TaxTMI Updates e-Newsletter
May 05,2021

Violation of principles of natural justice - validity of notice under Section 148 - jurisdiction of the Assessing Officer - remand for fresh adjudication - absence of a substantial question of law

Violation of principles of natural justice - remand for fresh adjudication - Tribunal's remand to the Assessing Officer for fresh adjudication on the plea of lack of opportunity and violation of principles of natural justice. - HELD THAT: - The Tribunal found that the assessee's consistent plea before the authorities was that there had been a lack of opportunity and a breach of natural justice, and on that basis remitted the matter to the Assessing Officer for fresh adjudication. The High Court reviewed the record, noted that the Commissioner (Appeals) order was ex parte and that the Tribunal's remit was directed to cure the asserted procedural infirmity, and observed that the Tribunal's decision to remit for fresh adjudication on those grounds did not furnish any basis for interference by this Court. The Court therefore declined to disturb the Tribunal's order of remand which required the Assessing Officer to consider the matter afresh in accordance with law and principles of natural justice. [Paras 5, 6, 9]

Tribunal's remand for fresh adjudication on lack of opportunity and violation of principles of natural justice upheld; matter returned to Assessing Officer for fresh disposal.

Validity of notice under Section 148 - jurisdiction of the Assessing Officer - absence of a substantial question of law - Whether the High Court should entertain the assessee's challenge to service and jurisdiction of the notice under Section 148 and whether a substantial question of law arises for this Court's consideration. - HELD THAT: - The assessee contended that the Section 148 notice was not served and that the notice issued from an Assessing Officer in Delhi was without jurisdiction, rendering the assessment void. The Revenue produced material showing transfer of records and subsequent issuance of notice by the local Assessing Officer and a verification report indicating notices were being received at the last known address. The High Court observed that the challenge before it did not arise from any error in the Tribunal's reasoning - which was procedural and led to remand - and that the contentions as to service and territorial jurisdiction were matters which the assessee remained entitled to raise before the Assessing Officer. Finding no substantial question of law deserving of interference, the Court dismissed the appeal. [Paras 7, 8, 10, 11, 12]

No substantial question of law made out; High Court declines to interfere with the Tribunal's order and dismisses the appeal, leaving questions of service and territorial jurisdiction to be raised before the Assessing Officer on fresh adjudication.

Final Conclusion: The High Court dismissed the Section 260A appeal, holding that there was no substantial question of law for its interference; the Tribunal's remand to the Assessing Officer for fresh adjudication on alleged violation of natural justice stands, and the assessee remains entitled to raise jurisdictional and service-related contentions before the Assessing Officer.

Mandamus - disclosure of documents and third-party statements - assessment under Section 153C of the Income Tax Act, 1961 - principles of natural justice - opportunity of hearing - payment of charges for copies

Mandamus - disclosure of documents and third-party statements - payment of charges for copies - Direction to furnish copies of documents and statements of third parties sought in the petitioner's representation dated 27.02.2021 - HELD THAT: - The Court recorded the respondents' admission that the representation dated 27.02.2021 is pending and that the petitioner may approach the respondents at any time to collect the copies of the documents sought, subject to payment of the necessary charges. The respondents' statement was accepted by the Court and treated as satisfying the relief insofar as directing supply of the requested documents is concerned. The mandamus prayed for in this respect was thereby achieved by the Court's order. [Paras 2, 3]

Respondents allowed to furnish the copies requested; petitioner may collect same after payment of charges; mandamus in this respect stands satisfied.

Assessment under Section 153C of the Income Tax Act, 1961 - principles of natural justice - opportunity of hearing - Completion of assessment under Section 153C to be carried out in accordance with principles of natural justice - HELD THAT: - The Court recorded the respondents' assurance that there was no intention to complete the assessment in haste and that the petitioner would be afforded a full opportunity of hearing before any orders are passed. On this assurance the Court concluded that the procedural requirement of affording opportunity in line with natural justice would be respected. The writ petition was disposed of on that basis. [Paras 3, 4]

Assessment under Section 153C shall not be completed hastily and petitioner shall be afforded full opportunity of hearing; writ petition disposed accordingly.

Final Conclusion: Writ petition disposed of by recording respondents' undertaking: petitioner may obtain copies of documents sought on payment of charges, and any assessment under Section 153C will be completed after affording the petitioner full opportunity of hearing; no costs.

Reopening of assessment after four years - requirement of reason to believe and failure to disclose fully or truly all material facts - change of opinion - audit objections as basis for reassessment - reasons recorded / formation of belief by assessing officer - reopening without jurisdiction

Reopening of assessment after four years - requirement of reason to believe and failure to disclose fully or truly all material facts - reasons recorded / formation of belief by assessing officer - change of opinion - Validity of the notice under which the assessment for A.Y. 2013-14 was reopened after the expiry of four years - HELD THAT: - The Court held that the assessee had, during original assessment proceedings, specifically disclosed the receipt of Rs. 15,00,000 as a gift and furnished primary documents including capital account, bank statements and the gift-deed, and that the assessing officer in the original assessment raised the query, received the explanation and nevertheless framed the assessment without making any addition. On these facts the Court concluded that there was no failure on the part of the assessee to disclose fully and truly all material facts; the assessing officer had already formed an opinion in the original assessment (albeit without recording reasons) and the subsequent reopening amounted to a change of opinion which cannot sustain reopening after four years. The Court applied established principles that, where primary facts were disclosed and examined in the original assessment, reassessment is impermissible as a mere change of opinion and the statutory requirement for forming an independent belief is not satisfied. [Paras 12, 13, 14, 15, 16]

Impugned notice reopening the assessment after four years is invalid and without jurisdiction; reassessment cannot be sustained on the present facts.

Audit objections as basis for reassessment - tangible new material - reopening without jurisdiction - Whether audit objections furnished to the assessing officer constituted new tangible material justifying reopening of assessment - HELD THAT: - The Court examined the reasons recorded and the material placed before the assessing officer and found that, apart from the audit objections, there was no new material that had not been available during the original assessment. The assessing officer's reliance on audit objections alone did not supply the requisite independent tangible material to form a fresh reason to believe that income had escaped assessment. The Court noted precedent and held that audit objections by themselves, in the absence of new tangible material, cannot validate reopening which would otherwise amount to change of opinion. [Paras 15, 16]

Audit objections did not constitute new tangible material; they could not justify reopening and the reassessment based on them is unsustainable.

Final Conclusion: Writ allowed; impugned notice dated 26.02.2019 issued to reopen assessment for A.Y. 2013-14 quashed and all subsequent proceedings pursuant thereto terminated.

