application of mind.

Clause (a) to Explanation 2 to section 147 (non-filer premise) - reopening on information of non-filing - Applicability of clause (a) to Explanation 2 to section 147 (which applies to non filers) to the petitioner who had filed a return. - HELD THAT: - The reasons record reliance on clause (a) to Explanation 2 to section 147 to deem escape of income; however, that clause is directed to cases where no return has been filed. The petitioner had filed a return for AY 2011-2012 which was processed under section 143(1). The Court therefore held that clause (a) could not legitimately be the basis for assuming jurisdiction to reopen the assessment in this case, and that reliance on that clause in the reasons shows improper application of the legal test for reopening. [Paras 6, 17]

Clause (a) to Explanation 2 to section 147 is not applicable where the assessee had filed a return; it cannot sustain the reopening.

Sanction/approval for issuance of notice - application of mind / adequacy of reasons recorded - Significance of inconsistencies in dates and absence of clear record of sanction/approval for issue of notice under section 148. - HELD THAT: - The reasons as furnished to the petitioner bear the date 29.3.2018 while the form for recording reasons shows 28.3.2018; the Assessing Officer and respondent pleaded typographical error and that approval was obtained after recording of reasons. The Court observed that the impugned order rejecting objections treated such discrepancies as inadvertent typing errors and generalised that similar mistakes occurred in many information-based reopenings, indicating mechanical recording. The lack of a clear, contemporaneous and coherent record linking formation of opinion to subsequent sanction undermines the validity of the reopening. Taken together with the other defects in the reasons, the Court found the approval/discrepancy issue reinforced the conclusion that a proper reasoned belief to reopen had not been formed. [Paras 7, 18]

Discrepancies in dates and absence of satisfying record regarding sanction, coupled with mechanical treatment of reasons, further vitiate the notice.

Final Conclusion: Taking into account the absence of material linking the alleged profit to AY 2011-2012, the incorrect reliance on the non-filer provision, and the defects in the reasons and sanction record, the High Court quashed and set aside the notice dated 29.3.2018 issued under section 148 of the Income-tax Act, 1961 for Assessment Year 2011-2012; petition disposed of with rule made absolute.

Mistake apparent from the record - rectification under Section 254(2) of the Income Tax Act - limited scope of rectification versus review/rehearing - appellate remedy under Section 260A

Rectification under Section 254(2) of the Income Tax Act - mistake apparent from the record - limited scope of rectification versus review/rehearing - Whether the Appellate Tribunal was justified in rejecting the Miscellaneous Application under Section 254(2) on the ground that the matters raised required re appreciation and did not constitute a mistake apparent from the record. - HELD THAT: - The Court examined the scope of Section 254(2) and reiterated that rectification is confined to patent, obvious mistakes apparent on the record and does not permit review, re hearing or substitution of the original order. A decision on a debatable point of law or a matter requiring argument or re appreciation of evidence does not qualify as a mistake apparent from the record. The Tribunal's conclusion that the matters raised by the assessee sought a review of its earlier findings and were not errors self evident on the record fell within the limited ambit of Section 254(2). Consequently, the Tribunal was not obliged to recall or rehear the appeal in toto under the guise of rectification. [Paras 11, 12, 13, 19, 20]

Tribunal's refusal to rectify its order under Section 254(2) was permissible as the issues raised were not mistakes apparent from the record but matters requiring reconsideration/review.

Mistake apparent from the record - appellate remedy under Section 260A - Whether the omission alleged by the assessee (that a specific ground was not considered) warranted rectification, and if not, what remedy remains open to the assessee. - HELD THAT: - The Court found on the record that the Tribunal had, in fact, discussed and recorded a finding on the ground complained of; therefore, there was no omission constituting an apparent mistake. Even if dissatisfaction remains with the manner of adjudication, Section 254(2) is not the appropriate forum to seek re appreciation. The proper course, if aggrieved by the Tribunal's findings, is to pursue statutory appellate remedy under Section 260A, where the matter can be canvassed and, if necessary, remitted for fresh consideration. [Paras 15, 18, 19, 21]

No rectification was warranted; the assessee's remedy is to prefer an appeal under Section 260A if so advised.

Final Conclusion: Writ petition dismissed; impugned order of the Appellate Tribunal upheld, and the assessee is left free to pursue appellate remedies under Section 260A in accordance with law.

Reopening of assessment - notice under section 148 - reason to believe - objections to reasons of reopening - speaking order - application of mind - quash and remit

Objections to reasons of reopening - speaking order - application of mind - quash and remit - Whether the order disposing of the objections to the reasons for reopening constitutes a speaking order reflecting application of mind and is sustainable. - HELD THAT: - The Court noted the settled legal position that once reasons for reopening an assessment are recorded, the assessee is entitled to file objections and the Assessing Officer must consider those objections and pass a speaking order reflecting application of mind. The Bench examined the order disposing of objections and found that the objections raised by the assessee were not meaningfully considered; the disposal did not constitute the required speaking order or demonstrate application of mind. For these deficiencies the Court declined to express any opinion on the merits of the reasons for reopening and instead concluded that the proper remedy is to quash the impugned order disposing of objections and remit the matter to the Assessing Officer for fresh consideration. The Assessing Officer is directed to take into account the assessee's objections and pass a fresh speaking order in accordance with law within the time stipulated by the Court, without the Court adjudicating the substantive merits of the reopening itself. [Paras 8, 9, 10, 11]

Order disposing of the objections is quashed and the matter is remitted to the Assessing Officer to consider the objections afresh and pass a speaking order reflecting application of mind.

Final Conclusion: Writ petition allowed in part by quashing the order disposing of objections and remitting the matter to the Assessing Officer for fresh consideration and a speaking order within four weeks; no opinion expressed on the merits of reopening, and usual remedies preserved.

Reopening of assessment beyond four years - reason to believe - change of opinion - deduction under section 35(2AB) - excess deduction leading to escapement of income - non-speaking order - quashing of notice under section 148

Reopening of assessment beyond four years - reason to believe - change of opinion - deduction under section 35(2AB) - excess deduction leading to escapement of income - Validity of reopening assessment for A.Y.2012-13 by notice dated 15.12.2017 under section 148 read with section 147. - HELD THAT: - The court examined the reasons recorded for reopening which alleged that excess deduction under the various sub clauses of section 35, particularly the claim under section 35(2AB) as compared to DSIR certification, resulted in escapement of income. The court concluded that the recorded material did not show any tangible information newly available to the Assessing Officer that would justify reopening beyond four years; the facts relied upon amounted to a prior concluded scrutiny and, in substance, a change of opinion. In absence of fresh tangible material independent of the earlier assessment proceedings, the reassessment notice was not sustainable. [Paras 7, 9]

Reopening notice dated 15.12.2017 under section 148 read with section 147 for A.Y.2012-13 is not sustainable and is quashed.

Non-speaking order - quashing of notice under section 148 - Validity of the order dated 17.08.2018 disposing of objections to the reopening notice. - HELD THAT: - The court found that the order disposing of objections does not deal with the objections raised by the assessee and is not a speaking order. The Assessing Officer failed to address, even prima facie, the substantive objections going to the root of the reassessment, thereby undermining the legitimacy of the reopening process. This deficiency reinforced the conclusion that the reopening could not be sustained. [Paras 8]

Objection disposal order dated 17.08.2018 is non speaking and does not cure the invalidity of the reopening; it provides additional basis for quashing the reassessment notice.

Final Conclusion: Writ petition allowed; the impugned reassessment notice dated 15.12.2017 under section 148 for A.Y.2012-13 is quashed and set aside.

Reopening of assessment under Section 147 of the Income tax Act - reason to believe - reopening beyond four years where return was accepted under section 143(1) - borrowed satisfaction - change of opinion - reopening based on subsequent specific and reliable information - sanction under Section 151

Reopening of assessment under Section 147 of the Income tax Act - reason to believe - reopening beyond four years where return was accepted under section 143(1) - reopening based on subsequent specific and reliable information - Validity of the notice of reopening issued under Section 148 (proceeding under Section 147) for A.Y. 2011-12 - HELD THAT: - The Court examined whether the Assessing Officer had, on the materials available, formed a valid subjective belief that income chargeable to tax had escaped assessment. It applied settled law that at the stage of issuing a reopening notice the court's role is limited to seeing whether there was relevant material from which a reasonable person could form the requisite belief and not to re try the merits or make final additions. The Assessing Officer relied on material showing a substantial increase in share capital and share premium allegedly routed through two Kolkata based entities, information from departmental databases and a statement attributed to an accommodation entry operator admitting the modus operandi. The Court held that acquisition of subsequent specific, reliable information exposing the falsity of previously disclosed transactions can confer jurisdiction to reopen, and that such material here was not vague or nonspecific. The Court rejected the contention that this amounted to a mere fishing inquiry or an impermissible change of opinion, noting that the Assessing Officer had applied his mind to the information and recorded a satisfaction of belief. [Paras 16, 18, 21, 25]

The notice of reopening under Section 148/147 for A.Y. 2011 12 was validly issued and the writ challenge to the reopening is rejected.

Borrowed satisfaction - change of opinion - Allegation that the Assessing Officer proceeded on 'borrowed satisfaction' and that the recorded reasons were only 'reasons to suspect' not amounting to reason to believe - HELD THAT: - The Court considered the argument that the Assessing Officer had merely acted on generalized database entries and third party statements without independent verification, thereby relying on 'borrowed satisfaction' or mere suspicion. Applying precedents, the Court observed that while mere suspicion or a fishing inquiry would invalidate reopening, the Assessing Officer here had material-specific information from departmental investigations and verification of investor companies-such that a bona fide subjective belief was recorded. The Court found that the material had a rational connection with the belief recorded and was not merely vague or nonspecific. [Paras 20, 21, 25]

The contention of 'borrowed satisfaction' and mere suspicion was rejected; the Assessing Officer's belief was held to be based on material sufficient to support reopening.

Sanction under Section 151 - Validity of the sanction accorded for issuance of the reopening notice under Section 151 - HELD THAT: - The Court noted the challenge to the sanctioning order but observed that the Revenue dealt with this aspect in its affidavit and found no foundation for the contention raised by the assessee. The Court treated the objection to sanction as without merit on the material before it. [Paras 24]

The objection to the sanction under Section 151 was dismissed as without foundation.

Final assessment order - Adjudication of the merits of the final assessment order passed pursuant to the reopening - HELD THAT: - The Court expressly confined its adjudication to the legality of the reopening notice and did not examine the merits of the final assessment order. It clarified that the assessee remains free to challenge the assessment order before the appellate authority and that the appellate authority must decide on merits uninfluenced by the Court's observations on reopening. [Paras 26, 27]

The Court did not adjudicate merits of the assessment order; the assessee may challenge it by appeal to the CIT(A) and the appellate authority shall decide on merits.

Final Conclusion: Writ petition dismissed insofar as it challenges the validity of the notice of reopening; the reopening under Section 148/147 for A.Y. 2011 12 is held valid. Objection to sanction under Section 151 is rejected. The Court has not gone into the merits of the assessment order, and the assessee is left free to agitate the same before the appellate authority in accordance with law.

Validity of notice issued to a deceased person - jurisdictional effect of issuance of notice - application of Section 153C of the Income-tax Act to a dead assessee - operation of Section 159 - legal representative deemed assessee - curative doctrine under Section 292B - definition of "person" under the Act and its scope

Validity of notice issued to a deceased person - application of Section 153C of the Income-tax Act to a dead assessee - jurisdictional effect of issuance of notice - Impugned notice under Section 153C issued in the name of the deceased is unenforceable and the proceedings pursuant thereto are without jurisdiction. - HELD THAT: - The Court examined whether proceedings initiated under Section 153C by issuing notice in the name of a person who was deceased are sustainable. It held that issuance of a notice to a dead person is not a mere technical defect but goes to jurisdiction because a jurisdictional notice is a condition precedent to the Assessing Officer assuming power to proceed. The Court applied the reasoning in earlier Gujarat High Court decisions (considering Section 148 jurisprudence) and analogous Supreme Court authority to conclude that where the legal heir did not submit to the Assessing Officer's jurisdiction and objected upon receipt, the notice issued to the deceased cannot be treated as valid. Consequently, proceedings founded on such an invalid notice must be quashed. [Paras 23, 24, 29, 35, 36]

Impugned notice under Section 153C issued to the deceased is void for want of jurisdiction and the proceedings based on it cannot be sustained; the notice and consequent orders are quashed.

Operation of Section 159 - legal representative deemed assessee - continuation of proceedings against legal representative - Section 159 does not validate continuation of proceedings based on a notice issued to a dead person where proceedings were not initiated against the deceased before death and the legal representative did not submit to jurisdiction. - HELD THAT: - The Court analysed Section 159(2)(a) and (b). Clause (a) allows continuation only where proceedings had been initiated against the deceased before death; clause (b) permits proceedings which could have been taken had the deceased survived but presupposes issuance of the requisite jurisdictional notice to the legal representative. In the present facts the reassessment proceeding had not been initiated prior to death; the notice was issued to the deceased after death and the legal heir objected rather than submitting to jurisdiction. Therefore Section 159 cannot be invoked to cure or validate the defective notice or proceedings. [Paras 13, 14, 15, 24]

Section 159 does not save the proceedings; the Assessing Officer could not lawfully proceed against the legal representative on the basis of a notice issued to a dead person in these circumstances.

