TaxTMI Updates e-Newsletter
Apr 04,2023

Revisional jurisdiction under Section 263 of the Income Tax Act, 1961 - Scope of "record" for revisional jurisdiction including subsequent proceedings - Effect of post assessment proceedings under Section 153A on revisional jurisdiction - Burden of proof under Section 68 in respect of unexplained credit - Duty of revisional authority to consider records available at the time of examination

Revisional jurisdiction under Section 263 of the Income Tax Act, 1961 - Duty of revisional authority to consider records available at the time of examination - Validity of the Principal Commissioner's assumption of jurisdiction and the order passed under Section 263 in light of records available at the time of examination. - HELD THAT: - The Court examined whether the PCIT, while exercising revisional jurisdiction, was entitled to disregard the reassessment/order completed under Section 153A dated 23.03.2015. The Tribunal applied settled jurisprudence that the expression "record" for the purpose of Section 263 is comprehensive and, by reason of the statutory explanation, includes all records relating to proceedings under the Act available at the time of the revisional examination. The Tribunal recorded that the Assessing Officer in the post search proceedings under Section 153A had inquired into the nature and source of the share capital and premium, issued notices under Section 133(6) to the shareholders, received their replies and accepted the share capital and premium without drawing any adverse inference. The PCIT's view that the 153A order was irrelevant was held to be legally untenable because the revisional authority was obliged to consider the post assessment records that formed part of the assessment record when he reconsidered the matter after the Tribunal's directions.

The PCIT could not lawfully ignore the post assessment order under Section 153A; the revisional order dated 30.03.2021 was not sustainable.

Effect of post assessment proceedings under Section 153A on revisional jurisdiction - Burden of proof under Section 68 in respect of unexplained credit - Whether facts and enquiries conducted during the Section 153A proceedings negatived the basis for interference under Section 263 in respect of additions under Section 68. - HELD THAT: - The Tribunal examined the material produced during the reassessment under Section 153A and found that the Assessing Officer had called for and verified the particulars of twenty five share subscribers, issued and received replies to notices under Section 133(6), and did not draw any adverse inference in the re assessment order dated 23.03.2015. Given that, and having regard to the statutory scope of "records" for revisional scrutiny, the Court agreed with the Tribunal that the post search enquiries demonstrated that the assessee had discharged the initial burden to explain the nature and source of credits under Section 68 for the year in question, and there was no valid basis to cancel or modify the original assessment by invoking Section 263.

The Tribunal rightly quashed the revisional order and granted relief to the assessee; the addition under Section 68 could not be sustained in the face of the enquiries and acceptance during the Section 153A proceedings.

Final Conclusion: The appeal is dismissed; the High Court upholds the Tribunal's decision setting aside the revisional order under Section 263 and answers the substantial questions of law against the revenue.

Estimation of net profit percentage - appellate interference on findings of fact - role of comparative profit levels of sister concern and prior years - condonation of delay

Estimation of net profit percentage - appellate interference on findings of fact - role of comparative profit levels of sister concern and prior years - Validity of the Income Tax Appellate Tribunal's determination of the assessee's net profit at 0.6% and whether that determination raised a substantial question of law warranting interference. - HELD THAT: - The Tribunal reduced the net profit percentage to 0.6% after noting the net profit levels declared by the assessee for AYs 2009-2010 to 2011-2012 (in the range of 0.2% to 0.29%), the estimation in the scrutiny proceedings being below one per cent, and by reference to the sister concern's estimated net profit. The Tribunal also observed that the nature of the business remained unchanged across years, the books were audited and no defects were pointed out by the authorities. These findings were factual, founded on contemporaneous comparative figures and scrutiny outcomes, and fell within the appellate forum's evaluative function. There was no fresh material before the Tribunal warranting reversal, nor any demonstrated legal error in the Tribunal's assessment approach. Consequently, the matter did not give rise to a substantial question of law.

Tribunal's finding that the net profit percentage was 0.6% is factually justified and does not raise a substantial question of law; appeal dismissed.

Final Conclusion: Delay in filing the appeal was condoned; on the merits the Tribunal's factual determination reducing the net profit to 0.6%-supported by prior years' figures, scrutiny estimates and comparison with a sister concern-was upheld and the appeal dismissed for lack of any substantial question of law.

Capital gains - long-term versus short-term - period of holding - date of agreement versus date of registration for computing period of holding - deduction under section 54 - quashing of revisionary order in exercise of powers under section 263 - reopening assessment under section 148

Date of agreement versus date of registration for computing period of holding - period of holding - capital gains - long-term versus short-term - deduction under section 54 - quashing of revisionary order in exercise of powers under section 263 - Whether the Principal Commissioner may direct recharacterisation of the assessee's capital gain as short-term on the basis of date of registration, thereby denying deduction under section 54, when the assessee had executed an earlier agreement of sale and paid substantial amounts prior to registration. - HELD THAT: - The Tribunal accepted the assessee's factual position that an agreement for purchase was executed on 10/11/2009 and substantial consideration was paid, although the final sale deed was registered on 12/12/2013 and the property was sold on 26/03/2015. Applying the principle in CIT v. S.R. Jeyashankar and Circular No.471, the Tribunal held that where rights in a property flow from an earlier agreement (and the allottee/purchaser has paid substantial amounts and obtained enforceable rights), the date of that agreement may determine the period of holding for capital gains purposes. The Principal Commissioner's conclusion treating the gain as short-term solely by reference to the registration date ignored the earlier agreement and the established precedent and was therefore not sustainable. Because deduction under section 54 is available only for long-term capital gains, the Tribunal found that the approach of the Principal Commissioner-disallowing section 54 and directing taxation as short-term capital gain-was erroneous. For these reasons the revisionary order issued under section 263 was quashed and the assessee's appeal allowed. [Paras 5, 6]

Order under section 263 quashed; assessee entitled to have period of holding and long-term status determined having regard to the earlier agreement and thereby to claim deduction under section 54.

Final Conclusion: The Tribunal allowed the appeal, quashed the Principal Commissioner's direction under section 263 to treat the gain as short-term, and restored the assessee's entitlement to have the capital gain treated as long-term (and the section 54 deduction considered) on the basis of the earlier agreement and the applicable precedent.