Validity of reassessment under Section 153C - Escapement of income - Reiteration of assessment - Double taxation - Availability of alternative remedy by appeal

Validity of reassessment under Section 153C - Escapement of income - Reiteration of assessment - Impugned order passed under Section 153C quashed as there was no escapement of income and it merely reiterated the earlier assessment. - HELD THAT: - The Court compared the assessment order passed under Section 143(3) with the subsequent order under Section 153C and observed that the assessed income and overall demand remained the same. The respondent's counter-affidavit conceded that there was no change in the demand amount and that no further demand was raised by the impugned order. In the absence of any escapement of income and given that the petitioner's income had already been determined in the earlier assessment, the Court held that passing a fresh order under Section 153C amounted to an unjustified reiteration of the earlier assessment. Consequently, the impugned order lacked justification and was quashed. [Paras 5, 6, 7]

Impugned order under Section 153C quashed; Writ Petition allowed.

Final Conclusion: Where a subsequent order under Section 153C merely reaffirms an earlier assessment under Section 143(3) without any finding of escapement of income or additional demand, the later order is unjustified and is liable to be quashed; accordingly the writ was allowed and the impugned order set aside.

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts (proviso to Section 147) - reasons recorded under Section 148 - claim of deduction under Section 80-IA - change of opinion

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts (proviso to Section 147) - claim of deduction under Section 80-IA - change of opinion - Validity of the notice issued under Section 148 read with Section 147 insofar as reopening an assessment beyond four years on the ground of alleged failure to disclose material facts. - HELD THAT: - The Court considered whether the proviso to Section 147 - requiring that income chargeable to tax had escaped assessment due to failure to disclose fully and truly all material facts - was satisfied so as to permit reopening beyond four years. The reasons recorded by the Assessing Officer were based on material already available in the assessment records and on an examination of the revised computation and Form 10CCB which had been placed before the Assessing Officer during scrutiny. The claim for deduction under Section 80-IA, together with the explanation for filing a revised return, had been called for, furnished and accepted by the Assessing Officer while framing the assessment under Section 143(3). Mere detection of an alleged irregularity on perusal of records in a subsequent year, or a change of opinion by the Assessing Officer, does not satisfy the proviso to Section 147. Where the relevant materials and the specific claim were before the Assessing Officer and processed during scrutiny, reopening beyond four years on the same materials is not sustainable. [Paras 13, 14, 15, 16]

The notice of reopening issued beyond four years is quashed as the requirement of failure to disclose fully and truly all material facts was not made out.

Final Conclusion: Writ allowed; impugned notice under Section 148 quashed and set aside for Assessment Year 2012-13.

Maintainability of writ petition - prohibition on parallel remedies - alternative remedy by appeal - competence of appellate authority - best judgment assessment under Section 144

Maintainability of writ petition - prohibition on parallel remedies - alternative remedy by appeal - competence of appellate authority - Writ petition dismissed as not maintainable because an appeal against the same assessment order was pending and had not been withdrawn. - HELD THAT: - The impugned orders were best judgment assessments passed under Section 144. The respondent established that the petitioner had instituted an appeal before the Commissioner of Income Tax (Appeals) which remained pending. The Court applied the well-settled principle that parallel remedies cannot be pursued simultaneously; while filing an appeal does not automatically bar recourse to the writ court, the petitioner must withdraw the statutory appeal before maintaining a writ challenging the same order. The Court accepted the respondent's submission that the appellate authority is competent to examine the contentions raised in the writ petition and therefore declined to entertain the writ. The Court expressly refrained from considering the merits of the assessment.

Writ petition dismissed without adjudication on merits; petitioner permitted to pursue the appeal remedy.

Final Conclusion: The writ petition challenging the best judgment assessment order under Section 144 is dismissed as not maintainable in view of the pending statutory appeal; merits were not considered and the petitioner may proceed with the appeal.

Estimation of profit element to plug leakage of revenue - burden of proof on assessee to establish genuineness of purchases - acceptance of banking payments, purchase invoices and customs certification as evidentiary support - application of CBDT instruction No.2 of 2008 for diamond business - addition under section 69C for unexplained expenditure

Estimation of profit element to plug leakage of revenue - burden of proof on assessee to establish genuineness of purchases - application of CBDT instruction No.2 of 2008 for diamond business - Whether purchases alleged to be accommodation entries could be partly admitted by estimating the profit element and making an addition in lieu of disallowing the entire purchases - HELD THAT: - The Tribunal found that the assessee formed part of a searched group where suppliers were held to be issuing accommodation entries and that the assessee failed to produce suppliers or elicit responses to notices, so the onus to establish genuineness was not fully discharged. At the same time, invoices, bank payments, PAN confirmations, customs certifications and quantitative correlation of purchases with sales were on record, making it inappropriate to disallow entire purchases. Applying the coordinate Bench's approach in the associated group and in line with CBDT Instruction No.2 of 2008 directing acceptance of a notional profit in diamond trading cases, the Tribunal reduced the addition to an estimated net profit element. Having noted the assessee's historical gross profit in the range of about 3% to 3.5%, the Tribunal directed computation of addition as 3% (net) of the tainted purchases, thereby balancing the need to plug revenue leakage with the documentary evidence produced by the assessee. [Paras 5]

Addition confirmed to the extent of 3% (net) of tainted purchases for the years in question; revenue appeals in respect of these additions dismissed to the extent indicated and assessee's cross-objection partly allowed.

Addition under section 69C for unexplained expenditure - acceptance of banking payments, purchase invoices and customs certification as evidentiary support - burden of proof on assessee to establish genuineness of purchases - Whether labour/job work charges disallowed as bogus could be sustained where payments were made by account payee cheques after TDS and the assessee produced business explanations - HELD THAT: - The Tribunal accepted that conversion of rough diamonds into polished diamonds necessarily involves labour/job work. For AY 2013-14 the claim of labour charges was small, supported by account-payee cheques and TDS deductions; similarly for AY 2015-16 there was no concrete material to show that payments were bogus. The Tribunal rejected the extrapolation methodology adopted by the Assessing Officer and affirmed by the CIT(A) which applied ratios from a different year, noting that labour costs fluctuate with size, quantity and other attributes of diamonds and cannot be assumed constant. In absence of tangible evidence of sham payments and having regard to documentary evidence of payments and the business purpose, additions made merely on suspicion were unsustainable. [Paras 7, 9]

Additions disallowing labour charges deleted; revenue appeals on this ground dismissed.

Final Conclusion: The revenue's appeals are dismissed and the assessee's appeals/cross-objections are allowed in part: additions for alleged bogus purchases are sustained only to the extent of a net 3% of tainted purchases as directed, while disallowances of labour charges are deleted for the years under consideration.