Curative doctrine under Section 292B - whether Section 292B can cure jurisdictional defect - Section 292B cannot be relied upon to cure the defect of issuing a jurisdictional notice to a deceased person when the legal representative has not waived the requirement of a valid notice. - HELD THAT: - The Court considered the scope of Section 292B which preserves validity of returns, notices or proceedings despite mistakes if they are in substance in conformity with the Act's intent and purpose. It emphasised the distinction between procedural/curable errors and jurisdictional defects. Since a valid jurisdictional notice is a precondition to assume jurisdiction under the charging provisions, issuing such notice to a dead person where the legal heir has objected is a jurisdictional defect that Section 292B cannot cure. Reliance on authorities where defects were treated as curable was distinguished on the ground that in those cases legal representatives had participated or waived objections. [Paras 16, 17, 18, 23, 24]

Section 292B is inapplicable to cure the jurisdictional defect arising from issuance of the notice to a deceased person in the present facts.

Definition of "person" under the Act and its scope - whether statutory "person" includes legal representatives of the deceased - The statutory definition of "person" does not permit treating a deceased individual as a person against whom a valid notice can be issued; claims that a "body of individuals" or other lexical constructs validate such notice are not persuasive to extend liability beyond the statute's text. - HELD THAT: - The Court examined Section 2(31) (definition of "person") and relevant authorities including the Supreme Court's decision in Shabina Abraham. It observed that definitions which include associations or bodies of individuals do not encompass legal representatives of persons since deceased, and one cannot import liabilities by construction where the statute uses present-tense notions of an assessee. The Court reiterated that taxing statutes must be construed strictly according to their words and cannot be extended by implication to cover the State's desiderata. [Paras 30, 31, 32, 33, 34]

The definition of "person" does not validate issuance of the notice to the deceased; statutory text and precedents do not support continuing assessment against a non-existent (dead) person.

Final Conclusion: The writ-application is allowed. The notice issued under Section 153C in the name of the deceased and the consequential preliminary/order are quashed and set aside; connected writ-applications are allowed on the same footing.

Reopening of assessment under Section 147 - Reason to believe - Failure to disclose fully and truly all material facts - Change of opinion - Requirement of tangible material to justify reopening (Kelvinator test) - Proviso barring reassessment in respect of matters pending in appeal

Reopening of assessment under Section 147 - Reason to believe - Failure to disclose fully and truly all material facts - Validity of reopening assessment for A.Y. 2011-12 on the ground that income had escaped assessment due to failure to disclose material facts - HELD THAT: - The Court examined whether the two preconditions for invoking Section 147-(i) reason to believe that income chargeable to tax has escaped assessment, and (ii) that such escapement arose from the assessee's omission or failure to disclose fully and truly all material facts-were satisfied. The material on record showed that the assessee had disclosed unit-wise details, Form 10CCB and the computation of deduction under Section 80IA during original assessment proceedings, and the original Assessing Officer had applied his mind and partly disallowed the claim. The Court held that the succeeding Assessing Officer's reasons reflected a different view on the same material rather than reliance on any new tangible material demonstrating non-disclosure by the assessee. Consequently, there was no valid satisfaction of the statutory preconditions for reopening under Section 147 in respect of the claimed excess deduction. [Paras 10, 14, 18, 19]

Reopening on the ground of failure to disclose fully and truly all material facts was unsustainable and invalid.

Change of opinion - Requirement of tangible material to justify reopening (Kelvinator test) - Whether reassessment was impermissible as being a mere change of opinion by the Assessing Officer - HELD THAT: - Applying the established principle that a mere change of opinion cannot justify reopening, the Court relied on the requirement that reopening must be supported by tangible material which has a live link to the belief that income escaped assessment. The Court found that the issue of time use charge and deduction under Section 80IA had been part of the original assessment enquires and computation; the successor Assessing Officer merely reached a different conclusion on the same material. The Court held that the reopening amounted to an impermissible review of the earlier assessment rather than reassessment based on new tangible material. [Paras 12, 13, 19]

Reassessment constituted an impermissible change of opinion and could not be sustained.

Proviso barring reassessment in respect of matters pending in appeal - Reopening of assessment under Section 147 - Whether reassessment was barred because the disputed issue was the subject matter of an appeal before the second appellate authority - HELD THAT: - The Court considered the proviso to Section 147 which excludes from reassessment income involving matters that are the subject matter of any appeal, reference or revision. The Court noted that the disallowance relating to the Section 80IA claim had been challenged before the Commissioner of Income Tax (Appeals) and that the appellate authority had deleted the addition. As the issue was pending disposal before the second appellate authority at the time of reopening, the Court held that reassessment proceedings could not lawfully be initiated on that issue under Section 147. [Paras 17, 19]

Reopening was barred insofar as it sought to reopen an issue that was the subject matter of appeal; such reassessment was impermissible.

Final Conclusion: Writ allowed. The notice dated 30.03.2018 under Section 148 and the consequent reassessment proceedings for A.Y. 2011-12 are quashed and set aside as being based on mere change of opinion, lacking the requisite tangible material and legal satisfaction under Section 147, and in respect of matters pending in appeal.

Mistake apparent from record - binding decision of jurisdictional High Court - cross-objection under section 253(4) - additional grounds raised for the first time before the tribunal - recall of tribunal order for non-consideration of binding precedent

Cross-objection under section 253(4) - additional grounds raised for the first time before the tribunal - Dismissal of the assessee's cross-objection for raising a ground not agitated before AO or CIT(A). - HELD THAT: - The coordinate bench had dismissed the assessee's cross-objection on the ground that the issue (taxability of non-compete fees) was not a matter of dispute before the assessing officer or the Commissioner (Appeals) and therefore could not be raised for the first time in cross-objections under section 253(4). The bench contrasted situations where the point sought to be raised had been decided by lower authorities or where the issue was purely legal and could be entertained by the tribunal. Having considered the coordinate bench's reasoning (set out at length in the order), the present Bench accepted that in general a cross-objection ordinarily should relate to matters arising from the order under challenge, but emphasized that this legal position must be applied consistently with binding precedent of the jurisdictional High Court and the Supreme Court where applicable. [Paras 6, 7]

The coordinate bench's basis for dismissal was examined and is recognised as a live legal question to be considered in the light of binding precedent; however, the dismissal was found to be vitiated by the failure to apply such precedent where applicable.

Mistake apparent from record - binding decision of jurisdictional High Court - recall of tribunal order for non-consideration of binding precedent - Whether non-consideration by the coordinate bench of a binding decision of the jurisdictional High Court amounted to a mistake apparent from the record warranting recall of the order. - HELD THAT: - The Bench noted that the coordinate bench did not advert to the decision of the Delhi High Court in Principal Commissioner of Income Tax v. Silver Line, which held that a purely legal point may be permitted to be raised for the first time before the tribunal. Relying on the principle that omission to consider a binding decision of the jurisdictional High Court or the Supreme Court can amount to a mistake apparent on the face of the record, the Bench concluded that the coordinate bench's order suffered from such a mistake. On that basis the Miscellaneous Application was allowed and the earlier order was recalled for hearing. The court directed registry to list the recalled cross-objection for hearing in due course. [Paras 8, 9]

Non-consideration of the binding jurisdictional High Court decision was a mistake apparent from record; the cross-objection is recalled and directed to be restored for hearing.

Final Conclusion: Miscellaneous application allowed; the tribunal's earlier dismissal of the assessee's cross-objection was recalled on the ground that a binding decision of the jurisdictional High Court had not been considered, and the cross-objection is directed to be placed for hearing afresh.

Reopening after quash of assessment under 153C-requirement of fresh tangible material - validity of sanction for reopening under 151 - requirement of issuance of notice under 143(2) where return is filed in response to notice under 148 - inapplicability of deemed service provision to cure absence of mandatory notice

Reopening after quash of assessment under 153C-requirement of fresh tangible material - Validity of reopening assessment after original assessment under section 153C was quashed in absence of fresh tangible material - HELD THAT: - The Tribunal upheld the conclusion of the CIT(A) that once an original assessment completed under section 153C has been quashed, the Assessing Officer cannot validly reopen the same assessment unless fresh tangible material is placed on record to form a belief that income chargeable to tax has escaped assessment. The AO relied solely on findings of the quashed assessment and did not bring any new tangible material; therefore the initiation of reassessment was held to be without lawful foundation. The Revenue did not challenge the CIT(A)'s findings on this point, rendering them final. [Paras 5, 8]

Reopening was invalid in absence of fresh tangible material and the reassessment was quashed on this ground.

Requirement of issuance of notice under 143(2) where return is filed in response to notice under 148 - Whether assessment completed under section 147/144 was valid where no notice under section 143(2) issued after a return was filed in response to the section 148 notice - HELD THAT: - The Tribunal agreed with the CIT(A)'s factual finding that the assessee had requested the AO to treat the original return as the return in response to the section 148 notice and that the AO's records contained a later reference admitting that a return had been filed in response to section 148. Once a return is filed in response to a section 148 notice, the AO is obliged to issue notice under section 143(2) to assume jurisdiction to complete assessment under section 143(3) or section 144. The record did not show any notice under section 143(2); accordingly the assessment framed without issuing the mandatory section 143(2) notice was held invalid and liable to be quashed. [Paras 8, 9]

Assessment completed without issuance of the mandatory section 143(2) notice after a return was treated as filed in response to section 148 was invalid and quashed.

Validity of sanction for reopening under 151 - Validity of the sanction granted under section 151(1) for issuance of notice under section 148 - HELD THAT: - The CIT(A) found, and the Tribunal endorsed, that the sanction recorded by the CIT under section 151(1) was invalid and mechanically granted without proper satisfaction. The AO also failed to independently apply mind in recording reasons for reopening, relying on the quashed predecessor's findings. In absence of a valid sanction and independent reasons, the reopening lacked statutory validity. [Paras 5, 8]

Sanction under section 151(1) was invalidly recorded; reopening therefore unsustainable.

Inapplicability of deemed service provision to cure absence of mandatory notice - Whether the provision that may deem a notice valid (referenced as section 292BB in the judgment) could cure the absence of the mandatory section 143(2) notice - HELD THAT: - The Tribunal noted the Revenue's reference to a deeming provision but observed that such provision cannot operate to validate proceedings where the mandatory notice under section 143(2) was not issued. After examining the record, including the AO's subsequent section 142(1) notice which acknowledged filing of a return, the Tribunal held that the deeming provision did not cure the absence of the mandatory section 143(2) notice in the circumstances of the case. [Paras 10]

Deeming provision could not validate the assessment in absence of mandatory section 143(2) notice; therefore it did not save the reassessment.

Final Conclusion: The Tribunal dismissed the Departmental appeals and upheld the CIT(A)'s orders quashing the reassessment proceedings for the stated AYs on the grounds that reopening was in absence of fresh tangible material, the sanction under section 151(1) was invalid, the mandatory section 143(2) notice was not issued after the return was treated as filed, and any deeming provision could not cure that defect.

Transfer pricing adjustment on reimbursement of expenses - Bench-marking under recognised transfer pricing methods - Remuneration/mark-up for intra-group services - Allowability of revenue Research and Development expenditure - Disallowance under section 14A and computation under rule 8D - Foreign tax credit under tax treaty relief - Short credit of tax deducted at source - Characterisation of income from sale of shade trees as capital gains - Use of historic fair market value as on 01-04-1981 for indexed cost computation

Transfer pricing adjustment on reimbursement of expenses - Remuneration/mark-up for intra-group services - Bench-marking under recognised transfer pricing methods - Whether a transfer pricing adjustment is required on amounts received as reimbursement of pre-acquisition expenses and, if so, whether a mark up is chargeable; and the appropriate course on determination of the mark up rate. - HELD THAT: - The Tribunal accepted that the assessee incurred pre-acquisition due diligence expenses on its own account and subsequently recovered the amount from an associate enterprise. In an uncontrolled market the transfer of benefit of such groundwork would attract a mark up because the assessees' resources and efforts confer a commercial advantage on the acquirer; accordingly the transaction falls within the ambit of transfer pricing. However, the rate of mark up must be determined by reference to any one of the recognised benchmarking methods prescribed under the rules and supported by external comparable data. The DRP had fixed a mark up of 10% based on the assessee's internal operating ratios without adducing external support; that approach does not satisfy the requirement of benchmarking under the Rules. The Tribunal therefore held that the question whether a mark up is chargeable is correctly answered in the affirmative, but the determination of the percentage mark up requires fresh examination by the AO/TPO with opportunity to the assessee and on the basis of appropriate benchmarking material. [Paras 5]

Transfer pricing adjustment by way of a mark up on the reimbursed pre acquisition expenses is required; the matter of determining the mark up percentage is restored to the file of the AO/TPO for fresh consideration in accordance with recognised benchmarking methods.

Allowability of revenue Research and Development expenditure - Whether the R&D expenses claimed by the assessee are capital in nature or allowable as revenue expenditure. - HELD THAT: - The assessee had shown various routine expenditures under the 'R&D' head (salaries, repairs, stores, power, testing etc.) and capitalised distinct capital items in its annual report. The AO's conclusion that such expenses created a copyright was unsupported by evidence and rested on conjecture. Routine expenditure incurred to maintain and update operations or to meet normal business requirements does not become capital merely by labelling; in absence of material showing that the expenditure resulted in an identifiable capital asset or proprietary right, it must be treated as revenue. Having regard to the particulars and the lack of evidence of creation of any right or copyright, the Tribunal found the AO's capitalisation disallowance unjustified. [Paras 6]

Disallowance deleted; R&D expenses held revenue in nature and allowable (AO directed to delete the addition).

