TaxTMI Updates e-Newsletter
Apr 26,2023

Maintainability of writ petition where statutory alternative remedy exists - statutory appeal as exclusive remedy in challenge to assessment order - challenge to assessment order not maintainable in exercise of Article 226 when alternate remedy provided - saving of obligations under the Finance Act, 1994 by Section 174(2)(c) of the CGST Act, 2017

Maintainability of writ petition where statutory alternative remedy exists - statutory appeal as exclusive remedy in challenge to assessment order - Writ petition challenging the assessment order is not maintainable where a statutory appeal remedy exists and has not been availed. - HELD THAT: - The court held that routine questions about legality of an assessment order fall within the statutory appellate mechanism and are not ordinarily to be entertained under the extraordinary writ jurisdiction conferred by Article 226. In the present case the petitioner had a statutory remedy of appeal against the assessment order which was not pursued; accordingly the writ petition could not be entertained to bypass the appeal remedy. The court therefore declined to adjudicate the assessment on merits in writ proceedings and directed the petitioner to avail the appellate remedy.

Writ petition not maintainable insofar as it directly challenges the assessment order; petitioner directed to prefer the statutory appeal.

Saving of obligations under the Finance Act, 1994 by Section 174(2)(c) of the CGST Act, 2017 - challenge to assessment order not maintainable in exercise of Article 226 when alternate remedy provided - Omission of Chapter V of the Finance Act, 1994 cannot be pressed as a ground to invalidate the assessment because transitional saving in Section 174(2)(c) preserves obligations under the Finance Act, 1994. - HELD THAT: - The court examined the contention that Chapter V of the Finance Act, 1994 having been omitted rendered the proceedings void. It concluded that the obligation created under the Finance Act, 1994 continues to be saved by the transitional provision in Section 174(2)(c) of the CGST Act, 2017; therefore the omission of Chapter V is not a valid ground in writ proceedings to challenge the assessment. Any factual or legal disputes arising from the levy under the Finance Act should be contested in the appropriate appellate forum.

Challenge based on omission of Chapter V of the Finance Act, 1994 rejected; transitional saving under Section 174(2)(c) preserves the obligation.

Challenge to assessment order not maintainable in exercise of Article 226 when alternate remedy provided - Allegation that service tax was charged and paid by a third party (U.P. Power Corporation) is a factual matter for determination in appropriate proceedings and not a ground to sustain direct writ relief. - HELD THAT: - The court observed that the contention regarding prior charging and payment of service tax by U.P. Power Corporation is essentially a factual issue. Such disputes are properly adjudicated in appeal or other statutory proceedings challenging the assessment order rather than in writ jurisdiction. The court therefore refused to entertain that factual contention in the writ petition.

Factual dispute regarding prior payment by U.P. Power Corporation to be raised and decided in the appellate/statutory proceedings, not in the writ petition.

Final Conclusion: The writ petition is dismissed. The petitioner is permitted to prefer the statutory appeal within four weeks and the appeal shall be entertained notwithstanding any limitation objection.

Exclusion of period for limitation - computation of limitation for seeking refund under GST - limitation for refund under GST - extension of Central Board Notification benefits to State authorities - restoration of refund application for adjudication

Exclusion of period for limitation - computation of limitation for seeking refund under GST - Whether the period 01.03.2020 to 28.02.2022 is to be excluded in computing limitation for refund claims under the GST enactments in light of Notification No.13/2022 - Central Tax dated 05.07.2022 - HELD THAT: - The Court recorded that the Central Board of Indirect Taxes and Customs issued Notification No.13/2022 excluding the period 01.03.2020 to 28.02.2022 for the purpose of computing limitation for issuance of orders under the relevant provision and for seeking refund under the GST enactments. Having noted the terms of the Notification, the Court applied its effect to the petitions before it and concluded that the exclusion operates to cure limitation-based rejections which fell within the excluded period. The Court therefore set aside orders rejecting refund solely on the ground of limitation where the excluded period applied.

Notification No.13/2022 applies to exclude the period 01.03.2020 to 28.02.2022 for computation of limitation for refund; orders rejecting refunds on the sole ground of limitation were set aside.

Extension of Central Board Notification benefits to State authorities - restoration of refund application for adjudication - Whether the benefit of the Central Board's Notification should be extended to assesses in the State of Tamil Nadu and the consequent relief to be granted where rejection also recorded non-availability of supporting documents - HELD THAT: - Although the Notification expressly applies to Central GST authorities and Union Territory GST authorities, the State's written instructions placed on record indicated that the benefit would be extended to assesses in Tamil Nadu. Relying on that recorded undertaking, the Court directed that (a) in matters where rejection was solely on limitation the refund be paid within six weeks, and (b) in matters where rejection additionally recorded non-availability of statutory or other supporting documents the refund applications be restored to the assessing authority for fresh adjudication. The petitioners in the latter category were directed to appear before the authority to satisfy it on aspects of their claim except those aspects already covered by the Notification.

Benefit of Notification No.13/2022 to be extended to assesses in Tamil Nadu as recorded; where rejection was solely for limitation payment ordered, and where rejection also cited missing documents the refund applications were restored for fresh consideration (with directions to petitioners to appear and satisfy the authority on aspects not covered by the Notification).

Final Conclusion: Writ petitions allowed in part: orders rejecting GST refund claims on limitation grounds set aside and refunds directed to be paid or applications restored for fresh adjudication as recorded; petitioners to appear before the assessing authority as directed; no costs.

Confiscation and detention of goods and conveyance - Powers under section 130 of the CGST Act - Interim release on furnishing bond and deposit of penalty and fine - Release subject to compliance with conditions imposed by court

Confiscation and detention of goods and conveyance - Interim release on furnishing bond and deposit of penalty and fine - Powers under section 130 of the CGST Act - Whether the detained goods and conveyance should be released on interim terms pending adjudication under proceedings initiated by FORM GST MOV-06 dated 09.10.2022. - HELD THAT: - The petitioner offered to comply with the same interim conditions granted in a related petition then pending before the Court and volunteered to furnish a bond and to deposit amounts in respect of penalty and fine for release of the goods and the conveyance. The State did not dispute these facts. In view of the petitioner's express willingness to abide by the conditions and the absence of contrary contention by the State, the Court granted interim relief. The determinative order directs release of the goods and conveyance confiscated and detained pursuant to the order dated 09.10.2022 on compliance with specified conditions, namely deposit of the penalty amount, deposit of the fine in lieu of confiscation of the conveyance, and furnishing of a bond for the value of the goods. Upon compliance with those conditions, the respondent-authority is to release the goods and conveyance during the pendency of the petition.

Goods and conveyance detained under FORM GST MOV-06 dated 09.10.2022 are directed to be released on interim terms upon deposit of the penalty and fine and upon furnishing the bond as specified; civil application allowed.

Final Conclusion: By an interim order, the High Court directed release of the detained goods and conveyance subject to the petitioner depositing the specified penalty and fine and furnishing the stipulated bond; the underlying writ petition remains pending and related matters are to be heard together.

Release of seized property under Section 451 Cr.P.C. - Seizure of property under Section 102 Cr.P.C. - Effect of pending income-tax assessment and notice under Section 132A of the Income Tax Act on release of seized currency

Release of seized property under Section 451 Cr.P.C. - Seizure of property under Section 102 Cr.P.C. - Whether the courts below erred in refusing to hand over the seized currency to the petitioner and whether the seized currency ought to be released to the petitioner - HELD THAT: - The Court applied the principles laid down by the Supreme Court in Sunderbhai Ambalal Desai regarding prompt and judicious exercise of powers under Section 451 Cr.P.C. and the treatment of seized valuable articles and currency. Noting that the currency was seized under Section 102 Cr.P.C. and had remained in police custody since 09.10.2018, the High Court observed that property which appears to have been used for commission of an offence should not be kept in custody longer than necessary and that the magistrate should pass appropriate orders for release after taking suitable safeguards. Having considered the record and the decisions cited, the Court concluded that the impugned orders refusing release were contrary to the legislative intent and appellate guidance to expedite disposal and release subject to conditions. [Paras 10, 11, 12]

Impugned orders refusing to hand over the seized currency are quashed and set aside; the seized currency is ordered to be released in favour of the petitioner on supurdgi subject to conditions.

Effect of pending income-tax assessment and notice under Section 132A of the Income Tax Act on release of seized currency - Security by way of bank guarantee to protect third-party revenue claims - Whether the pendency of Income Tax Department proceedings and issuance of notice under Section 132A justified withholding release of the seized currency and what protective measures should be ordered - HELD THAT: - The Court acknowledged the Income Tax Department's contention that a notice under Section 132A had been issued and assessment proceedings were pending. Balancing the competing interests, the Court held that pending tax enquiry did not preclude release of the currency but warranted protective measures to safeguard the revenue. Accordingly, the Court directed release on supurdgi conditioned upon the petitioner furnishing a bank guarantee in favour of the Income Tax Department initially for one year and to be renewed until completion of the tax assessment, permitting the Department to recover tax from the guarantee upon completion of assessment. [Paras 7, 13]

Seized currency to be released subject to the petitioner furnishing a bank guarantee of specified amount in favour of the Income Tax Department, renewable until completion of assessment, with liberty to recover tax from the guarantee.

Final Conclusion: The petition is allowed: the orders of the trial court and revisional court refusing release of the seized currency are quashed and set aside; the seized currency is ordered to be released to the petitioner on supurdgi conditioned upon furnishing a bank guarantee in favour of the Income Tax Department renewable until completion of the assessment, with liberty to the Department to recover tax from the guarantee.