On-money payment - addition on account of unexplained investment - reliance on charge sheet - need for independent corroborative evidence - burden of proof on Revenue - reopening of assessment - pending criminal proceedings before special court

On-money payment - reliance on charge sheet - need for independent corroborative evidence - burden of proof on Revenue - pending criminal proceedings before special court - Whether addition to the assessee's income on account of alleged on money payment for purchase of a villa plot can be sustained solely on the basis of CBI charge sheet and related material when no independent evidence was gathered by the Assessing Officer and criminal proceedings are pending. - HELD THAT: - The Tribunal affirmed the CIT(A)'s deletion of the addition, holding that the Assessing Officer based the addition only on the charge sheet and supplementary charge sheets filed by the CBI in proceedings against the seller, without producing any independent or corroborative evidence linking the assessee to payment of on money. The Tribunal relied on a co ordinate Bench decision on identical facts which held that the burden of proving undisclosed income rests on the Revenue and cannot be discharged merely by reference to third party statements or a charge sheet pending adjudication in the Special Court. The Tribunal noted that statutory powers to call for information exist, but the Department had not invoked them to obtain statements or documentary corroboration from relevant persons. In absence of independent enquiry or materials directly connecting the assessee to the alleged excess payment, and given that proceedings in the CBI Special Court were pending, the addition under the head of unexplained investment could not be sustained and deletion was warranted.

The addition made by the Assessing Officer on account of alleged on money payment was deleted; the Revenue's appeal is dismissed.

Final Conclusion: Consistent with the co ordinate Bench decision on identical facts, the Tribunal upheld the deletion of the addition made on account of alleged on money payment for the villa plot in assessment year 2009 10, holding that the Revenue failed to discharge its burden by producing independent corroborative evidence and could not sustain the addition solely on the basis of a pending CBI charge sheet.

Jurisdiction of Assessing Officer - time-barred notice under section 143(2) - processing under section 143(1) - invalidity of notice under section 142(1) when valid return exists - proceedings void ab initio - quashing assessment for want of jurisdiction

Time-barred notice under section 143(2) - processing under section 143(1) - jurisdiction of Assessing Officer - quashing assessment for want of jurisdiction - Validity of notice issued under section 143(2) of the Act and consequence for the assessment framed under section 143(3). - HELD THAT: - The return of income for AY 2016-17 was filed on 20.03.2017 and processed under section 143(1) on 20.05.2017. The Assessing Officer thereafter issued a notice under section 142(1) on 22.09.2017 calling for a return, and a notice under section 143(2) on 16.10.2017. The Tribunal held that, having a valid return on record (already processed under section 143(1)), the section 143(2) notice had to be issued within six months from the end of the financial year in which the return was filed; the 16.10.2017 notice was beyond that period and therefore barred by limitation. The Tribunal further held that issuance of a section 142(1) notice seeking to re-file a return when a valid return already existed was contrary to that position and that the consequent initiation of proceedings and framing of assessment under section 143(3) was without jurisdiction. Applying these conclusions to the facts on the face of the assessment order, the Tribunal quashed the assessment framed under section 143(3) as void for want of jurisdiction and did not examine the merits. [Paras 5, 7, 8, 9, 10]

Notice under section 143(2) issued on 16.10.2017 was time-barred; assessment framed under section 143(3) is quashed for want of jurisdiction.

Final Conclusion: The appeal is allowed; the assessment order dated 29.12.2017 for AY 2016-17 framed under section 143(3) is quashed as the notice under section 143(2) was time-barred and the proceedings were without jurisdiction.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - disallowance of expenditure does not ipso facto constitute furnishing inaccurate particulars - arm's length price of transfer of fixed assets and valuation methodologies - use of written down value under tax law versus book value/fair market value for ALP - reliance on external valuation report and application of CUP method

Arm's length price of transfer of fixed assets and valuation methodologies - use of written down value under tax law versus book value/fair market value for ALP - reliance on external valuation report and application of CUP method - penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Validity of penalty under section 271(1)(c) in respect of transfer pricing adjustment on sale of fixed assets. - HELD THAT: - The assessee sold fixed assets at book value as per audited accounts and relied on an external valuer's report. The Transfer Pricing Officer (TPO) instead used the Written Down Value (WDV) under the Income-tax Act to determine ALP and made an adjustment. The Tribunal held that WDV as per the Income-tax Act may not represent fair market value and that sale at book value after valuation does not establish concealment or furnishing of inaccurate particulars. A transfer pricing adjustment made by applying the CUP/WDV approach cannot, by itself, sustain penalty under section 271(1)(c) where there is no finding of deliberate concealment or false particulars; consequently the deletion of penalty on this ground was justified. [Paras 5, 6, 7, 8, 9]

Penalty on account of ALP adjustment of fixed assets deleted; penalty could not be sustained under section 271(1)(c).

Disallowance of expenditure does not ipso facto constitute furnishing inaccurate particulars - penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Sustainability of penalty under section 271(1)(c) in respect of disallowance of claimed expenses. - HELD THAT: - The Assessing Officer disallowed certain personnel, operative and finance expenses on the ground that the assessee had not carried on business activity. The Tribunal reviewed the assessee's supporting documentary flow showing purchases, rework, re-exports and statutory filings, and held that business activity had not ceased. Reliance was placed on established precedents that mere disallowance of an expense does not prove furnishing of inaccurate particulars or concealment; penalty under section 271(1)(c) requires proof of a conscious act of concealment or that the explanation offered was found false. In absence of any finding that particulars in the return were false or erroneous, the penalty could not be sustained. [Paras 10, 11, 12, 13, 18]

Penalty in respect of disallowance of expenses deleted; disallowance alone does not attract section 271(1)(c).

Final Conclusion: The Tribunal confirmed the CIT(A)'s deletion of penalty under section 271(1)(c) on both the ALP adjustment of fixed assets and the disallowance of expenses; the revenue's appeal is dismissed.

