TaxTMI Updates e-Newsletter
Apr 08,2021

Anti-Evasion Unit primacy in investigations - application of Central Board of Excise & Customs circular dated 05.10.2018 - avoidance of parallel investigations by multiple Commissionerates - direction for investigatory locus to specified Commissionerate

Anti-Evasion Unit primacy in investigations - application of Central Board of Excise & Customs circular dated 05.10.2018 - avoidance of parallel investigations by multiple Commissionerates - Scope and locus of further investigation into alleged GST evasion against the petitioner - HELD THAT: - The Court recorded the petitioner's grievance that multiple Commissionerates initiated investigations and noted the petitioner's reliance on the CBEC circular dated 05.10.2018 which, according to the petitioner, requires other units to refrain from initiating parallel action once the Anti Evasion Unit, CGST, Delhi East and South Commissionerate has triggered investigation. Having issued notice, the Court granted an interim direction restricting any further investigation, if necessitated, to be carried out by the Anti Evasion Unit, CGST, Delhi East and South Commissionerate in accordance with the said circular. The direction also records that the petitioner shall join and render assistance to that Commissionerate during such investigation. [Paras 4, 5, 9]

Any further investigation shall be carried out by the Anti Evasion Unit, CGST, Delhi East and South Commissionerate in line with the CBEC circular dated 05.10.2018, and the petitioner shall cooperate with that Commissionerate.

Final Conclusion: Writ petition issued; respondents to file counter affidavit within four weeks; interim direction confines any further investigation to the Anti Evasion Unit, CGST, Delhi East and South Commissionerate in accordance with the CBEC circular dated 05.10.2018, with the petitioner required to cooperate; matter listed for further hearing on 25.05.2021.

Vires of section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - decided on affidavits - directions for affidavit-in-opposition and reply timelines - listing before regular Bench - release from rostered list with liberty to mention

Listing before regular Bench - release from rostered list - Writ petitions listed in Group IV (serial nos. 4-8, 12 and 19) are to be removed from the Specially Assigned Bench roster and placed before the regular Bench. - HELD THAT: - The Bench recorded that the original reason for special assignment no longer exists and that the present Bench has only one hour in the week to deal with specially assigned writ petitions. All parties, including the Additional Solicitor General, had no objection to the matters being placed before the regular Bench. Consequently, the petitions were released from the list of this Bench for listing before the regular Bench.

Petitions released from this Bench to be listed before the regular Bench.

Directions for affidavit-in-opposition and reply timelines - decided on affidavits - Procedure for filing affidavits in WPA 8195 of 2020 and that the writ petitions will be decided on affidavits. - HELD THAT: - The Court directed that in WPA 8195 of 2020 (Victoria Global vs. Union of India) an affidavit-in-opposition shall be filed within four weeks and a reply affidavit within two weeks thereafter. The Bench recorded that the writ petitions are to be decided on the affidavits filed by the parties, and that the petitions may be mentioned to the regular Bench once affidavits are complete.

Affidavit-in-opposition due in four weeks and reply in two weeks; matters to be decided on affidavits.

Vires of section 16(2)(c) of the Central Goods and Services Tax Act, 2017 - The substantive challenge to the vires of section 16(2)(c) of the CGST Act, 2017 is recorded as pending and to be considered by the regular Bench on the affidavits to be filed. - HELD THAT: - Although the petitions challenge the vires of section 16(2)(c), the present order does not adjudicate the merits. The Court provided a procedural roadmap-directing affidavits and transferring the matters to the regular Bench-so that the regular Bench may decide the substantive constitutional and statutory questions on the basis of the affidavits.

Substantive challenge to section 16(2)(c) to be considered by the regular Bench on filed affidavits.

Final Conclusion: The Court directed filing of affidavits in the specified timelines, recorded that the matters will be decided on affidavits, released the listed writ petitions from the specially assigned roster and ordered them to be placed before the regular Bench with liberty to mention when affidavits are complete.

Release of detained goods and vehicle on deposit - treatment of detenue as owner under Section 129(1)(a) of Uttar Pradesh Goods & Services Tax Act, 2017 - security for tax demand - penalty not exceeding tax where owner established - e-way bill and tax invoice as evidence of transit and description - Circular of Commissioner advising limited examination during transit

Release of detained goods and vehicle on deposit - treatment of detenue as owner under Section 129(1)(a) of Uttar Pradesh Goods & Services Tax Act, 2017 - security for tax demand - Goods and vehicle detained while in transit shall be released subject to specified deposits and security, and the petitioner is to be treated as owner for the purpose of Section 129(1)(a). - HELD THAT: - The Court directed release of the goods and the vehicle forthwith on conditions securing the revenue. It recorded that the petitioner had produced the e-way bill and tax invoice at the time of detention and treated the petitioner as the owner within the meaning of Section 129(1)(a) of the Uttar Pradesh Goods & Services Tax Act, 2017. Initially the Court ordered deposit of 10% of tax and further 20% and security for the balance in a form other than cash or bank guarantee; subsequently, on clarification, the Court observed that sufficient amounts had been deposited towards penalty and part of the tax and permitted the petitioner to deposit the remaining 70% of the tax in cash as a further condition for release. The Court's direction reflects a balance between protecting the revenue and facilitating movement of goods in transit where statutory documents (e-way bill and invoice) are produced and the detenue is treated as owner.

Goods and vehicle ordered released subject to payment of the remaining tax deposit (70%) and existing deposits/security; petitioner treated as owner for the purpose of detention under Section 129(1)(a).

Penalty not exceeding tax where owner established - e-way bill and tax invoice as evidence of transit and description - Circular of Commissioner advising limited examination during transit - Court accepted that, where the petitioner produced e-way bill and tax invoice and was treated as owner, the interest of revenue was adequately secured by deposits already made and further deposit of tax, and that penalty exposure should be considered in that factual context. - HELD THAT: - The Court noted the petitioner's contention that, being the owner and having produced the e-way bill and tax invoice, the penalty could not exceed the amount of tax. It observed that the petitioner had already deposited amounts towards penalty and part of the tax, and that the revenue's interest was secure. On that basis the Court permitted release subject to deposit of the remaining tax. The Court also referred to a circular of the Commissioner advising that authorities should not examine beyond the e-way bill in such transit transactions, reinforcing limited scope of scrutiny when requisite documents are in order.

Petitioner's deposits towards penalty and tax deemed sufficient security for revenue for the purpose of interim release; further deposit of 70% of tax required to obtain release.

Final Conclusion: The writ petition was entertained and, treating the petitioner as owner under Section 129(1)(a), the High Court ordered immediate release of the detained goods and vehicle subject to payment of the remaining 70% of the tax and on account of deposits already made towards penalty and tax, noting that the e-way bill and tax invoice had been produced and the revenue's interest was adequately secured.

Confiscation under the Essential Commodities Act - jurisdictional bar on courts to order release where confiscation proceeding under the Essential Commodities Act is pending (Section 6-E) - confiscation for carriage of goods without E-way bill under the Central Goods and Services Act - release of detained vehicle subject to indemnity bond and conditions pending confiscation

Release of detained vehicle subject to indemnity bond and conditions pending confiscation - jurisdictional bar on courts to order release where confiscation proceeding under the Essential Commodities Act is pending (Section 6-E) - Whether the truck bearing registration No.BR-01GH-0866 should be released to the petitioner subject to conditions despite pending confiscation proceedings. - HELD THAT: - The High Court found that the trial court had rejected the petition for release solely because the challan lacked an E-way bill number though the consignments (160 drums of bitumen) were earlier ordered released on satisfaction of valid purchase documents. Noting that prolonged detention of a commercial vehicle in police custody serves no useful purpose and causes loss to the owner and State revenue, the Court directed that the petitioner may file an appropriate application in the court below with relevant documents. The court below is to obtain reports from the District Transport Officer and the Investigating Officer and, if papers are found in order, release the vehicle on an indemnity bond and specified undertakings; the court may impose further terms including panchnama and photographs before release. The Court also made clear that Section 6-E does not prevent these procedural directions for release on conditions while leaving the confiscation proceeding to continue. These directions supersede the impugned order and the revision was allowed accordingly. [Paras 4, 5, 6, 7, 9]

Impugned order refusing release is set aside; court below to consider an application for release, call for D.T.O. and I.O. reports and, if documents are in order, release the truck on an indemnity bond, sureties, undertakings and such other terms as deemed fit.

Confiscation under the Essential Commodities Act - confiscation for carriage of goods without E-way bill under the Central Goods and Services Act - Whether initiation of confiscation proceedings under Section 6-A(c) of the Essential Commodities Act was appropriate in the facts of the case. - HELD THAT: - The Court observed that confiscation for carriage without E-way bill is provided under the Central Goods and Services Act but, in the present matter, the confiscation proceedings were initiated under Section 6-A(c) of the E.C. Act. As the record shows no final order in the confiscation proceeding and it was not for the Court to adjudicate that statutory question at this stage, the matter requires determination by the competent authority before whom the confiscation proceeding is pending. The Deputy Commissioner must decide the validity of invoking Section 6-A(c) on its merits and the petitioner is at liberty to file her reply in those proceedings; this order does not prejudice the authority's decision. [Paras 4, 8]

The question of lawfulness of confiscation under Section 6-A(c) of the E.C. Act is left for the Deputy Commissioner to decide on merits; the present order does not preclude continuation or decision of the confiscation proceeding.

Final Conclusion: Revision allowed; the order refusing release is set aside and the court below is directed to consider release of the truck on specified indemnity bond, sureties and undertakings after D.T.O. and I.O. reports, while the Deputy Commissioner may continue and decide the pending confiscation proceedings on merits.

Intelligence based enforcement action - preclusion of parallel proceedings - seizure and investigation by Central authority - overlapping enquiry periods - quashing of adjudication - stay of coercive action

Intelligence based enforcement action - preclusion of parallel proceedings - seizure and investigation by Central authority - Validity of State GST proceedings where Central GST intelligence authority was already seized of the investigation - HELD THAT: - The Court examined the D.O. letter dated 5th October, 2018 which clarifies that officers of the authority initiating intelligence-based enforcement action are authorised to complete the investigation, adjudication and related proceedings and need not transfer the matter to the other tax authority. The State authority did not deny applicability of the circular but contended it was unaware that the Central authority had been seized of the specific issue. The petitioner, however, had informed the State authority on 7th September, 2019 that the DGGSTI (Central intelligence unit) was seized of the matter. There is also factual overlap in enquiry periods - the Central authority's enquiry spans July 2017 to September 2018 while the State notice related to April 2018 - indicating concurrent subject matter. Applying the circular and the facts that the Central intelligence unit had initiated and was pursuing investigation, the Court concluded that the State authority ought not to have proceeded to adjudicate while the Central authority remained seized of the intelligence-based investigation. [Paras 10, 12, 13, 14, 16]

The show cause notice dated 23rd July, 2019 and the orders passed by the State authority under Section 74 and Section 74(9) are quashed to the extent that they proceed despite the Central intelligence authority being seized of the matter.

Overlapping enquiry periods - stay of coercive action - Relief to be granted pending conclusion of the proceedings before the Central intelligence authority - HELD THAT: - Given that the Central authority's investigation covers July 2017 to September 2018 and the State action relates to April 2018 (an overlapping period), and having quashed the impugned show cause and orders, the Court considered the appropriate interim protection. The Court directed that no coercive action be taken by the State authority against the petitioner until the DGGSTI concludes its proceedings, while noting that the petitioner shall continue to cooperate with the Central authority. [Paras 16, 18]

Until conclusion of the proceedings initiated by the DGGSTI (Central intelligence authority), the State authority shall not take any coercive action against the petitioner.

Final Conclusion: Writ petition allowed: the State GST show cause notice and consequential orders impugned in the petition are quashed to the extent they proceeded while the Central intelligence authority was seized of the investigation; further, the State authority is restrained from taking coercive action against the petitioner until the DGGSTI's proceedings conclude.

Short delivery - joint note as admitted document - evidence weight of private weighbridge receipts - refund of sale consideration - interest on delayed payment - absence of entitlement to GST/TCS refund where sale consideration paid was without tax

Short delivery - joint note as admitted document - evidence weight of private weighbridge receipts - Quantum of undelivered scrap material payable to the petitioner - HELD THAT: - The Joint Note dated February 9, 2019, an admitted document signed by the parties, recorded that certain scrap lying on the river bed and under muddy soil could not be recovered and envisaged a fresh witnessing programme if further material was found. In the absence of any Railway document rebutting the petitioner's Requisition and Issue Notes, and given that the respondents' internal communications contradict the Joint Note, the court accepted the petitioner's consistent pleaded claim that 55 metric tons remained undelivered. The chart produced in court suggesting 63.475 MT was held contrary to the pleadings and based on private weighbridge receipts which, without corroboration, carry limited evidentiary weight; consequently the court adopted the pleaded figure of 55 MT as the short delivery. [Paras 8, 9, 10, 11, 12]

Short delivery quantified at 55 metric tons.