Exemption under Section 47(iv) for transfer of a capital asset to a wholly owned subsidiary - Chargeability to tax as capital gains on transfer of capital asset - Effect of a caveat in the return of income on assessment and appellate review

Exemption under Section 47(iv) for transfer of a capital asset to a wholly owned subsidiary - Chargeability to tax as capital gains on transfer of capital asset - Whether the surplus arising on transfer of Trunk Infrastructure/capital work in progress to the assessee's 100% subsidiary is exigible to tax as capital gains or excluded by Section 47(iv). - HELD THAT: - The Tribunal's conclusion that the surplus could not be treated as income in view of Section 47(iv) was upheld. The court observed that Section 47(iv) excludes transfers of capital assets by a company to its subsidiary from the operation of Section 45, provided the statutory prerequisites are satisfied. In the present case those prerequisites were conceded to be fulfilled - the transfer was to a 100% subsidiary and the subsidiary was an Indian company - and therefore the transfer fell within the statutory exclusion. The characterisation that an assessee may employ both capital and trading assets in its business does not override the specific exclusion in Section 47(iv) when its conditions are met; consequently the surplus arising on transfer could not be taxed as capital gains. [Paras 13, 14]

The Tribunal's allowance of the exemption under Section 47(iv) was affirmed and the surplus was held not exigible to tax as capital gains.

Effect of a caveat in the return of income on assessment and appellate review - Whether the fact that the assessee had included the surplus in its return of income precluded the Tribunal from examining the claim for exemption under Section 47(iv). - HELD THAT: - The court rejected the revenue's contention that the Tribunal could not go beyond the assessment order because the assessee had included the surplus in its return. The return contained an express note explaining the origin of the surplus (a caveat), and the court reiterated the established principle that an inadvertent offer of a receipt for levy does not sustain tax liability if the receipt does not otherwise constitute income under the Act. Accordingly, the presence of the note in the return did not bar the Tribunal from examining and granting the statutory exemption. [Paras 15, 16]

The Tribunal was entitled to consider the exemption despite the assessee's inclusion of the surplus in the return; the caveat permitted review and prevented estoppel.

Final Conclusion: Delay in filing the appeal was condoned; the Tribunal's order allowing the exemption under Section 47(iv) in respect of the transfer of Trunk Infrastructure to the wholly owned Indian subsidiary was affirmed, no substantial question of law arises, and the appeal is dismissed/closed.

Time-bar for reopening assessments under section 148 - limitation provision preserved by the first proviso to section 149 as inserted by Finance Act, 2021 - treatment of notices issued from 01.04.2021 to 30.06.2021 as show-cause notices under section 148A(b) - inapplicability of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 to revive notices barred under the old regime - precedential effect of Ashish Agarwal and Keenara Industries on validity of reassessment notices

Time-bar for reopening assessments under section 148 - limitation provision preserved by the first proviso to section 149 as inserted by Finance Act, 2021 - precedential effect of Keenara Industries and Ashish Agarwal - Impugned notices under section 148 and consequential orders under section 148A(d) issued for Assessment Years 2013-14 and 2014-15 are beyond the permissible time limit and therefore illegal and without jurisdiction. - HELD THAT: - The Court applied the principle that where a notice under section 148 had become time-barred under the old regime (six years from the end of the relevant assessment year) prior to 01.04.2021, it could not be revived under the amended scheme introduced by the Finance Act, 2021. Reliance was placed on the Supreme Court's directions in Ashish Agarwal treating notices issued between 01.04.2021 and 30.06.2021 as show-cause notices under section 148A(b) but preserving all defences available under section 149, and on this Court's decision in Keenara Industries which held that secondary legislation (TOLA/notifications) could not extend or revive the erstwhile limitation for issuance of reopening notices. Applying those precedents, the Court concluded that notices seeking reopening for AY 2013-14 and AY 2014-15, issued after the expiry of the six-year period under the old regime, are time-barred and therefore liable to be set aside. [Paras 6, 7, 10]

Impugned notices under section 148 and orders under section 148A(d) for the specified assessment years are set aside as time-barred and without jurisdiction.

Show-cause procedure under section 148A(b) - preservation of other factual and legal defences for fresh consideration - Other factual questions and the substantive reasons relied upon by the Assessing Officer for reopening the assessments were not adjudicated and are left open for consideration by the assessing officer. - HELD THAT: - While the petitions were allowed on the sole ground of limitation, the Court expressly refrained from examining or deciding the factual merits or other legal issues on which the Assessing Officer relied to reopen assessments. Those questions remain available to the parties and to the Revenue, and were not adjudicated by the Court in these petitions. [Paras 8, 9]

Questions of fact and other legal issues underlying the reasons for reopening are kept open for consideration and are not decided.

Final Conclusion: The petitions are allowed: notices dated in July 2022 under section 148 and the orders under section 148A(d) insofar as they seek reopening of assessment for AY 2013-14 and AY 2014-15 are set aside as time-barred; other factual and legal contentions relating to the reasons for reopening remain open for fresh consideration.

Time-barred notice under section 148 - order under section 148A(d) - first proviso to section 149 - application of amended reassessment regime (Finance Act, 2021) to pre-01.04.2021 assessment years - deeming of notices issued between 01.04.2021 and 30.06.2021 as show-cause notices under section 148A(b) - continuance of defences available under old regime (section 149) as preserved by Ashish Agarwal

Time-barred notice under section 148 - first proviso to section 149 - application of amended reassessment regime (Finance Act, 2021) to pre-01.04.2021 assessment years - Validity of notices under section 148 and orders under section 148A(d) issued in July 2022 for Assessment Years 2013-14 and 2014-15 on the ground of limitation. - HELD THAT: - The Court held that notices under section 148 issued in relation to assessment years beginning on or before 01.04.2021 must be tested by whether they could have been validly issued under the old regime prior to the commencement of the Finance Act, 2021. Under the pre-01.04.2021 law a notice under section 148 could not be issued after six years from the end of the relevant assessment year. Applying the principle in Keenara Industries Pvt. Ltd. and the directions in Ashish Agarwal, notices which had become time-barred under the old regime could not be revived by resort to the post-01.04.2021 provisions or by reliance on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) enactments and notifications. The Court accepted that the Supreme Court in Ashish Agarwal deemed notices issued between 01.04.2021 and 30.06.2021 to be treated as show-cause notices under section 148A(b) but emphasized that paragraph 28.5 of Ashish Agarwal preserves all defences available to assessees under section 149 as they stood. Applying these principles, the impugned notices dated in July 2022 concerning AY 2013-14 and AY 2014-15 were held to be beyond the permissible six-year outer limit under the old regime and therefore illegal and without jurisdiction.

All impugned notices under section 148 and the consequential orders under section 148A(d) relating to AY 2013-14 and AY 2014-15 are set aside as time-barred and without jurisdiction.

Order under section 148A(d) - procedural enquiry and factual grounds for reopening - Whether other factual contentions and reasons relied upon by the Assessing Officer for reopening the assessments were adjudicated. - HELD THAT: - The Court declined to examine or decide factual questions and other legal issues underlying the Assessing Officer's reasons for reopening, because the petitions were allowed on the discrete legal ground of limitation. The judgment expressly leaves all other factual and merits questions open for determination by the Revenue and the Assessing Officer in accordance with law, if necessary in fresh proceedings.

All questions of fact and other legal contentions underlying the reasons for reopening are kept open and not adjudicated in these petitions.

Final Conclusion: The Special Civil Applications are allowed. The notices under section 148 and orders under section 148A(d) impugned in respect of Assessment Years 2013-14 and 2014-15 are quashed as time-barred; other factual and legal issues relating to the reasons for reopening remain open for consideration.

Revision under section 263 of the Income Tax Act - deduction under section 80P of the Income Tax Act for interest income from co operative banks - where two views are possible the Assessing Officer's order is not erroneous - interest on deposits with co operative banks regarded as income eligible for section 80P deduction under contrary judicial view

Revision under section 263 of the Income Tax Act - deduction under section 80P of the Income Tax Act for interest income from co operative banks - where two views are possible the Assessing Officer's order is not erroneous - Whether the Principal Commissioner of Income Tax was justified in invoking section 263 to hold the assessment under section 143(3) as erroneous insofar as it allowed deduction under section 80P for interest earned on deposits with co operative banks. - HELD THAT: - The Tribunal held that the Assessing Officer adopted one of the possible views in allowing deduction under section 80P for interest earned from co operative banks. Earlier decisions, including a coordinate Tribunal decision in Shree Keshav Co operative Credit Society Limited and High Court authority favouring the assessee, demonstrate that conflicting views exist on whether such interest qualifies for deduction under section 80P. Where two views are possible and the view taken by the AO is legally sustainable, invoking revisional powers under section 263 is impermissible unless the AO's view is unsustainable in law. No material was produced by Revenue to show that the cited Tribunal decision had been stayed, reversed or that facts here were distinguishable to render the AO's view untenable. Applying this principle, the Tribunal found no error in the assessment causing prejudice to revenue and quashed the revisional orders. The Tribunal applied the same reasoning to the other two appeals having identical issues and facts, allowing those appeals as well. [Paras 7, 8, 9]

The revisional orders passed by the learned Principal Commissioner of Income Tax under section 263 were quashed and the assessments framed under section 143(3) upheld as not erroneous; the appeals are allowed.

Final Conclusion: All three appeals for A.Y. 2017-18 are allowed; the revisional orders under section 263 are set aside and the assessments under section 143(3) are sustained insofar as they allowed the deduction under section 80P for interest from co operative banks.

Condonation of delay - substantial justice over technicality - reopening of assessment - validity of reasons and approval - service of notice - affixture and due process - ex parte assessment under section 144 for non-filers - onus to prove sources of bank credits - remand for fresh adjudication and speaking order

Condonation of delay - substantial justice over technicality - Whether the Tribunal should condone the delay of 42 days in filing the appeals to admit them for adjudication on merits. - HELD THAT: - The assessee explained the delay by sworn affidavit that the director who handled company affairs was detained on criminal proceedings during the period when appeal papers required signing, and urged that the delay was beyond its control. The Tribunal applied the principle preferring substantial justice over technicality, relying on the ratio that non deliberate small delays should be condoned. Having considered the explanation and objections of the Revenue, the Tribunal found the plea reasonable and acceptable for a 42 day delay in both appeals and admitted the appeals for hearing on merits. [Paras 2, 3]

Delay of 42 days in filing both appeals condoned and appeals admitted for disposal on merits.