Recording of satisfaction by the Assessing Officer of searched person - Proceedings under Section 153C r.w.s. 153A of the Income tax Act, 1961 - Confidentiality and production of order sheet entries - Challenge to initiation of proceedings for lack of recorded satisfaction - Remand for verification of satisfaction recording - Objection of waiver/preclusion in raising a legal issue

Recording of satisfaction by the Assessing Officer of searched person - Proceedings under Section 153C r.w.s. 153A of the Income tax Act, 1961 - Challenge to initiation of proceedings for lack of recorded satisfaction - Remand for verification of satisfaction recording - Recording of satisfaction by the Assessing Officer of the searched person before transmitting seized material and initiation of proceedings under Section 153C r.w.s. 153A was not shown to have been examined and must be remitted for fresh adjudication. - HELD THAT: - The Tribunal noted that Section 153C requires the Assessing Officer of the searched person to transmit seized material to the jurisdictional AO of another person only upon reaching satisfaction that the seized material discloses undisclosed income of that other person, and that the AO having jurisdiction may then proceed by issuing notice under Section 153C r.w.s. 153A. The assessees repeatedly requested production of the order sheet entry recording such satisfaction, but the searched case AO refused, treating the order sheet as confidential. The CIT(A) upheld initiation of proceedings in a cryptic manner without determining whether any formal recording of satisfaction existed or on what basis such satisfaction was reached. The Tribunal concluded that the question of whether satisfaction was recorded is a legal and determinative matter going to the root of the validity of proceedings initiated under Section 153C, and therefore directed that the CIT(A) call for the relevant records from the AO of the searched person and decide the issue afresh. [Paras 5]

Issue remitted to the file of the CIT(A) for fresh adjudication after calling for the relevant records from the Assessing Officer of the searched person.

Confidentiality and production of order sheet entries - Objection of waiver/preclusion in raising a legal issue - Whether the assessees were precluded from raising the issue of recording of satisfaction because they did not raise it at the assessment stage. - HELD THAT: - The Tribunal rejected the Department's contention that the assessees were precluded from raising the challenge before the CIT(A) or the Tribunal on the ground that they had cooperated with the AO and not raised the point at assessment. The record shows the assessees sought copies of the order sheet entry and raised the issue before the CIT(A). Given that the existence and production of the recording of satisfaction is central to the validity of proceedings under Section 153C, the Tribunal held that the assessees were not precluded from pressing this legal objection and directed fresh consideration by the CIT(A). [Paras 5]

Objection of preclusion has no merit; assessees are entitled to have the recording of satisfaction examined by the CIT(A).

Final Conclusion: The Tribunal allowed the appeals for statistical purposes and remitted the legal issue of whether the Assessing Officer of the searched person recorded satisfaction (and the matter of supplying the relevant order sheet entries) to the file of the CIT(A) for fresh adjudication; other grounds remain open for the assessee in accordance with law.

Penalty under section 271G - maintenance of transfer pricing documentation under Rule 10D(1) - requirement of a speaking and reasoned order by an appellate authority - remand for fresh adjudication after affording opportunity of hearing

Penalty under section 271G - maintenance of transfer pricing documentation under Rule 10D(1) - requirement of a speaking and reasoned order by an appellate authority - remand for fresh adjudication after affording opportunity of hearing - Whether the order of the CIT(A) deleting the penalty under section 271G was sustainable and whether the matter required remand for a speaking adjudication after hearing the assessee. - HELD THAT: - The Tribunal held that the learned CIT(A)'s brief order deleting a substantial penalty imposed under section 271G was non-speaking and failed to discharge the quasi-judicial duty to deal with the factual findings and legal reasoning recorded by the Assessing Officer and TPO regarding non-maintenance of transfer pricing documentation under Rule 10D(1). The Tribunal observed that rules of natural justice and the duty to furnish reasons apply to appellate authorities and that the question of applicability of case law and merits of the documentation requirement could only be properly considered after a reasoned analysis addressing the facts, contentions and authorities relied upon by the AO/TPO. Reliance was placed on the principle that an appellate authority must correct errors or remit with directions as appropriate. In view of the laconic character of the CIT(A)'s order, the Tribunal vacated that order and remitted the matter to the CIT(A) to pass a proper speaking order after giving the assessee an opportunity to be heard; the assessee was permitted to place any submissions it considered relevant. [Paras 28, 29]

CIT(A)'s order deleting the penalty was set aside and the matter remitted to the CIT(A) for fresh, reasoned adjudication after affording the assessee an opportunity of being heard.

Final Conclusion: The Revenue appeal is allowed for statistical purposes: the CIT(A)'s order deleting the penalty is vacated and the matter is remitted to the CIT(A) to pass a proper speaking order after giving the assessee a fair opportunity to be heard; result pronounced on 01.02.2021.

Valuation of shares under the explanation to Section 56(2)(viib) - prescribed method and judicial satisfaction of the Assessing Officer - Application of Rule 11UA for computation of fair market value of unlisted shares - Addition under Section 56(2)(viib) on account of share premium where company valuation is not shown to be defective

Valuation of shares under the explanation to Section 56(2)(viib) - prescribed method and judicial satisfaction of the Assessing Officer - Application of Rule 11UA for computation of fair market value of unlisted shares - Addition under Section 56(2)(viib) on account of share premium where company valuation is not shown to be defective - Deletion of the addition made by the Assessing Officer and confirmed by the CIT(A) under Section 56(2)(viib) in respect of share premium received on issue of shares. - HELD THAT: - The Tribunal applied the decision in M/s. Lalithaa Jewellery Mart Pvt. Ltd. where it was held that the explanation to Section 56(2)(viib) contains two limbs: the prescribed valuation method (Rule 11UA) and the broader valuation of the company including its assets. Judicial satisfaction of the Assessing Officer under the explanation requires a reasoned consideration of the valuation and the company's assets and cannot be arbitrary. In the present case the Assessing Officer did not point to any specific defect in the valuation presented by the assessee or undertake a judicially satisfactory examination of the company valuation including intangible and other assets; instead the AO mechanically applied Rule 11UA. In the absence of any shown defect or error in the company's valuation, application of the AO's alternative valuation was not justified. Following the Tribunal's earlier reasoning, the addition under Section 56(2)(viib) was therefore unsustainable and was deleted.

Addition under Section 56(2)(viib) confirmed by the CIT(A) is set aside and deleted; appeal allowed.

Final Conclusion: The Tribunal followed its earlier Division Bench decision in M/s. Lalithaa Jewellery Mart Pvt. Ltd., found the AO's addition under Section 56(2)(viib) unsustainable for lack of judicial satisfaction regarding the company's valuation, and allowed the appeal by deleting the addition.