Refund of sale consideration - interest on delayed payment - joint note as admitted document - absence of entitlement to GST/TCS refund where sale consideration paid was without tax - Entitlement to refund and interest for the undelivered quantity and scope of GST/TCS claim - HELD THAT: - Applying the sale price per metric ton specified in the notice inviting tender, the court multiplied 55 MT by the stated rate to arrive at the principal refund amount. Because the Joint Note was the last joint document confirming unsuccessful recovery efforts after February 9, 2019, the respondents were held liable to refund the principal with interest at 6% per annum from that date. The court noted that the Sale Release Order stated the amount paid by the petitioner was without GST; accordingly, no award in lieu of GST or TCS was made. [Paras 13, 14]

Respondents to refund the sale value of 55 MT (computed at the tender rate) with interest at 6% per annum from February 9, 2019; no GST/TCS awarded.

Interest on delayed payment - refund of sale consideration - Mechanism and timeline for payment and consequence of default - HELD THAT: - The court directed payment of the computed principal plus accrued interest within 90 days. It further provided a consequential remedy for non-compliance: from the 91st day the respondents would be liable to pay interest at 10% per annum over and above the total awarded amount (principal plus 6% interest) until payment. The order for payment was final and no order as to costs was made. [Paras 15, 16]

Payment to be made within 90 days; default attracts enhanced interest at 10% per annum over and above the awarded amount from the 91st day.

Final Conclusion: Writ petition allowed: respondents directed to refund the sale value of 55 MT of undelivered scrap (computed at the tender rate) with interest at 6% per annum from February 9, 2019, payable within 90 days; failure to pay attracts enhanced interest as ordered; no GST/TCS awarded; no order as to costs.

Personal hearing mandated prior to finalization of assessment under Section 74(5) - opportunity to be heard - set aside for want of opportunity to be heard - de novo assessment after personal hearing

Personal hearing mandated prior to finalization of assessment under Section 74(5) - opportunity to be heard - Whether the petitioner was entitled to a personal hearing before finalization of assessment proceedings. - HELD THAT: - The Court accepted the petitioner's sole grievance that no personal hearing was granted prior to finalization of the impugned orders. Relying on the view expressed in WP.No.13652 of 2020 that Section 74(5) requires a personal hearing to be granted in all matters prior to finalization of assessments, the Court found that the petitioner had not been afforded the requisite opportunity to be heard. In consequence, the impugned orders could not stand without affording the petitioner the mandated personal hearing.

Petitioner was entitled to a personal hearing prior to finalization; the impugned orders are unsustainable for want of such opportunity.

Set aside for want of opportunity to be heard - de novo assessment after personal hearing - Relief to be granted in view of the absence of personal hearing. - HELD THAT: - The Court set aside the impugned assessment orders in respect of the specified periods and directed the petitioner to appear before the assessing authority on a fixed date. The matter was remitted for fresh consideration: after hearing the petitioner and considering any supporting evidence, the assessing officer is to pass orders of assessment de novo within six weeks from the date of personal hearing, in accordance with law. The direction contemplates a complete re-finalization of the assessments following the affording of the opportunity to be heard.

Impugned orders for 2017-18 and 2018-19 set aside and remitted for de novo assessment after personal hearing within a stipulated time.

Final Conclusion: Impugned assessment orders for 2017-18 and 2018-19 were set aside for failure to grant a personal hearing; the petitioner was directed to appear before the assessing officer on 22 March 2021 and the assessments were remitted for de novo finalization within six weeks of that personal hearing.

Summary order. Writ petition dismissed as withdrawn on petitioner's instruction, the reliefs sought being withdrawn in view of subsequent administrative instructions of the Central Board of Indirect Taxes and Customs dated 18-09-2020.

Transitional arrangements for input tax credit - tax deducted at source - input tax credit - advance collection of tax - carry forward of tax credit - Article 265 - levy and collection only by authority of law - constitutional vires of TDS machinery provisions

Tax deducted at source - transitional arrangements for input tax credit - carry forward of tax credit - Amounts deducted under Section 13 of the TNVAT Act (tax deducted at source) constitute tax for the purposes of transition and are eligible to be carried forward under Section 140 of the TNGST Act. - HELD THAT: - The Court held that deductions made under Section 13 of the TNVAT Act are made with statutory authority, are intended to facilitate advance payment/collection of tax and are immediately credited to the deductee's account as tax credit. Section 13 expressly excludes categories (labour contracts, inter state transactions, exempt transactions) which keeps the machinery provision within legislative competence; this distinction supports treating the deducted sums as tax rather than mere deposits. The Court declined to be guided solely by fluctuating nomenclature in the statute or forms, observing that terms such as 'amount', 'deposit' and 'tax' are used interchangeably and will not be decisive. A purposive construction of Section 140 of the TNGST Act - which permits transition of VAT and entry tax in addition to ITC - and the fact that TDS amounts were captured in returns and auto reflected as credit, led to the conclusion that such accumulated TDS must be included in transition. The Court distinguished the Income tax regime (where advance tax/TDS operate within a single assessment year and specific deeming provisions exist) from the VAT regime (which recognises carry forward of credit), and rejected revenue's reliance on Income tax authorities concerning characterisation of TDS for the present purpose. The substituted Rule 9 (effective 29.01.2016) and administrative practice of auto population of TDS credit provided supportive, though ancillary, confirmation of the statutory scheme. [Paras 28, 29, 31, 32, 33]

Petitioners are entitled to transition tax deducted at source under Section 140 of the TNGST Act; impugned orders denying transition are set aside.

Final Conclusion: Writ petitions allowed; orders denying transition of tax deducted at source under Section 13 of the TNVAT Act into the electronic credit ledger under Section 140 of the TNGST Act set aside and petitioners held entitled to transition such credit; connected miscellaneous petitions closed with no costs.

Summary order. Petitioners directed to amend the cause-title to add the Commissioner of C.G.S.T. and C.X., Kolkata North Commissionerate as a respondent and serve them with the writ petition. Affidavit-in-opposition to be filed within four weeks and any reply thereto within two weeks. Matter listed in the combined monthly list for February, 2021. Learned Additional Solicitor General requested to regularise appearance of Mr. Bhaskar Prasad Banerjee and his junior.

Pre-operative expenses - commencement of business versus setting-up of business - advertising expenses - goodwill as capital asset - deductibility under Section 37 of the Income Tax Act, 1961

Pre-operative expenses - commencement of business versus setting-up of business - Whether additions disallowing pre-operative expenses were rightly made on the ground that the assessee's business commenced only on 29.10.2009. - HELD THAT: - On the material placed before the authorities and recorded at the appellate level, the Court found that various acts necessary to set up the business were completed in earlier years: incorporation, PAN/TAN allotment, IEC, lease deeds for office and commercial premises, hiring of senior employees, local purchases and sales, receipt of customer orders and purchase orders raised on the holding company. Those facts, viewed together, established that the assessee had set up its business and was ready to carry it on in the previous year (AY 2009-2010). The launch of an 'experience centre' on 29.10.2009 was only a mode or platform for selling goods and did not displace the earlier steps evidencing readiness to do business. The Tribunal and CIT(A) had returned findings of fact to this effect, which the High Court did not disturb after examining the material; the revenue's reliance on the single fact of the experience centre's launch was held to be insufficient to treat the earlier expenditures as pre-operative and non-deductible. [Paras 7]

Addition disallowing pre-operative expenses deleted; assessee had set up business prior to 29.10.2009 and expenditures were not disallowable on that ground.

Advertising expenses - goodwill as capital asset - deductibility under Section 37 of the Income Tax Act, 1961 - Whether advertising expenditure was rightly disallowed as capital expenditure incurred to build goodwill. - HELD THAT: - The assessing officer's conclusion that advertising expenditure was for building 'goodwill' and therefore capital in nature was not supported by evidence that a capital asset was created in the assessment year. The record did not show that the expenditure was not laid out wholly and exclusively for the purposes of business. Goodwill, being an intangible monetised ordinarily on sale of a business, cannot be presumed to have been created merely because advertising enhances reputation. The extent of advertising expense alone does not convert revenue expenditure into capital. On these findings the CIT(A) and the Tribunal correctly deleted the addition and allowed the expenditure under the tests for allowability reflected in Section 37. [Paras 8]

Addition disallowing advertising expenditure deleted; advertising expenses held to be revenue in nature and deductible under Section 37.

Final Conclusion: Both substantial questions of law answered in favour of the assessee and against the revenue: additions in respect of pre-operative expenses and advertising expenses were rightly deleted by the authorities and the appeal is dismissed.

Tax deduction at source - assessee in default - accrual of income - provision for expenses - reversal of provisions - liability under Section 201(1) and Section 201(1A) - time of deduction-at payment or accrual - Accounting Standard-29

Tax deduction at source - assessee in default - accrual of income - provision for expenses - reversal of provisions - liability under Section 201(1) and Section 201(1A) - Whether the assessee could be held liable as an assessee in default under Section 201(1) and made liable to interest under Section 201(1A) for non-deduction of TDS on amounts credited to provisions which were subsequently reversed as not payable. - HELD THAT: - The Court applied the settled principle that liability to deduct tax at source arises when income accrues or payment is made, not from mere bookkeeping or hypothetical entries. Recognising that the assessee made year-end provisions in conformity with Accounting Standard-29 and that the entries which remained unutilised were reversed within the same accounting year, the Court held there was no taxable accrual to any payee. The Court relied on precedent establishing that a levy cannot be sustained where the purported income never materialises despite book entries. Consequently, the Assessing Officer erred in treating the provisioned-but-reversed amounts as attracting TDS and in initiating proceedings under Sections 201 and 201(1A). The tribunal and the CIT(A) were therefore wrong to affirm that liability. [Paras 9, 10, 11]

Liability to deduct TDS could not be fastened on the assessee in respect of provisions that were reversed and did not result in accrual of income; proceedings under Sections 201 and 201(1A) were unsustainable.

Final Conclusion: The substantial question is answered in favour of the assessee. The orders of the Assessing Officer, the Commissioner (Appeals) and the Tribunal are quashed and the appeal is allowed for Assessment year 2012-13.

Penalty for furnishing inaccurate particulars of income under Section 271(1)(c) - Change in accounting policy in conformity with Accounting Standard-7 - Fresh return filed pursuant to proceedings under Section 132/153A - New claim versus concealment or inaccurate particulars - Requirement of incriminating material for sustaining claims in return filed under Section 153A

Penalty for furnishing inaccurate particulars of income under Section 271(1)(c) - Change in accounting policy in conformity with Accounting Standard-7 - Fresh return filed pursuant to proceedings under Section 132/153A - New claim versus concealment or inaccurate particulars - Whether penalty under Section 271(1)(c) could be levied where the assessee, in a fresh return filed after search, made a new claim arising from a change in accounting policy (AS-7) without concealing particulars of income. - HELD THAT: - The Court accepted the findings recorded by the authorities below that the assessee had changed its method of accounting to align with AS-7 and in the fresh return under proceedings initiated after search under Section 132 read with Section 153A sought to claim certain expenditures on an accrual basis. Those facts were within the knowledge of the revenue and there was no concealment of particulars of income nor furnishing of inaccurate particulars. The Tribunal and the CIT(A) found that the claim arose from an accounting-policy change and that mere making of a claim which may not be sustainable in law does not, by itself, attract penalty under Section 271(1)(c). The Court distinguished the facts from cases of wholly unsustainable or fraudulent claims (e.g., Zoom Communications) and relied on authorities holding that an untenable claim alone is insufficient to constitute furnishing inaccurate particulars. In the absence of concealment or inaccurate particulars, and given the nature of the claim as one based on accounting treatment permissible under AS-7, initiation and imposition of penalty were not warranted. [Paras 4, 7]

The Tribunal's confirmation of the CIT(A)'s deletion of the penalty was upheld; the penalty could not be sustained in the facts of Assessment Year 2007-2008.

Final Conclusion: The appeal raised no substantial question of law; the order cancelling the penalty was affirmed and the appeal dismissed.