Reopening of assessment - validity of reasons and approval - service of notice - affixture and due process - ex parte assessment under section 144 for non-filers - onus to prove sources of bank credits - remand for fresh adjudication and speaking order - Whether the assessment framed under section 144 read with section 147 (A.Y. 2011-12) and confirmed by the CIT(A) is sustainable, having regard to objections on service of notices, existence/status of the company, adequacy and application of mind in reasons recorded for reopening, and allowance of expenses against bank credits. - HELD THAT: - The Tribunal examined the record and the submissions filed by the assessee and observed multiple substantial objections: the Revenue did not ascertain whether the company remained in existence though records indicated it was struck off; the reasons recorded for reopening raised questions about application of mind and the statutory approval (the reasons copy lacked the PCIT's signature); notices were served by affixture after postal service failed and the adequacy of service and compliance with procedural rules required fresh adjudication; and the assessee had not been given adequate opportunity to place on record explanations and supporting evidence regarding bank credits and expenses. In view of these material objections going to jurisdiction, procedural fairness and merits, the Tribunal found that the matters required fresh consideration. It therefore set aside the CIT(A)'s order and directed that the issues and objections raised by the assessee be considered afresh by the CIT(A) in a speaking order, with opportunity to the assessee to produce documents and be heard. [Paras 12]

Impugned assessment and CIT(A) order set aside; quantum appeal restored to the file of the CIT(A) for fresh adjudication on facts and law with a speaking order and opportunity to the assessee.

Penalty proceedings contingent on quantum outcome - remand for fresh adjudication - Whether the penalty appeal is maintainable independently when the quantum appeal is set aside for fresh adjudication. - HELD THAT: - The Tribunal observed that the penalty appeal could not be sustainably adjudicated independently because the quantum matter has been remanded to the CIT(A) for fresh consideration. Given the dependency of penalty determination on the outcome of the quantum proceedings, the Tribunal held that the penalty appeal must also be set aside and returned to the CIT(A) to be decided after disposal of the remanded appellate proceedings. [Paras 13]

Penalty appeal set aside and restored to the file of the CIT(A) to be decided in accordance with the outcome of the remanded quantum proceedings.

Final Conclusion: The Tribunal condoned the 42 day delay and admitted both appeals; the quantum assessment and the CIT(A)'s order were set aside and remitted to the CIT(A) for fresh, speaking adjudication with opportunity to the assessee; the penalty appeal was also set aside and returned to the CIT(A) to be dealt with following the remanded proceedings; both appeals allowed for statistical purposes.

Condonation of delay - maintainability of appeal - appealable orders under section 246A - waiver of late filing fee under section 234E

Condonation of delay - reasonable and sufficient cause - Whether the delay of 16 days in filing the appeals before the Tribunal should be condoned. - HELD THAT: - The Tribunal considered the assessee's petition explaining that the appeal filing was delayed because the managing partner was affected with COVID symptoms and confined at home until 28/11/2022, resulting in a 16-day delay. On perusal of the explanation and hearing the authorised representative, the Tribunal held that the assessee was prevented by a reasonable and sufficient cause from filing the appeals within time and that the facts warranted exercise of discretion to condone the delay. Accordingly the Tribunal condoned the delay and proceeded to decide the appeals on merits. [Paras 3]

Delay of 16 days in filing the appeals is condoned and the appeals are admitted for adjudication on merits.

Maintainability of appeal - appealable orders under section 246A - waiver of late filing fee under section 234E - Whether the appeals filed against the letter dated 10/05/2019 denying waiver of late filing fee are maintainable before the Commissioner (Appeals)/Tribunal. - HELD THAT: - The Tribunal examined the sequence: an intimation under section 200A gave rise to a demand for late filing fee under section 234E; the assessee wrote to the Assessing Officer seeking waiver/rectification; the ITO responded by letter dated 10/05/2019 stating it was out of his scope to waive the fee. The assessee filed appeals against that letter. Relying on the scope of appealable orders enumerated under section 246A, the Tribunal held that a response letter to a request for waiver is not an appealable order; the grievance arose from the intimation/order under section 200A/234E, which alone is appealable. Because the appeal was filed against the letter rather than against the intimation/order, the grounds could not be decided on merits and the appeal was not maintainable. The Tribunal found no infirmity in the Commissioner (Appeals)-NFAC's dismissal in limine and declined to interfere. [Paras 11, 12, 13]

Appeals filed against the letter denying waiver of late filing fee are not maintainable; the Commissioner (Appeals)-NFAC's order dismissing the appeals in limine is upheld and the appeals are dismissed.

Final Conclusion: The Tribunal condoned the 16-day delay in filing the appeals and on merits upheld the Commissioner (Appeals)-NFAC's conclusion that appeals filed against the ITO's letter denying waiver of late filing fee were not maintainable; accordingly all three appeals for the stated assessment years are dismissed.

Condonation of delay - treatment of unexplained cash deposits - avoidance of double taxation of same receipt - burden of proof and requirement to produce vouchers - assessment arising from search and seizure and consequential provisions - unexplained income under section 69 - appellate interference standard - scope of Tribunal's review - estimation of agricultural income on per acre basis

Condonation of delay - Admission of appeals despite delay in filing - HELD THAT: - The Tribunal found that the assessee established reasonable cause for a delay of 54 days in filing the appeals, namely illness of the person who manages the assessee's affairs and consequent inability to file within time. On hearing the authorised representative and considering the explanation as genuine and beyond the assessee's control, the Tribunal exercised its discretion to condone the delay and admit the appeals for hearing. [Paras 1]

Delay of 54 days condoned and appeals admitted for hearing.

Avoidance of double taxation of same receipt - treatment of unexplained cash deposits - Deletion of tax addition to the extent of a receipt taxed twice (A.Y.2011-12) - HELD THAT: - The AO had made additions by treating certain receipts as undisclosed/unaccounted income and also included a cheque receipt of Rs.15,00,000 within the cash/cheque breakup totalling the bank deposits. The Tribunal accepted that the Rs.15,00,000 represented loan/advance evidenced by GPA cum sale deed and that the amount was included both in the addition to income and within the bank deposit disallowance. Since the same amount could not be subjected to tax twice in the hands of the assessee, and the revenue did not dispute the nature of the Rs.15,00,000 receipt, the Tribunal directed deletion of the addition of Rs.15,00,000. [Paras 8]

Addition reduced by deleting the Rs.15,00,000 which was taxed twice; appeal partly allowed.

Burden of proof and requirement to produce vouchers - treatment of unexplained cash deposits - Sustaining 50% disallowance where vouchers not produced (A.Y.2012-13) - HELD THAT: - The assessee admitted cash deposits but failed to produce vouchers or verifiable evidence for the claimed sources. The CIT(A) applied a pragmatic test and, in absence of verification, allowed relief by reducing the disallowance to 50% of the deposited amount as a fair and reasonable measure. The Tribunal found no infirmity in the CIT(A)'s approach of granting substantial relief while upholding disallowance to the extent that the deposits were unverifiable. [Paras 15]

Tribunal upheld the CIT(A)'s order; appeal dismissed.

Burden of proof and requirement to produce vouchers - treatment of unexplained cash deposits - unexplained income under section 69 - Confirmation of partial disallowance and upholding of other additions where no supporting evidence produced (A.Y.2013-14) - HELD THAT: - The assessee claimed portions of bank cash deposits as reimbursements from an association and as real estate commission but failed to produce supporting vouchers or details. The CIT(A) sensibly reduced the addition in respect of the association receipts to 50% for want of verifiable evidence, while confirming the addition relating to real estate commission after rejecting the unsupported claim of expenses. The Tribunal agreed that the CIT(A) granted substantial relief and that, given absence of evidence, interference was not warranted. [Paras 22]

Tribunal upheld the CIT(A)'s orders: 50% disallowance on association receipts and confirmation of addition pertaining to real estate commission; appeal dismissed.

Estimation of agricultural income on per acre basis - appellate interference standard - scope of Tribunal's review - Reasonableness of agricultural income estimation and restriction of addition (A.Ys.2008-09 to 2010-11) - HELD THAT: - The assessee claimed agricultural income supported by an income certificate from the Village Revenue Officer and ownership documents for Ac.29.76 cnts. The AO rejected the claim for lack of revenue records and suspected inflation. The CIT(A) examined the records, accepted cultivation of commercial cash crops, and applied an accepted proposition (net income per acre for commercial cash crop) to estimate reasonable agricultural income, reducing the AO's addition accordingly and restricting the confirmed addition to a modest residual amount. The Tribunal found the CIT(A)'s estimation principled and reasonable and declined to interfere. [Paras 32]

Tribunal upheld the CIT(A)'s estimation of agricultural income and confirmed the limited addition; appeals dismissed.

Final Conclusion: The Tribunal condoned delay and admitted the appeals; for A.Y.2011-12 the appeal was partly allowed by deleting the double taxed receipt of Rs.15,00,000; for A.Ys.2012-13 and 2013-14 the Tribunal upheld the CIT(A)'s reductions and confirmations of additions where supporting evidence was lacking; for A.Ys.2008-09 to 2010-11 the Tribunal upheld the CIT(A)'s reasonable per acre estimation of agricultural income and dismissed the appeals.

Jurisdictional transfer of assessment proceedings - validity of notice under section 143(2) in presence of transfer of jurisdiction - restoration / remand for fresh adjudication and verification - disallowance of business expenditure for lack of satisfactory supporting evidence - disallowance under section 40(a)(ia) for failure to deduct tax at source - non-allowability of penalty as business expenditure under section 37

Jurisdictional transfer of assessment proceedings - validity of notice under section 143(2) in presence of transfer of jurisdiction - Validity of assessment proceedings where notice under section 143(2) was issued by ACIT but assessment order was passed by JCIT after a transfer of jurisdiction - HELD THAT: - The Tribunal examined the notification dated 26.08.2013 by which jurisdiction was assigned by the Commissioner of Income Tax-VII under the relevant delegatory power and the assessee's name appeared in the schedule transferring jurisdiction from ACIT, Business Circle-VII to JCIT, Business Range-VII. On this basis the Tribunal found that jurisdiction stood validly transferred and that the Assessing Officer who issued the notice and the officer who completed the assessment were officers having jurisdiction over the assessee. The additional grounds challenging the legality and jurisdiction of the assessment were therefore considered and rejected. [Paras 10]

Additional grounds challenging jurisdiction of the assessment proceedings dismissed; notice and assessment held valid.