Section 68 unexplained cash credit - deeming provision strictly construed - s.68 applies only when any sum is found credited in the books of the assessee - bank pass book / bank statement is not a book of account of the assessee - invocation of section 68 on basis of bank deposits held unsustainable

Section 68 unexplained cash credit - bank pass book / bank statement is not a book of account of the assessee - deeming provision strictly construed - s.68 applies only when any sum is found credited in the books of the assessee - Whether additions under section 68 can be sustained on the basis of cash deposits shown only in bank accounts/bank statements when no corresponding credit is found in the assessee's books of account - HELD THAT: - The Tribunal accepted the assessee's submission that section 68 is a deeming provision which applies only when a sum is found credited in the books of the assessee and the assessee either offers no explanation or the explanation is unsatisfactory. A bank pass book or bank statement is the record of the bank and cannot be equated to books of account maintained by the assessee. Applying the principle in CIT v. Bhaichand N. Gandhi (141 ITR 67) and subsequent Tribunal decisions, the Bench held that additions made solely on the basis of cash deposits in the assessee's bank account could not be treated as unexplained cash credits under section 68 where such deposits are not shown credited in the assessee's books for the previous year. The Tribunal therefore quashed the addition made and sustained by the lower authorities insofar as it rested upon invocation of section 68 based on bank deposits, and declined to decide other grounds raised on merits since the addition was set aside on this legal ground. [Paras 9, 10]

Addition under section 68 made on account of cash deposits in bank accounts deleted as bank pass book/statement is not the assessee's books and section 68 cannot be invoked on that basis.

Final Conclusion: Appeal allowed: additions of Rs. 4,03,000 sustained under section 68 by the lower authorities, being based solely on cash deposits in bank accounts and bank statements, are deleted; other contentions not decided as deletion was granted on the foregoing legal ground.

Classification of biometric devices as computer / computer hardware - Integral part of computer - Allowance of higher rate of depreciation for computers - Distinction between plant and machinery and computer hardware for depreciation

Classification of biometric devices as computer / computer hardware - Integral part of computer - Allowance of higher rate of depreciation for computers - Biometric (Aadhaar enrolment) kits are to be treated as computers / computer hardware and are eligible for depreciation at the higher rate claimed by the assessee. - HELD THAT: - The Tribunal found that biometric kits, though capable of capturing data independently, require attachment to a computer with software to produce usable output and to serve the purpose of Aadhaar enrolment; without the computer system the enrolment kit is not useful (paragraph 6.3). Applying the reasoning of the Madras High Court in CIT v. Cactus Imaging India (paragraph 6.4), which held printers to be an integral part of computers and therefore eligible for higher depreciation, and the Special Bench of the Mumbai Tribunal in Data Craft India Ltd. (paragraph 6.5), which treated networking devices as computer hardware when their functions are integrated with computers, the Tribunal held that where a device is used along with and functionally integrated with a computer it falls within the description of computer hardware. The Tribunal observed that biometric systems are used along with computer systems for their intended function, suffer similar wear and tear, and fit within the interpretative approach that treats such devices as part of the computer for depreciation purposes (paragraph 6.6). On that basis the Tribunal concluded that the biometric system qualifies as a computer and is eligible for depreciation at the higher rate claimed by the assessee, thereby setting aside the orders of the CIT(A) which had treated the devices as plant and machinery eligible only for the lower rate. [Paras 6]

Appeal allowed; biometric (Aadhaar enrolment) kits treated as computers/computer hardware and eligible for higher rate of depreciation.

Final Conclusion: The Tribunal allowed the assessee's appeal, holding that the biometric enrolment kits functionally used and integrated with computers qualify as computer hardware and are eligible for depreciation at the higher rate claimed; the orders of the CIT(A) were set aside.

Interpretation of an exemption notification - maintainability of writ petitions where statutory appellate remedy exists - deeming fiction of "manufacture" in chapter notes and its application to customs refunds - effect of Board Circular No.34/2010 on Notification No.102/2007-Cus - remand for de novo adjudication where Tribunal's decision did not consider material aspects

Maintainability of writ petitions where statutory appellate remedy exists - Writ petitions filed by the assessees challenging the original orders rejecting refund claims are not maintainable. - HELD THAT: - The Court held that the assessees had an available and efficacious statutory remedy of appeal to the Commissioner (Appeals) which they did not pursue within the prescribed period. The explanation that representations were made to the Adjudicating Authority seeking reconsideration was rejected because the Authority has no statutory power of review. Reliance on Raj Kumar Shiv Hare establishes that fiscal statutory forums should not be bypassed by writ petitions where an effective remedy exists. Given the delay of about three years in approaching the writ court, the learned Single Bench ought not to have entertained the writ petitions and therefore those orders are set aside. [Paras 41]

Writ petitions dismissed as not maintainable; orders passed in the writ petitions set aside.

Interpretation of an exemption notification - deeming fiction of "manufacture" in chapter notes and its application to customs refunds - effect of Board Circular No.34/2010 on Notification No.102/2007-Cus - remand for de novo adjudication where Tribunal's decision did not consider material aspects - The Tribunal's order allowing refund was set aside and the matter remanded to the Commissioner of Customs for fresh consideration de novo of the refund claims. - HELD THAT: - The Court emphasized that an exemption notification must be interpreted strictly and on its own wording, and external aids or implied deletions cannot be read into it. The Tribunal's conclusions-that Notification No.102/2007 superseded the earlier notification and that omission of the words "as such" altered the condition, and that the Circular No.34/2010 was not applicable-were prima facie unsustainable because the Tribunal did not deal with the Board Circular and other material aspects. The assessees had not earlier raised certain pleas before the Adjudicating Authority. Given these lacunae, the Court found it appropriate to set aside the Tribunal's order and remit the matter to the Commissioner of Customs, Tuticorin, to reconsider all issues afresh after affording the assessees an opportunity to be heard, including the applicability of the deeming provision in the chapter notes effective 11.07.2014 and the effect of Circular No.34/2010 on Notification No.102/2007. [Paras 44, 46, 48, 49, 50]

CMA allowed; Tribunal's order and original order set aside; matter remanded to the Commissioner of Customs for de novo adjudication of the refund claims.

Remand for de novo adjudication where Tribunal's decision did not consider material aspects - Refund applications previously rejected by the Assistant Commissioner of Customs are restored to his file to await the Commissioner's de novo decision and to be decided thereafter in accordance with that decision. - HELD THAT: - Because the Tribunal's order has been set aside and the matter remanded to the Commissioner for fresh adjudication, the Court directed that the orders of the Assistant Commissioner rejecting refund applications be set aside and the refund applications be restored to his file. The Assistant Commissioner is to await the outcome of the Commissioner's de novo consideration pursuant to the remand and thereafter proceed to decide the refund applications in terms of the Commissioner's decision. [Paras 50]

Orders of the Assistant Commissioner rejecting refund applications set aside and refund applications restored to his file to be taken up after Commissioner's de novo adjudication.

Final Conclusion: The civil miscellaneous appeal is allowed: the Tribunal's order and the original order are set aside and the matter remanded to the Commissioner of Customs for fresh adjudication after hearing the parties; the writ petitions are held not maintainable and dismissed, but the Assistant Commissioner's rejections are set aside and the refund applications restored to his file to await the Commissioner's de novo decision.