Reopening of assessment beyond four years for escapement of income - failure to disclose fully and truly all material facts (proviso to section 147) - reason to believe - change of opinion

Reopening of assessment beyond four years for escapement of income - failure to disclose fully and truly all material facts (proviso to section 147) - reason to believe - Validity of reopening assessment proceedings initiated under section 147/148 where reasons recorded do not allege non disclosure of material facts necessary for assessment in cases reopened beyond four years - HELD THAT: - The Tribunal examined the typed reasons recorded by the Assessing Officer for issuing notice under section 148 and found no allegation that the assessee had failed to disclose fully and truly all material facts necessary for assessment. In view of the assessment having been completed under section 143(3) and the notice being issued beyond the four year period, the proviso to section 147 mandates that the reasons must indicate that there was no full and true disclosure of material facts. The reasons recorded lacked that necessary ingredient and therefore did not satisfy the statutory requirement for reopening beyond four years. The Tribunal accepted the legal position urged by the assessee and noted support from authorities relied upon by it, concluding that the AO's reasons were not in conformity with section 147 and that the reopening was therefore bad in law. [Paras 7]

Reopening under section 147/148 is invalid because the reasons recorded do not allege non disclosure of material facts required for reopening beyond four years; the AO's order is bad in law and the ground is allowed.

Final Conclusion: The appeal is partly allowed: the reopening notice and consequent proceedings under Sections 147/148 are set aside for want of requisite reasons alleging failure to disclose fully and truly all material facts where reopening was beyond four years; other grounds are left open.

Condonation of delay on the basis of advice of chartered accountant - exercise of revisional jurisdiction under Section 263 - erroneous and prejudicial to interests of Revenue - requirement of filing Form No. 67 and compliance with Rule 128(8) and CBDT Notification - remand for fresh decision by Assessing Officer with opportunity of hearing

Condonation of delay on the basis of advice of chartered accountant - precedential value of affidavit of chartered accountant - Delay of 284 days in filing the appeal was to be condoned and the appeal admitted. - HELD THAT: - The assessee and her Chartered Accountant filed affidavits stating that the assessee was advised not to file an appeal because the PCIT had only set aside the assessment for re examination. The Tribunal noted that the affidavits were not controverted by the Revenue and relied on judicial precedents where delay was condoned when the plea of mistaken advice by a professional was supported by an affidavit. Having regard to these facts and the decisions relied upon by the assessee, the Tribunal found sufficient cause for the delay and exercised discretion to condone the delay and admit the appeal. The Tribunal distinguished or found inapplicable the line of authority relied on by the Department to reject condonation. [Paras 4]

Delay condoned and appeal admitted.

Exercise of revisional jurisdiction under Section 263 - erroneous and prejudicial to interests of Revenue - requirement of filing Form No. 67 and compliance with Rule 128(8) and CBDT Notification - remand for fresh decision by Assessing Officer with opportunity of hearing - The PCIT's order under Section 263 setting aside the assessment and directing denial of foreign tax credit because Form No. 67 was not filed in time was modified and the matter remanded to the Assessing Officer for fresh decision. - HELD THAT: - The Tribunal examined the assessment proceedings and found that the Assessing Officer conducted detailed inquiries under section 142(1) and considered the documents submitted by the assessee before passing the assessment under section 143(3). The PCIT issued a show cause and set aside the assessment on the ground that the AO had not examined the claim in relation to Rule 128(8) and that Form No. 67 was not filed within the due date as required by CBDT Notification No.9 dated 19.09.2017. The Tribunal held that, although the AO had not made a specific enquiry concerning Form No. 67 vis a vis Rule 128(8) and the CBDT notification, it could not be said that no enquiry was made or that the assessment order was totally erroneous and prejudicial to revenue. Rather than directing an outright denial of relief for non filing of Form No. 67, the Tribunal concluded that the PCIT should have directed the AO to call for requisite details and decide the issue in accordance with law after affording the assessee a reasonable opportunity of being heard. Accordingly, the Tribunal modified the PCIT order and directed the Assessing Officer to redo the assessment in accordance with law without being influenced by the PCIT's direction in para 14 of its order. [Paras 8, 9]

PCIT's order under Section 263 modified; matter remitted to Assessing Officer to redecide the claim for foreign tax credit in accordance with law after affording opportunity of hearing.

Final Conclusion: Delay in filing the appeal is condoned and the appeal is admitted; the PCIT's revisional order under Section 263 is modified and the matter is remitted to the Assessing Officer to re examine and decide the claim for foreign tax credit in accordance with law after affording the assessee a reasonable opportunity of being heard; appeal is partly allowed for statistical purposes.

Tax deduction at source (TDS) credit - Bar against direct demand on assessee under Section 205 - Liability of the deductor and assessee-in-default proceedings against deductor - Primary evidence of deduction as basis for allowing TDS credit

Tax deduction at source (TDS) credit - Bar against direct demand on assessee under Section 205 - Primary evidence of deduction as basis for allowing TDS credit - Liability of the deductor and assessee-in-default proceedings against deductor - Whether the assessee is entitled to TDS credit of Rs.10,11,000/- though the deductor did not deposit the amount or upload Form 26QB. - HELD THAT: - The Tribunal found on the material on record, including the registered agreement of sale cum GPA, that the vendee had deducted Rs.10,11,000/- as TDS from the sale consideration. Reliance was placed on the statutory scheme and judicial decisions holding that once tax is deducted at source, Section 205 operates to bar a direct demand on the assessee to the extent of the amount deducted, irrespective of whether the deductor has remitted the sum to the Central Government. The Tribunal observed that the scheme provides separate remedies against the person who deducted the tax (including treating him as an assessee-in-default and initiating recovery/penal action), and that it would be contrary to the statutory protection under Section 205 to make the deductee suffer by twice recovering the same tax. The Tribunal accepted that production of primary evidence showing deduction (the registered deed clause acknowledging deduction) is sufficient for granting credit and directed the CPC to allow the TDS credit, while leaving the department free to proceed against the deductor for non-deposit. [Paras 10, 11, 12, 14]

Credit of Rs.10,11,000/- shall be given to the assessee; the department may proceed against the deductor as provided under law.

Final Conclusion: The appeal is allowed: the Tribunal set aside the CIT(A)-NFAC order and directed the CPC to grant TDS credit of Rs.10,11,000/- to the assessee for A.Y.2019-20, leaving the department to pursue recovery/penal action against the deductor as per law.

Application of section 50C to determine consideration as per date of agreement where advance is received - Admissibility and evidentiary value of undated loose sheets seized during search for proving unexplained cash/on money - Obligation under Rule 46A when appellate authority relies on evidence on record

Application of section 50C to determine consideration as per date of agreement where advance is received - Whether the fair market value for computing capital gains under section 50C should be adopted as on the date of agreement/advance received instead of the date of registration where the agreement and receipt of advance preceded registration - HELD THAT: - The Tribunal held that the Assessing Officer relied solely on the date of registration of sale deeds to invoke section 50C, ignoring the agreement to sell and the receipt of advance in March 2016. The AO also relied on loose sheets without corroboration. Since the parties entered into agreement and the assessee received advances prior to registration, the delay in registration and subsequent increase in SRO value cannot alter the agreed consideration. The CIT(A) directed the AO to adopt the fair market value as on the date of the agreement, which the Tribunal concurred with, finding no reason to interfere. [Paras 6]

Addition under section 50C set aside; fair market value to be adopted as on the date of the agreement/advance (decision of CIT(A) upheld).