Non-speaking order - requirement of reasons by a tribunal - quash and remand - final fact-finding authority

Non-speaking order - requirement of reasons by a tribunal - quash and remand - Validity of the Tribunal's order in view of its reasoning and application of mind - HELD THAT: - The High Court found that the Tribunal's impugned order was cryptic and bereft of reasons. The Tribunal merely reproduced and relied upon the decision of another Bench (extracting paragraphs 18 and 19 of the Tribunal's order) without taking note of relevant statutory provisions or explaining how that precedent applied to the facts of the present case. The Court held that the Tribunal, as the final fact-finding authority, is obliged to assign reasons in support of its decision and to demonstrate application of mind; mere citation of an earlier decision without reasoning is insufficient. Consequently, the impugned order suffers from non-application of mind and cannot be sustained. The High Court quashed the Tribunal's order and remitted the matter to the Tribunal for fresh consideration on merits by a speaking order in the light of relevant statutory provisions, directing expedition.

Impugned Tribunal order quashed for being non-speaking and the matter remitted to the Tribunal for fresh consideration by a speaking order.

Final Conclusion: The appeals are disposed of by quashing the impugned order of the Tribunal for lack of reasons and remitting the matter to the Tribunal for fresh, expeditious consideration on merits; the substantial question of law was not decided.

Remand to Assessing Officer for fresh consideration - onus to prove genuineness of transaction - tribunal's power to remit subject to judicial principles - assessment and appellate authorities as last fact finding authority - treatment of off market/penny stock transactions as sham engineered transactions

Remand to Assessing Officer for fresh consideration - tribunal's power to remit subject to judicial principles - assessment and appellate authorities as last fact finding authority - Whether the Tribunal was justified in remitting the matter to the Assessing Officer for reconsideration after the Assessing Officer and the CIT(A) had conducted detailed enquiries and reached definite findings. - HELD THAT: - The Tribunal had remanded the matter following its earlier view in Kanhaiyalal & Sons (HUF). This Court applied its decision in Commissioner of Income Tax v. Manish D. Jain (HUF) which faulted similar remands where the Assessing Officer had conducted a detailed inquiry, the assessee had an opportunity to be heard and file submissions, and the CIT(A) had examined and recorded definite findings. The Court reiterated that the power to remand must be exercised on judicial principles and is inappropriate where all evidence has been produced and examined and where the appellate authority has recorded a definite finding. Here the Tribunal did not disturb the findings that the shares in question were acquired off market and their prices artificially hiked, nor did it identify material that necessitated a fresh remand. In those circumstances the Tribunal erred in remitting the issue to the Assessing Officer instead of recording its own finding as the last fact finding authority. [Paras 6, 7]

The Tribunal's order of remand is set aside; the substantial questions of law are answered in favour of the Revenue and against the assessee.

Final Conclusion: The Tax Case Appeal is allowed; the impugned order of the Tribunal is set aside, the substantial questions of law are answered for the Revenue, and the order of the CIT(A) stands restored.

Carry forward and set off of brought forward excess application of income - application of income for charitable purposes - commercial/book income principle under section 11 - depreciation/amortisation as application of income - precedential reliance on cognate Bench decisions

Carry forward and set off of brought forward excess application of income - application of income for charitable purposes - commercial/book income principle under section 11 - depreciation/amortisation as application of income - Assessee entitled to claim brought forward excess application and carry forward/set off of earlier-years application of income in the assessment year, and amortisation/depreciation can be treated as application of income for charitable purposes. - HELD THAT: - The High Court upheld the Tribunal's dismissal of the revenue's appeal, holding that the issue was covered by binding precedent of a cognate Bench which applied commercial/book-income principles to trusts. The court accepted that income for section 11 purposes is to be understood in its commercial sense and that adjustments such as amortisation or depreciation (even without cash outflow) constitute application of income. Relying on the reasoning in Sisters of St. Anne and the Division Bench decision in Ohio University Christ College, and consistent with administrative guidance recognising book income for trusts, the Tribunal correctly permitted earlier-years expenditure brought forward to be treated as application of income in the subsequent year and allowed the amortisation claimed by the assessee. The High Court found no infirmity in treating such brought forward adjustments as application of income and declined to interfere. [Paras 6, 7]

Revenue's appeal dismissed; Tribunal rightly allowed the carry forward/set off and amortisation claim in favour of the assessee.

Final Conclusion: The High Court dismissed the revenue appeal and affirmed the Tribunal's allowance of brought forward excess application and amortisation/depreciation as application of income, following the Division Bench's precedent that income for charitable trusts is to be computed on commercial/book principles.

Exemption under section 10(38) - long term capital gains claimed on sale through recognised stock exchange with STT paid - bogus/sham/ accommodation entries - discharge of initial onus under section 68 - reliance on investigation/SEBI reports without specific corroborative material

Exemption under section 10(38) - long term capital gains claimed on sale through recognised stock exchange with STT paid - reliance on investigation/SEBI reports without specific corroborative material - discharge of initial onus under section 68 - Deletion of addition of long term capital gains claimed as exempt under section 10(38) in assessment year 2015-2016 - HELD THAT: - The Tribunal held that the Assessing Officer's conclusion that the LTCG was 'bogus' rested primarily on the Kolkata Investigation Wing's report and general observations about modus operandi in penny stock cases without producing any material linking the assessee to accommodation entries. The assessee produced contemporaneous documentary evidence - bank payments for the preferential allotment, dematerialisation of shares, time stamped contract notes evidencing sale on BSE, receipt of sale proceeds through banking channels and STT payment - which satisfied the initial onus. The AO did not undertake independent enquiries nor confront the assessee with investigation statements or permit cross examination of such material; mere suspicion from price movement or investigative reports, without cogent corroboration specific to the assessee, was held insufficient to sustain the addition. Following earlier coordinate decisions and jurisdictional authority, the Tribunal affirmed the CIT(A)'s deletion of the addition and directed acceptance of the claimed exemption. [Paras 6, 7]

Addition of Rs. 1,60,98,447/- disallowing LTCG claimed exempt under section 10(38) is deleted and the assessment order is set aside for AY 2015-2016.

Exemption under section 10(38) - long term capital gains claimed on sale through recognised stock exchange with STT paid - bogus/sham/ accommodation entries - discharge of initial onus under section 68 - Deletion of addition of long term capital gains claimed as exempt under section 10(38) in assessment year 2016-2017 - HELD THAT: - The Tribunal agreed with the CIT(A) that the Assessing Officer had not brought specific incriminating material to show the assessee's transactions were not genuine. The assessee produced audited financial data and exchange records showing that the company whose shares were sold carried on substantial manufacturing business, had improving turnover and profits, institutional shareholding and dividend history - facts inconsistent with a 'penny stock' label. The shares were held for the requisite period, sold on NSE through registered brokers with time stamped contract notes, sale proceeds routed through banking channels and STT paid. The AO's reliance on generalized modus operandi of penny stock scams, or later regulatory actions not contemporaneous with the relevant year, without targeted evidence against the assessee, was held to be insufficient. The Tribunal therefore upheld the deletion of the addition. [Paras 10, 13]

Addition of Rs. 12,92,40,482/- disallowing LTCG claimed exempt under section 10(38) is deleted and the assessment order is set aside for AY 2016-2017.

Final Conclusion: Both departmental appeals are dismissed; the Tribunal upholds the CIT(A)s' deletions of the additions and directs acceptance of the long term capital gains claimed as exempt under section 10(38) for A.Y. 2015 2016 and A.Y. 2016 2017.

Reckoning the year of search for an "other person" from the date of receipt of seized books/documents - mandatory satisfaction note and notice requirement for invoking proceedings under section 153C - invalidity of assessment framed under section 143(3) where section 153C procedural prerequisites are not complied with - application of the first proviso to section 153C to fix the block period for assessments of the other person

Reckoning the year of search for an "other person" from the date of receipt of seized books/documents - mandatory satisfaction note and notice requirement for invoking proceedings under section 153C - invalidity of assessment framed under section 143(3) where section 153C procedural prerequisites are not complied with - Whether the assessment for A.Y. 2013-2014, framed under section 143(3) without recording the satisfaction note and without issuing notice under section 153C, is valid where the seized documents pertaining to the assessee were received by the Assessing Officer on 29.08.2013. - HELD THAT: - The Tribunal found on the record (including an RTI reply) that the seized documents relating to the assessee were handed over to the Assessing Officer on 29.08.2013 and that no satisfaction note under section 153C was found to have been recorded in the file of the searched person. Applying the first proviso to section 153C, and following the jurisprudence of the Delhi High Court and coordinate Tribunal precedents dealing with the same search group, the Tribunal held that for the purpose of section 153C the date of receipt/handing-over of documents determines the relevant "date of initiation of search" for the other person and thereby fixes the six assessment years to be considered. Because the Assessing Officer proceeded to frame the assessment under section 143(3) treating the earlier year as the year of search and did not comply with the mandatory requirement of a satisfaction note/transmission and the consequent issuance of notice under section 153C, the proceedings were held to be not in accordance with law. The Tribunal applied the ratio of earlier decisions (including the assessee's own earlier ITAT order and BNB Investment & Properties Ltd.) which held that failure to invoke section 153C's procedural prerequisites renders the assessment void, and accordingly declined to decide the additions on merits as the assessment itself was vitiated. [Paras 9]

Assessment for A.Y. 2013-2014 framed under section 143(3) is void for non-compliance with the procedural prerequisites of section 153C; assessment set aside and additions deleted.

Final Conclusion: The Tribunal allowed the appeal, held the assessment for A.Y. 2013-2014 to be null and void for failure to comply with the first proviso to section 153C (absence of satisfaction note/notice and reckoning the date of receipt of seized documents as the date of search), set aside the orders below and deleted the additions without adjudicating them on merits.

Validity of penalty show cause notice under Section 274 read with Section 271(1)(c) - requirement to specify the limb of Section 271(1)(c) under which penalty is proposed - vitiation and quashing of penalty proceedings for defective notice - admission of additional ground of appeal raising pure legal question

Admission of additional ground of appeal raising pure legal question - Admission of the assessee's additional ground of appeal challenging the validity of the show cause notices before levy of penalty. - HELD THAT: - The Tribunal found that the additional ground was legal in nature, arose out of the record and did not involve disputed facts. Reliance placed by the assessee on precedent for admitting purely legal grounds was noted. In view of these considerations the additional ground challenging the show cause notices under Section 274 read with Section 271(1)(c) was admitted for adjudication of the appeals. [Paras 5]

The additional ground of appeal was admitted in all the appeals.

Validity of penalty show cause notice under Section 274 read with Section 271(1)(c) - requirement to specify the limb of Section 271(1)(c) under which penalty is proposed - vitiation and quashing of penalty proceedings for defective notice - Whether the show cause notices dated 20.06.2014 were valid where they alleged both concealment of particulars of income and furnishing of inaccurate particulars of income without specifying which limb of Section 271(1)(c) applied, and whether the resultant penalty proceedings were vitiated. - HELD THAT: - The Tribunal observed it was an admitted fact that the show cause notices alleged both limbs of Section 271(1)(c) - concealment of particulars of income and furnishing inaccurate particulars of income - without specifying which limb was the basis for initiation of penalty proceedings. Under Section 274 an assessee must be given a reasonable opportunity to be heard; a notice that fails to specify the limb under which penalty is proposed does not afford a proper opportunity. The Tribunal relied on earlier decisions holding that such non specification renders the notice bad in law and the penalty proceedings void; those decisions were treated as persuasive and/or followed. Applying that principle to the admitted show cause notices dated 20.06.2014, the Tribunal concluded the notices were defective and the entire penalty proceedings were vitiated, making it unnecessary to decide penalty liability on merits. [Paras 8]

The show cause notices were held invalid; the penalty proceedings under Section 271(1)(c) were quashed and deleted for the assessment years in question.

Final Conclusion: The Tribunal admitted the additional legal ground and, holding that the show cause notices were defective for failing to indicate which limb of Section 271(1)(c) was invoked, quashed and deleted the penalty proceedings for A.Ys. 2009-2010 to 2012-2013 and allowed the appeals.