Enlargement on bail under section 439 Cr.P.C. - Non-bailable offence under the Customs Act determined by value threshold of seized goods - Grant of bail having regard to co-accused already enlarged on bail - Imposition of conditional restrictions as part of bail (surrender of passport; periodic reporting; prohibition on leaving the State)

Enlargement on bail under section 439 Cr.P.C. - Non-bailable offence under the Customs Act determined by value threshold of seized goods - Grant of bail having regard to co-accused already enlarged on bail - Imposition of conditional restrictions as part of bail (surrender of passport; periodic reporting; prohibition on leaving the State) - Application for regular bail under section 439 Cr.P.C. by the applicant arrested in relation to alleged smuggling of gold under the Customs Act was allowed subject to conditions. - HELD THAT: - The Court considered that the applicant was arrested on 11th March 2021 for offences under the Customs Act arising out of seizure of gold. While the prosecution contended that the total value of gold smuggled on the relevant dates exceeded the statutory threshold rendering the offence non-bailable, the Court took into account that one of the principal witnesses (Zuhair Penkar) and another accused had earlier been enlarged on bail and that the applicant had given a voluntary statement before arrest distancing himself from ownership of the seized gold and stating his limited commercial links. Balancing the gravity indicated by the value of the seizure against the fact that co-accused had been released on bail and the applicant's earlier voluntary statement, the Court found that the applicant deserved enlargement on bail. The Court imposed specific conditions as safeguards: furnishing a personal recognizance bond and solvent sureties, surrender of passport to the Superintendent of Customs (AIU), periodic reporting to the Superintendent of Customs (AIU) on specified Saturdays until a stated date, and prohibition on leaving the State of Maharashtra without prior court permission. These conditions were treated as necessary to protect the investigatory process and ensure attendance while permitting bail despite the non-bailable character of the offence alleged.

The bail application was allowed and the applicant was enlarged on bail on furnishing a P. R. bond and solvent sureties with conditions including surrender of passport, periodic reporting to Customs (AIU), and not leaving the State without court permission.

Final Conclusion: The High Court allowed the applicant's prayer for regular bail under section 439 Cr.P.C. despite the non-bailable nature of the offences alleged under the Customs Act, imposing custodial-avoidance and monitoring conditions (bond and sureties, surrender of passport, periodic reporting, and restriction on leaving the State).

Auction under Section 48 of the Customs Act - statutory duty to clear imported goods within thirty days - power of relaxation of import conditions in public interest under the Plant Quarantine (Regulation of Import into India) Order, 2003 - requirement of phytosanitary certificate and fumigation prior to export - claim for surplus sale proceeds under delegated powers of the Customs Act

Auction under Section 48 of the Customs Act - statutory duty to clear imported goods within thirty days - Validity of the customs auction and disposal of the consignment that was auctioned - HELD THAT: - The Court upheld the auction proceedings impugned in W.P.(MD)No.4472 of 2020. The customs authorities acted under the statutory mandate in Section 48 to issue notices and dispose of unclaimed goods after giving reasonable opportunity; notices were issued on 28.03.2019 and 05.04.2019 and the auction culminated in October 2019. The importer had ample time (approximately ten months since landing) but failed to secure the necessary relaxation from the competent authority; therefore the customs authority was not obliged to wait indefinitely and the auction could not be set aside. Consequently, challenge to the Plant Protection Officer's order dated 25.02.2020 became infructuous insofar as the cleared consignment is concerned.

Auction proceedings sustained and challenge thereto dismissed in relation to the consignment sold to the successful bidder.

Power of relaxation of import conditions in public interest under the Plant Quarantine (Regulation of Import into India) Order, 2003 - requirement of phytosanitary certificate and fumigation prior to export - Validity of grant of relaxation and clearance to the successful bidder for the auctioned consignment - HELD THAT: - The Court recorded that the successful bidder (M/s. Vijayalakshmi Traders) obtained relaxation and that the consignment was fumigated and inspected by plant quarantine authorities who were satisfied there was no adverse impact on ecology; on that basis the goods were lawfully cleared. The Court accepted that relaxation can be granted only in public interest and not as a matter of right, but found the inspection and subsequent clearance in this instance justified the grant of relaxation. As to this consignment, the grant of relaxation and delivery stood upheld.

Grant of relaxation and clearance in favour of the successful bidder sustained for the auctioned consignment.

Power of relaxation of import conditions in public interest under the Plant Quarantine (Regulation of Import into India) Order, 2003 - requirement of phytosanitary certificate and fumigation prior to export - Procedure to be followed and remedy available in respect of remaining consignments where auction was not finalized or clearance was refused - HELD THAT: - For the remaining consignments, the Court directed that the same procedural exercise undertaken in respect of the cleared consignment - namely fumigation and an inspection by plant quarantine authorities to ascertain absence of pest or invasive risk - may be carried out. If, after fumigation and inspection, authorities are satisfied that clearance would not threaten ecology or environment, the importer may be permitted to take the goods upon payment of applicable duties. Any relaxation is to be accorded only in public interest and subject to fulfillment of conditions; the Court accepted the petitioner's undertaking to adhere to regulatory requirements in future as a factor relevant to public interest. The Court thus remitted consideration of these consignments to the competent authorities for fresh action in accordance with law and the directions given.

Authorities directed to undertake fumigation and inspection and to consider granting relaxation for the remaining consignments in accordance with law; matter remitted for fresh consideration.

Claim for surplus sale proceeds under delegated powers of the Customs Act - Claim for balance proceeds of auction after deduction of duties and charges under delegated powers of the Customs Act - HELD THAT: - The Court refrained from deciding the entitlement to the surplus sale proceeds under Section 152 (delegation of powers) or any other provision, observing that the point was not properly raised in the writ petition for adjudication. Instead, the petitioner was permitted to make a formal application to the concerned customs authority under the relevant provisions for payment of the balance after deducting applicable duties and charges; the authority was directed to hear the petitioner and decide the application on merits within a specified timeframe. All substantive contentions on this point were left open for the authority to decide in accordance with law.

Petitioner permitted to file a formal application to claim balance proceeds; substantive entitlement left open and remitted to the customs authority for decision.

Final Conclusion: The writ petitions were disposed by upholding the auction and the clearance of the auctioned consignment; the court directed the competent authorities to undertake fumigation and inspection of the remaining consignments and to consider relaxation only if clearance would not threaten ecology, and permitted the petitioner to apply to the customs authority for payment of any balance sale proceeds after statutory deductions, leaving substantive contentions open for decision in accordance with law.