Obligation under Rule 46A when appellate authority relies on evidence on record - Whether Rule 46A required the CIT(A) to provide the Assessing Officer an opportunity to examine fresh evidence when the alleged advance was recorded in documents already available to the AO - HELD THAT: - The Tribunal noted that the advance was recorded in the registered sale deeds which were available to the AO during assessment proceedings and that no additional evidence was filed before the CIT(A). In these circumstances, the CIT(A)'s consideration of the matter did not attract the requirement of Rule 46A to afford the AO an opportunity to examine fresh evidence. The bench found that the CIT(A) acted within his powers. [Paras 7]

No violation of Rule 46A; no remand required for opportunity to AO (CIT(A)'s decision upheld).

Admissibility and evidentiary value of undated loose sheets seized during search for proving unexplained cash/on money - Whether undated loose sheets seized during search, lacking particulars such as dates, payees or payers, can be used as corroborative evidence to add alleged 'black' receipts to assessee's income - HELD THAT: - The Tribunal agreed with the CIT(A) that the loose sheets were undated and did not specify dates of payments, payees or payers, rendering them 'dumb' documents without corroborative evidence. The registered sale deeds expressly recorded the consideration admitted by the assessee. In absence of tangible corroboration, reliance on such incomplete loose sheets to conclude receipt of on money was unsustainable. The Tribunal also relied on the reasoning in the CIT(A)'s reliance on earlier Tribunal precedents that loose sheets without particulars do not justify additions. [Paras 9]

Addition based on loose sheets for alleged on money deleted; CIT(A)'s deletion upheld.

Admissibility and evidentiary value of undated loose sheets seized during search for proving unexplained cash/on money - Validity of addition of alleged cash receipt on sale of flat based on the same category of seized loose sheets - HELD THAT: - The Tribunal applied the same reasoning as with the plot sale on money: the Annexure containing the alleged cash amount was a seized loose sheet lacking requisite particulars and corroboration. The CIT(A) relied on jurisdictional precedent and found no merit in treating the entry in the loose sheet as establishing unexplained cash receipts. The Tribunal found no reason to interfere with that conclusion. [Paras 10]

Addition of alleged cash receipt on sale of flat deleted; CIT(A)'s deletion upheld.

Final Conclusion: Revenue's appeal dismissed on merits; the orders of the CIT(A) upholding adoption of consideration as on the date of agreement and deleting additions based on undated loose sheets are affirmed; cross objections by the assessee rendered infructuous.

Transfer pricing adjustment - application of turnover filter in comparables - advertisement and promotion (AMP) expenses as separate international transaction - Transactional Net Margin Method (TNMM) and benchmarking of trading segment - employee's contribution to Provident Fund - deposit before due date for deduction under Section 36(1)(va) and interaction with Section 43B

Application of turnover filter in comparables - transfer pricing adjustment - Exclusion of comparables whose turnover exceeds Rs.200 crores while benchmarking the software development segment. - HELD THAT: - The Tribunal followed the coordinate bench authority which held that turnover is a relevant criterion for selecting comparable companies and, where appropriate, companies with substantially higher turnover than the assessee may be excluded. Respectfully applying that precedent, the Tribunal held that the listed companies with turnover in excess of Rs.200 crores must be excluded from the comparable set for the software development segment. The remaining grounds relating to the SWD TP adjustment were not pressed and accordingly dismissed as not pressed. [Paras 11, 12]

Companies with turnover more than Rs.200 crores are excluded from the comparable set; other SWD grounds dismissed as not pressed.

Advertisement and promotion (AMP) expenses as separate international transaction - Transactional Net Margin Method (TNMM) and benchmarking of trading segment - transfer pricing adjustment - Whether AMP expenses can be treated as a separate international transaction and attract a separate TP adjustment when TNMM benchmarking of the trading segment including AMP costs was not rejected by the TPO. - HELD THAT: - Having regard to the facts that the AMP expenses formed part of the operating cost of the trading segment and that the TPO/AO accepted the trading segment margins (i.e. did not reject the ALP analysis for the trading segment), the Tribunal followed its coordinate-bench precedents which hold that AMP expenses, being part of the operating cost and not shown to arise from an agreement creating a separate international transaction, cannot be culled out as a separate international transaction for making an independent TP adjustment. Applying that reasoning to the present year - and noting that AMP costs are included in the trading segment's operating expenses and that no separate adjustment to the trading margin was made by the TPO - the Tribunal deleted the AMP-related TP adjustment. [Paras 14, 15, 16, 21, 22]

TP adjustment in respect of AMP expenses deleted; AMP expenses not treated as a separate international transaction where trading-segment margins were accepted.

Employee's contribution to Provident Fund - deposit before due date for deduction under Section 36(1)(va) and interaction with Section 43B - Allowability of deduction for employee's contribution to PF where deposit to statutory authorities was made after the due date for deposit but before filing of return. - HELD THAT: - The Tribunal applied the Supreme Court's decision in Checkmate Services (P.) Ltd. which held that amounts deducted from employees' wages and retained by the employer are required to be deposited on or before the due date prescribed under the relevant welfare enactment for the deduction to be allowable under the proviso to Section 36(1)(va); the non-obstante clause in Section 43B does not relieve the employer of that condition. Following that binding authority, the Tribunal held that the employee's contribution must be remitted before the due date to qualify as deduction and therefore dismissed the assessee's ground on this issue. [Paras 23, 24, 25]

Grounds challenging disallowance of employee's PF contribution dismissed; deduction not allowable where deposit was beyond the statutory due date.

Final Conclusion: The appeal is partly allowed: TP adjustment in respect of AMP expenses is deleted; exclusion of comparables with turnover above Rs.200 crores upheld for the SWD segment and other SWD grounds are not pressed; disallowance of employees' PF contribution under Section 36(1)(va) is sustained in view of Supreme Court precedent.

Transfer pricing adjustment - arm's length price - comparability analysis - turnover filter - range concept (35th-65th percentiles) - segmental profitability versus entity-level margin - deferred receivables as an international transaction - remand to TPO/AO for verification and recomputation

Turnover filter - comparability analysis - Exclusion of certain high turnover comparable companies from the dataset and direction to recompute ALP. - HELD THAT: - The Tribunal, following the coordinate bench precedent, held that companies whose current year turnover materially exceeds the assessee's turnover (i.e. exceed the upper turnover filter) should be excluded from the set of comparables. The bench directed the TPO to exclude the seven specified companies from the comparable set and to recompute the arm's length price accordingly, observing that turnover is a relevant criterion in comparability and that an upper limit must be applied consistently where a lower limit was applied by the TPO. [Paras 14]

Seven specified high turnover comparable companies are to be excluded and the TPO is directed to recompute ALP.