Arm's length price - Transactional Net Margin Method (TNMM) - transfer pricing adjustment - range of +/-5% de minimis variation - rectification under Section 154 - low tax appeal / minimum tax threshold

Arm's length price - Transactional Net Margin Method (TNMM) - range of +/-5% de minimis variation - rectification under Section 154 - Whether any transfer pricing adjustment is required after the TPO's rectification reduced the shortfall to an amount within the prescribed +/-5% tolerance. - HELD THAT: - The assessee had adopted TNMM and claimed that, after the ld. CIT(A)'s directions and the subsequent rectification order passed by the TPO under Section 154, the shortfall in the transfer pricing adjustment stood reduced to Rs. 38,74,748/-, which was less than 5% of the international transaction. The TPO himself, upon rectification, held that no adjustment was proposed because the revised shortfall fell within the allowable +/-5% range. Given that the rectified position removes the asserted material discrepancy and places the variance within the de minimis tolerance, the appellate grievance of the assessee became infructuous. [Paras 11]

Assessee's appeal dismissed as infructuous since the TPO's rectification placed the variance within the +/-5% tolerance and no adjustment is proposed.

Transfer pricing adjustment - Arm's length price - low tax appeal / minimum tax threshold - Whether the Revenue's appeal opposing exclusion of a comparable (TSR Darashaw Ltd.) should be admitted despite the relatively small tax effect. - HELD THAT: - The sole remaining challenge in the Revenue's appeal related to the exclusion of one comparable, TSR Darashaw Ltd. The Tribunal noted that acceptance of the Revenue's contention would alter the tax effect by an amount resulting in a total tax impact of Rs. 34,36,924/-. The Tribunal treated this as a low tax appeal, observing that the tax effect did not meet the minimum threshold warranting admission of the Revenue's appeal. In view of the limited fiscal impact, the appeal was held not to survive. [Paras 12]

Revenue's appeal dismissed as a low tax appeal since the tax effect was below the minimum threshold for preferring an appeal.

Final Conclusion: Both cross appeals are dismissed: the assessee's appeal is infructuous because the TPO's rectification placed the variance within the +/-5% tolerance and no adjustment is proposed; the Revenue's appeal is dismissed as a low tax appeal since the tax effect does not meet the minimum threshold for prosecution before the Tribunal.

Arm's length price - international transaction - transfer pricing adjustment - internal comparable (Internal CUP) - external comparable (External CUP) - disallowance under Section 14A read with Rule 8D - recharacterisation of transaction - interest for deferment of advance tax under Section 234C

International transaction - arm's length price - internal comparable (Internal CUP) - transfer pricing adjustment - Validity of benchmarking and ALP of corporate/financial guarantee provided by the assessee for A.Y 2012-13. - HELD THAT: - The Tribunal examined the TPO's rejection of the assessee's Internal CUP (average guarantee commission paid by the assessee to banks for third-party guarantees) and the TPO's ad hoc adoption of 2% p.a. as the ALP. Applying the ratio of the Bombay High Court in CIT v. Everest Kanto Cylinders Ltd. and following the Tribunal's earlier decisions in the assessee's own preceding years, the Court held that bank guarantee rates are not comparable to corporate guarantees and that an available Internal CUP is preferable. The assessee's Internal CUP (0.43% p.a.), supported by contemporaneous sanction letter evidence and precedent decisions approving similar low rates, was found to be a reliable benchmark. The TPO's methodology was held to be inconsistent with binding precedent and hence unsustainable. [Paras 9, 10]

Internal CUP accepted; ALP of corporate guarantee for A.Y 2012-13 upheld at 0.43% p.a and the transfer pricing adjustment of Rs. 28,69,70,745/- vacated.

Arm's length price - internal comparable (Internal CUP) - external comparable (External CUP) - transfer pricing adjustment - Benchmarking and ALP of interest charged on loan to Greatship Global Holdings Ltd. for A.Y 2012-13. - HELD THAT: - The Tribunal considered the assessee's use of an Internal CUP (arithmetic mean of interest rates the assessee paid on its foreign currency borrowings) to benchmark interest charged to its Mauritius AE (LIBOR + 2.9%). The TPO had rejected the Internal CUP on grounds of security and transaction costs and resorted to external comparables from Bloomberg, arriving at LIBOR + 3.32%. The Tribunal, however, accepted the Internal CUP as a closer comparable, relied on earlier Tribunal precedent (including the holding company's decision) and the DRP's acceptance in the preceding year, and held that there was no justification to depart from the earlier conclusion that LIBOR + 2.9% was at arm's length. [Paras 11, 14, 15]

Internal CUP accepted; interest charged at LIBOR + 2.9% on the loan to GGHL held to be at arm's length and the TP adjustment of Rs. 97,39,903/- vacated.

Recharacterisation of transaction - arm's length price - transfer pricing adjustment - Whether the sale of an under-construction vessel to AE (Greatship Vimla) could be recharacterised as a loan and whether a notional interest adjustment was permissible for A.Y 2012-13. - HELD THAT: - The TPO treated advances made under the shipbuilding contract as a notional loan and computed notional interest (opportunity cost) as the ALP; the DRP sustained that view. The Tribunal observed that revenue did not contend that the form differed from substance and that recharacterisation is permissible only in exceptional cases where form and substance differ or the arrangement departs from what independent enterprises would have done. The assessee produced market evidence and an independent valuation showing sale consideration exceeded contemporaneous market value; therefore the TPO's recharacterisation and computation of notional interest exceeded jurisdiction and was unwarranted. [Paras 16, 17, 20]

Recharacterisation rejected; notional interest adjustment of Rs. 62,23,256/- vacated.

Disallowance under Section 14A read with Rule 8D - Sustainability of the further disallowance under Section 14A read with Rule 8D for A.Y 2012-13 (and consequentially A.Y 2014-15 remand). - HELD THAT: - The assessee had made a suo-moto pro rata disallowance; the AO replaced it with a higher amount computed under Rule 8D. The Tribunal applied the Supreme Court decisions (Godrej & Boyce; Maxopp) and held that the AO must record objective satisfaction that the assessee's claim is not correct before invoking Rule 8D. Identical factual matrix in prior years led the Tribunal previously to remit the matter; accordingly, in the present case the Tribunal set aside the issue for fresh adjudication by the AO in light of Maxopp, directing opportunity to the assessee to substantiate its suo-moto disallowance. [Paras 21, 23, 25]

Matter remanded to AO for fresh adjudication of disallowance under Section 14A r.w. Rule 8D after recording requisite satisfaction; grounds allowed for statistical purposes.

Interest for deferment of advance tax under Section 234C - Correct basis for computation of interest under Section 234C for A.Y 2012-13. - HELD THAT: - The Tribunal examined Section 234C and its Explanation and held that the interest for deferment of advance tax is to be computed on the 'tax due on the returned income' (tax chargeable on total income declared in the return reduced by specified amounts). The AO had computed interest on assessed tax rather than tax on returned income. The Tribunal directed recomputation of Section 234C interest by the AO in accordance with the statutory Explanation. [Paras 26, 28]

Issue restored to AO with direction to recompute interest under Section 234C on tax due on returned income as defined in the Explanation.

International transaction - arm's length price - internal comparable (Internal CUP) - Validity of benchmarking and ALP of corporate/financial guarantee provided by the assessee for A.Y 2014-15. - HELD THAT: - Facts and controversy mirror A.Y. 2012-13. The DRP followed the predecessor panel's approach for A.Y. 2013-14 and directed adoption of 1.25% p.a.; the Tribunal applied the same reasoning as in the A.Y. 2012-13 decision and directed use of the assessee's Internal CUP (arithmetic mean) resulting in an ALP of 0.49% p.a for the year under appeal. [Paras 34, 37, 38]

Internal CUP accepted; ALP of corporate guarantee for A.Y 2014-15 to be taken at 0.49% p.a and corresponding TP adjustment vacated.

Arm's length price - internal comparable (Internal CUP) - Benchmarking and ALP of interest charged on loan to Greatship Global Holdings Ltd. for A.Y 2014-15. - HELD THAT: - Issue and facts are the same as for A.Y. 2012-13. The Tribunal applied its reasoning from the earlier part of the consolidated order and accepted the assessee's Internal CUP, holding LIBOR + 2.9% as the arm's length rate for the loan to GGHL. The DRP's and TPO's external comparable approach was rejected where a fitting Internal CUP existed and where prior DRP/Tribunal findings in related years supported the assessee. [Paras 39, 40, 41]

Internal CUP accepted; interest at LIBOR + 2.9% held to be at arm's length and the TP adjustment vacated.

Final Conclusion: The Tribunal allowed the assessee's appeals for A.Y. 2012-13 and A.Y. 2014-15: it upheld the assessee's Internal CUP benchmarks for corporate guarantees and for interest on the loan to GGHL (accepting ALPs at 0.43%/0.49% for guarantees and LIBOR + 2.9% for interest), vacated the transfer pricing additions relating to those items and the notional interest on the vessel transfer, remanded the Section 14A disallowance issues to the AO for fresh adjudication after recording requisite satisfaction, and directed recomputation of interest under Section 234C in accordance with the statutory Explanation.

Addition under section 69 of the Income-tax Act - notional interest on foreign bank balances - evidence required to impute income - presumption and surmise cannot sustain addition - remand for fresh adjudication with verification

Addition under section 69 of the Income-tax Act - notional interest on foreign bank balances - evidence required to impute income - presumption and surmise cannot sustain addition - remand for fresh adjudication with verification - Whether the notional interest added by the Assessing Officer on alleged undisclosed foreign bank balances can be sustained or the matter requires fresh adjudication after verification of accounts and supporting evidence. - HELD THAT: - The Tribunal observed that the Assessing Officer's computation of notional interest sprang from earlier additions and was founded on a presumption that credit balances in the foreign accounts would have earned interest. The CIT(A) had earlier deleted such notional additions for a prior assessment year on the ground that the information exchanged from the foreign bank records did not show any payment of interest and that the AO's assumption applied Indian banking norms inappropriately to accounts in a developed-country banking system where interest rates and account practices differ. The Tribunal found merit in the assessee's contention that the accounts relied upon by the AO (identified by profile names) were shown to have been closed in FY 2005-06 and therefore could not have generated interest in the impugned year. The Tribunal held that additions of notional interest can be made only on the basis of tangible evidence or material and not merely by presumption or surmise. In the interest of justice, the Tribunal set aside the CIT(A)'s order insofar as it deleted the addition and remanded the issue to the AO with specific directions: (i) verify whether the bank accounts relied upon are in fact closed and, if closed, do not make any addition as no interest could be earned on closed accounts; (ii) if any other undisclosed bank account of the assessee is found, make any addition only on the basis of evidence and at a reasonable rate of interest; and (iii) additions should not be made on the basis of hypothetical computation without supporting material. [Paras 9, 10]

Order of the CIT(A) deleting the addition set aside; matter remanded to the Assessing Officer to verify account status and evidence and to decide afresh in accordance with the Tribunal's directions.

Final Conclusion: The Tribunal allowed the Revenue's appeal for statistical purposes by setting aside the CIT(A)'s deletion of the notional interest addition and remanding the matter to the Assessing Officer for fresh adjudication with directions to verify account closures, rely on evidence before making any addition, and, if warranted, compute interest at a reasonable rate.

Mutual Agreement Procedure (MAP) settlement binding for pending appeals - Levy of interest under section 234B where entire tax liability is discharged through deduction at source - Attribution of business profits to assumed Permanent Establishment - Characterisation of software revenue as royalties for taxability

Mutual Agreement Procedure (MAP) settlement binding for pending appeals - Attribution of business profits to assumed Permanent Establishment - Characterisation of software revenue as royalties for taxability - Effect of MAP settlement on the appeals filed by the taxpayer and the Revenue and consequent dismissal/withdrawal of those appeals. - HELD THAT: - The Tribunal recorded the communication dated 02.03.2021 from the Competent Authority confirming resolution of the MAP for the relevant assessment years and detailing the manner in which contract receipts would be treated (assumption of a PE, attribution of business profits to that PE, and characterization of certain software revenue as royalties). The Tribunal held that where all issues between the parties have been settled under MAP and communicated by the Competent Authority, there is no purpose in keeping the appeals alive pending procedural formalities. The Tribunal further noted the Revenue representative's inability to controvert the settlement and observed that administrative formalities cannot defeat the finality of a MAP resolution. Accordingly, the taxpayer's appeals were ordered dismissed as withdrawn and the Revenue's cross-appeals were dismissed as infructuous (subject to the limited exception noted below), with liberty to the Revenue to seek restoration if required. [Paras 4, 8, 9, 11, 15]

All appeals arising from the settled issues were dismissed as withdrawn or held infructuous and disposed of in view of the MAP settlement, subject to liberty to the Revenue to restore its appeals if necessary.