Scheme of Amalgamation - Sanction of scheme - Dispensation of meetings of shareholders and unsecured creditors - Transfer and vesting of assets and liabilities pursuant to section 232(3) of the Companies Act, 2013 - Appointed date - Protection of employees on amalgamation - Filing of amended Memorandum and Articles of Association and payment of differential fee/stamp duty - Accounting treatment in compliance with Indian Accounting Standards - Official Liquidator's verification and payment of auditor's fees - Income Tax Department's entitlement to recover statutory dues despite sanction

Scheme of Amalgamation - Sanction of scheme - Dispensation of meetings of shareholders and unsecured creditors - Accounting treatment in compliance with Indian Accounting Standards - Income Tax Department's entitlement to recover statutory dues despite sanction - Sanction of the Scheme of Amalgamation between the Transferor and Transferee Companies and related consequential directions. - HELD THAT: - After considering the petition, the certified Scheme annexed as Annexure 4, the affidavit of service, the reports and certifications placed on record (including statutory auditors' certificates regarding accounting treatment), and the responses of statutory authorities, the Tribunal found the Scheme prima facie in compliance with the Companies Act, 2013 and the Rules. Meetings of equity shareholders and unsecured creditors had been dispensed with in earlier directions and requisite statutory notices and paper publications were effected. The Regional Director raised a limited objection concerning payment/adjustment of fees for enhanced authorised capital which the Transferee Company undertook to remedy; the Official Liquidator recorded an investigative report and the Tribunal accepted that report subject to payment of the auditor's remuneration fixed by the Tribunal. No other statutory objections were placed on record and no pending investigations or oppression/mismanagement proceedings were shown against the companies. The Tribunal expressly clarified that its sanction does not exempt compliance with stamp duty, taxes or other statutory obligations and recognized the Income Tax Department's continuing entitlement to pursue recovery of any statutory dues notwithstanding the sanction. On these bases the Tribunal sanctioned the Scheme and directed the consequential steps set out in the order, including the appointed date as specified in the Scheme. [Paras 5, 6, 7, 8, 9]

The Scheme of Amalgamation is sanctioned and the Tribunal issued consequential directions for transfer and vesting, filing of certified copy of the order with the Registrar, and other incidental actions, while preserving statutory rights of authorities including tax recovery.

Filing of amended Memorandum and Articles of Association and payment of differential fee/stamp duty - Regional Director's objection - Objection by the Regional Director regarding payment/adjustment of fees for enhancement of authorised capital and requirement to file amended constitutional documents. - HELD THAT: - The Regional Director observed that Clause 14 of the Scheme provides for enhancement of the Transferor Company's authorised capital and noted absence of provision for payment of further fee/stamp duty required by the Registrar of Companies. The Transferee Company's authorised representative filed an affidavit undertaking to pay the necessary fee/stamp duty and to file the amended Memorandum and Articles of Association with the Registrar of Companies after setting off fees paid by the Transferor Company as provided in the Scheme. The Tribunal recorded this undertaking and directed the Transferee Company to file the revised MOA/AOA and make requisite payments of any differential fee as part of its sanction order. [Paras 6, 9]

Regional Director's objection is addressed by the Transferee Company's undertaking; Tribunal directed filing of amended MOA/AOA and payment of differential fee/stamp duty as required.

Official Liquidator's verification and payment of auditor's fees - Verification of affairs of transferor company - Acceptance of the Official Liquidator's report and fixation of remuneration for the auditor who examined the Transferor Company's affairs. - HELD THAT: - The Official Liquidator appointed a chartered accountant to verify the affairs of the Transferor Company and placed that report on record, which observed that statutory registers and returns were maintained, accounts were audited without qualifications and there were no deposits or unpaid dividends, and that income tax returns were regularly filed. The Official Liquidator sought to take that report on record and to fix remuneration payable to the investigating auditor. The Tribunal accepted the report and directed the Transferor Company to pay the auditor's fees as fixed by the Tribunal. [Paras 6]

The Official Liquidator's report is taken on record and the Transferor Company is directed to pay the auditor's remuneration fixed by the Tribunal.

Final Conclusion: The Company Petition is allowed; the Scheme of Amalgamation between Quest Compbio Private Limited and Sekkei Bio Private Limited is sanctioned with the appointed date as specified in the Scheme, subject to the Tribunal's consequential directions (including transfer and vesting of assets and liabilities, employee protections, filing of certified copy with the Registrar, filing of amended constitutional documents and payment of any differential fees/stamp duty, and payment of auditor's fees), while preserving statutory rights of authorities to take action or recover dues in accordance with law.

Financial debt - Section 5(8) definition of financial debt under the IBC, 2016 - financial lease under Accounting Standards (AS 19) - receivables sold or discounted (assignment of rent receivables) - successor in interest / assignment entitling purchaser to status of financial creditor - admission of claim under the Corporate Insolvency Resolution Process

Financial debt - financial lease under Accounting Standards (AS 19) - receivables sold or discounted (assignment of rent receivables) - successor in interest / assignment entitling purchaser to status of financial creditor - Claim of the Applicant (IDBI Bank) in respect of Term Loan II qualifies as a financial debt and the Applicant is a Financial Creditor entitled to admission of its claim. - HELD THAT: - The Tribunal examined the Master Rental Agreement (MRA) and the documents evidencing purchase of rental receivables by the Applicant. Applying the definition of 'financial debt' in Section 5(8) of the IBC, 2016 and the criteria in AS 19 for classification of a finance lease, the transaction was found to be a finance type arrangement in substance. The MRA's terms (including absolute and unconditional payment obligations, allocation of risks and rewards, and the contractual scheme for assignment) render the lease a financial lease for accounting purposes and the receivables were capable of assignment under Clause 26. The purchase of rent receivables by the Applicant was a disbursement against the consideration for the time value of money and thus falls within the scope of financial debt (including receivables sold other than on non recourse basis). The IRP's reliance on bookkeeping entries and back to back transactions did not alter the character of the underlying contractual arrangements. Consequently, the Tribunal held that the Applicant, as successor in interest to Rentworks, acquired the rights of a financial creditor and the IRP's rejection of the Term Loan II claim could not be sustained. [Paras 33, 37, 38, 39]

Rejection of the claim in respect of Term Loan II set aside; Respondent directed to admit the Applicant's claim and treat the Applicant as a Financial Creditor.

Final Conclusion: The Application is allowed: the Tribunal finds the Term Loan II claim to constitute 'financial debt', directs admission of the claim, and recognizes IDBI Bank as a Financial Creditor for the purposes of the CIRP.