Range concept (35th-65th percentiles) - comparability analysis - arm's length price - Treatment of R.S. Software Ltd.'s multi year margins where upper turnover filter fails for certain years. - HELD THAT: - Applying Rule 10CA and related provisions, the Tribunal held that where a comparable company's earlier-year data fails the turnover (upper) filter, the margins for those years must be ignored in computing the weighted average/multi year dataset. The Tribunal directed that R.S. Software Ltd.'s margins for the years in which the upper turnover filter fails should be excluded from the dataset used for ALP computation. [Paras 17]

Margins of R.S. Software Ltd. for years failing the upper turnover filter shall be ignored for comparability and ALP computation.

Segmental profitability versus entity-level margin - transfer pricing adjustment - Validity of TPO's rejection of assessee's segmental profitability and remand for verification of allocation basis. - HELD THAT: - The Tribunal noted conflicting precedents and observed that the assessee's segmental statement (certified by a CA) uses head count to allocate common costs. In view of coordinate bench authority accepting head count allocation in comparable circumstances, the Tribunal did not decide the merits but remitted the issue to the TPO/AO for fresh consideration and verification of the segmental allocations and employee details, directing the assessee to furnish required information and cooperate. [Paras 31]

Issue remitted to TPO/AO for afresh consideration of segmental profitability and cost allocation; assessee to furnish details.

Comparability analysis - remand to TPO/AO for verification and recomputation - Exclusion/inclusion and comparability of specific companies (CG VAK Software & Exports Ltd. and I2T2 India Ltd.). - HELD THAT: - For CG VAK the Tribunal observed absence of segmental information and that the assessee did not raise the exclusion before TPO/DRP; the matter is remitted to TPO/AO to re consider exclusion keeping in mind Tribunal precedent (3DPLM). For I2T2, on facts that current year turnover is below the lower turnover threshold, the Tribunal upheld the TPO/DRP rejection and sustained exclusion. [Paras 24, 26]

CG VAK remitted to TPO/AO for fresh consideration; I2T2 exclusion upheld.

Deferred receivables as an international transaction - arm's length price - remand to TPO/AO for verification and recomputation - Notional interest on delayed receivables - remit for re computation applying accepted guidelines. - HELD THAT: - The Tribunal followed coordinate bench guidance that deferred receivables fall within the definition of international transaction and that ALP for such debt like items must be examined. Rather than deciding the precise rate or period, the Tribunal remitted the matter to the TPO/AO for benchmarking and recomputation of the adjustment (including consideration of invoice wise realization periods and appropriate rate basis), in line with precedent and after affording opportunity to the assessee. [Paras 35]

Matter remitted to TPO/AO for benchmarking and recomputation of notional interest on delayed receivables as an international transaction.

Remand to TPO/AO for verification and recomputation - Treatment of Rheal Software Pvt. Ltd. on account of RPT filter - verification directed. - HELD THAT: - The Tribunal, following coordinate bench precedent, observed conflicting contentions on application of the RPT (>15%) filter and directed remand to TPO to verify related party transactions of Rheal Software Pvt. Ltd. and to decide its comparability in light of Barracuda precedent and the guidance of the Tribunal. [Paras 20]

Issue remitted to TPO to verify RPT details of Rheal Software Pvt. Ltd. and to decide comparability.

Final Conclusion: The appeal is partly allowed: the Tribunal directed exclusion of specified high turnover comparables and ignored non comparable years for R.S. Software Ltd.; upheld exclusion of I2T2; and remitted several contested matters (segmental allocation, CG VAK comparability, Rheal RPT verification, and benchmarking of notional interest on delayed receivables) to the TPO/AO for fresh consideration and recomputation in accordance with the Tribunal's directions and applicable transfer pricing rules.

Reliance on seized documents as a whole - consistency in method of assessing undisclosed income across assessment years - presumption as to seized documents under section 292C - onus on the assessee to rebut presumption arising from search/seizure - inadmissibility of selective reliance on parts of a seized document - principle of separate assessment years and requirement for compelling reasons to depart from earlier approach - adoption of highest of unaccounted assets/unaccounted capital/unaccounted liability as basis for addition

Consistency in method of assessing undisclosed income across assessment years - reliance on seized documents as a whole - inadmissibility of selective reliance on parts of a seized document - principle of separate assessment years and requirement for compelling reasons to depart from earlier approach - Whether the Assessing Officer was justified in treating the value of unaccounted assets as undisclosed income for A.Y. 2013-14 when the assessee had consistently offered unaccounted capital as undisclosed income for the group and for other years. - HELD THAT: - The Tribunal accepted the finding of the CIT(A) that the assessee had a consistent accounting methodology by which it segregated unaccounted portions from the seized balance-sheets and offered unaccounted capital (after adjusting prior years' disclosures) as undisclosed income for successive assessment years. The Assessing Officer departed from this accepted approach for A.Y. 2013-14 by adopting the higher figure of unaccounted assets as the basis for addition, without raising any cogent doubt about the figures in the seized documents or giving strong and compelling reasons for changing the method already accepted in other assessment years and in respect of other group entities. The Tribunal relied on the settled principle that a document found during search is to be read as a whole and that departure from an earlier accepted approach across assessment years requires clear justification. In the facts of the case the AO did not cast doubt on the seized figures or the computation method and therefore the change of principle for the year under appeal was unsustainable. The addition made by adopting unaccounted assets in place of unaccounted capital was deleted.

Addition made by adopting unaccounted assets in place of the unaccounted capital offered by the assessee is deleted; the AO's departure from the earlier accepted method is held to be unjustified.

Presumption as to seized documents under section 292C - onus on the assessee to rebut presumption arising from search/seizure - adoption of highest of unaccounted assets/unaccounted capital/unaccounted liability as basis for addition - Whether the Assessing Officer had rebutted or cast doubt on ownership or correctness of figures in the seized balance-sheet so as to justify taxing the higher figure of unaccounted assets for A.Y. 2013-14. - HELD THAT: - The Tribunal noted that under the statutory presumption applicable to documents found in search proceedings the contents are presumed to be true unless rebutted. However, in this case the AO did not rebut the figures in the seized balance-sheet nor demonstrate that the seized entries did not belong to the assessee. The assessee had, as a matter of abundant caution, disclosed a sum for the year and had consistently offered unaccounted capital in adjoining years. Given absence of any challenge to the seized figures and lack of cogent reasons to treat the higher asset figure as income for the year, the AO could not validly convert the unaccounted assets into undisclosed income for A.Y. 2013-14.

Since the AO neither rebutted nor discredited the seized balance-sheet figures and gave no cogent reason for treating unaccounted assets as income, the addition based on the higher asset figure is not sustained.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for A.Y. 2013-14 and confirmed the deletion of the addition made by the Assessing Officer; grounds raised by Revenue are rejected for want of justification for departure from the method previously accepted and for failure to rebut the seized documents.