Levy of interest under section 234B where entire tax liability is discharged through deduction at source - Sustainability of levy of interest under section 234B against the non-resident taxpayer which had tax deducted at source on payments made to it. - HELD THAT: - The Tribunal accepted the taxpayer's contention, supported by the Delhi High Court precedent relied upon, that where a non-resident assessee has a PE in India but the entire tax on payments made to the non-resident was subject to deduction at source by the payer, the non-resident was not under an obligation to pay advance tax. In such circumstances, the levy of interest under section 234B on the non-resident was held to be not sustainable. The Tribunal followed the reasoning that the payer/recipient of payments bears primary liability for withholding and the payer may be an assessee-in-default under the relevant provisions; the failure of the payer to deduct tax cannot be converted into advance-tax liability of the non-resident leading to interest under section 234B. [Paras 12, 13, 14, 15]

Ground no.22 of the taxpayer's appeal (challenging levy of interest under section 234B) was allowed and the interest was deleted.

Final Conclusion: In view of the MAP settlement communicated by the Competent Authority, the Tribunal dismissed the taxpayer's appeals as withdrawn and held the Revenue's cross-appeals to be infructuous, except that the Tribunal adjudicated and allowed the taxpayer's ground challenging levy of interest under section 234B for the specified assessment year, deleting that interest; the Revenue retains liberty to restore its appeals if necessary.

Approval under section 10(23C)(vi) of the Income-tax Act - existing solely for educational purposes - eligibility of societies as educational institutions for exemption - effect of prior inadmissible claim under section 10(23C)(iiiad) on institutional character - powers of the prescribed authority to call for documents and verify genuineness of activities - misapplication of judicial precedent

Effect of prior inadmissible claim under section 10(23C)(iiiad) on institutional character - existing solely for educational purposes - Whether the denial of approval under section 10(23C)(vi) could be sustained on the basis that the assessee had earlier made inadmissible claims of exemption under section 10(23C)(iiiad). - HELD THAT: - The Tribunal held that an earlier inadmissible claim of exemption under section 10(23C)(iiiad), made because aggregate receipts in the relevant years exceeded the prescribed limit, does not alter or impinge upon the character of the institution as existing solely for educational purposes. The finding by the CIT(E) that such prior inadmissible claims affected the extent and quality of surpluses and therefore justified rejection of approval was characterised as a general and unsubstantiated observation without factual basis. The Tribunal accepted the assessee's explanation that once it became aware that receipts exceeded the limit it applied for approval, and held that this circumstance was not a ground to deny approval under section 10(23C)(vi). [Paras 10]

The denial of approval could not be justified on the ground of prior inadmissible claims under section 10(23C)(iiiad); such claims do not negate that the institution exists solely for educational purposes.

Eligibility of societies as educational institutions for exemption - misapplication of judicial precedent - approval under section 10(23C)(vi) of the Income-tax Act - Whether the assessee society was disqualified from approval under section 10(23C)(vi) by reason of the decision in Pinegrove International Charitable Trust as interpreted by the CIT(E). - HELD THAT: - The Tribunal found that the CIT(E) misread and misapplied the Pinegrove decision. The High Court in Pinegrove had held that institutions registered as societies may qualify as educational institutions eligible for exemption under section 10(23C)(vi). The assessee, being a registered society, therefore met the eligibility principle established by that precedent. The CIT(E)'s conclusion that the applicant 'being a society prima facie does not get covered' was contrary to the correct reading of the cited authority and was therefore incorrect. [Paras 11]

The assessee, as a registered society, is not disqualified from approval under section 10(23C)(vi) by the Pinegrove precedent; the CIT(E)'s contrary conclusion was a misapplication of that decision.

Powers of the prescribed authority to call for documents and verify genuineness of activities - approval under section 10(23C)(vi) of the Income-tax Act - Whether the prescribed authority was entitled to verify objects and activities and whether, on the material before it, denial of approval was warranted. - HELD THAT: - The Tribunal noted the proviso to section 10(23C)(vi) permits the prescribed authority to call for documents and make enquiries to satisfy itself about genuineness of activities. However, on the material placed before the CIT(E) - including aims and objects and the explanations furnished - there was no valid basis to conclude that the society did not exist solely for educational purposes or to justify rejection of the application for approval. The Tribunal therefore set aside the CIT(E)'s order and directed grant of approval in accordance with law. [Paras 8, 12]

While the prescribed authority may verify objects and activities, the CIT(E) lacked a factual or legal basis to refuse approval in this case; the order rejecting approval was set aside and the CIT(E) directed to grant approval as per law.

Final Conclusion: The appeal is allowed. The order denying approval under section 10(23C)(vi) is set aside: prior inadmissible claims under section 10(23C)(iiiad) do not defeat the institution's character as existing solely for educational purposes, the Pinegrove precedent does not disqualify societies from eligibility, and the CIT(E) is directed to grant approval in accordance with law.

Disallowance for unvouched cash payments - business expediency - ad hoc disallowance - verifiability of vouchers

Disallowance for unvouched cash payments - ad hoc disallowance - business expediency - Deletion of 5% disallowance made on Diwali expenses - HELD THAT: - The Assessing Officer disallowed 5% of Diwali expenses on the ground that payments were partly in cash and supported by self made vouchers. No specific items were identified as not being for business purposes, nor was there any finding that the test of business expediency failed. The CIT(A) upheld the disallowance as reasonable, but the Tribunal found that sustaining an ad hoc disallowance on the sole basis of cash payments and self made vouchers-without pointing to specific non business or bogus items-was impermissible. Inconsistency in the lower authority's approach (deleting a similar disallowance elsewhere where no specific examples were produced) further undermined the basis for the addition. Consequently the disallowance was held to be ad hoc and was deleted.

Disallowance of 5% on Diwali expenses deleted.

Disallowance for unvouched cash payments - ad hoc disallowance - business expediency - Deletion of 5% disallowance made on general cartage expenses - HELD THAT: - The Assessing Officer imposed a 5% disallowance on general cartage expenses because parts of the payments were in cash and vouchers were said to be self made. There was no finding that specific payments were not for business or that business expediency was lacking. The Tribunal observed that disallowance merely on the basis of cash payment and unverifiable vouchers, without identification of non business items, is arbitrary. In light of the absence of any specific adverse finding and the inconsistent approach of the lower authority, the Tribunal treated the disallowance as ad hoc and unsustainable.

Disallowance of 5% on general cartage expenses deleted.

Disallowance for unvouched cash payments - ad hoc disallowance - business expediency - Deletion of 5% disallowance made on material shifting expenses - HELD THAT: - Material shifting expenses were subjected to a 5% disallowance by the Assessing Officer on the basis of cash payments and allegedly self made vouchers. There was no demonstration that particular expenditures were not incurred for business purposes or that the books were unreliable to the extent of warranting rejection under the applicable provision. The Tribunal held that in absence of specific findings impugning business character or expediency of expenses, a percentage disallowance based on mode of payment alone is ad hoc and cannot be sustained.

Disallowance of 5% on material shifting expenses deleted.

Disallowance for unvouched cash payments - ad hoc disallowance - business expediency - Deletion of 5% disallowance made on miscellaneous expenses - HELD THAT: - Miscellaneous expenses were partly paid in cash and therefore a 5% disallowance was made by the Assessing Officer. The record did not contain any finding that such expenses were not for business or that vouchers were so unreliable as to warrant a disallowance. The Tribunal concluded that a mechanistic percentage disallowance on the basis of cash payments and self made vouchers, without identification of non business items, is ad hoc and not sustainable.

Disallowance of 5% on miscellaneous expenses deleted.

Disallowance for unvouched cash payments - ad hoc disallowance - business expediency - Deletion of disallowance on repairs & maintenance expenses (including reversal of CIT(A)'s partial restriction) - HELD THAT: - Repairs and maintenance expenditure was disallowed at 5% by the Assessing Officer on account of cash payments and unverifiable vouchers; the CIT(A) partly allowed the appeal by limiting the disallowance to a fixed sum. The Tribunal observed that neither authority identified specific items as not being for business or showed that the test of business expediency was not satisfied. Given the absence of specific adverse findings and the inconsistent treatment across expense categories, the Tribunal found the disallowance to be ad hoc. The partial restriction did not cure the fundamental lack of basis for disallowance, and therefore the entire addition was deleted.

Disallowance on repairs & maintenance deleted in full.

Final Conclusion: The Tribunal found that the Assessing Officer's percentage disallowances across various expense heads were ad hoc and unsupported by any finding that the expenditures were not incurred for business purposes; in consequence all contested disallowances were deleted and the assessee's appeal was allowed.

Amendment of documents under Section 149 of the Customs Act - bills of entry amendment after clearance subject to documentary evidence - admissibility of contemporaneous documents not on departmental record - technological limitation of ICES/GSTN cannot defeat statutory remedy - obligation of assessing officer to consider bona fide errors and grant consequential reliefs

Amendment of documents under Section 149 of the Customs Act - bills of entry amendment after clearance subject to documentary evidence - admissibility of contemporaneous documents not on departmental record - Correction of bona fide errors in GSTIN mentioned in bills of entry under Section 149 is permissible and the assessing authority must consider contemporaneous documents in the possession of the importer to establish inadvertent error. - HELD THAT: - The Court construed Section 149 as enabling correction of documents even after goods are cleared, subject to the proviso which requires documentary evidence that existed at the time of clearance. The proviso's conditional nature demonstrates that post-clearance amendment is contemplated. The Assessing Authority cannot confine itself strictly to documents already on departmental record; contemporaneous documents available with the importer may be admitted to establish that the error was inadvertent and bona fide. The spirit of the transitional GST regime - to permit seamless transactions and credit flow - supports a liberal construction permitting correction where established by adequate documentary proof. The Court has earlier applied these principles and reaffirms that approach in favour of the petitioner. [Paras 11, 12, 13, 15]

Request for amendment to correct bona fide errors in the bills of entry is legally maintainable and must be considered on the basis of contemporaneous documentary evidence.

Technological limitation of ICES/GSTN cannot defeat statutory remedy - obligation of assessing officer to consider bona fide errors and grant consequential reliefs - A systemic or technological inability of ICES/GSTN to permit electronic amendment does not preclude the assessing officer from considering and allowing amendment under Section 149; manual consideration and measures must be adopted until IT systems are upgraded. - HELD THAT: - The Court rejected the contention that the design or limitation of the ICES/GSTN interface, and the fact that data has been transmitted to GSTN, operates as an absolute bar to amendment. To allow a technological limitation to deny a statutory remedy would be contrary to the Act and the objectives of GST transition. Administrative safeguards to protect integrity of transactions are legitimate, but they do not authorise denial of relief where an importer proves an inadvertent, bona fide error. The Court directed that, pending necessary technological measures, the assessing authority should accept and examine the petitioner's records and pass orders in accordance with law, with the opportunity of hearing and with all consequential reliefs. The petitioner was permitted to press its materials before the Assessing Officer, who is to decide the matter within a specified time. [Paras 14, 15, 16, 17]

Technological constraints in the departmental IT system do not bar amendment; the assessing officer must manually consider the petitioner's proof and decide the amendment request and consequential reliefs within the time directed, with the show cause notice kept in abeyance pending that exercise.

Final Conclusion: Writ petitions allowed; impugned orders refusing amendment set aside. Petitioner permitted to place contemporaneous records before the Assessing Authority, which shall consider the amendment requests under Section 149 and pass orders after hearing within four weeks, with the issued show cause notice kept in abeyance pending that exercise.

Transfer of winding-up proceedings to the NCLT under the 5th proviso to section 434(1)(c) of the Companies Act, 2013 - irreversible stage of winding-up - custodia legis and powers of the Company Liquidator - modification of interim Status Quo order - negotiation and settlement between auction purchaser and unsecured/secured creditors - production of latest winding-up status report and records by the Official Liquidator - preservation of original title deeds subject to leave of the Court

Transfer of winding-up proceedings to the NCLT under the 5th proviso to section 434(1)(c) of the Companies Act, 2013 - irreversible stage of winding-up - Whether the pending winding-up proceedings should be transferred from the High Court to the NCLT or remitted for verification of facts. - HELD THAT: - The Court applied the principle laid down by the Hon'ble Supreme Court that a Company Court may exercise its discretion under the 5th proviso to section 434(1)(c) to transfer winding-up proceedings to the NCLT unless the winding-up has reached an irreversible stage making it impossible to set the clock back. Whether such an irreversible stage has been reached depends on the facts and circumstances and requires factual verification of the stage and steps already taken in the winding-up proceedings. In consequence, the Court directed that the record and a latest Status Report of the winding-up proceedngs be produced so that the Court may determine, in accordance with the cited Supreme Court principle, whether transfer to the NCLT is appropriate in this case. [Paras 2, 3, 6, 10, 15]

Remanded for factual verification: directed production of winding-up record and latest Status Report to enable decision whether the proceedings should be transferred to the NCLT under the stated principle.