Disallowance under section 14A and computation under rule 8D - Whether disallowance under section 14A should be computed under rule 8D and, specifically, whether disallowance out of interest expense under rule 8D(2)(ii) is warranted while disallowance under rule 8D(2)(iii) from administrative expenses is sustainable. - HELD THAT: - The Tribunal noted that an identical question in the assessee's own case for earlier years had been restored to the AO by a coordinate bench and, upon examination, no disallowance out of interest had been made in those restored proceedings after verification that investments were from surplus funds. Given the comparable facts and the prior treatment by the coordinate bench, the Tribunal held that the issue of disallowance of interest under rule 8D(2)(ii) requires fresh examination by the AO (consistent with the coordinate bench's approach). On the other hand, the disallowance computed under rule 8D(2)(iii) out of administrative expenses was found to be sustainable. The Tribunal directed that while giving effect the AO shall give set off for the amount voluntarily disallowed by the assessee. [Paras 7]

Issue of disallowance out of interest under rule 8D(2)(ii) set aside and restored to AO for fresh examination; disallowance under rule 8D(2)(iii) (administrative expenses) sustained, with set off for the assessee's voluntary disallowance.

Foreign tax credit under tax treaty relief - Whether the assessee is entitled to the full foreign tax credit claimed. - HELD THAT: - The AO restricted the credit claimed without recording reasons. The Tribunal observed that the AO has not explained the basis for partial disallowance and that the issue had been recently considered by a coordinate bench in Ittiam Systems Pvt. Ltd., where principles for allowing foreign tax credit were articulated. In absence of reasons from the AO and in view of the cited coordinate bench guidance, the Tribunal directed restoration of the issue to the AO for fresh examination and to follow the principles laid down by the Bangalore bench in Ittiam Systems Pvt. Ltd. [Paras 8]

Claim for foreign tax credit restored to the AO for fresh adjudication in accordance with the principles stated by the Bangalore bench in Ittiam Systems Pvt. Ltd.; direction to allow credit following those principles.

Short credit of tax deducted at source - Whether the assessee is entitled to the claimed credit of TDS not allowed by the AO. - HELD THAT: - The question of short credit of TDS involves factual verification of records and reconciliation. The Tribunal did not decide the factual entitlement but restored the matter to the AO for appropriate verification and decision. [Paras 9]

Issue restored to the file of the AO for factual verification and decision on entitlement to the claimed TDS credit.

Characterisation of income from sale of shade trees as capital gains - Use of historic fair market value as on 01-04-1981 for indexed cost computation - Whether income arising from sale of various shade trees (Rosewood, Silver Oak, Eucalyptus and others) is to be assessed under the head 'Capital gains' and whether fair market value as on 01 04 1981 is to be adopted for computing indexed cost. - HELD THAT: - The Tribunal noted that trees maintained as shade for coffee bushes are treated as capital assets in the assessee's own earlier decisions of the jurisdictional High Court and that the DRP had followed those binding precedents including ITAT decisions in the assessee's own case. The DRP's classification, which treats certain trees as capital assets and directs computation of capital gains adopting FMV as on 01 04 1981 for indexed cost purposes, was in accordance with the binding Karnataka High Court decisions relied upon. Given the precedent and the DRP's reasoning, the Tribunal found no infirmity in the DRP's direction to compute capital gains using FMV as on 01 04 1981. [Paras 10]

DRP's directions upheld; income from the sale of specified shade trees to be treated as capital gains and AO directed to compute capital gains adopting fair market value as on 01 04 1981.

Final Conclusion: The Tribunal upheld that a transfer pricing adjustment by way of a mark up on reimbursed pre acquisition expenses is chargeable but remitted the determination of the mark up rate to the AO/TPO for fresh benchmarking; disallowed capitalisation of routine R&D expenditure and directed deletion of the addition; restored the question of disallowance of interest under rule 8D(2)(ii) and the claims for foreign tax credit and short TDS credit to the AO for fresh examination (with one part of the rule 8D disallowance under rule 8D(2)(iii) sustained); and accepted the DRP's direction to treat sale of specified shade trees as capital gains with FMV as on 01 04 1981 for computing indexed cost. Appeals disposed accordingly.

Reopening of assessment under section 147/148 - reasons to believe / reasons recorded for reopening - non-application of mind in recording reasons for reassessment - validity of approval/sanction under section 151 - live link between tangible material and escapement of income - quashing of reassessment and consequential deletion of additions

Reopening of assessment under section 147/148 - reasons to believe / reasons recorded for reopening - non-application of mind in recording reasons for reassessment - live link between tangible material and escapement of income - Validity of reassessment initiated by recording reasons dated 17.03.2017 for A.Y. 2010-2011 - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer which were principally based on information from CIT, Central-2 that an intermediary had provided accommodation entries. The reasons recorded contained demonstrably incorrect and inconsistent facts (notably as to the amount alleged to have escaped assessment and the mode/number of transactions) and did not refer to the retraction by the intermediary which was available prior to recording of reasons. No tangible material or live link was shown in the reasons to connect the information received with escapement of income by the assessee. The AO, therefore, failed to apply independent mind to the information and merely reproduced the investigation report and incorrect particulars; on that basis the reasons did not satisfy the statutory requirement for forming a belief that income chargeable to tax had escaped assessment. Following precedents dealing with reopening based on incorrect or non-existing reasons, the Tribunal held that the reassessment was invalid and liable to be quashed. [Paras 6]

Reopening of assessment was invalid for want of proper reasons and non-application of mind; reassessment proceedings quashed and consequential additions deleted.

Validity of approval/sanction under section 151 - mechanical or ritualistic satisfaction by higher authority - quashing of reassessment and consequential deletion of additions - Validity of the sanction/approval granted by Pr. CIT under section 151 for issuance of notice under section 148 - HELD THAT: - The Tribunal reviewed the approval recorded by the Pr. CIT which was certified as 'approved as per proforma' and found no supporting proforma or record indicating that the Pr. CIT applied his mind to the assessment record or reasons. In light of dicta holding that approval must reflect application of mind (even if briefly), and authorities condemning mechanical sanctions, the Tribunal concluded that the sanction was recorded in a ritualistic manner and therefore invalid. Because the sanction was vitiated, the initiation of reassessment could not stand. [Paras 6]

Sanction under section 151 was recorded mechanically and is invalid; accordingly the reassessment based on that sanction is quashed.

Final Conclusion: The reassessment under sections 147/148 was quashed for lack of valid reasons and for mechanical sanction under section 151; all additions made in the reassessment were deleted and the assessee's appeal was allowed.

Allowability of business expenditure under section 37 test - burden of proof on assessee to establish genuineness of expenditure - disallowance of expenditure as bogus on account of accommodation entries / list of shell companies - application of human probabilities test - estimation and partial allowance where full proof is lacking

Disallowance of expenditure as bogus on account of accommodation entries / list of shell companies - burden of proof on assessee to establish genuineness of expenditure - application of human probabilities test - estimation and partial allowance where full proof is lacking - allowability of business expenditure under section 37 test - Whether the advertisement expenditure claimed by the assessee which was disallowed as bogus on account of payments to entities appearing in the list of shell companies should be allowed in full, disallowed, or allowed in part. - HELD THAT: - The assessee produced documentary evidence (invoices, bank payments, TDS certificates, photographs of hoardings and vendor confirmations) asserting the expenditure was for bona fide advertisement in the ordinary course of its publication business. However, the payees in question were found in the Government list of shell/accommodation-entry companies; notices issued to those companies were returned unserved, and the assessee later produced replacement invoices with different addresses, numbers and amounts which it could not satisfactorily explain. Applying the approach of examining explanation in light of human probabilities as reflected in the cited precedents, these facts raised real doubts about the full genuineness of the claimed payments. The Tribunal accepted that some advertisement activity by the assessee was probable given its business and the material filed, but concluded the assessee had not fully discharged the onus to establish the entire claim because the recipients were treated as accommodation providers. In the exercise of balancing evidentiary doubt and fairness, the Tribunal confirmed the Assessing Officer's addition only to the extent of 40% of the disputed claim and deleted the remaining 60%, directing consequential computation. The Tribunal emphasised that this estimation is fact-specific and not to be treated as precedent. [Paras 5, 6]

Addition on account of the impugned advertisement expenditure confirmed in part and quantified at 40% of the disputed claim; remaining 60% of the disallowance deleted and consequential computation to follow.

Final Conclusion: The appeal is partly allowed: in view of doubts caused by the payees being listed as shell/accommodation-entry companies and inconsistencies in supporting invoices, the Tribunal upheld a partial disallowance, confirming 40% addition and deleting the balance 60%, with computations to follow.

Proviso to Section 50C retrospective operation - computation of full value of consideration under Section 50C when agreement date precedes registration - use of stamp valuation/Declared List of Rates (DLC) for determination of full value of consideration - eligibility for exemption under Section 54F where residential property is purchased in the name of spouse

Proviso to Section 50C retrospective operation - computation of full value of consideration under Section 50C when agreement date precedes registration - use of stamp valuation/Declared List of Rates (DLC) for determination of full value of consideration - Proviso to Section 50C applied to compute full value of consideration based on value prevailing on date of agreement/receipt where agreement and receipt preceded registration. - HELD THAT: - The Tribunal accepted assessee's undisputed factual position that (i) agreement for sale was dated 15/11/2010, (ii) entire sale consideration was received by cheque on 16/11/2010 and 08/12/2010 and deposited in assessee's bank account, and (iii) registration was executed on 20/04/2011 when the DLC rate had been revised. Applying the proviso to Section 50C, read as curative and retrospective, the value prevailing on the date of the agreement (and receipt) is to be taken as the full value of consideration rather than the higher DLC rate at the subsequent registration date. The Tribunal relied on earlier coordinate-bench decisions and higher courts recognising that a proviso inserted to remedy unintended consequences and to render a section workable may be read retrospectively; having regard to those authorities and the factual matrix, the Tribunal held the proviso applicable and directed that the DLC/rate as on the date of agreement (Rs.1500 per sq.mt. in the facts) be used for computation of full value.

Addition under Section 50C confirmed by lower authorities set aside; full value to be computed with reference to rate prevailing on date of agreement/receipt.

Eligibility for exemption under Section 54F where residential property is purchased in the name of spouse - Assessee entitled to deduction under Section 54F notwithstanding that the new residential house was purchased in the name of his wife. - HELD THAT: - On the issue of disallowance of improvement cost and claim of exemption under Section 54F, the Tribunal found that the assessee produced an engineer's valuation report (unrebutted) and documentary evidence of purchase in wife's name. Relying on coordinate-bench decisions and the purposive interpretation of the term 'assessee' in the context of Section 54F, the Tribunal held there is no bar to granting the exemption where the residential property is purchased in the name of the spouse. Applying those precedents and having regard to the unchallenged factual material, the Tribunal concluded that the addition relating to this matter must be deleted.

Addition on account of disallowance of improvement cost and denial of Section 54F relief deleted; assessee held eligible for exemption.

Final Conclusion: The appeal is allowed: the addition made by the A.O. as sustained by the CIT(A) is deleted - full value of consideration to be computed by reference to the rate applicable on the date of agreement/receipt under the proviso to Section 50C, and the claim of exemption under Section 54F in respect of the residential property purchased in the name of the assessee's wife is allowed.

Constitutional challenge to executive notification - validity of Minimum Import Price (MIP) - scope of powers under the Foreign Trade (Development and Regulation) Act, 1992 - interaction between Foreign Trade Act and Customs Act in valuation - binding effect of authenticated Central Government notification - Article 226 maintainability of constitutional challenge - Article 14 (equality) challenge to price fixation - acceptance and estoppel by conduct

Article 226 maintainability of constitutional challenge - Maintainability of petition under Article 226 challenging constitutional validity of Notification No.53 (RE-2013) dated 2.12.2013 - HELD THAT: - The Court rejected the preliminary objection that the petition was not maintainable because an alternate remedy under Section 130 of the Customs Act exists. Given that the petition raised a direct challenge to the constitutional validity of the impugned notification, adjudication under Article 226 was held to be permissible and the writ petition was entertained for decision on merits. The Court therefore proceeded to decide the validity issues raised by the petitioners. [Paras 26]

Petition is maintainable under Article 226.

Scope of powers under the Foreign Trade (Development and Regulation) Act, 1992 - binding effect of authenticated Central Government notification - interaction between Foreign Trade Act and Customs Act in valuation - Whether Notification No.53 (RE-2013) dated 2.12.2013 fixing MIP for cashew kernels is ultra vires the Foreign Trade Act or the Customs Act - HELD THAT: - The Court accepted that the notification was issued in exercise of powers of the Central Government under section 3 (and authenticated as relating to DGFT under the Authentication Rules), and treated the DGFT notification as an amendment/notification of import policy made by the Central Government. Having regard to earlier decisions (including this Court's decision in Premium Pulses Products & Kusum Agency), the Court held that the DGFT did not itself exercise powers under section 3 but merely authenticated the Government's amendment under the Authentication Rules. Consequently the impugned notification cannot be struck down on the ground that DGFT lacked authority to notify it. Further, the Court found no merit in the contention that fixation of MIP is exclusively within the code of the Customs Act such that notification under the Foreign Trade Act would be ultra vires; the notification, issued as an import policy measure by the Central Government, was held not to be invalid on the statutory grounds advanced by the petitioners. [Paras 31, 33, 35]

Notification No.53 (RE-2013) is not ultra vires the Foreign Trade Act or the Customs Act and is valid.

Acceptance and estoppel by conduct - constitutional challenge to executive notification - Whether petitioners could challenge the impugned MIP after having accepted and paid duty on MIP for two bills of entry - HELD THAT: - The Court noted that the petitioners had, by letter dated 1.7.2019, agreed to change the HS code and accepted clearance on the basis of the MIP for two specific bills of entry, paid customs duty accordingly and obtained clearance. In view of this conduct, the petitioners could not thereafter contend that the price fixed by the notification lacked rationale so as to avoid adjudication. The Court treated the petitioners' prior acceptance and payment as depriving them of the right to repudiate the MIP in respect of those consignments. [Paras 34]

Petitioners' prior acceptance and payment on MIP precludes their challenge to the notification in respect of the two bills of entry.