Restoration / remand for fresh adjudication and verification - disallowance of business expenditure for lack of satisfactory supporting evidence - Whether disallowances made in respect of proportionate interest on borrowed funds, commission payments, sale promotion expenses and travelling expenses were sustainable on the record before the authorities - HELD THAT: - The Tribunal observed that the CIT(A) had largely reproduced the AO's conclusions without independent reasoned findings and that material facets necessary for a proper adjudication were not addressed. In particular, there was no discussion of prevailing market rates or the temporal character of loans for the interest disallowance; the commission payments required verification (including whether recipients had offered the amounts to tax and the genuineness of services rendered); sale promotion claims involved large disputed payments supported by bills which prima facie appeared to be for gold/diamond jewellery and required verification from vendors and assessment records; and travelling expenses required scrutiny as certain travellers were not shown to be representatives or employees. Given these deficiencies, the Tribunal directed restoration of these issues to the file of the CIT(A) to call for a remand report, permit the assessee a fair opportunity to produce records, and to decide each issue by a speaking order, permitting the AO/CIT(A) to verify particulars from preceding and subsequent years where necessary. [Paras 11, 12, 13, 14, 16]

Disallowances relating to proportionate interest, commission payments, sale promotion expenses and travelling expenses restored to the CIT(A) for fresh consideration and verification with a direction to provide fair opportunity and to pass a speaking order.

Non-allowability of penalty as business expenditure under section 37 - Allowability of the claimed service tax penalty as business expenditure - HELD THAT: - The Tribunal noted that the sum in question was a penalty and that no specific submission was made by the assessee to justify its allowance. Applying the established principle that penalties are not allowable as business expenditure under the general provision, the Tribunal sustained the disallowance. [Paras 15, 16]

Disallowance of the service tax penalty confirmed.

Final Conclusion: The Tribunal dismissed the additional grounds challenging jurisdiction and held the assessment proceedings valid; it confirmed the disallowance of the service tax penalty; and it restored the contentious disallowances relating to proportionate interest, commission payments, sale promotion expenses and travelling expenses to the CIT(A) for fresh consideration and verification with directions to afford the assessee a fair opportunity and to pass speaking orders.

Disallowance under section 14A read with Rule 8D - Inclusion of investments yielding exempt income for computation under Rule 8D(2) - Typographical error in audit report vis-a -vis income tax return regarding closing stock - Notional foreign exchange loss and Accounting Standard re statement for true and fair view - Application of ratio in CIT v. Woodward Governor regarding notional exchange loss - Shortfall between agreed sale consideration and actual consideration for sale of shares - Remand to Assessing Officer for fresh examination of disputed sale consideration - Allowability of transaction related professional fees where transaction concluded in relevant year

Disallowance under section 14A read with Rule 8D - Inclusion of investments yielding exempt income for computation under Rule 8D(2) - Disallowance under section 14A read with Rule 8D in absence of exempt income - HELD THAT: - The Tribunal noted that the assessee had not earned any exempt income in the year under appeal, a fact not controverted by revenue. Relying on the recent judgment of the Delhi High Court in PCIT v. Era Infrastructure (as applied by the Tribunal), the Tribunal held that when no exempt income arises in an assessment year, disallowance under section 14A read with Rule 8D is not called for. Consequently the CIT(A)'s deletion of the disallowance was sustained and the revenue's contentions on restricting the average investment computation to investments yielding exempt income were rejected. [Paras 9]

Deletion of disallowance under section 14A read with Rule 8D upheld; revenue grounds on this point dismissed.

Typographical error in audit report vis-a -vis income tax return regarding closing stock - Addition for difference in closing stock based on mismatch between audit report and ITR - HELD THAT: - The Tribunal examined the quantitative figures: audit report showing closing stock of 6973 MT and the ITR schedule showing 6978 MT. Noting that the subsequent year's opening stock was recorded as 6973 MT, the Tribunal found the discrepancy to be prima facie typographical and not warranting an addition. The CIT(A)'s view that no disallowance was called for was accepted. [Paras 10]

Addition for difference in closing stock deleted; revenue grounds on this point dismissed.

Notional foreign exchange loss and Accounting Standard re statement for true and fair view - Application of ratio in CIT v. Woodward Governor regarding notional exchange loss - Disallowance of notional foreign exchange loss claimed as finance cost - HELD THAT: - The Tribunal found the claimed foreign exchange loss to be notional - computed on outstanding foreign currency receivables/payables for contracts not expired as on the year end - and recorded under Accounting Standard for true and fair presentation. Applying the ratio of the Apex Court in CIT v. Woodward Governor, the Tribunal held that such notional exchange adjustments, made for correct presentation and crystallised later when contracts conclude, do not justify disallowance. The CIT(A)'s deletion of the disallowance was therefore affirmed. [Paras 11, 12]

Disallowance of notional foreign exchange loss deleted; revenue ground dismissed.

Shortfall between agreed sale consideration and actual consideration for sale of shares - Remand to Assessing Officer for fresh examination of disputed sale consideration - Treatment of shortfall between agreement price and actual consideration received on sale of shares - HELD THAT: - The assessee sold shares at an agreed price per the sale agreement but received a lower amount per share. The Tribunal observed that the sale consideration actually received is prima facie lower than the agreement amount and that the assessee did not place documentary material before the Tribunal to explain the shortfall. Although the Assessing Officer had not invoked section 56(2)(viia) explicitly, the Tribunal held that the reason for the shortfall is for the assessee to explain and placed the matter back to the AO for fresh examination with directions to the assessee to file necessary details so the AO may decide in accordance with law. [Paras 13]

Addition relating to the shortfall in sale consideration restored to the Assessing Officer for fresh adjudication; matter remanded.

Allowability of transaction related professional fees where transaction concluded in relevant year - Allowability of professional fees paid to effect the sale transaction though major payments were advanced in prior year - HELD THAT: - The Assessing Officer disallowed the professional fee on the ground that substantial payment and the invoice related to the preceding year. The CIT(A) accepted the assessee's explanation that advances were given earlier but the sale concluded in the year under appeal, and that the expenditure was genuine and incurred for effecting the sale. The Tribunal agreed with the CIT(A) that the cost incurred for effecting the transaction is allowable in the year in which the transaction concluded and that the genuineness of the expenditure was not in doubt. [Paras 14, 15]

Disallowance of professional fees reversed; expenditure of Rs. 1,05,85,891/- allowed.

Final Conclusion: The revenue appeal is partly allowed for statistical purposes: the Tribunal upheld the CIT(A)'s deletion of the section 14A disallowance, the closing stock addition and the disallowance of notional foreign exchange loss; it confirmed allowance of the transaction related professional fees; and it restored to the Assessing Officer for fresh examination the issue of shortfall between the agreed and actual sale consideration for shares.

Deduction under section 80P(2)(d) - Eligibility of a co-operative society for exemption on interest from deposits with a co-operative bank - Scope of section 80P(4) not affecting section 80P(2)(d) in respect of deposits with registered co-operative societies - Application of binding precedent of the Pune Bench interpreting section 80P

Deduction under section 80P(2)(d) - Eligibility of a co-operative society for exemption on interest from deposits with a co-operative bank - Assessee entitled to deduction under section 80P(2)(d) on interest earned from Maharashtra Gramin Bank for AY 2017-18. - HELD THAT: - The Assessing Officer denied the section 80P deduction on interest received from Maharashtra Gramin Bank on the ground that deduction under section 80P(2)(d) is allowable only where interest is earned from a co-operative society. The Tribunal examined earlier decisions of the Pune Bench and held that where the payer-bank is a registered co-operative society as defined under section 2(19) (i.e., registered under the Co-operative Societies Act or a law for the time being in force), interest on deposits with such co-operative bank is eligible for deduction under section 80P(2)(d). The Tribunal further noted that the insertion of section 80P(4) w.e.f. 1.4.2007, which excludes certain co-operative banks from eligibility, does not negate the entitlement under section 80P(2)(d) where the bank qualifies as a co-operative society under the statutory definition. Applying the binding view of the Division Bench of the Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. v. Pr. CIT, the Tribunal overturned the AO's finding and directed grant of the deduction for the interest income in question. [Paras 5]

Impugned order reversed and deduction under section 80P(2)(d) allowed on interest income from Maharashtra Gramin Bank for AY 2017-18.

Deduction under section 80P(2)(d) - Application of precedent to subsequent assessment year - Assessee entitled to deduction under section 80P(2)(d) on interest earned from Maharashtra Gramin Bank for AY 2018-19. - HELD THAT: - Facts and legal question for AY 2018-19 were held to be substantially similar to AY 2017-18. Having disposed of the preceding year in favour of the assessee on the ground that interest from a co-operative bank registered as a co-operative society is eligible for section 80P(2)(d) deduction, the Tribunal applied the same reasoning and precedent to reverse the AO's disallowance for AY 2018-19 and directed the grant of the deduction. [Paras 7]

Impugned order reversed and deduction under section 80P(2)(d) allowed on interest income from Maharashtra Gramin Bank for AY 2018-19.

Final Conclusion: Both appeals for AY 2017-18 and AY 2018-19 are allowed: the Tribunal, following the Pune Bench precedent, held that interest income received from Maharashtra Gramin Bank (a registered co-operative society) is deductible under section 80P(2)(d) and directed the Assessing Officer to allow the deduction.