Modification of interim Status Quo order - negotiation and settlement between auction purchaser and unsecured/secured creditors - Whether the long-standing blanket Status Quo order should be modified to permit negotiations/settlement between Respondent No.5 (auction purchaser) and unpaid secured creditors. - HELD THAT: - Considering the prolonged pendency (over ten years) and the stagnation of productive assets, the Court held that continuing a blanket Status Quo order would serve no useful purpose and impede resolution or productive use of assets. As an interim measure, the Court modified the earlier Status Quo orders to permit Respondent No.5 (Shree Industries Ltd.) and Respondent No.9 (ASREC (India) Ltd., assignee of Bank of Baroda) and other unpaid secured creditors to undertake negotiations for settlement of dues during the interregnum. Any settlement arrived at must be produced before the Court; if settlement is not possible, parties must file a Status Report detailing efforts and reasons for failure to settle. Such modification is subject to the final decision in the Letters Patent Appeal. [Paras 11, 12, 13]

Blanket Status Quo order modified to permit negotiation and interim settlement efforts by specified parties; any settlement or report of efforts to be placed on record and shall remain subject to the final decision.

Production of latest winding-up status report and records by the Official Liquidator - Obligation to place on record the current stage and material orders in the winding-up proceedings of M/s. Ganpati Pulp and Paper Mills Ltd. - HELD THAT: - The Court summoned and directed the Official Liquidator to produce the latest Status Report of the winding-up proceedings and to place before the Court the record of Company Petition No.139 of 1985 and relevant interim applications and orders. This production is necessary for the Court to assess the stage of winding-up and to decide, in accordance with the Supreme Court's guidance, whether transfer to the NCLT is permissible or whether the winding-up has reached an irreversible stage. [Paras 7, 8, 10, 14, 15]

Official Liquidator directed to produce the latest Status Report and the winding-up petition record along with relevant orders before the next date of hearing.

Preservation of original title deeds subject to leave of the Court - Whether the original title deeds in possession of Gujarat State Financial Corporation should be released to any party. - HELD THAT: - As an interim protective measure the Court ordered that the Original Title Deeds of the properties in question, which are said to be in possession of Respondent No.1 (Gujarat State Financial Corporation), shall not be handed over to any party except with the leave of the Court. This preserves the status quo regarding title documents pending further orders and safeguards interests while adjudication and possible negotiations proceed. [Paras 17]

Original Title Deeds shall not be delivered to any party without the leave of the Court.

Final Conclusion: The Court, applying the Supreme Court's guidance, directed production of the winding-up record and latest Status Report to determine whether transfer to the NCLT is permissible or whether the winding-up has progressed to an irreversible stage; meantime the long-standing blanket Status Quo order is modified to permit negotiation and interim settlement efforts by specified creditors and the auction purchaser (subject to final orders), the Official Liquidator is directed to place records on file, and original title deeds are preserved subject to Court leave. The matter is treated as part-heard and posted for further hearing.

Limitation under Article 137 of the Limitation Act - Effect of acknowledgement under Section 18 of the Limitation Act - Effect of payment on account under Section 19 of the Limitation Act - Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code (Section 238-A) - Transfer of pending winding up proceedings and the Companies (Transfer of Pending Proceedings) Rules (Rule 5) - Balance sheet entries as acknowledgment of debt - Status of assignee as Financial Creditor/Trustee applicant under Section 7

Status of assignee as Financial Creditor/Trustee applicant under Section 7 - Appellant (Phoenix ARC Pvt. Ltd. acting as trustee of Phoenix Trust Fy 14 9) is the assignee and qualifies as Financial Creditor for purposes of filing the Section 7 application. - HELD THAT: - The assignment deed dated 30th December, 2013 describes the assignor as L&T Infrastructure Finance Company Ltd. and the assignee as Phoenix ARC Pvt. Ltd. acting in its capacity as trustee of the specified Phoenix Trust. On this basis the Tribunal found no defect in the description of the applicant in the Section 7 petition and held that the appellant stands as assignee of the financial debt and thus as Financial Creditor entitled to file under Section 7 of the IBC. The Tribunal rejected the respondent's contention that this defeated maintainability of the Section 7 application. [Paras 10]

Appellant is the assignee and is a Financial Creditor; the challenge on this ground is rejected.

Limitation under Article 137 of the Limitation Act - Effect of acknowledgement under Section 18 of the Limitation Act - Effect of payment on account under Section 19 of the Limitation Act - Applicability of the Limitation Act to proceedings under the Insolvency and Bankruptcy Code (Section 238-A) - Transfer of pending winding up proceedings and the Companies (Transfer of Pending Proceedings) Rules (Rule 5) - Balance sheet entries as acknowledgment of debt - Section 7 application filed on 15th September, 2017 is within limitation and cannot be dismissed as time barred. - HELD THAT: - The Tribunal applied the settled principle that residuary Article 137 governs limitation for Section 7 applications and that Section 238 A makes the Limitation Act applicable to IBC proceedings 'as far as may be'. However, the Limitation Act's provisions such as Sections 18 and 19 apply to extend or restart limitation where there is a valid written acknowledgment or a payment on account made before expiry of the prescribed period. The Tribunal analysed the statutory scheme including the substitution of Section 434 and the evolution of Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, observing that the legislative framework did not intend to treat claims in pending winding up petitions as time barred and allowed parties an option to file under Sections 7/8/9 after abatement. Although the appellant withdrew the winding up petition rather than seeking formal transfer, the High Court order was read in context to have left the lis open to be pursued before the Adjudicating Authority. Critically, the record contained audited annual statements/balance sheets for 2014 15, 2015 16 and 2016 17 showing acknowledgement of the debt and a payment by cheque in April 2015. The Tribunal held that these balance sheet entries and the payment fall within Sections 18 and 19 of the Limitation Act, thereby generating fresh periods of limitation and rendering the Section 7 application filed on 15th September, 2017 within time. The Tribunal rejected the respondent's submission that balance sheet entries or settlement related payments could not operate as acknowledgments in every case, reiterating that the question is fact sensitive and that entries in audited financial statements may constitute written acknowledgment when not qualified by directors' reservations. [Paras 11, 14, 16, 39]

Application under Section 7 is held to be within limitation and the Adjudicating Authority's dismissal on limitation grounds is set aside; the Section 7 petition is restored for admission and further orders.

Final Conclusion: The Tribunal allowed the appeal: Phoenix ARC Pvt. Ltd. is a Financial Creditor/assignee entitled to prosecute the Section 7 petition, and the Section 7 application filed on 15th September, 2017 was held to be within limitation (by reason of balance sheet acknowledgments and an April 2015 payment), therefore the impugned order dismissing the petition as time barred was quashed and the matter was restored to the Adjudicating Authority for admission and further directions.

Commercial wisdom of Committee of Creditors - interference with commercial decision of CoC - maintainability of appeal under Section 33(2) of the Insolvency & Bankruptcy Code, 2016 - precedential effect of Supreme Court judgment in Kalpraj Dharamshi v. Kotak Investment Advisors - dismissal of appeal as withdrawn

Maintainability of appeal under Section 33(2) of the Insolvency & Bankruptcy Code, 2016 - precedential effect of Supreme Court judgment in Kalpraj Dharamshi v. Kotak Investment Advisors - interference with commercial decision of CoC - The appellant was permitted to withdraw the Company Appeal and the appeal was dismissed as withdrawn; the Tribunal recorded concerns about maintainability in light of Section 33(2) IBC and the Supreme Court's observations but did not decide the maintainability issue on merits. - HELD THAT: - On hearing, the Tribunal put a query to the appellant's counsel as to how the appeal was maintainable in view of the ingredients of Section 33(2) of the I&B Code and the Supreme Court's guidance in Kalpraj Dharamshi v. Kotak Investment Advisors (paras.155-159), which emphasises non-interference with the commercial wisdom of the Committee of Creditors except within limited scope. The Adjudicating Authority (NCLT, Hyderabad) had also observed in the impugned order that interference with the CoC's decision could not be sustained where the resolution plan was submitted after the last date. In response, the appellant sought permission to withdraw the appeal. The Tribunal, without deciding the maintainability issue on merits, acceded to the withdrawal request and dismissed the appeal as withdrawn, also closing all connected interlocutory applications and ordering no costs. [Paras 2, 3, 4]

Appeal dismissed as withdrawn; interlocutory applications closed and no order as to costs.

Final Conclusion: The Tribunal allowed the appellant to withdraw the Company Appeal (AT)(Ins) No.11 of 2021 and dismissed it as 'withdrawn', noting objections as to maintainability under Section 33(2) IBC and the Supreme Court's guidance but making no adjudication on those issues; connected interlocutory applications were closed and there was no order as to costs.

Right to travel abroad as part of fundamental rights - Conditions of bail and passport custody - Balance between right to travel and interests of investigation and trial - Power to relax bail conditions subject to adequate safeguards - Risk of tampering with evidence and flight risk - Liberty to cancel order on non-compliance of conditions

Conditions of bail and passport custody - Balance between right to travel and interests of investigation and trial - Risk of tampering with evidence and flight risk - Validity of the Designated Court's order relaxing the bail condition to permit the accused to retain and use his passport for business travel subject to specific conditions - HELD THAT: - The High Court examined whether the conditions imposed by the Designated Court - including execution of an additional bond, deposit, provision of itinerary and contact details to the investigating officer and Court, undertaking to remain present for trial, restriction on leaving India during crucial witness examination, reporting on return, and a three month continuous stay limit abroad - adequately protect the interests of investigation and trial while respecting the accused's right to travel. The Court noted: (a) the accused had previously obtained permission on multiple occasions and complied with conditions without any recorded breach; (b) trial and investigation are protracted with no prospect of completion in the near future, making repeated short term permissions potentially burdensome; and (c) the Designated Court reserved liberty to cancel the order on non compliance. On this combined factual and legal assessment the Court found the safeguards sufficient to prevent prejudice to the prosecution, to trace the accused when abroad, and to secure his presence at trial if required. The apprehension of flight or tampering with evidence was held to be misplaced in view of past compliance and the conditions imposed. [Paras 15, 16, 17, 20, 21]

The impugned order relaxing the bail condition and permitting retention and use of the passport on the specified safeguards is not illegal and is upheld.

Power to relax bail conditions subject to adequate safeguards - Liberty to cancel order on non-compliance of conditions - Balance between right to travel and interests of investigation and trial - Whether an additional condition requiring prior leave of the Court for each foreign travel was necessary despite the safeguards imposed by the Designated Court - HELD THAT: - The Court considered the applicant's submission that an omnibus relaxation should nonetheless be subject to the accused seeking leave of the Court before each trip. Having regard to the nature of the business activities, the frequent need for timely foreign travel, the detailed conditions imposed by the Designated Court (including advance communication of itinerary and contact details, limits on continuous stay, reporting obligations and express power to cancel on non compliance), and the accused's past compliance, the High Court concluded that imposing a further condition of seeking leave of the Court would be a futile and burdensome exercise. The conditions in the impugned order were held to constitute sufficient checks to secure trial and investigation without unduly infringing the accused's right to conduct business abroad. [Paras 18, 19, 21]

The prayer to add a condition requiring leave of the Court for each trip is refused; no such additional condition is necessary.

Final Conclusion: Criminal Revision Application is dismissed. The order of the Designated Court dated 17.09.2020 permitting the respondent to retain and use his passport for business travel subject to the stipulated safeguards stands confirmed; liberty to move for cancellation of the order remains available on proof of non compliance.

Provisional attachment under PMLA - Properties involved in money laundering - Scheduled offences under PMLA - Corresponding law under PMLA - Interim relief pending adjudication

Interim relief pending adjudication - Provisional attachment under PMLA - Properties involved in money laundering - Whether interim protection should be granted against the provisional attachment order and related notices under the PMLA. - HELD THAT: - The Division Bench declined to grant interim relief. The court observed that the order of attachment is provisional, limited in duration, and a show-cause notice has been issued with the adjudicatory process pending. The Bench noted the allegation of laundering of Rs. 43.69 crores and that identical writ proceedings involving similar facts had been dismissed earlier, with an LPA pending without interim protection. In these circumstances the petitioner had not established a prima facie case or balance of convenience in his favour to justify interim restraint on the provisional attachment or the ongoing proceedings under the PMLA. The court therefore found it inappropriate to pass any interim order at this stage. [Paras 12, 13]

Interim relief refused; no interim order against the provisional attachment or notice.