Article 14 (equality) challenge to price fixation - Validity of the impugned notification under Article 14 of the Constitution - HELD THAT: - The petitioners' argument that the MIP (fixed in 2013 and unvaried) and a single uniform price for differing grades violated Article 14 was considered. The Court found these contentions insufficient to invalidate the notification, particularly in light of the petitioners' acceptance of MIP for the two bills of entry and prior judicial treatment of similar notifications. The Court did not find the Article 14 challenge sustainable on the materials before it. [Paras 35]

Article 14 challenge to the notification is rejected.

Final Conclusion: The petition is dismissed on merits. The impugned Notification No.53 (RE-2013) dated 2.12.2013 is not declared ultra vires the Foreign Trade Act, the Customs Act, or Article 14; the petitioners' challenge is unsuccessful and earlier interim reliefs are vacated.

Duty drawback - Central Excise - Service Tax - Availment of drawback - Verification by respondent and filing of affidavit

Duty drawback - Central Excise - Availment of drawback - Duty drawback qua Central Excise has not been availed by the petitioners. - HELD THAT: - The Court records receipt of an email from the concerned officer indicating that the petitioners have not availed duty drawback in relation to Central Excise. On this factual finding, no further adjudication on Central Excise duty drawback is required in the present proceedings. [Paras 2]

Proceedings will not proceed on the question of duty drawback qua Central Excise as it has not been availed by the petitioners.

Duty drawback - Service Tax - Verification by respondent - Filing of affidavit - Whether petitioners have availed duty drawback qua Service Tax is to be examined by respondent no.2 and verified by affidavit. - HELD THAT: - The Court directs that, having dispensed with the Central Excise component, respondent no.2 must now examine only the question of availment of duty drawback in relation to Service Tax. Respondent no.2 is directed to complete this part of the exercise and file the affidavit as earlier ordered so that the matter can be further considered on the next listed date. [Paras 3, 5]

Respondent no.2 to verify the issue of duty drawback qua Service Tax and file the requisite affidavit; matter listed for further consideration.

Final Conclusion: The Court records that duty drawback qua Central Excise was not availed and requires respondent no.2 to verify and file an affidavit on whether duty drawback qua Service Tax was availed; the matter is listed for further hearing.

Permission to travel abroad while on bail - Extradition Treaty effect on apprehension of non-return - Conditions for temporary abroad travel while facing criminal proceedings - Escorting for visa renewal and surrender of passport

Permission to travel abroad while on bail - Conditions for temporary abroad travel while facing criminal proceedings - The validity of the Magistrate's order dated 29.10.2020 permitting the respondent to travel abroad for a fixed period subject to specified conditions. - HELD THAT: - The High Court examined the impugned order which allowed the respondent temporary travel abroad on furnishing an FDR and subject to conditions including furnishing addresses, authorising counsel to accept notices, instructions to counsel to avoid adjournments for want of instruction, surrender of passport on return and a prohibition against repeating similar offences. Taking into account that the respondent was arrested and subsequently granted bail, that investigation was complete and complaint filed, the Court found no infirmity in the Magistrate's exercise of discretion in granting permission to travel. The Court also noted the respondent's personal circumstances (aged parents and financial difficulty) as relevant. The Court observed that the conditions imposed were protective of the progress of the criminal proceedings and were in the interest of justice. The respondent's counsel's statement that the conditions had been complied with was recorded.

The impugned order permitting temporary travel abroad on the stated terms is upheld.

Extradition Treaty effect on apprehension of non-return - Escorting for visa renewal and surrender of passport - Whether the Directorate of Revenue Intelligence's apprehension that the respondent would not return to India justified refusal of the travel permission. - HELD THAT: - The Court considered the Extradition Treaty between India and the Republic of Korea (5.10.2004, in force 8.6.2005) and noted Article 2(4) which provides that extradition for offences relating to taxation, customs duties, foreign exchange control or other revenue matters may not be refused solely because the Requested Party's laws do not correspond exactly with those of the Requesting Party. In light of the treaty and the fact that the alleged seized consignment and the respondent's nexus to the concerned company were on record, the Court concluded that the DRI's apprehension of non-return was not well founded. The Court also recorded prior directions that DRI should ensure personnel accompany the respondent for visa renewal and that visa renewal be done in accordance with law; the FRRO extension of the respondent's visa was placed on record. These considerations led the Court to reject the contention that travel permission posed a real risk of absconding.

The apprehension of non-return premised on extraditability risks was held to be unfounded and did not justify upsetting the Magistrate's order; arrangements for visa renewal/escort were to be adhered to as directed.

Final Conclusion: The petition is disposed of with the High Court upholding the Magistrate's order dated 29.10.2020 permitting temporary travel abroad subject to the imposed conditions and recording that the DRI's apprehension of non-return was not well founded; compliance with the conditions was noted.

Summary order. Stay of the show cause notice dated 12th November, 2020 issued by the Reserve Bank of India; officials of the Department of Financial Services, Ministry of Finance and the Ministry of Corporate Affairs to file a common affidavit after consulting the Reserve Bank of India within four weeks; interim orders to continue; list on 19th May, 2021.

Maintainability of joint Section 9 application by multiple operational creditors - requirement of individual Section 8 demand notice by each operational creditor - individual filing obligation under Section 9 of the Insolvency and Bankruptcy Code, 2016

Maintainability of joint Section 9 application by multiple operational creditors - requirement of individual Section 8 demand notice by each operational creditor - Joint application under Section 9 filed by more than one Operational Creditor is not maintainable because each Operational Creditor must issue a separate Section 8 demand notice and file an individual Section 9 petition. - HELD THAT: - The Tribunal considered the statutory scheme of Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016 and followed the reasoning in Uttam Galva Steels Ltd. v. DF Deutsche Forfait AG & Anr., holding that a notice under Section 8 must be issued by an Operational Creditor individually and a petition under Section 9 must likewise be filed by an Operational Creditor individually. The Bench observed that practical and substantive differences (such as differing claim amounts, dates of default and separate Form-3/Form-4 particulars) make joint filing by multiple Operational Creditors impermissible. Applying that principle to the facts, where the Demand Notice and Section 9 application were filed jointly by the persons claiming as Operational Creditors, the Tribunal found the joint application to be contrary to the individual notice and filing requirement and therefore not maintainable. [Paras 18, 19, 20]

The joint Section 9 application by the Operational Creditors is not maintainable; the application is rejected.

Final Conclusion: The petition filed jointly under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditors is dismissed as not maintainable on the ground that each Operational Creditor must issue its own Section 8 demand notice and file an individual Section 9 application.

Liquidation under Section 33(1) - commercial wisdom of the Committee of Creditors - appointment of liquidator under Section 34(1) - valuation and viability assessment by the Committee of Creditors - powers of the liquidator over board of directors and key managerial personnel - public notice and ROC intimation in liquidation - bar on suits during liquidation subject to Section 52 - liquidator's fees under the IBBI (Liquidation Process) Regulations, 2016

Liquidation under Section 33(1) - commercial wisdom of the Committee of Creditors - valuation and viability assessment by the Committee of Creditors - Whether the Corporate Debtor should be placed into liquidation following the Committee of Creditors' resolution and on the material before the Tribunal. - HELD THAT: - The Tribunal found that the Committee of Creditors (CoC), which in this case consisted effectively of Bank of Baroda representing 100% of financial creditors, had considered valuations, asset position and the state of operations and unanimously resolved to liquidate the Corporate Debtor. The record showed the Corporate Debtor to be non-operational for two years with negligible assets (a single shop) and expiring/uncertain value of intangible registrations; valuations and CoC minutes supported conclusion of no viable revival. Reliance was placed on the established principle of respecting the commercial wisdom of the Committee of Creditors as articulated by higher courts, and the Tribunal declined to interfere where the requisite majority had resolved for liquidation. Objections by the suspended director alleging procedural lapses and opportunities for resolution plans were considered but rejected on the facts and in view of the CoC's assessment and the lapse of the CIRP period. [Paras 15, 16, 17]

Application for liquidation under Section 33(1) was allowed and the Corporate Debtor ordered to be liquidated, the CoC's unanimous decision being respected.

Appointment of liquidator under Section 34(1) - powers of the liquidator over board of directors and key managerial personnel - public notice and ROC intimation in liquidation - bar on suits during liquidation subject to Section 52 - liquidator's fees under the IBBI (Liquidation Process) Regulations, 2016 - Appointment of the liquidator and the scope of powers and procedural directions to govern the liquidation process. - HELD THAT: - The Tribunal appointed the Resolution Professional as Liquidator under Section 34(1) and directed initiation of the liquidation process in accordance with the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The order vested in the liquidator all powers of the board of directors and key managerial personnel, directed issuance of public notice and intimation to the ROC, and declared that, subject to Section 52 of the Code, no suit or legal proceeding shall be instituted by or against the Corporate Debtor except through the liquidator with prior approval of the Adjudicating Authority. The liquidator was entitled to fees as provided in the Regulations. The Tribunal also recorded that personnel of the Corporate Debtor must cooperate with the liquidator. An application under Section 66 filed by the RP was retained to be pursued by the liquidator. [Paras 18]

The Resolution Professional was appointed as Liquidator with the stated powers, fee entitlement and directions for conducting the liquidation; ancillary proceedings under Section 66 to be pursued by the liquidator.

Final Conclusion: The Tribunal allowed the application for liquidation, upheld the CoC's unanimous decision to liquidate the Corporate Debtor, appointed the Resolution Professional as Liquidator with the powers and directions specified in the order, and left the pending Section 66 application to be pursued by the appointed liquidator.

Financial Debt - Default - admission under the Insolvency and Bankruptcy Code - assignment of financial debt - record of default with Information Utility - limitation under Limitation Act - appointment of Interim Resolution Professional - moratorium under the Code

Financial Debt - Default - assignment of financial debt - admission under the Insolvency and Bankruptcy Code - Existence of a financial debt, occurrence of default and entitlement to admission of a petition under the Code by the assignee (Financial Creditor). - HELD THAT: - The Tribunal examined the documents including the sanction letter, debenture issuance, assignment agreement and payment history and found that credit facilities of Rs. 55,00,00,000/- were disbursed on 20.11.2016 and were secured by debentures. The account was declared NPA and the last payment by the Corporate Debtor was on 16.04.2019. The Assignor Bank assigned the debt to the Petitioner on 21.05.2019 and the Petitioner produced the Debenture Trustee and security documents. On these materials the Bench held that the obligations constituted a "financial debt" and that a "default" had occurred within the meaning of the Code, satisfying the two essential preconditions for admission under section 7. The Bench therefore concluded that the Petition was fit for admission. [Paras 27, 28, 29, 35, 36]

The Petition under the Code was admitted as the existence of financial debt and default by the Corporate Debtor was established and the Petitioner as assignee was entitled to move under section 7.

Record of default with Information Utility - Sufficiency of record of default furnished by the Financial Creditor. - HELD THAT: - The Corporate Debtor contended non-compliance with the requirement to furnish record of default under the statutory provision requiring record from an information utility. The Bench noted that the Financial Creditor produced the default available with the Information Utility, National E-Governance Services Limited (NeSL), and relied upon the summary and detailed account of outstanding principal, interest and penalties. On the material placed on record the Bench found the requirement complied with and treated the Information Utility record as available evidence of default. [Paras 31, 32, 33, 35]

The record of default with the Information Utility was produced and was treated as sufficient for the purposes of the petition.

Limitation under Limitation Act - Whether the petition is barred by limitation. - HELD THAT: - The Corporate Debtor pleaded that the petition was barred by limitation and that there was no acknowledgement of debt within three years prior to filing. The Bench examined the payment history showing the last payment on 16.04.2019, the declaration of NPA on 17.05.2019, assignment on 21.05.2019 and filing on 02/03/2020. The Tribunal observed that in view of the dates and the relevant provision of the Limitation Act the petition was within time and not barred by limitation. [Paras 32]

The plea of limitation was rejected and the petition was held to be within the period of limitation.

Appointment of Interim Resolution Professional - moratorium under the Code - Appointment of the proposed Interim Resolution Professional and imposition of moratorium consequent to admission. - HELD THAT: - The Financial Creditor proposed a named Insolvency Professional and filed his written consent (Form 2). The Bench found no record of disciplinary proceedings against the proposed IRP and appointed him to conduct the Corporate Insolvency Resolution Process. Upon admission the Bench directed that the moratorium under the Code shall be operative from the date of the order, restraining specified actions against the Corporate Debtor and directing the IRP to make the public announcement and perform duties under the Code and to report compliance within the stipulated time. [Paras 38, 39, 40, 41, 42]

The proposed Interim Resolution Professional was appointed and the moratorium under the Code was declared effective from the date of the order; the IRP was directed to carry out statutory duties including public announcement and reporting.

Final Conclusion: The Tribunal admitted the section 7 petition filed by the Financial Creditor, holding that a financial debt had been created, default had occurred and the petitioner, as assignee, was entitled to proceed; the record of default with the Information Utility was accepted, the limitation defence was rejected, the proposed Interim Resolution Professional was appointed and the moratorium under the Code was declared operative from the date of the order.