Allowability of statutory duties and taxes on payment basis under section 43B - deductibility of payments made under protest as statutory liabilities - treatment of royalty and related R&D cess as revenue or capital expenditure - application of transfer pricing principles and benchmarking of cross border royalty (TNMM) - disallowance of expenditure relatable to exempt income under section 14A and Rule 8D - tax treatment of gains on sale of mutual funds - capital gains v. business income (intention test) - allowability of provision for warranty as business expense (accrual accounting / AS 9) - disallowance under section 40(a)(i) for failure to deduct tax at source - permanent establishment and attribution issues under tax treaty - treatment of provisional liabilities for foreseen price increase as accrued deductible liability - allowance of weighted deduction for in house R&D under section 35(2AB) subject to DSIR approval verification - recomputation / verification powers of Assessing Officer on remitted issues

Allowability of statutory duties and taxes on payment basis under section 43B - deductibility of payments made under protest as statutory liabilities - Deletion of disallowances under section 43B in respect of various categories of duties and taxes and allowance of payments made under protest. - HELD THAT: - The Tribunal, following binding decisions of coordinate Benches and the jurisdictional High Court in the assessee's earlier years, held that (i) excise duty and R&D cess on finished vehicles included in closing stock were allowable under section 43B when actually paid (grounds 3.3-3.4); (ii) customs duty paid on inputs where exports and duty drawback issues were involved was allowable on payment basis (ground 3.5); (iii) customs duty/CVD on inputs in transit or to be adjusted against excise on finished products were allowable (grounds 3.8-3.9); (iv) customs duty included in valuation of closing stock was allowable on payment (ground 3.10); and (v) customs duty and sales tax paid under protest constituted statutory payments allowable under section 43B (grounds 3.11-3.12). On these items the Tribunal directed deletion of the impugned disallowances. The Tribunal also recorded that identical issues in prior years had been decided for the assessee and no contrary binding precedent was shown by Revenue.

Impugned disallowances under section 43B in respect of the specified items deleted; payments made under protest allowed as deduction.

Allowability of amounts forming part of RG 23A (unutilised credits) - remand for verification - Claim in respect of amounts forming part of RG 23A (unutilised MODVAT/credit balances) was remitted to AO for verification. - HELD THAT: - Relying on prior decisions and subsequent directions of the Delhi High Court, the Tribunal held that the claim in respect of RG 23A balances to the extent directly paid to customs authorities required factual verification. The matter was restored to the file of the Assessing Officer to verify the claim in accordance with the High Court's directions and allow deduction if found in order.

Issue restored to AO for verification and consequential relief if claim is established.

Withdrawal of add back of earlier 43B disallowances - remand - Claim for withdrawal of add back of amounts earlier disallowed under section 43B was remitted to AO for fresh decision. - HELD THAT: - The Tribunal noted that the question of withdrawal of add backs (amounts earlier added back to profit and subsequently received/adjusted) had been the subject of prior observances and orders in the assessee's earlier years. Following the coordinate Bench approach, the Tribunal set aside the issue and restored it to the Assessing Officer to decide afresh in accordance with those directions, affording the assessee an opportunity of hearing.

Grounds allowed for statistical purposes and issue remitted to AO for fresh adjudication.

Disallowance under section 14A read with Rule 8D - requirement of AO's satisfaction - Section 14A disallowance partly set aside and remitted to AO for limited verification of administrative expense component; interest component under Rule 8D disallowance reversed in part. - HELD THAT: - The Tribunal emphasised that Rule 8D can be invoked only if the AO, having regard to the accounts, records satisfaction that the assessee's claim is incorrect. On the facts the Tribunal found the Assessing Officer was not justified in mechanically applying Rule 8D to disallow interest costs where the assessee had sufficient interest free funds and where the AO had not adequately recorded requisite satisfaction; however, in respect of administrative expenses the Tribunal directed limited verification by AO of the suo moto disallowance and remitted the matter for quantification in accordance with law. Accordingly the grounds were partly allowed and remitted for limited purpose.

Disallowance under section 14A/Rule 8D partly set aside; AO to verify administrative expense claim and recompute disallowance as per law.

Treatment of royalty and related R&D cess as revenue or capital expenditure - application of transfer pricing principles and benchmarking of cross border royalty (TNMM) - Royalty payments and R&D cess treated as revenue expenditure; transfer pricing adjustment in respect of royalty deleted. - HELD THAT: - On facts identical to earlier assessment years, and relying on coordinate bench precedent, the Tribunal held that the payments to the foreign licensor were for limited licenses/know how and did not result in acquisition of enduring capital asset; accordingly the Assessing Officer's view of capitalisation was reversed and the royalty was allowed as revenue expenditure. Consequentially the R&D cess on royalty was also allowed. Separately, the transfer pricing adjustment (TPO/TPO driven ALP upward adjustment) in respect of royalty was held to be unsustainable on the facts and deleted, following the Tribunal's earlier reasoning that there was direct nexus between revenue and royalty and prior decisions applying TNMM at entity level.

Royalty and R&D cess allowed as revenue deductions; TP adjustment in respect of royalty deleted.

Provisional liability for Foreseen Price Increase (FPI) - accrual/deduction - Disallowance of provision for foreseen price increase deleted. - HELD THAT: - The Tribunal followed coordinate bench findings that FPI provisions represented accrued/crystallised liabilities arising from contractual understandings with suppliers and were computed on an established, consistently applied basis by the assessee; consequently the Assessing Officer's addition was deleted and the claim allowed.

Addition on account of FPI deleted.

Sharing of resources with related entities - scope for AO's factual determination - Ad hoc disallowance for sharing of resources set aside and remitted to AO for fresh decision after giving opportunity to assessee. - HELD THAT: - The Tribunal found the Assessing Officer's ad hoc disallowance unsupported by record and, following earlier Tribunal practice, set aside the disallowance and remitted the issue to the AO to determine any correct disallowance (if justified) after appropriate verification and hearing.

Impugned ad hoc disallowance set aside; matter restored to AO for fresh adjudication.

Allowability of Corporate Social Responsibility (CSR) expenditure under section 37(1) - Disallowance of CSR expenditure deleted; such expenditure held allowable for AY 2010 11. - HELD THAT: - Applying the Tribunal's prior reasoning and noting that Explanation 2 to section 37 (which excludes CSR after 1.4.2015) was not applicable to the year in issue, the Tribunal held that CSR expenditure incurred for promotion, goodwill and public awareness (including road safety and community development) was incurred for the purpose of business and therefore deductible under section 37(1). The AO was directed to delete the disallowance.

CSR expenditure deletion directed; disallowance deleted.