Scheduled offences under PMLA - Corresponding law under PMLA - Whether PMLA proceedings against the petitioner are maintainable in Jammu & Kashmir and whether reference to Section 120-B IPC in the Schedule corresponds to local law. - HELD THAT: - The arguments on the applicability of the PMLA to Jammu & Kashmir and on interpretation of the Schedule (including whether reference to Section 120-B IPC corresponds to any provision in local law) were canvassed by counsel for both sides. The court recorded the rival contentions (including reliance on the provision treating references as to corresponding law) but did not decide these questions on merits at this stage, noting that adjudication on such issues requires an opportunity to the respondents to file their response. Consequently the court refrained from adjudicating these substantive legal issues in the present hearing.

Substantive questions on applicability and interpretation of the Schedule to the PMLA not adjudicated at this stage; left for adjudication after pleadings.

Provisional attachment under PMLA - Procedural directions for continuation of proceedings before the Court and Adjudicating Authority. - HELD THAT: - The court directed the respondents to file their counter affidavit within three weeks and granted the petitioner one week thereafter to file a rejoinder. The petition was listed for admission/final disposal on a specified date and ordered to be considered along with the earlier LPA arising from identical facts. [Paras 14, 15]

Respondents to file counter within three weeks; rejoinder in one week; matter listed for admission/final disposal along with LPA on the stated date.

Final Conclusion: The Division Bench refused interim relief against the provisional attachment and related show-cause proceedings under the PMLA, declined to finally adjudicate substantive questions on the Act's applicability and the Schedule at this stage, directed the respondents to file their counter, permitted rejoinder, and listed the matter for final hearing along with the related LPA.

Provisional attachment - interim order - vacation of interim order - expiry of 180 days under Section 5(1)(b) of the Prevention of Money Laundering Act, 2002 - proceedings under Section 5(5) of the Prevention of Money Laundering Act, 2002 - maintainability of writ petition - affidavit-in-opposition

Interim order - vacation of interim order - Whether the interim order dated 21st October, 2020 should be vacated at this stage - HELD THAT: - The Court recorded that the interim order of 21st October, 2020 continues to subsist and was granted on the premise that respondents had sought time. No vacating application had been filed by the respondents in the interim. Having regard to those facts and the continued subsistence of the interim order, the Court refused to vacate the interim order at this stage and declined to entertain the respondents' prayer for vacatur.

Prayer to vacate the interim order dismissed; the interim order of 21st October, 2020 remains subsisting.

Provisional attachment - expiry of 180 days under Section 5(1)(b) of the Prevention of Money Laundering Act, 2002 - proceedings under Section 5(5) of the Prevention of Money Laundering Act, 2002 - Whether pendency of the writ petition and the interim order prevents the respondents from proceeding with complaint No.1262 of 2020 under Section 5(5) of the PMLA - HELD THAT: - The Court held that continuation of the writ petition and the subsisting interim order will not operate as an embargo on the respondents from proceeding with complaint No.1262 of 2020 under Section 5(5) of the PMLA. The Court distinguished such complaint proceedings from coercive steps taken in execution of the provisional order of attachment and permitted the respondents to proceed, observing that such proceedings would not amount to coercive action under the provisional attachment order.

Respondents are free to proceed with complaint No.1262 of 2020 under Section 5(5) PMLA notwithstanding pendency of the writ petition and the subsisting interim order.

Affidavit-in-opposition - maintainability of writ petition - Directions for filing affidavits and further steps in the writ petition - HELD THAT: - The Court found that the matter could be more effectively heard after filing of affidavits. It therefore directed the respondents to file an affidavit-in-opposition within four weeks and permitted the petitioners to file a reply within two weeks thereafter. The Court granted liberty to mention after six weeks for listing under the heading 'Hearing'. The directions for filing affidavits were made peremptory in view of the subsisting interim order.

Affidavit-in-opposition to be filed within four weeks; reply, if any, within two weeks thereafter; liberty to mention after six weeks for inclusion in the hearing list.

Final Conclusion: The Court refused to vacate the interim order of 21st October, 2020, allowed respondents to proceed with complaint No.1262 of 2020 under Section 5(5) PMLA despite the writ petition's pendency, and directed the filing of affidavits on a peremptory timetable with liberty to list the matter for hearing thereafter.

Grant of bail under the Prevention of Money Laundering Act - Revival of the twin conditions in Section 45 of PMLA by legislative amendment - Burden and presumption under Section 24 of PMLA - Provisional attachment and adjudication under Section 5 and Section 8 of PMLA - Permissible perusal of sealed cover material in bail proceedings - Custodial necessity and delay between investigation and arrest

Revival of the twin conditions in Section 45 of PMLA by legislative amendment - Grant of bail under the Prevention of Money Laundering Act - Amendment to Section 45(1) of PMLA does not revive the twin conditions struck down by the Supreme Court in Nikesh Tarachand Shah. - HELD THAT: - The Court examined the post-judgment amendment to Section 45(1) (insertion of words "under this Act" and related textual changes) and the reasoning of the Supreme Court in Nikesh Tarachand Shah which declared the twin conditions unconstitutional as violative of Articles 14 and 21. Having considered authorities and earlier High Court decisions on the point, the Court concluded that the amendment does not have the effect of reviving or resurrecting the twin conditions struck down by the Apex Court. The notification effecting amendment is silent as to retrospective revival and cannot be read to negate the Supreme Court's conclusion that the twin conditions are manifestly arbitrary and violative of fundamental rights. The Court therefore held that the rigour of the struck-down twin conditions is not applicable for deciding the present bail application. [Paras 40, 41, 42, 43]

Amendment to Section 45(1) does not revive the twin conditions; those conditions remain inapplicable for the purpose of the bail application.

Grant of bail under the Prevention of Money Laundering Act - Custodial necessity and delay between investigation and arrest - Burden and presumption under Section 24 of PMLA - Whether, on the facts of this case, the applicant should be released on bail despite the seriousness of allegations under PMLA. - HELD THAT: - The Court assessed the factual matrix: alleged transactions dated 2009-2012, ECIR registered in January 2019, applicant repeatedly cooperated and appeared on summons, arrest effected after about 18 months (07.09.2020), and the applicant had been in custody for over six months. The Adjudicating Authority had dismissed the complaint under Section 5(5)/Section 8 and not confirmed the provisional attachment; that order was under challenge and a status-quo was directed by the Appellate Authority. Co-accused (including the principal alleged beneficiary and V. N. Dhoot) had been released on bail or produced and released, and no charge-sheet had been filed by the CBI in respect of scheduled offences. The Court noted that statements and documents would require testing at trial and that several explanations were tendered by the applicant and some witness statements tended to support aspects of the defence. The Court considered the presumption in Section 24 but observed that rebuttal and testing are matters for trial and that at bail stage the court must act on broad probabilities. Balancing liberty and investigation needs, and finding no convincing material to show present risk of absconding or demonstrable tampering that would justify continued custody, the Court concluded further detention was unnecessary. [Paras 49, 51]

Bail allowed; applicant to be released on conditions (PR bond, reporting, surrender of passport, prohibition on tampering and travel without permission, etc.).

Provisional attachment and adjudication under Section 5 and Section 8 of PMLA - Effect of adjudicating authority's findings on interim custody and bail - Relevance of the Adjudicating Authority's dismissal of the complaint under Section 5(5)/Section 8 to the bail determination. - HELD THAT: - The Court recorded and relied upon the Adjudicating Authority's detailed findings that the provisional attachment of the flat, cash and NRPL assets was not sustained: the Authority concluded that the Rs. 64 crores investment and the flat were not proved to be proceeds of crime and that the RTL loan had been repaid and not shown to have caused loss. The Adjudicating Authority held that defendants had discharged the burden under Section 8(1). That adjudicatory outcome, though under challenge, and subject to status-quo, formed part of the factual matrix which weighed in favour of bail since the purported proceeds-of-crime link was not confirmed at adjudication. [Paras 16, 20, 28]

Adjudicating Authority's dismissal of the complaint and findings that attached properties were not proceeds of crime were relevant factors supporting grant of bail.

Permissible perusal of sealed cover material in bail proceedings - Grant of bail under the Prevention of Money Laundering Act - Whether the Court may rely on, or record findings based on, material produced by the prosecution in a sealed envelope alleging tampering with evidence. - HELD THAT: - The Court noted the prosecution tendered material in a sealed envelope and relied on P. Chidambaram v. DRI to observe that while a court may peruse material produced in sealed cover to satisfy its judicial conscience, it should not record conclusive findings based solely on sealed-cover material in bail proceedings as that would undermine fair trial. Having perused the sealed envelope, the Court refrained from making adverse findings about its contents and declined to treat the sealed material as determinative against the applicant for denial of bail. [Paras 30]

Court refrained from recording findings based on sealed-cover material and did not treat it as decisive for denial of bail.

Final Conclusion: The High Court held that the post-Nikesh Shah amendment to Section 45(1) of PMLA does not revive the twin conditions struck down by the Supreme Court; on the facts-long delay between investigation and arrest, cooperation by the applicant, dismissal by the Adjudicating Authority of the provisional attachment complaint and absence of compelling grounds of flight or proven tampering-the Court exercised its discretion to grant bail subject to conditions (PR bond/sureties, reporting, surrender of passport, prohibition on tampering and leave from trial court to travel abroad).

Proceeds of crime - money laundering - prosecution under the PML Act - corpus delicti - seizure - untainted money - requirement to project proceeds as untainted money

Proceeds of crime - prosecution under the PML Act - untainted money - seizure - corpus delicti - Prosecution of the petitioner under the PML Act in C.C.No.60 of 2018 is not maintainable and is quashed. - HELD THAT: - The complaint identifies the sum of Rs. 50,00,000/- recovered from a car as the proceeds of crime and the corpus delicti in the related CBI case. The material shows that the petitioner handed over that sum to the public official (A1) as an alleged bribe; there is no pleading or finding that the petitioner had mobilised the money by any antecedent criminal activity. The sum became proceeds of crime only when the public official obtained it as a bribe; before the official could be said to have projected the sum as untainted money, the CBI intervened and seized the cash. The penal provisions of the PML Act require that the accused should have projected proceeds as untainted money; those elements are not made out against the petitioner on the admitted facts. For these reasons the prosecution of the petitioner under the PML Act was held to be misconceived. [Paras 4, 6, 7, 8]

Proceedings in C.C.No.60 of 2018 against the petitioner under the PML Act are quashed.

Final Conclusion: Writ petition allowed; proceedings in C.C.No.60 of 2018 insofar as they concern the petitioner are quashed.

Protective assessment - retrospective operation of statute - substantive rights versus procedural law - liability of a power of attorney holder for dealer's tax dues - revenue recovery proceedings and attachment - requirement of independent assessment before recovery

Retrospective operation of statute - liability of a power of attorney holder for dealer's tax dues - protective assessment - Section 19C of the Kerala General Sales Tax Act could not be retrospectively invoked against the seventh respondent for transactions as Power of Attorney holder which had ceased prior to the statutory retrospective date. - HELD THAT: - Section 19C, though framed as providing for protective assessment, creates a new substantive liability on persons (agents, power of attorney holders, etc.) by making them liable for taxes of a registered dealer. While procedural provisions are presumptively retrospective, a statute that creates new disabilities or obligations affecting substantive rights must be construed as prospective unless a contrary intention is clearly shown. The seventh respondent ceased to be Power of Attorney holder on 02.07.1989; Section 19C was given retrospective effect only from 29.08.1989. Applying the principles governing retrospective legislation, Section 19C could not be lawfully invoked to fasten liability on the seventh respondent for transactions concluded prior to the retrospective date. The Court therefore held that protective assessment under Section 19C could not be applied to him in respect of such prior transactions. [Paras 33, 34, 35, 38, 41]

Section 19C cannot be retrospectively applied to make the seventh respondent liable for transactions that had ceased prior to 29.08.1989.

Requirement of independent assessment before recovery - revenue recovery proceedings and attachment - Recovery proceedings and attachment/sale of the seventh respondent's property without an independent protective assessment and fixation of liability on him were invalid. - HELD THAT: - The statutory scheme contemplates assessment of the person from whom recovery is sought; persons newly subjected to liability under Section 19C require an independent assessment to fix their liability before recovery under the Revenue Recovery Act is resorted to. There was no such independent assessment or fixation of liability on the seventh respondent before attachment and sale of his property. Given that Section 19C could not be validly invoked against him for the relevant period, the consequent revenue recovery actions, attachment and sale effected against his property were illegal. [Paras 12, 13, 38, 41]

Revenue recovery proceedings, attachment and sale of the seventh respondent's property without an independent assessment were illegal and unsustainable.