Section 9 application under the Insolvency and Bankruptcy Code, 2016 - existence of operational debt and default - binding effect of settlement agreement - appointment of Interim Resolution Professional - moratorium under Section 14

Existence of operational debt and default - binding effect of settlement agreement - Section 9 application under the Insolvency and Bankruptcy Code, 2016 - Operational Creditor has established a debt due and payable by the Corporate Debtor and default in payment in terms of the settlement agreement, entitling admission of the Section 9 application. - HELD THAT: - The Tribunal found that the parties had entered into a settlement agreement dated 26.04.2019 which fixed the outstanding dues and provided instalment terms and reduced interest. The Corporate Debtor made initial part payments but defaulted on the agreed instalments and did not make payments after 07.06.2019. The Operational Creditor issued fresh demand notices and the outstanding due as on 25.12.2019 was quantified in terms of the Settlement Agreement. The Tribunal rejected the Corporate Debtor's request to keep the application in abeyance and concluded that the default under the settlement agreement constituted a provable operational debt for the purposes of admission under Section 9. [Paras 12, 16]

Application under Section 9 is maintainable and the Operational Creditor has made out a case of debt and default.

Appointment of Interim Resolution Professional - disclosures and disciplinary status of IRP - Interim Resolution Professional is appointed because the Operational Creditor did not propose a name and conditions for appointment were specified. - HELD THAT: - Noting that Part-III of the application did not propose an Insolvency Resolution Professional, the Tribunal appointed Mr. Thauvai Ramachandran Ravichandran as Interim Resolution Professional subject to the condition that no disciplinary proceedings are pending against him and that required disclosures under the Insolvency Regulations be furnished within one week. The appointment was made as a consequential and necessary step on admitting the Section 9 application. [Paras 17]

Mr. Thauvai Ramachandran Ravichandran is appointed as Interim Resolution Professional subject to mandated disclosures and clearance.

Moratorium under Section 14 - scope of moratorium - Moratorium under Section 14(1) is declared on admission and its scope and effect are directed to be enforced. - HELD THAT: - Upon admission of the Section 9 application, the Tribunal directed the moratorium to operate in terms of Section 14(1), prohibiting institution or continuation of suits or proceedings against the Corporate Debtor, transfer or disposition of its assets, enforcement of security interests, and recovery of property occupied by the Corporate Debtor. The Tribunal also directed that supply of essential goods or services not be terminated during the moratorium, that certain transactions notified by the Central Government are excluded, and that the moratorium will continue until completion of the CIRP or approval of a resolution plan or order for liquidation. [Paras 17]

Moratorium is declared with the specified prohibitions and directions, effective from the date of the order until completion of CIRP or further order.

Final Conclusion: The Section 9 application is admitted: the Tribunal found a provable operational debt and default under the settlement agreement, appointed an Interim Resolution Professional subject to disclosures, and declared the moratorium in terms of Section 14, directing communication of the order to the parties and the IRP.

Bar of limitation under Article 137 of the Limitation Act - inapplicability of Section 18 of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code - effect of written acknowledgment of debt where acknowledgment is disputed and subject to criminal proceedings

Bar of limitation under Article 137 of the Limitation Act - inapplicability of Section 18 of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code - effect of written acknowledgment of debt where acknowledgment is disputed and subject to criminal proceedings - Whether the Section 9 petition filed by the operational creditor is maintainable or is barred by limitation. - HELD THAT: - The Tribunal found that the invoices forming the basis of the claim were raised between April 2016 and August 2016, whereas the petition under Section 9 was filed in November 2019, which is beyond the three-year period applicable under Article 137 of the Limitation Act from the date the right to apply accrued. The Tribunal noted binding precedents applying Article 137 to applications under the Code and observed the Supreme Court's ruling that Section 18 of the Limitation Act (fresh period of limitation arising from an acknowledgment in writing) is not applicable to insolvency proceedings under the Code; consequently, an acknowledgment cannot revive or extend limitation for a Section 9 petition. Further, the only contemporaneous acknowledgment relied upon by the applicant was disputed by the respondent and is the subject-matter of a criminal complaint alleging forgery; in view of that dispute the acknowledgment could not be treated as valid to defeat the plea of limitation. The Tribunal also observed other factual disputes raised by the respondent regarding the supplies and resupplied invoices, but held that there was no need to decide the merits of those disputes once the petition was found time-barred. For these reasons the petition was held to be barred by limitation and dismissed. [Paras 9, 10, 11, 12, 13]

The Section 9 petition is dismissed as barred by limitation.

Final Conclusion: The petition filed under Section 9 of the IBC is dismissed on the ground of limitation: the application was filed beyond the three year period under Article 137, the relied acknowledgment is disputed and the benefit of Section 18 of the Limitation Act is not available in insolvency proceedings.

Admission of application under Section 9(5) of the Insolvency and Bankruptcy Code, 2016 - Default in payment of operational debt - Pecuniary jurisdiction where default arose before change in threshold limit - Appointment of Interim Resolution Professional - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Operational Creditor to deposit cost for interim resolution professional to manage CIRP expenses

Default in payment of operational debt - The Corporate Debtor had committed default in payment of the operational debt claimed by the Operational Creditor. - HELD THAT: - The Tribunal examined the documents filed with the petition-purchase order, invoice, correspondence including post dated cheques and return memos, replacement cheques and ledger statement-and found that goods were supplied, the invoice required payment within 30 days, cheques issued by the Corporate Debtor were presented and returned with endorsement "funds insufficient", and no payment was made thereafter. The Corporate Debtor received the demand notice and failed to reply. On this basis the Tribunal concluded that default in repayment of the operational debt was proved. [Paras 10]

Default by the Corporate Debtor in repayment of the operational debt established and accepted.

Pecuniary jurisdiction where default arose before change in threshold limit - The Tribunal had pecuniary jurisdiction to entertain the Section 9 application despite subsequent increase in the threshold limit. - HELD THAT: - Although the monetary threshold for Section 9 claims was raised to a higher limit by notification with effect from 24.03.2020, the Tribunal noted that the default in this case arose prior to that notification and the petition was filed on 30.01.2020. Therefore, the earlier lower threshold as applicable at the time of default governed the matter and the Tribunal possessed pecuniary jurisdiction to admit the application. [Paras 11]

Pecuniary jurisdiction to entertain the petition upheld because the default arose before the notification raising the threshold limit.

Admission of application under Section 9(5) of the Insolvency and Bankruptcy Code, 2016 - The Section 9 application filed by the Operational Creditor was admitted under Section 9(5) of the Code. - HELD THAT: - Having found that an operational debt existed and that the Corporate Debtor had defaulted and not replied to the demand notice, the Tribunal applied the provisions of the Code and admitted the petition under Section 9(5). The admission triggers the statutory consequences provided under the Code. [Paras 12]

Petition under Section 9(5) admitted.

Appointment of Interim Resolution Professional - Disclosures and absence of disciplinary proceedings as condition on appointment - An Interim Resolution Professional was appointed from the IBBI list subject to required disclosures and absence of pending disciplinary proceedings. - HELD THAT: - The Operational Creditor had not proposed a name despite opportunity. The Tribunal, relying on the latest list provided by IBBI for the relevant period, appointed the named professional as Interim Resolution Professional. The appointment was made conditional upon there being no pending disciplinary proceedings against her and on timely compliance with disclosure requirements under the applicable regulations. [Paras 12]

Ms. Chitra Perinkulam Ragavan appointed as Interim Resolution Professional subject to statutory disclosures and absence of disciplinary proceedings.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Upon admission, the moratorium under Section 14 came into effect in respect of the Corporate Debtor. - HELD THAT: - The Tribunal directed that, consequent to admission, the moratorium provisions under Section 14(1) operate from the date of the order until completion of the CIRP, and reproduced the statutory protections and exceptions-including restrictions on institution or continuation of legal proceedings, transfer or disposition of assets, enforcement of security and recovery of property-subject to the exceptions and duration prescribed in Section 14(2), (2A), (3) and (4). [Paras 12, 13, 14]

Statutory moratorium declared effective from the date of the admission order until completion of the CIRP subject to statutory exceptions.

Operational Creditor to deposit cost for interim resolution professional to manage CIRP expenses - The Operational Creditor was directed to deposit an amount to meet the Interim Resolution Professional's initial expenses. - HELD THAT: - To enable the Interim Resolution Professional to perform her functions and meet out expenses as per the regulations, the Tribunal directed the Operational Creditor to pay a specified sum to the Interim Resolution Professional upon her filing the requisite declaration, as an upfront contribution towards CIRP expenses. [Paras 15]

Operational Creditor directed to deposit the specified sum with the Interim Resolution Professional to meet initial CIRP expenses.

Final Conclusion: The Tribunal admitted the Section 9 application against the Corporate Debtor, appointed an Interim Resolution Professional from the IBBI list subject to disclosures and absence of disciplinary proceedings, declared the moratorium under Section 14 with statutory exceptions, and directed the Operational Creditor to deposit an amount to meet initial CIRP expenses; the Registry and IBBI were to be furnished with copies of the order for further action.

Default - admission under Section 7 of the Insolvency and Bankruptcy Code - initiation of Corporate Insolvency Resolution Process - moratorium - appointment of Interim Resolution Professional

Default - admission under Section 7 of the Insolvency and Bankruptcy Code - Whether the Financial Creditor's application is complete and a default has occurred such that admission under Section 7 is warranted. - HELD THAT: - The Tribunal found that the Financial Creditor had filed the application in the prescribed form with supporting documents and a computation of outstanding amounts and dates of default, and that no limitation plea was raised. The Corporate Debtor, although filing an affidavit in opposition, did not deny the occurrence of default and relied on vague contentions regarding prospective investments and negotiations with lenders. The Adjudicating Authority's role is limited to satisfaction that a default has occurred in respect of a financial debt; here the material on record, including the CIBIL report and demand-cum-recall notice, established default on the dates pleaded. Having found the application complete and no denial of default, the Tribunal concluded that admission under Section 7 was justified. [Paras 7, 8, 16, 17, 18]

Application is complete and default has occurred; admission under Section 7 is warranted.

Initiation of Corporate Insolvency Resolution Process - moratorium - appointment of Interim Resolution Professional - Reliefs and consequential orders upon admission including declaration of moratorium and appointment of IRP. - HELD THAT: - On admitting the petition, the Tribunal ordered initiation of the CIRP and declared the statutorily mandated moratorium for the period of the CIRP, directing compliance with the public announcement and claim submission processes. The moratorium prohibitions-inter alia restraint on suits, transfer or encumbrance of assets, and enforcement of security-were specified as applicable from the date of admission until completion of the CIRP, subject to cessation on approval of a resolution plan or liquidation. The Tribunal also appointed the proposed professional as Interim Resolution Professional subject to his written consent, directed convening of the Committee of Creditors and identification of prospective resolution applicants within the statutory timeline, and made ancillary directions (deposit towards IRP, communications, and listing for progress report). [Paras 19, 20]

CIRP initiated; moratorium declared; proposed IRP appointed as Interim Resolution Professional with directions for CoC formation and further proceedings.

Final Conclusion: The petition under Section 7 was admitted: the Tribunal found the Financial Creditor's application complete and default established, directed initiation of the Corporate Insolvency Resolution Process, declared the moratorium, appointed the Interim Resolution Professional, and issued consequential administrative directions for the conduct of the CIRP.

Pre-arrest bail - custodial interrogation requirement in economic offences - possession of disproportionate assets as proceeds of crime - right against self-incrimination under Article 20 - presumption of innocence - distinguishing precedents on custody in economic offences

Pre-arrest bail - bail conditions - possession of disproportionate assets as proceeds of crime - Pre-arrest bail was granted to the petitioners subject to specified conditions. - HELD THAT: - The Court found that, on the material on record and the stage of investigation, the petitioners were entitled to the concession of pre-arrest bail. The ACB had earlier investigated FIR No.12/2013 and presented a charge-sheet framing charges in respect of disproportionate assets for the period w.e.f. 01.03.1991 to 05.08.2013; subsequently respondent No.2 registered an ECIR under PMLA on 21.02.2020. Despite registration of the ECIR more than a year prior, the petitioners were not subjected to custodial interrogation and have been attending investigation when called. Having regard to the progress of investigation, the absence of earlier custodial interrogation, and the principle that arrest cannot be a substitute for post-trial punishment, the Court held that custody for interrogation at this stage would be unjustified. Accordingly, pre-arrest bail was allowed subject to furnishing personal bonds with surety, cooperating with investigation and appearing when called, not leaving the Union Territory without permission of the investigating officer, and not tampering with prosecution witnesses. [Paras 5, 6, 10]

Petition allowed; pre-arrest bail granted on conditions (personal bonds with surety, cooperation, territorial limitation, no tampering with witnesses).

Custodial interrogation requirement in economic offences - right against self-incrimination under Article 20 - presumption of innocence - distinguishing precedents on custody in economic offences - Custodial interrogation was not necessary in the facts of the case and the relied-upon Supreme Court decisions were distinguishable. - HELD THAT: - The Court examined the contention that economic offences often require custodial interrogation and the reliance on P. Chidambaram and Y.S. Jagan Mohan Reddy. It held that those decisions concerned complicated economic offences of huge magnitude with serious national financial implications and could not be equated with a case involving alleged disproportionate assets unearthed by the ACB. Given that respondent No.2 had not found it necessary to arrest or custodially interrogate the petitioners for over a year of investigation, and having regard to the constitutional protection against self-incrimination under Article 20 and the presumption of innocence, the Court concluded that custody for interrogation was not justified at the present stage. The Court also noted the settled principle that arrest cannot replace post-trial punishment and observed the inapplicability of an ouster of bail principles where facts are materially distinct. [Paras 8, 9, 10]

Respondent's plea for custodial interrogation rejected; precedents relied upon held distinguishable on facts and custody not warranted.

Final Conclusion: The petition for anticipatory bail is allowed: the petitioners are granted pre-arrest bail on furnishing personal bonds with surety and subject to conditions of cooperation with the investigation, territorial restriction without prior permission, and non-tampering with witnesses; custodial interrogation is not warranted in the present circumstances and the relied-upon authorities are distinguishable.