Reopening of assessment - change of opinion - application of mind by assessing officer - mark-to-market (MTM) gains - double taxation - de novo consideration - claim under section 10AA

Reopening of assessment - change of opinion - application of mind by assessing officer - Validity of reopening assessment under section 147/148 for AY 2013-14 - HELD THAT: - The Tribunal found that at the time of the original assessment under section 143(3) there was no material before the Assessing Officer regarding the MTM gains and therefore the Assessing Officer had not applied his mind to that aspect. The reasons recorded for reopening referred to the absence of MTM gains in the profit & loss account and computation and relied on the Woodward Governor decision; these constituted fresh material/audit objection which justified initiation of proceedings under section 148. Because the Assessing Officer had not examined the issue of MTM gains in the original assessment, the reopening was not a mere change of opinion but a valid exercise to bring to tax income which had not been considered earlier. The Tribunal held that the CIT(A) did not properly adjudicate the reopening issue, but on merits the Assessing Officer was justified in issuing the notice and completing reassessment under section 143(3) r.w.s. 147. [Paras 8, 9]

Reopening of assessment upheld as valid; change of opinion does not arise where no material was before the Assessing Officer in the original assessment.

Mark-to-market (MTM) gains - double taxation - de novo consideration - claim under section 10AA - Merits of taxing MTM gain and related claims including book profit and section 10AA relief - HELD THAT: - On merits the Tribunal found that the Assessing Officer and the CIT(A) had not properly examined and recorded reasons: the Assessing Officer added the MTM gain while the CIT(A) deleted the addition without adequate reasoning or supporting evidence. Given these deficiencies, the Tribunal set aside the CIT(A) order and directed the Assessing Officer to consider the treatment of MTM gains afresh in accordance with law. The assessee was directed to raise any claim for exemption under section 10AA and contest on book profits before the Assessing Officer, who shall decide these issues de novo after allowing parties to place evidence and submissions. [Paras 10, 11]

Addition relating to MTM gain set aside and remitted to the Assessing Officer for fresh adjudication; issues relating to section 10AA and book profits to be raised and decided by the Assessing Officer de novo.

Final Conclusion: Both the Revenue's appeal and the assessee's cross objections were allowed for statistical purposes: reopening under section 147/148 for AY 2013-14 sustained, while the merits concerning taxation of MTM gains (and related claims including section 10AA and book profits) were remitted to the Assessing Officer for fresh consideration in accordance with law.

Re-assessment notice and scope of reassessment - limitations on Assessing Officer introducing additions not founded on reasons recorded for issuance of notice - deduction under section 80P(2)(a)(i) - deletion of additions in reassessment where original grounds do not subsist - remand for fresh assessment where assessment/order is ex parte without considering assessee's written submissions

Re-assessment notice and scope of reassessment - limitations on Assessing Officer introducing additions not founded on reasons recorded for issuance of notice - deduction under section 80P(2)(a)(i) - deletion of additions in reassessment where original grounds do not subsist - Validity of denial of deduction under section 80P(2)(a)(i) on interest income in reassessments for A.Y. 2013-14, 2014-15 and 2016-17 where the reasons for issuance of notice related to unexplained cash deposits but no addition was made on that ground and AO ultimately disallowed deduction on a different basis. - HELD THAT: - The Assessing Officer issued notices to reopen on the basis of alleged unexplained cash deposits in bank accounts. During assessment proceedings the AO became satisfied with the assessee's explanation regarding those cash deposits and made no addition on that ground. Instead the AO disallowed the claim for deduction under section 80P(2)(a)(i) in respect of interest income and made an addition. The Tribunal applied the principle that reassessment cannot be sustained by making an addition or taking a view different from the foundational reasons recorded for issuance of the notice where those foundational reasons do not subsist; reliance was placed on the ratio in CIT vs. Jet Airways as authority for the proposition that an AO cannot proceed with reassessment on a non-existent ground. Since the denial of the 80P deduction was not the subject matter of the reasons recorded for reopening and the original reasons did not result in any adverse addition, the addition made by the AO on a different basis was held to lack legality and directed to be deleted for the three assessment years.

Addition arising from denial of deduction under section 80P(2)(a)(i) deleted for A.Y. 2013-14, 2014-15 and 2016-17.

Remand for fresh assessment where assessment/order is ex parte without considering assessee's written submissions - procedural fairness and opportunity of hearing in assessment proceedings - Whether the ex parte assessment and ex parte appellate order for A.Y. 2017-18 should stand where the assessee had filed written submissions before the Assessing Officer and before the first appellate authority which were not considered. - HELD THAT: - The assessment for A.Y. 2017-18 was completed by the AO under the ex parte provision and the first appellate authority also passed an ex parte order. The record establishes that the assessee had furnished written submissions to the AO by e-mail before the assessment order and had similarly submitted written submissions before the CIT(A), both of which were not considered. In the interest of justice and in view of the failure to consider the written submissions, the Tribunal concluded that the correct course is to set aside the impugned order and remit the matter to the file of the Assessing Officer for fresh assessment, with the direction that the assessee shall be afforded a reasonable opportunity of hearing.

Assessment for A.Y. 2017-18 set aside and remitted to AO for fresh assessment with opportunity of hearing; appeal allowed for statistical purposes.

Final Conclusion: Appeals for A.Y. 2013-14, 2014-15 and 2016-17 allowed by deleting the additions arising from denial of deduction under section 80P(2)(a)(i); appeal for A.Y. 2017-18 set aside and remitted to the Assessing Officer for fresh assessment after affording the assessee a reasonable opportunity of hearing.

Scope of assessment under section 153A in unabated assessment years - requirement of incriminating material unearthed during search for additions in 153A proceedings - treatment of share application money and shareholding list as incriminating material - onus of proof under section 68 in respect of share capital

Scope of assessment under section 153A in unabated assessment years - requirement of incriminating material unearthed during search for additions in 153A proceedings - Additions in an unabated assessment year made under proceedings initiated by notice under section 153A cannot be sustained in absence of incriminating material unearthed during the search. - HELD THAT: - The Tribunal held that the assessment year 2010-11 was an unabated assessment year as on the date of search and that the established line of authority of the jurisdictional High Court (notably PCIT v. Saumya Construction) and other decisions require that, for unabated years, additions in 153A proceedings must be founded on incriminating material discovered during the search. The Tribunal examined the Assessing Officer's remand report and the record and concluded that the impugned addition was not based on any incriminating material unearthed in the search but on particulars already reflected in the assessee's books and balance sheet; therefore the addition could not be sustained in the 153A assessment for an unabated year. The Tribunal followed the cited High Court and tribunal precedents and rejected the Revenue's contrary reliance on out-of-jurisdiction decisions where different conclusions were reached. [Paras 6, 8]

Addition deleted as not based on incriminating material unearthed during search

Treatment of share application money and shareholding list as incriminating material - The list of shareholders and the share application money reflected in the balance sheet do not, by themselves, constitute incriminating material unearthed during the search. - HELD THAT: - The Tribunal agreed with the CIT(A)'s finding that the list of shareholding and the disclosure of share application money were part of the assessee's books of account and audited annual report and therefore could not be treated as incriminating material discovered during the search. The Assessing Officer's attachment of a seized page containing a list of shareholders did not transform ordinary books or published records into search sourced incriminating material sufficient to support additions in an unabated assessment year. [Paras 7]

List of shareholders/share application money not treated as incriminating material

Onus of proof under section 68 in respect of share capital - The assessee discharged the onus under section 68 by establishing identity and creditworthiness of subscribers to share capital, and hence no addition was warranted on merits. - HELD THAT: - Although the Assessing Officer expressed scepticism about the creditworthiness of certain investors, the Tribunal noted that the assessee furnished documentary evidence during assessment and appellate proceedings to establish identity and creditworthiness, that many subscribers were relatives or family members, and that only a limited portion involved companies potentially classifiable as shell entities. On the combined view that (i) the 153A addition was void ab initio for lack of search based incriminating material and (ii) on merits the assessee had discharged its section 68 burden sufficiently, the Tribunal upheld the CIT(A)'s deletion of the addition. [Paras 7, 8]

Assessee's onus under section 68 held discharged; addition not sustainable on merits

Final Conclusion: The departmental appeal is dismissed; the addition of share application money made in assessment under section 153A for AY 2010-11 is quashed because it was not founded on incriminating material unearthed during the search and, on the facts, the assessee discharged the onus under section 68.

Taxability of interest on External Commercial Borrowings (ECB) vis-a -vis Permanent Establishment - Applicability of bilateral tax treaty rate and beneficial ownership under Article 11(2) of the India-Netherlands DTAA - Attribution of income between branch and head office - separate entity fiction under Article 7 - Treatment of interest paid by Indian branch to head office/overseas branches - not taxable in hands of head office - Prospective effect of amendment to section 9(1)(v) - Finance Act, 2015

Taxability of interest on External Commercial Borrowings (ECB) vis-a -vis Permanent Establishment - Applicability of bilateral tax treaty rate and beneficial ownership under Article 11(2) of the India-Netherlands DTAA - Applicability of the India-Netherlands DTAA (including the 10% rate under Article 11(2)) to interest earned on ECB loans and whether such income should be taxed as business income of the assessee's PE. - HELD THAT: - The Tribunal recorded that the Assessing Officer and the CIT(A) treated the interest as includible in the assessee's hands but did not determine the applicability of the DTAA nor was beneficial ownership established by the assessee before the lower authorities. The assessee before the Tribunal sought treaty taxation at the Article 11(2) rate but had not adduced evidence to prove beneficial ownership or otherwise satisfied the treaty condition(s) during assessment. In these circumstances the Tribunal found it appropriate to remit the question of treaty applicability and entitlement to the concessional treaty rate to the Assessing Officer for fresh adjudication, permitting the assessee to produce evidence and submissions in support of its claim. The coordinate bench decisions and earlier orders were noted, but the determinative factual and treaty issues require examination afresh by the AO. [Paras 10, 18, 22]

Issue remanded to the Assessing Officer for de novo consideration of the applicability of the India-Netherlands DTAA and the assessee's entitlement to taxation at 10% under Article 11(2); grounds 1-4 allowed for statistical purposes.