Club membership fee - business expediency test - Addition in respect of club membership fees deleted. - HELD THAT: - Following coordinate bench precedents in the assessee's earlier years, the Tribunal accepted that the club membership expenditure related to business purposes and commercial expediency and directed the AO to allow the expenditure.

Club membership fee allowed; disallowance deleted.

Gains on mutual funds - intention test; remand for factual determination - Question whether gains on mutual funds are capital gains or business income remitted to AO for fresh consideration. - HELD THAT: - The Tribunal observed that classification turns on factual matrix (intention, period of holding, frequency, accounting treatment, funding source). Noting earlier years' acceptance but different approach in the assessment, the Tribunal set aside the impugned treatment and restored the issue to the AO for fresh decision after considering all objections and binding precedents.

Issue remitted to AO for fresh adjudication on facts; allowed for statistical purposes.

Provision for warranty - accrual accounting and AS 9 - Provision for warranty allowed as business deduction. - HELD THAT: - Relying on binding decisions of the Delhi High Court and other precedents, the Tribunal held that provision for warranty made on accrual basis pursuant to established accounting practice (and AS 9) represented an ascertained liability and was deductible; AO directed to delete the addition.

Warranty provision allowed; disallowance deleted.

Disallowance under section 40(a)(i) for payments to non resident supplier - PE and attribution under tax treaty; remand - Disallowance under section 40(a)(i) in respect of purchases from SMC set aside and remitted to AO for fresh adjudication. - HELD THAT: - Given complex factual and treaty questions (existence of PE, dependent agent, place of management, attribution of profits), and in view of the assessee's contentions and authorities, the Tribunal found it appropriate to remit the matter to the AO to adjudicate afresh after affording opportunity to the assessee to lead material; the Tribunal observed that even on Revenue's case correct attribution would be much smaller than AO's ad hoc computation.

Impugned disallowance set aside; matter restored to AO for fresh decision and quantification.

Transfer pricing adjustment - deletion following prior coordinate bench precedent - TP adjustment in respect of royalty (section 92CA(3) order) deleted. - HELD THAT: - Relying on the Tribunal's prior rulings in the assessee's own case and authority on application of TNMM at entity level, the Tribunal found the TPO/AO's adjustment to be unjustified on the facts and deleted the transfer pricing addition of Rs.442.92 crores.

TP adjustment deleted; AO directed to give effect.

TDS credit verification and adjustment - Assessee's claim for additional TDS credit directed to be verified and given if established. - HELD THAT: - The Tribunal directed the Assessing Officer to verify the assessee's claim for additional TDS certificates and grant the credit in accordance with law.

AO to verify and grant TDS credit if established.

Interest under section 234B - correct method of computation - Interest computation under section 234B to be recomputed by AO in accordance with law and binding CBDT guidance. - HELD THAT: - The Tribunal found merit in the assessee's contention on incorrect adjustment sequencing by the AO and directed recomputation of interest in accordance with law (and applicable CBDT instructions), allowing the ground for statistical purposes.

Interest recomputation directed; matter allowed for statistical purposes.

Weighted deduction under section 35(2AB) - DSIR approval and scope of delegated signing - DRP's direction to allow deduction under section 35(2AB) subject to AO verifying DSIR approval affirmed; Revenue's appeal dismissed. - HELD THAT: - The DRP directed allowance subject to verification that DSIR approval in Form 3CM (even if signed by Scientist G 'for and on behalf of' the Secretary) covers the relevant year. The Tribunal followed the Mumbai Bench authority (Ferment Biotech) and declined to adopt a hyper technical bar where DSIR's internal delegation resulted in the nodal officer signing. The Tribunal confirmed the DRP direction and rejected Revenue's ground, while directing the AO to verify the existence and applicability of the DSIR approval for the year.

DRP direction affirmed; Revenue's appeal dismissed; AO to verify DSIR Form 3CM for the relevant year.

Final Conclusion: For Assessment Year 2010 11 the Tribunal, largely following coordinate bench and jurisdictional High Court precedents in the assessee's own case, deleted a number of substantive additions (notably many section 43B disallowances, royalty and related R&D cess, TP adjustment, FPI, CSR, warranty and certain excise/customs items), directed remittal to the Assessing Officer for factual verification/quantification on specific issues (RG 23A balances, withdrawal of add backs, limited section 14A administrative expense verification, resource sharing, mutual funds classification, section 40(a)(i)/PE attribution and interest recomputation), and affirmed the DRP direction to allow weighted R&D deduction subject to verification of DSIR approval; Revenue's appeal on the R&D approval point was dismissed. Overall, the assessee's cross appeal was allowed for statistical purposes and the Revenue's appeal dismissed.

Anti-competitive agreements - appreciable adverse effect on competition - bilateral ancillary cartel - primary cartel - lesser penalty application - imposition of penalty for cartelisation under Section 27(B) proviso - proportionality of penalty - mitigating factors in penalty assessment - recording of reasons by a quasi-judicial authority

Anti-competitive agreements - bilateral ancillary cartel - appreciable adverse effect on competition - Geep Industries entered into an agreement (Clause 4.3 of the PSA) amounting to a bilateral ancillary cartel with PECIN/Panasonic and thereby contravened the prohibition in Section 3. - HELD THAT: - Clause 4.3 of the Product Supply Agreement recorded Geep's agreement not to take steps detrimental to PECIN's market interests and to follow market prices as reviewed by PECIN. By expressly accepting that condition, Geep agreed to conduct that restricted its pricing autonomy. The Tribunal accepted CCI's finding that such conduct places Geep in a bilateral ancillary cartel with Panasonic, while Panasonic was part of a primary cartel in the market. Although Geep was a very small player with negligible market share and limited bargaining power, the admission to follow prices set by PECIN renders the conduct anti-competitive and within the scope of Section 3(1)/(2)/(3) as adjudicated by the CCI and affirmed by the Tribunal. [Paras 20]

The finding that Geep Industries contravened Section 3 by participating in a bilateral ancillary cartel is upheld.

Imposition of penalty for cartelisation under Section 27(B) proviso - proportionality of penalty - mitigating factors in penalty assessment - recording of reasons by a quasi-judicial authority - The quantum of monetary penalty imposed on Geep Industries is disproportionate in the facts of the case and is to be reduced. - HELD THAT: - The Proviso to Section 27(B) permits penalties up to three times the profits or up to 10% of average turnover; CCI imposed a penalty at 4% of turnover for each year of continuance of the cartel. The Tribunal observed that the impugned order itself recognised Geep as a very small player with under 1% market share, lacking bargaining power, and having sustained losses in early years. Those features are mitigating and make an excessive monetary penalty potentially fatal to the enterprise. The Tribunal also noted that specific reasons for selecting the 4% figure were not apparent and invoked the principle that quasi judicial authorities should record clear reasons when exercising their discretion to fix penalties. Balancing deterrence with proportionality and the appellant's market position and financial record, the Tribunal concluded a reduced rate would suitably reflect seriousness while avoiding an unduly crushing consequence on a minor player. [Paras 23, 26, 28, 32, 34]

Penalty imposed on Geep Industries is modified from 4% to 1% of turnover for each year of continuance of the cartel.