Revenue recovery proceedings and attachment - liability of a power of attorney holder for dealer's tax dues - Exts.P15 (order of the Land Revenue Commissioner) and P21 (order of the Government) authorising the recovery/appropriation of the seventh respondent's property were quashed as illegal. - HELD THAT: - Because Section 19C could not be validly invoked against the seventh respondent for the period in question and because recovery was effected without the requisite independent assessment, all proceedings taken against him under the Revenue Recovery Act, including attachment and sale and the Government's subsequent buy-in, were held to be without legal foundation. The Court set aside Exts.P15 and P21 and declared the petitioner's entitlement to pay land tax and apply for transfer of registry if otherwise eligible. [Paras 41, 42]

Exts.P15 and P21 are quashed; proceedings against the seventh respondent and appropriation of his property for the dealer's sales tax are illegal.

Substantive rights versus procedural law - maintainability of writ petition - The writ petition was maintainable; neither res judicata nor delay or laches barred the petitioner's challenge to Exts.P15 and P21. - HELD THAT: - The earlier O.P. No.10661/2002 was not a final adjudication on the substantive issues because a Division Bench subsequently modified the Single Judge's order and permitted the petitioner to pursue statutory remedies. The petitioner pursued those remedies and challenged the administrative orders within a reasonable time; accordingly, the Court found no merit in pleas of res judicata or in arguments of delay and laches and proceeded to decide the substantive legal questions. [Paras 23, 24, 25]

Writ petition is maintainable; res judicata, delay and laches do not bar the petition.

Final Conclusion: The writ petition is allowed. Section 19C could not be retroactively applied to fasten liability on the seventh respondent for transactions that had ceased before 29.08.1989; revenue recovery proceedings, attachment and sale effected without independent assessment were illegal; Exts.P15 and P21 are set aside and the petitioner is entitled to pay land tax and apply for transfer of registry if otherwise eligible.

Urban agricultural land not assessable to wealth-tax - retrospective amendment - refund of tax paid on exempted asset - CBDT circular authorising revision under Section 25 - decision on merits notwithstanding limitation technicalities

Urban agricultural land not assessable to wealth-tax - retrospective amendment - refund of tax paid on exempted asset - Application of the Finance Act, 2013 amendment excluding urban agricultural land from wealth-tax with retrospective effect and consequent entitlement to refund of wealth-tax paid. - HELD THAT: - The High Court accepted that the amended definition operates with retrospective effect from 01.04.1993 and that urban agricultural land is not chargeable to wealth-tax. Where an assessee has paid wealth-tax on such land prior to the amendment, the payment is exigible to refund under the amended provision. The court noted that refund may be claimed by filing revised return or rectification within the statutory time-limit, and where that time-limit has expired, the assessee may seek relief under the administrative dispensation reflected in the CBDT circular of 11.06.2015 which recognizes genuine hardship arising from the retrospective amendment.

The amended provision excludes urban agricultural land from wealth-tax with retrospective effect and an assessee who paid tax on such land is entitled to pursue a refund in accordance with law and the CBDT circular.

CBDT circular authorising revision under Section 25 - decision on merits notwithstanding limitation technicalities - Duty of the Commissioner to adjudicate a pending Revision Application filed under Section 25 in terms of the CBDT circular and not to reject it merely on technical limitation grounds. - HELD THAT: - The court recorded the CBDT circular authorising Principal Commissioner/Commissioners of Wealth-tax to admit revision applications under Section 25 after expiry of the period specified in that section and to decide them on merits. The assessee had filed a Revision Application dated 14.11.2018 which remained pending. The court directed the revenue authority to hear and decide that Revision Application in accordance with law within two months from receipt of the order, expressly instructing that technical pleas of limitation should not be raised and clarifying that the court has not examined the merits of the claim itself.

The Commissioner is directed to adjudicate the pending Revision Application in accordance with the CBDT circular and law within two months, deciding the claim on merits and without raising mere limitation technicalities.

Final Conclusion: Writ petition disposed by directing the jurisdictional wealth-tax authority to hear and decide the assessee's pending Revision Application for refund in accordance with law and the CBDT circular within two months, without entertaining technical objections on limitation; the court did not adjudicate the merits of the refund claim.

Sentencing discretion under the NDPS Act - Section 32B factors for imposing higher than minimum punishment - Quantity of contraband as relevant factor in sentencing - Commercial quantity and sentencing range under Section 21 - Proportionality and Article 21 in sentencing

Section 32B factors for imposing higher than minimum punishment - Quantity of contraband as relevant factor in sentencing - Sentencing discretion under the NDPS Act - Whether imposition of 15 years R.I., higher than the minimum prescribed under the Act, was impermissible for lack of reasons or failure to consider only the factors enumerated in Section 32B - HELD THAT: - The Court held that Section 32B permits the court to take into account "such factors as it may deem fit" in addition to the specified clauses (a)-(f), and therefore the discretion to consider factors outside clauses (a)-(f) is not fettered. Quantity of the contraband is a relevant factor falling within "such factors as it may deem fit." Where the accused was found in possession of 1 kg of heroin (four times the minimum commercial quantity of 250 gm), the trial court and High Court were entitled to treat the large quantity as a valid basis for imposing punishment above the statutory minimum. The Special Court had applied its mind and moderated the sentence from the maximum permissible; on the facts it was not shown that the courts considered any irrelevant factor or failed to exercise discretion judicially. [Paras 6]

The sentencing court's exercise of discretion to impose 15 years R.I. was valid; absence of express recital of each clause of Section 32B did not vitiate the sentence where quantity was a relevant factor.

Proportionality and Article 21 in sentencing - Commercial quantity and sentencing range under Section 21 - Sentencing discretion under the NDPS Act - Whether mitigating circumstances (first offender, poverty, sole breadwinner, alleged status as mere carrier, and non-apprehension of main supplier) warranted reduction of sentence below the imposed 15 years R.I. - HELD THAT: - The Court recognised that sentencing engages personal liberty and requires balancing mitigating and aggravating circumstances, but emphasised that offences under the NDPS Act carry serious societal consequences and public interest must be weighed. Mere poverty, being a first offender, or being described as a carrier do not automatically preclude higher punishment, particularly where the accused sold a large commercial quantity of drug. The Special Court expressly considered the accused's plea for leniency and refrained from awarding the maximum term; that moderation indicates application of mind. The non-arrest of the main supplier is not a ground to deny or reduce sentence where the accused was found in illegal possession and involved in sale of a substantial quantity. [Paras 6, 7]

Mitigating factors did not merit interference with the sentence; on the facts and having regard to societal interest under the NDPS regime, the sentence of 15 years R.I. was not excessive.

Final Conclusion: The appeal against sentence is dismissed; the sentence of 15 years rigorous imprisonment with fine, imposed under Section 21 of the NDPS Act and confirmed by the High Court, is upheld.

Offence under Section 138 of the Negotiable Instruments Act - Vicarious liability of directors and persons in charge under Section 141 of the Negotiable Instruments Act - Prima facie sufficiency of averments for summoning in criminal complaint - Scope of interlocutory quashing under Section 482 Cr.P.C. where disputed facts require trial

Prima facie sufficiency of averments for summoning in criminal complaint - Offence under Section 138 of the Negotiable Instruments Act - Whether the averments in the complaint were sufficient to proceed against the petitioner under Sections 138 and 141 of the Negotiable Instruments Act. - HELD THAT: - The Court examined the complaint, accompanying documents and the chronology showing issuance of the cheque dated 27.12.2016, its dishonour by return memo dated 27.03.2017 and service of the legal demand notice dated 12.04.2017. The Court applied settled principles that where disputed questions of fact arise, the contentions of the accused as to non-liability or absence of responsibility are matters peculiarly within their knowledge and ordinarily require trial for resolution. Reliance was placed on precedents holding that the High Court should not resort to quashing under Section 482 Cr.P.C. where factual disputes require evidence and trial. The material on record (including company master data showing petitioner under "Directors/Signatory Details" with a begin date of 01.07.2015 and the timing of the cheque) cast doubt on the petitioner's categorical denial that he was in charge on the cheque date, while the complaint of theft/forgery was lodged after dishonour and demand. The certificate from bank about non-matching signatures and other records were held to be matters for verification at trial rather than grounds for summary quashing. [Paras 21, 22, 23, 26]

The averments were held sufficient to proceed and the question of petitioner's liability under Sections 138 and 141 requires trial.

Vicarious liability of directors and persons in charge under Section 141 of the Negotiable Instruments Act - Scope of interlocutory quashing under Section 482 Cr.P.C. where disputed facts require trial - Whether the impugned summoning order dated 31.08.2017 and the dismissal of discharge application dated 21.12.2019 were liable to be quashed by this Court. - HELD THAT: - The Court considered the rival contentions that the petitioner was not a director/authorized signatory and that the cheque was forged or stolen. Noting that documentary extracts placed on record (including company master data and other corporate records) created triable issues as to the petitioner's status and role, and that the theft/forgery complaint was lodged after the cheque's dishonour and demand, the Court held that these contentions could only be adjudicated after evidence is led at trial. The Court reiterated the principle that restrictions on liability of directors or existence of special circumstances negativing liability are within the knowledge of the accused and ordinarily to be established at trial. In the light of binding authority, the Court declined to exercise its extraordinary jurisdiction to quash the proceedings at the interlocutory stage. [Paras 24, 25, 26, 27]

The petition seeking quashing of the summoning order and the dismissal order was dismissed; the impugned orders were not interfered with.

Final Conclusion: Petition dismissed; the High Court declined to quash the criminal proceedings under Sections 138/141 of the Negotiable Instruments Act and held that disputed factual questions concerning petitioner's role, signature and alleged theft/forgery must be determined at trial.

Locus standi of a stranger to a contract - maintainability of writ petition under Article 226 - State-entered contracts governed by contract and not by Article 14 after tender conclusion - Government's contractual power to change lottery scheme on distributor's request - lotteries as extra commercium and Article 19(1)(g) inapplicable - distinction between person aggrieved and stranger

Locus standi of a stranger to a contract - maintainability of writ petition under Article 226 - distinction between person aggrieved and stranger - The writ petition by the petitioner, a non participant and stranger to the tender and the contract between the State and respondent No. 3, is not maintainable for want of locus standi. - HELD THAT: - The Court found that the petitioner did not participate in the RFP/NIT and is not a party to the agreements dated 27.07.2015; therefore it cannot seek specific performance or challenge the impugned order permitting conversion of the distributorship. Applying the tests drawn from Jasbhai Motibhai Desai and the principle in M/s Radhkrishna Agarwal, once the State has concluded the tender process and entered into an ordinary contract, relations are governed by the contract terms and not by Article 14 in that contractual sphere. The petitioner has neither been deprived of any legal right recognised by law nor suffered a special and substantial grievance beyond that of the public at large; it was not entitled to be heard in the impugned decision and hence is a 'stranger' not a 'person aggrieved'. Accordingly the petition is not maintainable and must be dismissed. [Paras 21, 22, 23, 29]

Petition dismissed for want of locus standi; writ not maintainable.

Government's contractual power to change lottery scheme on distributor's request - State-entered contracts governed by contract and not by Article 14 after tender conclusion - lotteries as extra commercium and Article 19(1)(g) inapplicable - The challenge to the conversion of online lottery distributorship to paper lottery fails because the action falls within the contractual terms and because lotteries are not a trade protected under Article 19(1)(g). - HELD THAT: - The agreements contained clause 5.5 authorising the State to change lottery schemes on a written request by the sole distributor and clauses relating to termination and appointment of another distributor. The impugned decision of 12.09.2018 was taken within the ambit of those contractual provisions and, even if clause 5.5 were wrongly invoked, the petitioner-being a non party-cannot question the State's contractual exercise under Article 226. Further, following authoritative precedent, State authorised lotteries remain within the realm of gambling (extra commercium) and do not attain the status of ordinary trade; therefore Article 19(1)(g) protection is unavailable to the petitioner. Consequently, the conversion does not give the petitioner a constitutional cause of action. [Paras 11, 24, 26, 27]

Conversion upheld as within contractual power and not amenable to challenge by the petitioner; Article 19(1)(g) inapplicable.

Final Conclusion: The writ petition is dismissed as not maintainable: the petitioner, a stranger to the tender and contracts, lacks locus standi to challenge the State's decision to convert online lottery distributorship to paper lottery; the conversion was within the contractual framework and, in any event, State authorised lotteries do not attract Article 19(1)(g) protection.