Attribution of income between branch and head office - separate entity fiction under Article 7 - Treatment of interest paid by Indian branch to head office/overseas branches - not taxable in hands of head office - Prospective effect of amendment to section 9(1)(v) - Finance Act, 2015 - Whether interest paid by the Indian branch to its head office/overseas branches is taxable in the hands of the head office (i.e., attributable to India) or is non taxable receipt of the same enterprise. - HELD THAT: - Having considered the assessee's reliance on Special Bench authority (Sumitomo Mitsui) and relevant High Court decisions, the Tribunal accepted the view that the Article 7 independent entity fiction is intended for determining profits attributable to a PE and does not convert receipts between a branch and its head office into taxable income of the head office in India. The Tribunal also noted that the amendment to section 9(1)(v) made by Finance Act, 2015 was to be given prospective effect and is not applicable to the years under consideration. Applying these precedents and principles, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition treating the interest paid to head office/overseas branches as income taxable in the hands of head office. [Paras 13, 15, 19, 23]

Addition in respect of interest paid to head office/overseas branches deleted; ground dismissed.

Final Conclusion: All three appeals by the Revenue are partly allowed for statistical purposes: issues concerning treaty applicability and entitlement to the Article 11(2) rate remanded to the Assessing Officer for fresh adjudication; additions treating interest paid to head office/overseas branches as taxable in the hands of head office are deleted.

Benami transaction - parameters for identifying a benami purchase - free consent and undue influence - adverse inference for non-examination of key witnesses - partition and declaration of shares - setting aside instruments for want of mental capacity

Benami transaction - parameters for identifying a benami purchase - Whether the A and B schedule properties purchased in the name of Rajeswari Bai were benami held for her husband or were her personal properties - HELD THAT: - The court found that the sale deeds for A and B schedule properties stood in the name of Rajeswari Bai and the evidence on record did not establish that the purchase moneys came from the husband or that other indicia of a benami transaction were present. The plaintiff failed to produce direct evidence or to examine herself to prove that the consideration was provided by her father. The materials relied upon by the plaintiff (including purchase of stamp papers in the husband's name) were held inadequate to substantiate a benami inference. Applying established parameters for identifying benami purchases, the court concluded the preponderance of evidence points to ownership by Rajeswari Bai. [Paras 11, 12, 13]

Issue No.1 decided against the plaintiff; A and B schedule properties held to be the properties of Rajeswari Bai and not benami for her husband

Free consent and undue influence - setting aside instruments for want of mental capacity - adverse inference for non-examination of key witnesses - Whether the registered settlement deeds executed by Rajeswari Bai in favour of certain defendants (Ext.P3 and Ext.P8) were valid or vitiated by want of free consent - HELD THAT: - The court recorded undisputed facts that at the relevant times Rajeswari Bai was aged, paralytic and under the care, custody and control of the first defendant; the originals of the settlement deeds were not produced; and key witnesses (including the first defendant and the allegedly capable second defendant) were not examined. In this factual matrix the burden to explain the mental status and circumstances of execution lay on the defendants, which they did not discharge. The court drew adverse inferences from non-examination and concluded there was strong suspicion as to the executant's capacity and the voluntariness of the transactions. On this basis the court held the deeds were not the product of free will and must be set aside. [Paras 14, 15, 16, 17, 19]

Ext.P3 and Ext.P8 are set aside as null and void for want of free consent and due to the defendants' failure to discharge the evidentiary burden

Partition and declaration of shares - Whether the plaintiff is entitled to a declared share in the C schedule property allotted on family partition - HELD THAT: - There was no dispute as to the C schedule property having been allotted to the father by a family partition and both parents have since died. The court accepted the uncontested position and declared the plaintiff's share accordingly. [Paras 6]

Issue No.2 decided in favour of the plaintiff; plaintiff's 1/3 share in C schedule property declared

Partition and declaration of shares - costs - Relief consequential to findings on ownership and invalidity of settlement deeds, including declaration of plaintiff's share in all schedules and costs - HELD THAT: - Having held that A and B schedule properties belonged to Rajeswari Bai and having set aside Ext.P3 and Ext.P8 for want of free consent, the court proceeded to decree the suit. The court noted that defendants who had constructed on A schedule property should be permitted equitable adjustment at the stage of final decree, but that interim relief does not override the declaration of shares. The court awarded costs and directed consequential orders to follow. [Paras 21, 22]

Suit decreed: plaintiff's 1/3 share in all scheduled properties declared; Ext.P3 and Ext.P8 set aside; suit decreed with costs

Final Conclusion: The court rejected the plaintiff's benami plea as to A and B schedules but found the settlement deeds executed by Rajeswari Bai void for want of free consent; the C schedule share was declared undisputedly in favour of the plaintiff and, on the cumulative findings, the suit was decreed declaring the plaintiff's one-third share in all schedule properties, setting aside the two settlement deeds and awarding costs.

Anti-dumping duty - provisional anti-dumping duty - final determination of dumping and material injury - interim relief pending adjudication - failure to implement confirmed interim orders - Section 9A(2) of the Tariff Act

Final determination of dumping and material injury - failure to implement confirmed interim orders - interim relief pending adjudication - provisional anti-dumping duty - Section 9A(2) of the Tariff Act - Petitioner entitled to interim direction for imposition of provisional anti-dumping duty where designated authority failed to levy duty despite a final finding of dumping and material injury and non-implementation of earlier interim orders. - HELD THAT: - The Court recorded that the designated authority issued a Final Finding dated 31.03.2022, determining significant dumping and consequent material injury to the domestic industry, but the respondents failed to impose the anti-dumping duty. The Court noted that various High Courts had granted interim orders directing provisional assessment which were not implemented by the authority, and that challenges to those interim orders by the Union had been dismissed by this Court. Having regard to the averments that continued non-levy causes grave and irreparable injury to Indian manufacturers on a daily basis, the Court concluded that interim relief was warranted. As an interim measure pending final disposal, the Court directed respondents to impose a provisional anti-dumping duty under the power available in Section 9A(2) of the Tariff Act at the rate determined in the Final Finding dated 31.03.2022 (published in the Extraordinary Gazette of India), while making clear that the levy is subject to final adjudication in these proceedings.

Respondents directed, as an interim measure pending final disposal, to impose provisional anti-dumping duty under Section 9A(2) of the Tariff Act at the rate determined in the Final Finding dated 31.03.2022, subject to final adjudication.

Final Conclusion: Notice issued; respondents ordered to impose provisional anti-dumping duty at the rate fixed in the Final Finding dated 31.03.2022 under Section 9A(2) of the Tariff Act as an interim measure pending final disposal, the levy being subject to the outcome of these proceedings.

Classification under General Rules for the Interpretation of the Import Tariff - Eligibility for exemption notification based on description 'digital still image video camera' - Burden of proof on Revenue to justify substituted classification - Primacy of tariff enactment over subordinate notifications and circulars - Irrelevance of deleted technical Explanation to post-amendment imports - Validity of confiscation and penalties under sections 111(m), 112, 114A and 114AA of the Customs Act

Classification under General Rules for the Interpretation of the Import Tariff - Eligibility for exemption notification based on description 'digital still image video camera' - Irrelevance of deleted technical Explanation to post-amendment imports - Imported GoPro 'action cameras' (Hero 5 Session and Hero 5 Black) fall within the description corresponding to tariff item 8525 8020 as 'digital still image video camera' and are eligible for the exemption notifications relied upon by the appellants. - HELD THAT: - The Tribunal examined heading 8525 and its sub-headings and held that the imported goods properly fit within sub-heading 8525 80 and tariff item 8525 8020. The Court observed that the technical specifications contained in the erstwhile Explanation to the exemption notification had been rescinded before the imports and therefore could not restrict eligibility. In the absence of any finding or evidence placing the goods within a residual 'others' description at sub-heading level, the declared classification could not be displaced. The rescinding of the Explanation removed any requirement for conformity with obsolete technical limits, and nothing on record negated that the imported goods conformed to the description entitling them to duty-free import under the notifications claimed. [Paras 11, 12]

Declared classification under tariff item 8525 8020 accepted and entitlement to the exemption notifications upheld.

Burden of proof on Revenue to justify substituted classification - Primacy of tariff enactment over subordinate notifications and circulars - Revenue failed to discharge the burden of proof required to substitute the importers' declared classification with tariff item 8525 8090, and reliance on other notifications, circulars or manufacturer materials could not justify reclassification. - HELD THAT: - Relying on settled authorities, the Tribunal reiterated that classification is a matter of chargeability and the onus lies on Revenue to produce evidence supporting a proposed classification different from that claimed by the importer. The adjudicating authority's reliance on circulars, deleted Explanations, website descriptions, or classifications adopted in other ports was insufficient to discharge that burden. A notification or circular cannot be used to determine classification which falls to be decided under the General Rules for Interpretation of the Import Tariff, and subordinate instruments cannot override the statutory tariff descriptions. [Paras 5, 9, 12]

Substituted classification to tariff item 8525 8090 by the customs authorities is not sustained for want of proof; the declared classification stands.

Validity of confiscation and penalties under sections 111(m), 112, 114A and 114AA of the Customs Act - Confiscation and the penalties and demands confirmed by the adjudicating authority are vacated as they stemmed from an unsustained reclassification and denial of exemption. - HELD THAT: - Because the Tribunal set aside the reclassification and held that the imported goods were entitled to the exemption, the consequential confirmation of demand under section 28, confiscation under section 111(m) and penalties under sections 112, 114A and 114AA had no legal basis. The Tribunal therefore vacated the confiscation (and any redemption fine), annulled the confirmed demand and quashed the penalties imposed on the importer and the named persons. [Paras 13, 14]

Confirmation of demand, confiscation and all impugned penalties set aside; impugned order quashed and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, held that the imported GoPro action cameras fall within tariff item 8525 8020 and are eligible for the claimed duty free notifications, found that Revenue failed to discharge the burden to reclassify the goods, and accordingly set aside the demand, confiscation and all penalties arising from the impugned order.