Principles of natural justice - Opportunity of personal hearing - Remand for fresh adjudication - Pre-deposit condition for interim relief

Principles of natural justice - Opportunity of personal hearing - Impugned adjudication was passed in breach of principles of natural justice and therefore requires quashing. - HELD THAT: - The writ applicants had filed documents and repeatedly requested an opportunity to explain reconciliation between books of account and returns; the adjudicating authority had indicated it would first examine the reply and then grant personal hearing but proceeded to pass the impugned order confirming demand on the ground that documentary evidence and reconciliation were not produced. The respondents relied on recital in the impugned order that representatives had appeared and that replies were on record, but the Court found that the factual matrix warranted granting an opportunity for oral submissions before final adjudication. For these reasons the Court concluded that the impugned order suffers from breach of the audi alteram partem principle and cannot stand. [Paras 12, 13]

Impugned order dated 11.11.2019 is quashed for breach of principles of natural justice and the matter is ordered for fresh adjudication after granting an opportunity of hearing to the writ applicants.

Remand for fresh adjudication - Pre-deposit condition for interim relief - Matter remitted to adjudicating authority for fresh adjudication subject to a pre-deposit condition; timeline for completion fixed. - HELD THAT: - Having quashed the impugned order, the Court remitted the case to the respondent authority for fresh adjudication and specified a condition for interim relief in the form of a pre-deposit. The pre-deposit ordered is 7.5% of the net tax demand as computed in the impugned order (stated as Rs. 9,21,490), to be retained subject to final outcome and to be adjusted or refunded as appropriate. The Court also directed that the fresh adjudication exercise be completed within two months from receipt of the writ of this order. [Paras 13, 14, 15]

Proceedings remitted to respondent No.2 for fresh adjudication after giving hearing, on condition of pre-deposit of 7.5% of the net tax demand (Rs. 9,21,490); adjudication to be completed within two months.

Final Conclusion: Writ petition allowed in part: impugned order quashed for breach of natural justice; matter remitted for fresh adjudication after giving hearing, subject to a pre-deposit of 7.5% of the net tax demand (Rs. 9,21,490), with the exercise to be completed within two months.

Jurisdiction of CESTAT to adjudicate refund claims under Section 142(6) of the CGST Act, 2017 - refund of unutilised CENVAT credit - distinction between refund remedies under Section 11B/Rule 5 of the CENVAT Credit Rules and refund under Section 142(6) of the CGST Act

Jurisdiction of CESTAT to adjudicate refund claims under Section 142(6) of the CGST Act, 2017 - refund of unutilised CENVAT credit - distinction between refund remedies under Section 11B/Rule 5 of the CENVAT Credit Rules and refund under Section 142(6) of the CGST Act - Whether CESTAT has jurisdiction to adjudicate the appellant's claim for refund of unutilised CENVAT credit framed under Section 142(6) of the CGST Act, 2017. - HELD THAT: - The appellant's claim, although relating to unutilised CENVAT credit, was presented and pursued as a refund under Section 142(6) of the CGST Act, 2017. The Tribunal examined the nature of the claim and the authorities relied upon and observed that the cited precedents principally deal with refunds under Section 11B of the Central Excise Act, 1944 or under Rule 5 of the CENVAT Credit Rules, 2004. Those decisions are therefore not determinative of a claim brought under the CGST statutory provision. Adjudication of eligibility and entitlement under Section 142(6) of the CGST Act requires examination and interpretation of the CGST statute, a matter outside the adjudicatory jurisdiction of CESTAT. Although the Tribunal noted that an arguable case on Central Excise law might exist, the claim as framed under the CGST Act could not be entertained by CESTAT. Consequently, the appeal cannot be decided on merits by this forum for lack of jurisdiction.

Appeal dismissed for want of jurisdiction as CESTAT cannot adjudicate the refund claim made under Section 142(6) of the CGST Act, 2017.

Final Conclusion: The appeal is dismissed for want of jurisdiction because the refund claim was framed under Section 142(6) of the CGST Act, 2017, which the CESTAT is not empowered to decide; no adjudication on the merits of the refund claim was undertaken.

Refund claimed as a consequence of an appellate order - Explanation (B) to Section 11B - clause (ec) - relevant date for refund - statutory time limit for refund - deposit under protest - appropriation of amount towards demand

Refund claimed as a consequence of an appellate order - Explanation (B) to Section 11B - clause (ec) - relevant date for refund - statutory time limit for refund - deposit under protest - Whether the refund of the amount of Rs. 4,00,000/- paid during investigation is admissible despite delay, having regard to Explanation (B)(ec) to Section 11B when the refund is claimed as a consequence of an appellate order. - HELD THAT: - The Tribunal held that the refund in the present case was claimed as a direct consequence of the CESTAT's Final Order No. 41775 of 2017 dated 21.08.2017 and therefore does not constitute a 'normal' refund claim. Explanation (B)(ec) to Section 11B, inserted with effect from 11.05.2007, prescribes the relevant date and a one year time condition for refund applications arising from appellate orders; it is a specific statutory provision which must be complied with. When a particular class of cases is covered by a specific statutory provision, claims falling within that class must satisfy the conditions laid down therein. The Tribunal rejected the appellant's contention that the payments constituted a 'deposit under protest' which would take the claim outside the mischief of Section 11B, finding that the statutory proviso (ec) applies to refund claims consequent to appellate orders. The contention that the CESTAT's final order remained unserved was not accepted because the Registry had sent the order by registered post to the address in the appeal memorandum and there was no follow up by the appellant. The Tribunal recorded that the refund application was filed with unexplained delay (not satisfying (ec)) and therefore the claim failed to meet the statutory requirement; accordingly there was no merit to interfere with the findings of the lower authorities. [Paras 7, 9, 11, 12]

The refund claim was held not to satisfy Explanation (B)(ec) to Section 11B and the appeal was dismissed.

Appropriation of amount towards demand - Whether the amount of Rs. 4,00,000/- appropriated against the demand could be refunded in view of the appellate order. - HELD THAT: - The Tribunal noted that the sum of Rs. 4,00,000/- had been appropriated towards the demand confirmed by the original order and upheld on first appeal. Although the CESTAT later set aside the impugned order, the refund of the appropriated amount when claimed as a consequence of that appellate order remains subject to the specific statutory conditions of Explanation (B)(ec) to Section 11B. Since the appellant's refund application did not comply with the time limit and other conditions under (ec), the claim for refund of the appropriated amount could not be allowed. [Paras 7, 11, 12]

The claim for refund of the amount appropriated against the demand was refused for non compliance with Explanation (B)(ec) and the appeal was dismissed.

Final Conclusion: The appeal is dismissed: the Tribunal held that refunds claimed as a consequence of an appellate order fall within Explanation (B)(ec) to Section 11B and must satisfy its conditions; the appellant's refund application (including the amount appropriated) did not comply with (ec) and service related pleas were not accepted.

Cenvat credit admissibility for inputs used in fabrication of capital goods - user test for capital goods - beneficial character of Cenvat credit scheme - consistency and certainty in tax administration - reliance on Chartered Engineer's certificate as evidence of use - presumption of ordinary use for civil construction

Cenvat credit admissibility for inputs used in fabrication of capital goods - user test for capital goods - reliance on Chartered Engineer's certificate as evidence of use - beneficial character of Cenvat credit scheme - Admissibility of Cenvat credit on structural steel items and welding electrodes used for fabrication of capital goods, components and accessories which are further used in manufacture of final product. - HELD THAT: - The Tribunal examined earlier orders in the assessee's own case and the material establishing that the steel items and welding electrodes were used in fabrication of machinery, parts and accessories falling within the ambit of capital goods. The adjudicating and appellate authorities had accepted Chartered Engineer certificates and applied the user test as settled by higher courts. In view of binding departmental and Tribunal decisions in the assessee's favour and the absence of contrary evidence from Revenue, the Tribunal applied the user test and the beneficent character of the Cenvat regime to hold that credit on such steel items and welding electrodes is admissible. The Tribunal emphasised the need for consistency with earlier orders and therefore set aside the impugned denial of credit. [Paras 5, 6]

Impugned orders denying Cenvat credit on the subject steel items and welding electrodes are set aside and the appeals are allowed with consequential relief.

Presumption of ordinary use for civil construction - consistency and certainty in tax administration - Validity of denying credit on the basis that the steel items were 'ordinarily used for civil construction' without supporting evidence. - HELD THAT: - The Tribunal found that the Show Cause Notices proceeded on a presumption of ordinary use for civil construction or factory sheds without material support. Where lower authorities and the first appellate authority had previously allowed credit on identical items and Revenue failed to produce material to rebut the certificates and prior findings, denial based on mere presumption was unsustainable. The Tribunal relied on the principle of certainty and consistency in tax matters to uphold the assessee's entitlement. [Paras 6]

Denial of credit grounded on an unsupported presumption of civil construction use is unjustified; the impugned proceedings are set aside.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned orders and restored the assessee's entitlement to Cenvat credit on the structural steel items and welding electrodes for the periods in dispute, applying the user test, upholding reliance on Chartered Engineer certification and emphasizing consistency and certainty in tax administration.

Eligibility to tax exemption - right to choose between tax benefits - input tax credit (ITC) entitlement - forfeiture of tax collected under Section 41 - prospective operation of statutory amendment - bar on ITC for exempt sales under Section 19(5)(a)

Eligibility to tax exemption - Turnover for the purposes of the TNVAT Act falls below the taxable threshold once interstate sales are excluded and the petitioner is eligible for the Schedule A exemption. - HELD THAT: - The Court examined the differing turnover figures reported by the petitioner and found that the income-tax return figure included interstate sales which must be excluded for computing turnover under the TNVAT Act. After deducting the interstate sales, the turnover for the Act is less than the taxable limit, rendering the petitioner eligible for exemption under Entry 65 of Schedule A. The revenue's position that the turnover is below Rs. 5.00 crores is accepted on this basis. [Paras 4]

Turnover for 2011-12, calculated excluding interstate sales, is below the taxable limit and the petitioner is eligible for the Schedule A exemption.

Right to choose between tax benefits - An assessee who is eligible for an exemption is not compelled to avail it; the assessee may elect not to claim an available exemption. - HELD THAT: - Relying on precedent applying the principle of choice between available fiscal benefits, the Court held that eligibility does not mandate availment. The assessee may lawfully refrain from claiming an exemption and organise its financial affairs within the law. The distinction drawn by revenue between notifications and schedule-based exemptions was rejected as immaterial to the core principle that the assessee has freedom to choose whether to avail a statutory concession. [Paras 5, 7, 8, 9]

The petitioner could validly eschew the available exemption; eligibility does not oblige availment.

Input tax credit (ITC) entitlement - forfeiture of tax collected under Section 41 - bar on ITC for exempt sales under Section 19(5)(a) - prospective operation of statutory amendment - Where the petitioner, though eligible for exemption, elects not to avail it and has remitted tax, it is entitled to claim ITC; the amendment to Section 41 is prospective and the bar in Section 19(5)(a) applies only where sales are actually exempted under section 15. - HELD THAT: - The Court construed Section 41 and the 2012 amendment as operating prospectively from 1.4.2012. The amended provision permits deduction of eligible ITC from forfeited tax, but that amendment does not deny ITC to a dealer who remains taxable by choice. Section 19(5)(a) denies ITC only in respect of sales exempted under section 15; it does not operate where the exemption is available but not availed. Given that the petitioner remitted the tax in full and chose not to claim the exemption, denying ITC by thrusting an exemption upon the petitioner would be inconsistent with the scheme and neutrality objective of VAT and would amount to imposing an involuntary forfeiture. [Paras 12, 13, 14, 15, 16]

Petitioner, having elected not to avail the exemption and having remitted tax, is entitled to ITC; the statutory amendment is prospective and the bar in Section 19(5)(a) does not apply where exemption is not availed.

Final Conclusion: The writ petition is allowed; the assessment revision rejecting the petitioner's claim to ITC while treating the exemption as thrust upon it is set aside, and the petitioner's entitlement to claim ITC (subject to satisfaction of tax liability) is recognised. No costs.

Application of amended additional sales tax slab to initial turnover slab - treatment and apportionment of turnover for computation of additional sales tax - comparison of local effective tax rate with central sales tax flat rate - interpretive effect of departmental circular on tax computation - remand for recalculation by Assessing Officer

Application of amended additional sales tax slab to initial turnover slab - treatment and apportionment of turnover for computation of additional sales tax - interpretive effect of departmental circular on tax computation - Whether the petitioner is entitled to benefit of the amendment by Act 23 of 1993 which exempts the first ten lakhs of turnover from additional sales tax and whether the turnover can be apportioned so that the initial Rs. 10 lakhs is not liable to additional tax. - HELD THAT: - The Court accepted the contention based on the amendment to Section 2(1)(a) of the Tamil Nadu Additional Sales Tax Act, 1970 (Act 23 of 1993) effective 1 April 1993, and the clarifying circular of the Special Commissioner and Commissioner of CT dated 29.4.1993. The circular demonstrates by examples that where a dealer's inter state sales turnover falls within the threshold rendering additional sales tax zero for the first Rs. 10 lakhs, the local effective rate must be computed without including any additional sales tax component for that initial slab (example showing basic local rate plus surcharges giving 3.6%). The Tribunal's view that turnover could not be split is inconsistent with the circular's explanation that the initial Rs. 10 lakhs is not subject to additional sales tax and therefore cannot be passed on. Applying this interpretive guidance, the Court held that the petitioner should receive the benefit of the amendment for the subject assessment year and remitted the matter to the Assessing Officer for computation and assessment in accordance with that position.