Mitigating factors in penalty assessment - Penalties imposed on the individual directors/officers responsible for entering into the PSA are appropriate and are not disturbed. - HELD THAT: - The Tribunal accepted the CCI's view that the named directors and officers were directly responsible for entering into the PSA and should have understanding of corporate conduct and competition law. Given their roles and knowledge, the penalties imposed on Ms. Pushpa M., Mr. Joeb Thanawala and Mr. Jainuddin Thanawala are commensurate with their conduct and do not warrant modification. [Paras 35]

Penalties on the named directors/officers are confirmed without change.

Final Conclusion: The appeal is allowed in part: the CCI's finding of Geep Industries' participation in a bilateral ancillary cartel is affirmed, the monetary penalty on Geep is reduced to 1% of turnover for each year of the cartel's continuance, and penalties on the named directors/officers are upheld; no order as to costs.

Pre-existing dispute - operational creditor's claim and default - initiation of CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016 - adjudicating authority's satisfaction on existence of debt and default - forgery/allegation of forged documents and application under Section 340, CrPC - appointment of Interim Resolution Professional

Pre-existing dispute - operational creditor's claim and default - adjudicating authority's satisfaction on existence of debt and default - forgery/allegation of forged documents and application under Section 340, CrPC - Whether a genuine pre-existing dispute between the parties barred admission of the Section 9 application and initiation of CIRP. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that a clear debt of Rs.11,95,447/- existed and had been defaulted. It accepted the factual matrix that the goods were delivered and consumed by the Corporate Debtor and that the inspection report and related communications showing removal directions came after delivery; there was no contemporaneous rejection at unloading. The allegation of a pre-existing dispute was scrutinised but, on the material before the Adjudicating Authority (including the inspection report and email exchanges), the Tribunal found no genuine dispute existing prior to the Section 8 demand notice which would have barred admission under Section 9. The Tribunal also noted that the Operational Creditor had placed an application under Section 340 CrPC alleging interpolation/forgery of certain diary pages and that this further weakened the Corporate Debtor's plea of a bona fide pre-existing dispute. On these bases the Adjudicating Authority's conclusion that there was debt and default and that no pure pre-existing dispute existed was not interfered with. [Paras 13]

The plea of a pre-existing dispute was rejected; the admission of the Section 9 application and initiation of CIRP were upheld.

Appointment of Interim Resolution Professional - initiation of CIRP under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether appointment of an Interim Resolution Professional (IRP) following withdrawal of consent by the proposed IRP was appropriately addressed. - HELD THAT: - The Adjudicating Authority had recorded that the Operational Creditor had proposed an IRP who subsequently withdrew consent. The Tribunal noted that where a proposed IRP withdraws, the Adjudicating Authority (and this bench) may appoint a Registered Professional from the IBBI panel. The appointment of Mr. Umang Jain as IRP by the Adjudicating Authority was recorded and left undisturbed by the Tribunal.

The appointment of the IRP was affirmed and left undisturbed.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's order admitting the Section 9 application, initiating CIRP against the Corporate Debtor and appointing the IRP is upheld.

Declared service under section 66E(e) - consideration - tolerating an act or situation - liquidated damages in breach of contract - Circular dated 03.08.2022 regarding applicability of GST on liquidated damages - intention of the parties and contractual penal clause not constituting a service

Declared service under section 66E(e) - liquidated damages in breach of contract - consideration - intention of the parties and contractual penal clause not constituting a service - Circular dated 03.08.2022 regarding applicability of GST on liquidated damages - Liquidated damages collected for delay in supply are not consideration for providing a declared service under section 66E(e). - HELD THAT: - The Tribunal followed earlier decisions holding that a declared service under section 66E(e) requires an agreement (express or implied) whereby one party agrees to refrain from an act, tolerate an act or situation, or do an act, and there must be a flow of consideration specifically for that agreed activity. Penal or liquidated damages arising from breach of contractual obligations are safeguards for commercial interests and arise only upon non-compliance; they do not reflect an intention by the parties to pay or receive consideration for toleration or abstention as a contractual service. The Circular dated 03.08.2022, relied upon by the department, likewise acknowledges that mere flow of money does not establish a taxable supply absent an agreement to do/abstain in return for payment, and payments made under penal clauses do not, without an independent arrangement, constitute consideration for toleration. Applying these principles and precedent, the Tribunal concluded that recovery of liquidated damages in the period concerned does not constitute consideration for a declared service under section 66E(e).

The adjudicating authority's finding that liquidated damages during the period constituted consideration for a declared service is set aside.

Final Conclusion: The order under challenge is set aside and the appeal is allowed.

Principle of unjust enrichment - refund under Section 11B of the Central Excise Act - pre-deposit under Section 35F of the Central Excise Act - no presumption from treatment in books of account

Principle of unjust enrichment - refund under Section 11B of the Central Excise Act - pre-deposit under Section 35F of the Central Excise Act - no presumption from treatment in books of account - Whether the bar of unjust enrichment under Section 11B applies to amounts deposited as pre-deposits under Section 35F and therefore bars refund of such deposits. - HELD THAT: - The Court recorded that Section 11B governs refund of duty subject to the principle of unjust enrichment, which prevents a claimant who has passed the burden to buyers from obtaining a refund. Section 35F requires a deposit as a condition for prosecuting an appeal. This Court's earlier Division Bench decisions have treated amounts deposited under Section 35F as pre-deposits made to avail a remedy of appeal and not as duty covered by Section 11B, and held that Section 11B does not apply to such pre-deposits. The Tribunal's factual finding on remand had led the Commissioner (Appeals) to treat the amounts as pre-deposits. Given that factual finding, the Court held the settled legal principle (including later Supreme Court and Division Bench authority) squarely applicable: treatment of the amounts in the assessee's books does not give rise to a conclusive presumption that the burden was passed to buyers, and the unjust enrichment bar under Section 11B does not operate to deny refund of a genuine pre-deposit. As the Commissioner (Appeals) had established that the deposits were pre-deposits, the legal principle precluding application of Section 11B followed and required allowance of the refund claim. The question of breach of natural justice was held not to arise once the substantial question on unjust enrichment was decided in favour of the appellant. [Paras 10, 11, 12, 13]

The principle of unjust enrichment under Section 11B does not apply to amounts deposited as pre-deposits under Section 35F; the deposits are refundable and no presumption arises merely from their treatment in books of account.