Requirement of FCRA Account details "as on 31st March" in Form FC-4 - Permissibility of furnishing subsequently opened designated FCRA account for earlier financial year returns - Designation of State Bank of India, New Delhi Main Branch (Sansad Marg) as FCRA account - Waiver of penalty and restraint on coercive action for delayed filing where account opened after amendment

Requirement of FCRA Account details "as on 31st March" in Form FC-4 - Permissibility of furnishing subsequently opened designated FCRA account for earlier financial year returns - Waiver of penalty and restraint on coercive action for delayed filing where account opened after amendment - Whether petitioners who opened the designated SBI (Sansad Marg) FCRA account after the FCRA Amendment (and after 31st March 2020) may nonetheless furnish that account's details in Form FC-4 for the financial year 2019-2020 and be protected from penal/coercive action. - HELD THAT: - The Court observed that the narrow controversy concerns the Form FC-4 requirement to furnish the "FCRA account" details "as on 31st March of the year ending" when the FCRA (Amendment) Act, 2020 came into force later. Noting that the petitions raise issues already considered by this Court in earlier orders (including WNS Cares Foundation and Helping Hands Jaipur Society), the Court followed the reasoning in WNS Cares Foundation which permitted an organisation that opened its SBI, Sansad Marg FCRA account after the amendment to fill serial no.7 of Form FC-4 with the subsequently opened SBI account. Applying the same approach, and having regard to the fact that the petitioners have since opened their SBI, Sansad Marg accounts, the Court allowed the petitioners to upload their annual returns for 2019-2020 by specifying the SBI account number of the account opened subsequently. The Court further directed that if the annual returns are uploaded within one month there shall be no penalty charged and no coercive steps taken against the petitioners. [Paras 11, 12, 13]

Petitioners permitted to upload Form FC-4 for 2019-2020 by specifying the SBI, Sansad Marg account opened subsequently; if uploaded within one month, no penalty shall be imposed and no coercive action taken.

Final Conclusion: Petitions disposed permitting the petitioners to furnish the subsequently opened designated SBI (Sansad Marg) FCRA account in Form FC-4 for FY 2019-2020 and directing that returns so filed within one month will not attract penalty or coercive measures.

Service Tax on royalty payments - IPR service liability on reverse charge basis - Recognition of intellectual property under Indian law - Meaning of "law for the time being in force" for IPR - Precedential value of coordinate CESTAT Benches

Service Tax on royalty payments - IPR service liability on reverse charge basis - Recognition of intellectual property under Indian law - Meaning of "law for the time being in force" for IPR - Demand of Service Tax on royalty paid to a foreign licensor (CCI) for use of licensed technology. - HELD THAT: - The Tribunal examined whether royalty payments to a foreign licensor for Licensed Technology attract service tax under the IPR service on reverse charge basis. It followed earlier coordinate-bench decisions which hold that liability under the IPR service arises only where the intellectual property is recognised by a law in force in India. Registration in India is not an absolute prerequisite, but the IPR must satisfy the requirements of recognition under Indian law. The Board's Circular B2/8/2004-TRU dated 10.09.2004 clarifies that the phrase "law for the time being in force" refers to laws applicable in India; therefore only IPRs covered by Indian law are chargeable. In the present case it was an admitted fact that the IPR was not registered for enforcement under any law in India and, applying the consistent view of the Tribunal in earlier decisions, the appellant cannot be held liable to service tax on the royalty paid to CCI. On that basis the demands were held to be improper and set aside. [Paras 7, 8]

Demands of service tax on the royalty payments to M/s. CCI held not sustainable; impugned orders set aside and appeals allowed.

Final Conclusion: Following consistent CESTAT precedents and the Board's clarification on the scope of laws "for the time being in force", the Tribunal held that royalty paid for the foreign IPR (not recognised/registered for enforcement under Indian law) did not attract service tax on reverse charge basis; impugned orders were set aside and the appeals allowed.

Job work versus manufacture - Classification as business auxiliary service - Service-tax liability of sub-contractor - CENVAT Credit

Job work versus manufacture - Classification as business auxiliary service - Powder coating carried out by the appellant on job work basis is not a manufacturing activity and is classifiable as a business auxiliary service. - HELD THAT: - The Tribunal examined whether the powder coating activity rendered by the appellant results in the creation of any new goods or amounts to 'manufacture' so as to exclude it from the ambit of 'business auxiliary service'. The Bench noted the orders of co ordinate CESTAT Benches and the decision of the Apex Court relied upon by the Revenue and observed that those authorities treat powder coating as not bringing new goods into existence and therefore as falling under business auxiliary service. The appellant's reliance on a contrary decision of a co ordinate Bench was considered but the Tribunal held that the preponderant line of authority, as noted in the impugned order, is adverse to the appellant and accordingly answered the issue against the appellant. [Paras 9, 10]

Activity of powder coating on the facts of this case is not manufacture and is taxable as business auxiliary service.

Service-tax liability of sub-contractor - CENVAT Credit - The appellant, as a sub-contractor performing powder coating, remains liable for Service Tax despite the main contractor having remitted tax and availed CENVAT Credit. - HELD THAT: - The Tribunal referred to the Larger Bench precedent which holds that liability of a sub contractor does not cease even when the main contractor remits the service tax. The appellant's contention that liability rested solely on the main contractor and that the exercise was revenue neutral was considered; the Tribunal rejected the contention on the point of sub contractor liability, and declined to adjudicate on revenue neutrality because that aspect depends on case specific facts and prior higher authority has addressed it. [Paras 9, 11]

The appellant remains liable as a service provider/sub contractor notwithstanding payment by the main contractor; revenue neutrality was not adjudicated.

Final Conclusion: The appeal is dismissed: powder coating carried out by the appellant is held to be taxable as business auxiliary service and the appellant, as sub contractor, remains liable for Service Tax; no interference is called for with the orders below.

Goods transport agent service - consignment note - delivery challan - hiring of tankers on monthly basis

Goods transport agent service - consignment note - delivery challan - Whether the services rendered under monthly hiring of tankers amounted to a taxable goods transport agent service attracting service tax - HELD THAT: - The Tribunal examined the contractual terms and factual matrix and found that the appellants hired tankers on a fixed monthly basis, with additional payments for per kilometre run and tolls, and that the transporter assumed full responsibility for the goods en route. The contract stipulated that the transporter would collect documents before leaving the plant and bear consequences of interception or levies, and that the transporter would not issue LRs while the assessee would issue delivery challans and the transporter would merely obtain acknowledgements on delivery challans. In these circumstances no consignment notes (LRs) were issued by the transporter and the arrangements evidenced a carriage under contract of affreightment rather than a goods transport agent service as defined and taxed under the impugned demand. The Tribunal therefore concluded that the facts did not disclose provision of goods transport agent service and the demand was without merit.

The demand of service tax under the head of goods transport agent service was set aside and the appeal allowed.

Final Conclusion: On the contract terms and factual findings (monthly tanker hiring, transporter bearing responsibility, absence of consignment notes and issuance of delivery challans by the appellant), the Tribunal held that no goods transport agent service was rendered; the demand was set aside and the appeal allowed.

Valuation for captive consumption - cost of production and apportionment of factory overheads - acceptable costing methodology - invocation of extended period of limitation - interest and penalty consequential on unsustainable demand

Valuation for captive consumption - cost of production and apportionment of factory overheads - acceptable costing methodology - Whether the assessee's method of computing overheads as a percentage of wages for valuing footwear components cleared for captive consumption was permissible and whether the departmental computation resulted in undervaluation. - HELD THAT: - The Tribunal examined the competing costing approaches: the Department's approach of adding a fixed percentage of prime cost as overheads and the assessee's approach of computing overheads as a uniform percentage of wages. The Tribunal accepted the assessee's contention that raw material (prime cost) is a variable item and therefore unsuitable as the basis for apportioning factory overheads for valuation purposes. It found that deriving overheads as a percentage of wages is a stable and appropriate method of costing in the circumstances and noted that duty had already been paid on the basis of that method. Applying this reasoning to the facts, the Tribunal concluded there was no undervaluation in the assessee's costing and consequently no sustainable demand. The Tribunal thereby reversed the Commissioner (Appeals) remand and sustained the adjudicating authority's conclusion on merits. [Paras 11, 12, 14]

Assessee's costing methodology accepted; no undervaluation; demand not sustainable.

Invocation of extended period of limitation - interest and penalty consequential on unsustainable demand - Whether the extended period of limitation under the proviso to Section 11A could be invoked and whether interest and penalty were payable. - HELD THAT: - The Tribunal recorded the assessee's contention that returns were regularly filed and audits conducted, and noted that the adjudicating authority had earlier found insufficient basis to invoke the proviso to Section 11A. The Tribunal observed that, having held the demand unsustainable on merits, it was unnecessary to decide the limitation point. It nonetheless expressed that the assessee's limitation argument had merit but proceeded to dispose of the appeal on merits. As the demand was held unsustainable on substantive grounds, the Tribunal concluded that interest and penalty that would flow from a sustainable demand were also not payable. [Paras 13, 14]

Limitation point not adjudicated as determinative; interest and penalty not sustainable as demand fails on merits.

Valuation for captive consumption - cost of production and apportionment of factory overheads - Whether the Commissioner (Appeals) was right to set aside the adjudicating authority's order and remand the matter for re-adjudication on the basis of the Commissioner's observations on costing. - HELD THAT: - The Tribunal reviewed the Commissioner (Appeals) order which remanded the matter for reconsideration of overhead apportionment and profit element. Having independently examined the costing methodologies and concluded that the assessee's method was appropriate and resulted in no undervaluation, the Tribunal found no justification for the remand. The Tribunal therefore set aside the Commissioner (Appeals) order and restored the result in favour of the assessee. [Paras 10, 14]

Order of remand by Commissioner (Appeals) set aside; appeal allowed in favour of assessee and Revenue's appeal rejected.

Final Conclusion: The Tribunal allowed the assessee's appeal, held the assessee's overhead apportionment methodology acceptable and found no undervaluation; the demand, and consequential interest and penalty, were not sustainable. The Commissioner (Appeals) remand was set aside and the Revenue's appeal was rejected.