Orders of assessment and confirmation thereupon set aside; matter remitted to the Assessing Officer with direction to exclude additional sales tax on the first Rs. 10 lakhs of the petitioner's turnover for 1994-95 and reassess accordingly.

Interpretive effect of departmental circular on tax computation - penalty relief consequent upon reassessment - Whether the penalty levied on the petitioner is liable to be set aside to the extent attributable to levy of additional sales tax on the first Rs. 10 lakhs. - HELD THAT: - Because the Court directed that additional sales tax should not have been levied on the initial Rs. 10 lakhs of turnover, the levy of penalty that flowed from that tax assessment could not stand to the same extent. The Court therefore set aside the penalty insofar as it relates to the portion of tax attributable to the first Rs. 10 lakhs, leaving the Assessing Officer to recompute tax and consequential liability in conformity with the direction on additional tax.

Levy of penalty set aside to the extent it relates to additional sales tax improperly levied on the first Rs. 10 lakhs; consequential adjustment to follow reassessment.

Final Conclusion: Writ petitions partly allowed: assessment and appellate orders set aside and remitted to the Assessing Officer to give the benefit of Act 23 of 1993 by excluding additional sales tax on the first Rs. 10 lakhs of turnover for 1994-95; penalty consequentially set aside to that extent; no costs.

Levy of penalty under Section 27(3) of the TNVAT Act - willful suppression / mens rea for penalty - non speaking assessment order - appellate/tribunal jurisdiction and scope

Levy of penalty under Section 27(3) of the TNVAT Act - willful suppression / mens rea for penalty - non speaking assessment order - Whether the Tribunal was correct in restoring the penalty when the Assessing Officer had not recorded any finding of willful suppression in the assessment order or in the prerevision notice. - HELD THAT: - The Assessing Officer's prerevision notice proposed penalty but did not assign reasons or record a prima facie finding of mens rea to justify invoking Section 27(3). The assessment order confirmed the assessment but contained no discussion or findings explaining why penalty was to be levied or why the assessee's objections were unsustainable; thus the order was non speaking on the penalty issue. The First Appellate Authority correctly applied the principle that mens rea or willful suppression must be placed on record to sustain a penalty, relying on established precedent, and accordingly deleted the penalty. The Tribunal, by restoring the penalty, embarked on fact finding and adjudication of an issue that had never been adjudicated by the Assessing Officer at first instance and where no prima facie finding had been recorded; in doing so it exceeded its appellate jurisdiction and converted itself into a court of first instance. The High Court found this to be a jurisdictional error and reinstated the First Appellate Authority's order. [Paras 6, 7, 8]

The Tribunal's order restoring the penalty is set aside and the First Appellate Authority's order deleting the penalty is restored.

Final Conclusion: Tax case revision allowed; Tribunal's order set aside and the First Appellate Authority's order deleting the penalty restored, with the question of law answered in favour of the assessee.

Mandatoriness of directives issued by the Reserve Bank of India under Section 110A(1)(iii) of the Maharashtra Co operative Societies Act - distinction between executive/administrative order and quasi judicial order in supersession/suspension of co operative boards - absence of requirement for show cause notice and personal hearing where Registrar acts under RBI requisition - scope of discretion under Section 110A(1)(iii) - vesting of suspension/supersession decision with RBI - conformity of amendment to Section 110A(1)(iii) with Article 243ZL of the Constitution - non applicability of Section 102 procedure when acting under RBI directives under Section 110A(1)(iii) - power of RBI to require supersession/suspension of board of a Central Co operative Bank under the combined scheme of the Banking Regulation Act and Section 110A(1)(iii) of the MCS Act - limited scope of judicial review of Registrar's compliance with mandatory RBI directives

Absence of requirement for show cause notice and personal hearing where Registrar acts under RBI requisition - executive/administrative order - Registrar was not required to issue show cause notice or grant personal hearing before supersession and appointment of administrator pursuant to RBI directives - HELD THAT: - The Court found that the order of the Registrar superseding the Board and appointing an administrator was passed in mandatory compliance with the RBI's requisition under Section 110A(1)(iii) and is of an executive/administrative character. The established precedents and the construction of Section 110A(1)(iii) lead to the conclusion that no quasi judicial procedure (show cause notice and personal hearing) is prescribed for the Registrar when acting on the RBI's written requisition; hence, procedural safeguards of hearing are not required at that stage. [Paras 58, 60, 66, 68]

No show cause notice or personal hearing was required before the Registrar acted on the RBI directive; the order was administrative and not quasi judicial.

Scope of discretion under Section 110A(1)(iii) - vesting of suspension/supersession decision with RBI - mandatoriness of directives issued by the Reserve Bank of India under Section 110A(1)(iii) of the Maharashtra Co operative Societies Act - Registrar has no discretion to refuse or alter RBI's direction to suspend or supersede the board; the choice between suspension and supersession rests with RBI - HELD THAT: - On construction of Section 110A(1)(iii) and consistent Supreme Court and High Court precedents, the Court held that the phrase 'as the case may be' and related language confer the discretion to select suspension or supersession on the RBI when it issues a requisition. Once RBI directs supersession or suspension, the Registrar is bound to comply and cannot substitute his own discretion to suspend instead of superseding. [Paras 23, 30, 66, 69, 78]

No discretionary power vests in the Registrar to disregard or modify RBI's directive; the RBI alone decides suspension vs. supersession and the Registrar must implement it.

Conformity of amendment to Section 110A(1)(iii) with Article 243ZL of the Constitution - repugnancy and constitutional primacy - Amendment substituting five years with one year in Section 110A(1)(iii) is in conformity with Article 243ZL and not repugnant thereto - HELD THAT: - The Court compared Article 243ZL (including provisos) with the amendment to Section 110A(1)(iii) effected in 2013 and observed that the reduced period to one year accords with the fourth proviso to Article 243ZL for banking co operative societies. The constitutional validity of the amendment was not challenged and the Court found no repugnancy between Article 243ZL and the amended statutory provision. [Paras 63, 64, 65, 70]

The 2013 amendment to Section 110A(1)(iii) conforms with Article 243ZL and Article 243ZL does not prevail over the amended provision.

Power of RBI to require supersession/suspension of board of a Central Co operative Bank under the combined scheme of the Banking Regulation Act and Section 110A(1)(iii) of the MCS Act - preservation of Banking Regulation Act powers - RBI is empowered to issue directives under Section 110A(1)(iii) to supersede/suspend the board of a Central Co operative Bank and to require appointment of administrators - HELD THAT: - Considering the status of respondent bank as a Central Co operative Bank and relevant provisions of the Banking Regulation Act, the Court held that RBI possesses power to examine a co operative bank's affairs and to requisition the Registrar under Section 110A(1)(iii). The Court noted that the Banking Regulation Act's provisions are preserved by constitutional provisos and that RBI's requisitioning power operates in conjunction with Section 110A(1)(iii). [Paras 71, 75, 80]

RBI has authority to direct supersession or suspension of the board of a Central Co operative Bank under the statutory scheme.

Non applicability of Section 102 procedure when acting under RBI directives under Section 110A(1)(iii) - distinct legislative schemes - winding up versus mandatory compliance with RBI requisition - Registrar is not required to follow Section 102 winding up procedure when acting under RBI directives under Section 110A(1)(iii) - HELD THAT: - The Court differentiated the functions and triggering events of Section 102 (winding up) from the Registrar's duty to comply with RBI requisitions under Section 110A(1)(iii). It concluded the two provisions operate in different fields and circumstances; compliance with RBI directives does not oblige the Registrar to adopt Section 102's enquiry/hearing requirements. [Paras 31, 72, 73]

Procedure under Section 102 is not applicable to Registrar's compliance with RBI directives under Section 110A(1)(iii).

Limited scope of judicial review of Registrar's compliance with mandatory RBI directives - judicial restraint where RBI has granted opportunities to improve bank affairs - Judicial interference is limited and the writ court will not substitute its judgment for RBI's where Registrar acted in mandatory compliance with RBI directives and no mala fides is alleged - HELD THAT: - Relying on precedent, the Court emphasised the narrow scope of review when the Registrar implements an RBI requisition issued to protect depositors and public interest. The petitioners did not impugn the RBI's requisition itself or allege malafide; on that basis the Court declined to interfere with the Registrar's administrative act. [Paras 66, 82, 83]

The High Court will not interfere with Registrar's compliance with RBI directives absent challenge to the requisition itself or proof of mala fides.

Appointment of sole administrator versus board of administrators - Registrar's implementation latitude - Appointment of a sole administrator by the Registrar (rather than a Board of Administrators as requested by RBI) does not invalidate the supersession order - HELD THAT: - Although RBI had requested constitution of a 'Board of Administrators', the Court held that the Registrar's appointment of a sole administrator in compliance with the RBI directive did not render the order infirm. The Court found no ground to set aside the Registrar's choice of administrator when acting pursuant to the mandatory requisition. [Paras 11, 71]

The Registrar's appointment of a sole administrator is not a ground for quashing the supersession order.

Final Conclusion: Writ Petition dismissed; the Registrar of Co operative Societies was bound to act on the RBI's mandatory requisition under Section 110A(1)(iii), no show cause or personal hearing was required, the 2013 amendment to Section 110A(1)(iii) conforms with Article 243ZL, RBI possesses power to direct supersession/suspension of a Central Co operative Bank's board, and the court will not interfere with the Registrar's administrative compliance absent challenge to the RBI requisition or mala fides.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal of statutory presumption - legally enforceable debt for the purpose of Section 138 of the Negotiable Instruments Act - presentation within six months and proviso to Section 138 - cheque issued as security - acquittal under Section 255(1) Cr.P.C.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal of statutory presumption - legally enforceable debt for the purpose of Section 138 of the Negotiable Instruments Act - Whether the appellant proved that the cheques were issued in discharge of a legally enforceable debt or liability so as to attract the presumption in favour of the payee under Section 139. - HELD THAT: - The court recounted the ingredients of Section 138 and the statutory presumptions under Sections 118 and 139, observing that those presumptions arise only if it is admitted or proved that the cheques were issued in discharge of a legally enforceable debt or liability. Although the accused did not dispute his signatures, he stated in his Section 313 examination that the cheques were issued as security. The complainant (PW1) admitted that the cheques were handed over two years prior to presentation and the complaint and deposition lacked particulars of the underlying transaction. The trial court's earlier finding (Ext.D1) further undermined the plausibility of the complainant's case. On these materials the High Court held that the appellant failed to prove that the cheques were issued in discharge of a legally enforceable debt and that the statutory presumption was not established or rebutted in the appellant's favour. [Paras 7, 8, 9, 10, 13]

The presumption under Section 139 was not made out; the appellant failed to prove that the cheques were issued in discharge of a legally enforceable debt.

Presentation within six months and proviso to Section 138 - Whether the cheques were presented within the period required by the proviso to Section 138 so as to maintain the complaint. - HELD THAT: - The court applied the proviso to Section 138, which requires presentation within six months from the date on which the cheque is drawn or within the period of its validity. It was an uncontroverted fact (admitted by PW1) that the cheques were handed over two years prior to presentation. The court concluded that the cheques were not presented within the statutory six-month period and that this defect was fatal to the appellant's claim under Section 138. [Paras 11, 12]

The cheques were not presented within the period prescribed by the proviso to Section 138; non-compliance defeats the complaint.

Cheque issued as security - acquittal under Section 255(1) Cr.P.C. - Whether the trial court's finding of acquittal on the basis that the cheques were issued as security and the defence version was more probable warranted interference. - HELD THAT: - The accused's admission that the cheques were given as security, coupled with inconsistencies in the complainant's account (including timing and place of delivery) and the earlier related magistrate's finding (Ext.D1), led the trial court to accept the defence version and record an acquittal under Section 255(1) Cr.P.C. The High Court reviewed the evidence and found no material to compel a different conclusion; a remand was held to be unnecessary and would be futile given the failure of the appellant to prove the essential elements under Section 138. [Paras 7, 8, 10, 13]

No interference with the trial court's acquittal; the defence explanation that the cheques were security and the shortcomings in the prosecution case justified the acquittal.

Final Conclusion: The High Court dismissed the appeal: the appellant failed to establish that the cheques were issued in discharge of a legally enforceable debt and they were not presented within the statutory period under the proviso to Section 138; there was no reason to interfere with the trial court's acquittal.

Presumption under Section 139 of the Negotiable Instruments Act - presumptions under Section 118 of the Negotiable Instruments Act - rebuttal on preponderance of probabilities - essential ingredient of Section 138 - cheque issued for discharge of legally enforceable debt - blank cheque signed by maker attracts presumption under Section 139 - presumptions as evidentiary burden distinct from presumption of innocence

Presumption under Section 139 of the Negotiable Instruments Act - presumptions under Section 118 of the Negotiable Instruments Act - essential ingredient of Section 138 - cheque issued for discharge of legally enforceable debt - rebuttal on preponderance of probabilities - Applicability and effect of statutory presumptions under Sections 118 and 139 in proceedings under Section 138 and the standard required to rebut them. - HELD THAT: - The Court held that Sections 118 and 139 raise rebuttable presumptions favouring the complainant that the cheque was issued for discharge of a legally enforceable debt. Proceedings under Section 138 are quasi criminal but the prosecution may discharge its obligation with the assistance of these statutory presumptions. Consistent with Rangappa and later authorities, the accused seeking to rebut the presumption under Section 139 must place sufficient material to produce a probable defence; the standard to rebut is that of preponderance of probabilities and not proof beyond reasonable doubt. If the accused raises a defence that makes the complainant's case improbable on balance of probabilities, the prosecution can fail; otherwise the presumption stands and evidence of the complainant is to be accepted. [Paras 13, 14, 15, 25]

Statutory presumptions under Sections 118 and 139 apply and, absent a defence that rebuts them on the preponderance of probabilities, support conviction under Section 138.