Final Conclusion: Appeal allowed; impugned orders quashed and set aside, and the Department directed to take necessary steps to give effect to the refund of the pre-deposits.

Pre-deposit requirement for entertainment of appeal - maintainability of appeal - statutory appellate jurisdiction under Section 35G - ultra vires challenge to pre-deposit provision - discretion to waive pre-deposit

Pre-deposit requirement for entertainment of appeal - maintainability of appeal - Tribunal was justified in treating the appeal as defective and rejecting it for non-compliance with the mandatory pre-deposit requirement. - HELD THAT: - The Court held that Section 35F prescribes a specific mandatory condition for entertainment of appeals - deposit of a fixed percentage of the amount in dispute - and that compliance with this statutory requirement is a pre-condition to maintainability. As there is no statutory provision for exemption from the pre-deposit condition, non-compliance renders the appeal non-maintainable. The appellate authority was therefore justified in refusing to entertain the appeal for failure to make the mandated pre-deposit. The Court found no error in the tribunal's order rejecting the appeal on that ground.

Appeal dismissed for non-compliance with the mandatory pre-deposit condition; tribunal correctly treated the appeal as defective.

Statutory appellate jurisdiction under Section 35G - ultra vires challenge to pre-deposit provision - discretion to waive pre-deposit - High Court exercising jurisdiction under Section 35G cannot waive or set aside the statutory pre-deposit condition or adjudicate an ultra vires challenge to that provision in the exercise of the statutory appellate power. - HELD THAT: - The Court explained that its role under Section 35G is appellate within the statutory scheme and limited to substantial questions of law arising on the record; it must therefore apply and give effect to the statutory conditions for maintaining an appeal. Challenges to the vires of the pre-deposit provision cannot be entertained in the Court's statutory appellate jurisdiction in lieu of exercising writ jurisdiction under Article 226. The Court also observed that orders passed in other forums or under writ jurisdiction (or by co ordinate benches which did not consider the statutory scheme and binding precedents) do not authorize departure from the statutory pre-deposit requirement in the present statutory appeal.

Court will not waive the statutory pre-deposit or decide the ultra vires challenge in the exercise of its Section 35G appellate jurisdiction; such relief is not available in the present statutory appeal.

Final Conclusion: The appeal is dismissed for want of the mandatory pre-deposit required by statute; dismissal does not prevent the appellant from complying with the pre-deposit requirement and seeking recall or filing the appeal after compliance, and the tribunal is expected to consider sympathetically any such recall application.

Condonation of delay - Liberty to file statutory appeal after dismissal of writ petition - Pre-deposit requirement for statutory appeal - Treatment of honest and dishonest assessee in appellate proceedings

Condonation of delay - Liberty to file statutory appeal after dismissal of writ petition - Delay of 111 days in filing the appeal was condoned. - HELD THAT: - The Court accepted the appellant's explanation that a writ petition had earlier been preferred in bona fide belief and was dismissed with liberty on 12.9.2022 to file an appeal under the statutory provision. The affidavit accompanying the delay condonation application was held to sufficiently explain the delay. On this basis the Court exercised its discretion to condone the delay and directed that the appeal be given a regular number.

Delay of 111 days condoned; appeal to be given a regular number.

Pre-deposit requirement for statutory appeal - Admitted the appeal on the question whether the Tribunal was justified in insisting on mandatory pre-deposit when nothing was left with the appellant because assets had been auctioned and the factory was under liquidation. - HELD THAT: - The Court admitted the appeal limited to the framed question challenging the Tribunal's insistence on a mandatory pre-deposit in circumstances allegedly leaving no recoverable assets with the appellant, including auction of immovable properties and liquidation of the factory. Admission indicates the Court found the question suitable for appellate consideration though no final adjudication on merits was recorded in the order.

Appeal admitted on the question of applicability of mandatory pre-deposit where no assets remain recoverable.

Treatment of honest and dishonest assessee in appellate proceedings - Admitted the appeal on the question whether the Tribunal was justified in treating an honest assessee and a dishonest assessee on the same footing. - HELD THAT: - The Court admitted the appeal on the framed question challenging the Tribunal's approach of treating differently situated assessees alike. The admission reflects that the legal controversy regarding equitable treatment and differential application of pre-deposit or other procedural requirements between honest and dishonest assessees merits appellate examination; the order did not decide the substantive legal point.

Appeal admitted on the question of the Tribunal's treatment of honest and dishonest assessees.

Final Conclusion: The High Court condoned the delay of 111 days in filing the appeal and admitted the appeal for hearing on the two framed questions concerning (i) the requirement of mandatory pre-deposit where no assets remain recoverable due to auction and liquidation, and (ii) whether the Tribunal was justified in placing an honest assessee and a dishonest assessee on the same footing; no substantive merits were decided in the order.

Condonation of delay - statutory pre-deposit under Section 35F of the Central Excise Act, 1944 - maintainability of appeal under Section 35G of the Central Excise Act, 1944 - treatment of honest and dishonest assessee

Condonation of delay - maintainability of appeal under Section 35G of the Central Excise Act, 1944 - Application for condonation of delay in filing the appeal (delay of 111 days) was considered and allowed. - HELD THAT: - The appellant filed the appeal with a delay of 111 days. The affidavit in support of the delay condonation application explained that the appellant had earlier preferred a writ petition which was dismissed on 12.9.2022 with liberty to file an appeal under Section 35G of the Central Excise Act, 1944; the present appeal was thereafter filed. The court accepted the explanation in the accompanying affidavit as sufficient cause for the delay and exercised discretion to condone the delay, directing that the appeal be given a regular number.

Delay of 111 days condoned and the appeal is directed to be given a regular number.

Statutory pre-deposit under Section 35F of the Central Excise Act, 1944 - treatment of honest and dishonest assessee - Two substantive questions of law were admitted for consideration in the appeal: (a) whether mandatory pre-deposit can be insisted upon where the appellant has no assets and is under liquidation; and (b) whether Section 35F places an honest and a dishonest assessee on the same footing. - HELD THAT: - The appellant challenged the Tribunal's order on the ground that it did not consider the appellant's inability to make the pre-deposit and contended that Section 35F is ultravires and discriminatory in placing honest and dishonest assessees on the same footing. The respondent relied on settled law upholding statutory pre-deposit under Section 35F, citing earlier decisions. The High Court admitted the appeal on the framed questions (questions (ii) and (iii) in the memo of appeal) for adjudication, without finally deciding the merits in this order.

The appeal is admitted on the two specified questions for hearing; merits to be adjudicated subsequently.

Final Conclusion: The application for condonation of 111 days' delay is allowed and the appeal is admitted for hearing on the two framed questions concerning insistence of mandatory pre-deposit where the appellant claims inability to pay due to liquidation, and the contention that Section 35F treats honest and dishonest assessees alike; substantive adjudication deferred to the appeal hearing.