Entitlement to area-based exemption under notification - interpretation of substitution in notification - substitution leads to retrospective incorporation - strict construction of exemption notification

Entitlement to area-based exemption under notification - interpretation of substitution in notification - substitution leads to retrospective incorporation - strict construction of exemption notification - Respondent entitled to benefit of Notification No. 50/2003 dated 10.06.2003 read with Notification No. 34/2005-CE dated 30.09.2005 in respect of unit situated at Hadbast No. 110 & Khasra No. 147. - HELD THAT: - The Tribunal examined the notifications and the authorities below and held that Notification No. 34/2005-CE effected a substitution of Hadbast & Khasra numbers (substituting 110 (1 to 418) in place of 110 (1 to 41)). Applying established principles of interpretation, the Tribunal accepted that a substitution operates to read the altered provision into the original notification and, therefore, the substituted entries relate back to the parent notification for the purposes of eligibility. The Tribunal relied on authorities dealing with substitution and its retrospective operative effect as explanatory and clarificatory (Madhu Sudan Mittal ; Mehler Engineered Products India Pvt Ltd ; Commissioner of CE & ST, Bangalore vs. Fosroc Chemicals India Pvt Ltd ), noting that where an amendment is by way of substitution and is clarificatory, the provision is to be read as if the altered wording had existed from the inception. While acknowledging the general rule that exemption notifications are to be construed strictly, the Tribunal found that the present substitution did not take away any substantive right or impose penal consequences and that the State Revenue authority had also clarified the respondent's entitlement. On that basis the Tribunal concluded there was no merit in the Revenue's contention that the substitution could not be given retrospective effect, and upheld the findings of the lower authorities allowing the exemption. [Paras 6, 7, 8]

Appeal dismissed; impugned order upholding grant of exemption under the notifications is affirmed.

Final Conclusion: The departmental appeal is dismissed and the Commissioner (Appeals) order upholding the respondent's entitlement to exemption under Notification No. 50/2003 read with Notification No. 34/2005 is affirmed.

Quashing of First Information Report - Registration of FIR on suspicion or probability - Disproportionate assets and criminal misconduct under the Prevention of Corruption Act - Scope of interference under Article 226 and Section 482 - Mala fide allegations as ground for quashing - CBI Circular on methodology for disproportionate assets cases - Investigative process and leave to investigate

Quashing of First Information Report - Registration of FIR on suspicion or probability - Scope of interference under Article 226 and Section 482 - Investigative process and leave to investigate - Whether the High Court was justified in quashing the FIR registered under Section 13(1)(b) read with Section 13(2) of the P.C. Act and Section 120B IPC. - HELD THAT: - The Court held that the High Court transgressed established limits in quashing an FIR at the investigation stage by scrutinising probabilities and engaging in a mini-trial. A first information report need only, when read on its face, disclose material which gives the police reason to suspect a cognizable offence so as to set the investigative machinery in motion; the police need not be satisfied of the truth of the allegations at that stage. Applying these principles to the FIR and its antecedent preliminary inquiry, the Court found that despite inept drafting, the FIR contained particulars and disclosures (including a check period, property particulars and deposits) which prima facie warranted investigation into alleged disproportionate assets and possible criminal misconduct under Section 13 of the P.C. Act. The High Court's reliance on the FIR being based on 'probabilities' and its expectation of exact figures at registration were held to be impermissible bases for quashing. For these reasons the High Court's interference was unjustified and the quashing was set aside. [Paras 61, 64, 65, 76]

Impugned judgment quashing the FIR set aside; appeals allowed and writ petitions dismissed, with directions to permit investigation to proceed.

Disproportionate assets and criminal misconduct under the Prevention of Corruption Act - Registration of FIR on suspicion or probability - Whether the FIR in a disproportionate-assets case was deficient for lack of precise figures or check-period particulars so as to preclude registration and investigation. - HELD THAT: - The Court explained the elements of criminal misconduct under Section 13 of the P.C. Act and recognised the utility of preliminary inquiry in such cases, but emphasised that the law does not require that exact figures or exhaustive particulars be stated in the FIR in order to register a case. While careful drafting is desirable, a complaint that, when read with the results of a preliminary inquiry, furnishes material indicating prima facie possession of pecuniary resources disproportionate to known income suffices to initiate investigation. The factual disclosures in the FIR (including references to the period 2004-2018, particulars of properties and notable deposits) were held to meet that threshold. [Paras 50, 51, 54, 55]

FIR was not vitiated for want of precise figures or check-period particulars; investigation was to be permitted to continue.

Mala fide allegations as ground for quashing - Scope of interference under Article 226 and Section 482 - Whether allegations of mala fide (political vendetta) established a ground to quash the FIR. - HELD THAT: - The Court found the pleadings of mala fide to be vague and insufficiently particularised; persons allegedly responsible for mala fide (the Chief Minister or Chief Secretary) were not impleaded eo nomine; and the materials subsequently sought to be relied upon (news reports and chats) did not furnish a basis to quash the FIR. The Court observed that even if political overtones exist, a prosecution supported by adequate evidence is not vitiated solely because of such overtones; mala fide must be affirmatively pleaded and proved and, in disproportionate-assets cases, material uncovered in investigation and trial is the decisive test. Accordingly, the Court held there were no cogent grounds to quash the FIR on mala fide grounds. [Paras 70, 71, 72, 75]

Mala fide plea rejected; not a basis to quash the FIR in the present proceedings.

CBI Circular on methodology for disproportionate assets cases - Whether the FIR was invalid for non-compliance with CBI Circular No. 29/2020. - HELD THAT: - The Court noted the CBI Circular provides a methodology for registering FIRs in disproportionate-assets matters but observed the impugned FIR was registered on 25 February 2020 whereas the CBI Circular was issued on 12 November 2020 and adopted by the State only later. Consequently, the later-issued Circular could not retrospectively invalidate the FIR and the alleged breach of that Circular could not be a ground to quash the FIR. [Paras 64]

CBI Circular held inapplicable to invalidate the FIR registered prior to its issuance and subsequent adoption.

Final Conclusion: The Supreme Court set aside the High Court's order quashing the FIR, held that the High Court had exceeded its jurisdiction by undertaking a merits-based scrutiny at the investigation stage, rejected the mala fide plea as inadequately pleaded and insufficient to quash the FIR, and directed that the investigation proceed to its logical conclusion; interim protection was continued for three weeks and parties to bear their own costs.

Due execution and attestation of Will - proof under Section 63(c) Indian Succession Act and Section 68 Indian Evidence Act - registration of Will and evidentiary weight - benami transaction-applicability of Benami Transactions (Prohibition) Act, 1988 - suspicious circumstances in probate matters - onus in case of undue influence and coercion

Due execution and attestation of Will - proof under Section 63(c) Indian Succession Act and Section 68 Indian Evidence Act - registration of Will and evidentiary weight - Ex.P1 Will has been duly executed, attested and proved in the manner required by law. - HELD THAT: - The Court examined the pleadings, proof affidavits and oral testimony of the attesting witnesses. P.W.1 (second appellant) consistently stated that she and the respondent attested the Will and filed a proof affidavit; the respondent (D.W.1) admitted that the signature on Ex.P1 "looks like" hers and did not seriously deny attestation. The Will was executed on 06.03.2005 and subsequently registered on 19.04.2005; the fact of registration, and the testatrix signing before the Sub-Registrar at registration, made the defence that signatures were taken on blank papers and later misused inherently improbable. Applying the principles in Naresh Charan Das Gupta and M.S. Thanigachalam Pillai, the Court held that the evidence of one attesting witness coupled with the admissions of the other sufficed to satisfy Sec.63(c) of the Indian Succession Act read with Sec.68 of the Evidence Act. The Single Judge's finding that the attesting witness had totally denied her signature was contrary to the evidence. [Paras 42]

Ex.P1-Will is proved as duly executed and attested; requirements of Sec.63(c) Indian Succession Act read with Sec.68 Evidence Act are satisfied.

Benami transaction-applicability of Benami Transactions (Prohibition) Act, 1988 - tests for benami transaction - The Benami Transactions (Prohibition) Act, 1988 does not invalidate Ex.P1-Will and the asserted benami defence fails. - HELD THAT: - Applying the illustrative tests (source of purchase money, possession, conduct of parties, custody of title-deeds, relationship and motive), the Court found the entire purchase consideration came from the appellants' father, possession and conduct were consistent with his ownership, and no contemporaneous protest was made by the testatrix. The property purchase pre-dated the 1988 Act and the Act is not retrospectively applicable to defeat the Will. On these facts the Court concluded the recitals in Ex.P1 reflecting the real source of consideration were true and the benami contention could not prevail. [Paras 49]

Ex.P1-Will is not hit by the Benami Transactions (Prohibition) Act, 1988 and the claim of benami purchase is rejected.

Suspicious circumstances in probate matters - onus in case of undue influence and coercion - Allegations of suspicious circumstances and of undue influence/coercion do not invalidate Ex.P1-Will. - HELD THAT: - The Court considered the suspicious circumstances advanced (advanced age and dominion of the brother, delayed registration, different witnesses at registration, registration during lunch hour, delay in filing petition). It held that mere speculation or events occurring post-execution do not constitute suspicious circumstances bearing on due execution. The testatrix's age and health were not shown to impair testamentary capacity; registration on a later date and different identifying witnesses are lawful and not inherently suspect; no material was produced to prove registration during non-working hours or abuse of office. Having accepted that the propounder discharged the initial burden of proof, the Court noted that the caveator adduced no evidence to substantiate undue influence or the fabrication of signatures; hence the onus to prove coercion was not discharged. The Court reiterated that suspicious circumstances must be germane to execution of the Will itself and proven, not conjectured. [Paras 63]

The alleged suspicious circumstances and the plea of undue influence/coercion are not established; the Will stands unimpeached.

Final Conclusion: The intra Court appeal is allowed: Ex.P1 (the registered Will) is held to be duly executed, attested and proved; the benami defence and allegations of suspicious circumstances or undue influence fail. The decree of the Single Judge is set aside; no order as to costs; connected miscellaneous petition closed.