Blank cheque signed by maker attracts presumption under Section 139 - defence of loss/theft of cheque - evidentiary value of inconsistent defence and conduct of accused - Whether the accused successfully rebutted the statutory presumption by proving that the cheque was lost/stolen or that it was not issued towards discharge of any debt. - HELD THAT: - On the facts the Court found no dispute as to the accused's signature on the cheque and accepted the complainant's evidence that she advanced the loan and presented the cheque which was dishonoured. The accused's defence of loss/theft was inconsistent - varying between loss in transit at Bengaluru and misplacement in office at Gulbarga - and documentary and oral material produced by the accused did not establish theft or loss in a manner that would probabilise his case. There was no evidence that the complainant had access to the accused's cheque books or that a signed cheque was misplaced by the accused and later misused. The accused did not show that he had not authorised filling of material particulars or that the cheque was not issued for repayment; he also failed to produce evidence of informing the bank about loss of the cheque leaf or of lodging a charge against the complainant. The Trial Court's acceptance of the prosecution case on these points was held to be correct; the Appellate Court's contrary conclusion was characterised as erroneous and mechanical. [Paras 20, 21, 22, 24, 26]

The accused failed to rebut the presumption; the defence of loss/theft was disbelieved and the conviction under Section 138 is to be upheld.

Final Conclusion: Appeal allowed; the appellate court's order of acquittal is set aside and the trial court's conviction and sentence under Section 138 of the Negotiable Instruments Act are affirmed, the respondent to pay the fine or undergo the sentence as directed by the trial court.

Emergency Arbitrator as an Arbitral Tribunal - Enforceability of interim measures under Section 17(2) of the Arbitration and Conciliation Act - Party autonomy to incorporate institutional rules and emergency arbitration - Group of Companies doctrine and inclusion of non signatories in arbitration - Composite transaction / integrated bargain and intention of the parties - Prima facie jurisdiction and kompetenz kompetenz - Nullity of arbitral orders - Assessment whether protective rights amount to control for FEMA purposes - Enforcement remedies under Order XXXIX Rule 2 A and Order XXI of the CPC

Emergency Arbitrator as an Arbitral Tribunal - Enforceability of interim measures under Section 17(2) of the Arbitration and Conciliation Act - Party autonomy to incorporate institutional rules and emergency arbitration - Legal status of an Emergency Arbitrator and whether the Emergency Arbitrator's interim order is an order under Section 17(1) enforceable under Section 17(2). - HELD THAT: - The Court held that an Emergency Arbitrator appointed under institutional rules (SIAC Schedule 1) is an arbitrator for all intents and purposes because parties, by agreement, may incorporate institutional rules and determine arbitral procedure. Sections 2(6), 2(8) and 19(2) of the Act permit party autonomy to adopt such rules; Rule 1.3 of SIAC and the incorporated SIAC Schedule empower the Emergency Arbitrator to grant interim measures and rule on jurisdiction. An interim order by the Emergency Arbitrator thus falls within the ambit of Section 17(1) and is enforceable under Section 17(2), subject to the Tribunal's power to reconsider or modify such orders once constituted. The Court rejected the contention that Section 17(2) is confined to orders of a subsequently constituted tribunal and found no need for legislative amendment to recognise emergency arbitration under the current framework. [Paras 144, 145, 146, 150, 188]

The Emergency Arbitrator is an arbitrator within the meaning of the Act; the interim order dated 25 October 2020 is an order under Section 17(1) and is enforceable under Section 17(2).

Group of Companies doctrine and inclusion of non signatories in arbitration - Composite transaction / integrated bargain and intention of the parties - Prima facie jurisdiction and kompetenz kompetenz - Whether the Emergency Arbitrator correctly applied the Group of Companies doctrine to treat Future Retail Limited (FRL), a non signatory, as a proper party to the arbitration. - HELD THAT: - Applying settled Supreme Court tests (Chloro, Cheran, MTNL), the Court found that the Emergency Arbitrator properly applied the Group of Companies doctrine. The material indicia - direct relationship between signatory and non signatory, commonality of subject matter, concurrent and interlinked negotiations, single integrated transaction, statutory disclosures by FRL, coordinated conduct, financial flows and the purpose of the arrangements - together prima facie demonstrate the mutual intention to bind signatories and the non signatory. The Court endorsed the Emergency Arbitrator's nine factor analysis and concluded that including FRL in the arbitration proceedings served the ends of justice and complied with the consent based enquiry; further, the objection that this doctrine is confined to Section 8 proceedings was rejected as contrary to Supreme Court precedent. [Paras 166, 167, 168, 169, 189]

The Emergency Arbitrator correctly invoked the Group of Companies doctrine; FRL is prima facie a proper party to the arbitration.

Nullity of arbitral orders - Enforceability of interim measures under Section 17(2) of the Arbitration and Conciliation Act - Whether the Emergency Arbitrator's interim order of 25 October 2020 is a nullity (in particular insofar as FRL is concerned). - HELD THAT: - The Court examined the plea of 'nullity' and found it vague and unsubstantiated. The respondents did not plead the legal foundations or essential ingredients of nullity, nor did they demonstrate that the agreements themselves were void. The Emergency Arbitrator had considered and rejected challenges to jurisdiction and to the legality of treating the agreements as a composite transaction. The Single Judge's prima facie observations in earlier proceedings did not amount to a final determination rendering the EA order void. On the material before the Court, the EA order is not a nullity. [Paras 172, 173, 174, 175, 190]

The interim order is not a nullity; the challenge to its validity is rejected.

Assessment whether protective rights amount to control for FEMA purposes - Composite transaction / integrated bargain and intention of the parties - Whether treating the related agreements as a single integrated transaction would result in the petitioner acquiring control over FRL and thus violating FEMA / FDI rules. - HELD THAT: - The Emergency Arbitrator (and this Court) analysed the structure and regulatory disclosures and concluded prima facie that the petitioner's rights were protective, special and material but did not amount to control of FRL. The investment was through an Indian owned controlled entity (FCPL) and the protective rights, as evidenced by disclosures to regulators and the terms of the agreements, did not translate into impermissible control under FEMA. The Court agreed that the composite reading of the agreements, for the purposes of jurisdiction and interim relief, does not itself amount to illegality under FEMA. [Paras 172, 173, 174, 175, 191]

Treating the agreements as a single integrated transaction does not, on the material before the Court, amount to petitioner's control of FRL or a violation of FEMA/FDI rules.

Enforcement remedies under Order XXXIX Rule 2 A and Order XXI of the CPC - Interim enforcement of arbitral orders - Whether the Emergency Arbitrator's interim order should be enforced and what consequential judicial measures were appropriate for non compliance. - HELD THAT: - Having found the EA order enforceable and not a nullity, the Court proceeded to enforce it. The respondents were found to have willfully violated the EA order; the Court invoked civil enforcement powers (Order XXXIX Rule 2 A and Order XXI) to attach assets of respondents 1-13, issued show cause notices for possible civil detention, directed filing of affidavits of assets, and imposed costs. The Court recorded that enforcement by civil process was appropriate to give effect to the interim arbitral relief now deemed an order of the Court under Section 17(2). [Paras 194, 195, 196, 197, 198]

The EA order is enforced: assets of respondents 1-13 attached; show cause notices issued; directions given for affidavits and compliance; costs awarded to be deposited as directed.

Final Conclusion: The Court upheld the Emergency Arbitrator's jurisdictional and prima facie merits findings: an Emergency Arbitrator appointed under incorporated institutional rules is an arbitrator and its interim order of 25 October 2020 is an order under Section 17(1) enforceable under Section 17(2). The Group of Companies doctrine was correctly applied to include FRL as a prima facie party; the EA order is not a nullity; treating the agreements as an integrated transaction does not, on the material before the Court, amount to control in violation of FEMA; accordingly the EA order is enforced and consequential civil enforcement measures (asset attachment, show cause notices, compliance directions and costs) were directed.

Section 138 of the Negotiable Instruments Act, 1881 - presumption under Section 139 of the Negotiable Instruments Act - service of statutory notice of dishonour - cheque issued as security versus cheque issued in discharge of debt or liability - reverse burden of proof on drawer

Service of statutory notice of dishonour - Section 138 of the Negotiable Instruments Act, 1881 - Validity of service of legal notice regarding dishonour of cheques upon the petitioner. - HELD THAT: - The courts below found that the complainant sent the legal notice by two modes-registered post and courier-and produced postal certification (Exhibit-6) recording delivery of the registered letter to the payee on 19.08.2004 whereas the courier copy was served upon the petitioner's son. The High Court upheld the concurrent finding that the registered post constituted valid service on the petitioner after appreciation of Exhibit-5 and Exhibit-6. The petitioner's contention that service upon his son via courier negates service was rejected because the registered post delivery to the petitioner was separately established by the postal certificate and relied upon by the lower courts. [Paras 15, 16, 17]

Notice was validly served upon the petitioner by registered post and the contention based on service upon the son is without merit.

Presumption under Section 139 of the Negotiable Instruments Act - cheque issued as security versus cheque issued in discharge of debt or liability - reverse burden of proof on drawer - Section 138 of the Negotiable Instruments Act, 1881 - Whether the cheques were issued as security/advance (and thus not actionable under Section 138) or were issued in discharge of an existing debt/liability attracting Section 138, and whether the drawer discharged the statutory presumption. - HELD THAT: - The complainant's case described an investment arrangement where he advanced funds and was to receive 40% of profit; thereafter the accused issued cheques which were dishonoured. The High Court applied the statutory presumption under Section 139 that a cheque is drawn for discharge of debt or liability. Noting that the accused did not lead defence evidence and admitted certain facts under Section 313 (including the business arrangement and that he wrote the letter seeking further funds), the Court held that the petitioner failed to discharge the reverse burden cast by Section 139. Reliance on the Supreme Court decision distinguishing advances paid by way of advance payment was considered, but the Court found the material facts and the presumption supported conviction. The lower courts' concurrent conclusion that the essential ingredients of Section 138 were made out was therefore upheld. [Paras 18, 19, 20, 21, 22]

The cheques were properly treated as issued in discharge of liability under the presumption of Section 139, the petitioner did not rebut the presumption, and conviction under Section 138 is upheld.

Final Conclusion: The revision petition is dismissed: the High Court upheld the lower courts' concurrent findings that the statutory notice was validly served and that, on the record and in view of the presumption under Section 139 (not rebutted by the petitioner), the offence under Section 138 of the Negotiable Instruments Act is made out; bail bonds are cancelled and records are remitted to the trial court.

Electronic records admissibility under Section 65B - Certificate requirement under Section 65B - Timing of Section 65B certificate - at marking of documents - Application to produce electronic evidence - Recall of witness under Section 311 Cr.P.C. - Expert opinion on handwriting under Section 45 Indian Evidence Act - Admissibility of handwriting evidence where signature is not disputed - Precedential guidance from Bir Singh and State by Karnataka Lokayukta v. M.R. Hiremath

Electronic records admissibility under Section 65B - Certificate requirement under Section 65B - Timing of Section 65B certificate - at marking of documents - Application to produce electronic evidence - Application under Section 65B of the Indian Evidence Act seeking permission to produce electronic documents was allowed subject to production of the statutory certificate at the time of marking the documents. - HELD THAT: - The trial Court had rejected the application because the electronic documents were not accompanied by the certificate contemplated by Section 65B. The High Court accepted the view in State by Karnataka Lokayukta v. M.R. Hiremarth that the certificate is necessary at the time of marking the document though it need not accompany the charge-sheet. Accordingly, rejection of the application on the sole ground of absence of the certificate was held to be erroneous. The petitioner is permitted to produce the electronic documents provided the certificate as required under Section 65B is placed while marking the documents in evidence. [Paras 2, 4, 7]

Order rejecting the Section 65B application is quashed; petitioner may produce the electronic documents with the Section 65B certificate at the time of marking.

Recall of witness under Section 311 Cr.P.C. - Application to produce electronic evidence - The Trial Court's rejection of the application under Section 311 Cr.P.C. to recall DW.1 was partly set aside and the witness was directed to be recalled to lead further evidence upon production of the Section 65B certificate. - HELD THAT: - In view of the High Court's direction permitting production of electronic records with the requisite certificate, the accused must be given the opportunity to prove the defence. Therefore DW.1, who had been examined earlier, is to be recalled and allowed to adduce further evidence by placing the Section 65B certificate while marking the documents. [Paras 6, 7]

Order rejecting the application under Section 311 Cr.P.C. is quashed insofar as it denies the recall of DW.1; DW.1 shall be recalled and permitted to lead further evidence with the Section 65B certificate.

Expert opinion on handwriting under Section 45 Indian Evidence Act - Admissibility of handwriting evidence where signature is not disputed - Precedential guidance from Bir Singh - The Trial Court's rejection of the application under Section 45 of the Indian Evidence Act for a handwriting expert was upheld. - HELD THAT: - The learned Magistrate rejected the Section 45 application because the accused did not dispute the signature on the cheque. Applying the ratio in Bir Singh, the High Court found that a contention regarding different handwritings on other documents does not warrant expert examination when the signature on the cheque itself is not contested. Consequently, no error was found in refusing the request for handwriting expert evidence. [Paras 3, 5, 7]

Order rejecting the Section 45 application is confirmed.

Final Conclusion: Writ petition allowed in part: the Magistrate's rejection of the Section 65B and Section 311 applications is quashed and the petitioner permitted to produce electronic documents with the Section 65B certificate and to recall DW.1 to lead further evidence; the rejection of the Section 45 application is confirmed.