Review of adjudicating authority's admission order - maintainability of review under the Insolvency and Bankruptcy Code - powers under Rule 11 of the NCLT Rules, 2016 - belated submission of Expression of Interest - Committee of Creditors' decision to liquidate - finality of CoC decision where liquidation order has been passed

Review of adjudicating authority's admission order - maintainability of review under the Insolvency and Bankruptcy Code - powers under Rule 11 of the NCLT Rules, 2016 - Whether the applications filed by the erstwhile Board of Directors seeking review/cancellation of the admission order and restoration of status quo ante are maintainable and capable of being entertained by the Adjudicating Authority. - HELD THAT: - The Tribunal examined the reliefs seeking relief from the consequences of admission and restoration to the pre-admission status. It held that the applications amounted to a review of the Adjudicating Authority's admission order, which is beyond the scope of remedies under the Code and that the proper remedy, if any, lay in appeal to the NCLAT. The Tribunal noted that Rule 11 of the NCLT Rules, 2016 does not confer power to review an admission order in the manner sought. It also observed that the erstwhile Board had earlier approached the NCLAT and obtained time to settle the debt but failed to do so, and a subsequent civil appeal to the Supreme Court was withdrawn without liberty. For these reasons the applications for review/status quo ante lacked merit and were not maintainable before the Tribunal. [Paras 9, 10, 11, 12]

Applications challenging the admission order and seeking restoration of status quo ante dismissed/closed for being not maintainable and without merit.

Belated submission of Expression of Interest - Committee of Creditors' decision to liquidate - finality of CoC decision where liquidation order has been passed - Whether the belatedly submitted Expression of Interest should be directed to be considered and whether the meeting/decision of the Committee of Creditors moving towards liquidation should be stayed. - HELD THAT: - The applicant who filed IA/552/IB/2020 applied for relief under Section 60(5) seeking direction to the Resolution Professional/CoC to consider a belated Expression of Interest and for a stay on CoC meetings. The Tribunal recorded that the EoI invitation period had expired and the belated communication was made thereafter; meanwhile the CoC in its fifth meeting had resolved to proceed to liquidation and the Tribunal had passed a liquidation order (IA/663/IB/2020). In view of the belated nature of the submission and the CoC's decision culminating in a liquidation order, the application seeking consideration of the belated EoI and stay of CoC proceedings was without merit and was dismissed. [Paras 5, 6, 7, 13]

Application for consideration of belated Expression of Interest and stay of CoC meeting dismissed as belated and rendered moot by the CoC's decision to liquidate and the subsequent liquidation order.

Final Conclusion: The applications by the erstwhile Board seeking review/cancellation of the admission order were dismissed/closed as not maintainable and without merit; the application for belated consideration of an Expression of Interest and for stay of CoC proceedings was dismissed in view of its belated filing and the CoC's decision resulting in a liquidation order.

Initiation of Corporate Insolvency Resolution Process under Section 9 - Operational debt and default - Jurisdiction of Adjudicating Authority (pecuniary and territorial) - Limitation period - Appointment of Interim Resolution Professional - Moratorium under Section 14 - Directions for payment to Interim Resolution Professional for expenses

Operational debt and default - Existence of operational debt and default and admission of the Section 9 application. - HELD THAT: - The Operational Creditor supplied materials to the Corporate Debtor between 07.08.2018 and 30.01.2019 and raised invoices which were received and accepted. The Adjudicating Authority examined the pleadings and documents and found that the Operational Creditor proved existence of the debt and default. On that basis the Authority was inclined to admit the application and initiate the Corporate Insolvency Resolution Process under the provisions relied upon by the Operational Creditor. [Paras 7, 8]

Application under Section 9 is admitted on the ground of proved operational debt and default and CIRP is initiated.

Jurisdiction of Adjudicating Authority (pecuniary and territorial) - Limitation period - Pecuniary and territorial jurisdiction of the Adjudicating Authority and applicability of limitation. - HELD THAT: - The Adjudicating Authority recorded that at the time of filing the petition the pecuniary jurisdiction threshold (debt one lakh and above) was met and that the registered office of the Corporate Debtor lay within the State of Tamil Nadu, establishing territorial competence. The alleged debt arose between 01.04.2018 and 17.07.2019 and was held to fall within the period of limitation for the purposes of the application. [Paras 7]

The Adjudicating Authority has jurisdiction to adjudicate the Section 9 application and the claim is within limitation.

Appointment of Interim Resolution Professional - Moratorium under Section 14 - Directions for payment to Interim Resolution Professional for expenses - Appointment of Interim Resolution Professional, imposition of moratorium and interim directions regarding IRP expenses and communication of order. - HELD THAT: - Since the application was admitted under Section 9(5), the Authority appointed an Interim Resolution Professional from the IBBI list, subject to disclosures and disciplinary status. Consequentially, the moratorium under Section 14 was declared to operate from the date of the order until completion of CIRP (subject to the exceptions and cessation events specified in the Code). The Operational Creditor was directed to deposit a sum to meet IRP's expenses, and the Registry was directed to communicate the order to the parties and to IBBI and furnish a copy to the IRP. [Paras 8, 9, 10, 11, 12]

An Interim Resolution Professional is appointed, moratorium under Section 14 is declared, the Operational Creditor is directed to pay an amount towards IRP expenses, and the order is to be communicated to relevant parties and IBBI.

Final Conclusion: The Section 9 application filed by the Operational Creditor is allowed; CIRP is initiated against the Corporate Debtor, an Interim Resolution Professional is appointed subject to disclosures, the moratorium under Section 14 is declared, the Operational Creditor is directed to make the specified interim payment for IRP expenses, and the Registry is directed to communicate the order and notify IBBI.

Existence of dispute - pre-existing dispute - operational debt and default - demand notice under Section 8 of the IBC - plausible contention requiring further investigation - subrogation-cum-assignment

Existence of dispute - pre-existing dispute - plausible contention requiring further investigation - There exists a pre existing and genuine dispute between the parties in respect of certain invoices which defeated the Section 9 application. - HELD THAT: - A conjoint reading of the e mails exchanged and the invoices established that the Corporate Debtor had raised contentions prior to receipt of the demand notice - including that two invoices related to a different material and supplier and that debit notes for detention and demurrage had been raised before the demand notice. The Tribunal applied the test in Mobilox Innovations Pvt. Ltd. v. Kirusa Software (P) Ltd. that the dispute must be pre existing and that the adjudicating authority at this stage must be satisfied only that a plausible contention exists which merits further investigation and is not a patently feeble or unsupported assertion. On the material before it the Tribunal found the defence to be real and not a mere afterthought or sham; the assignment/subrogation matters did not negate the existence of the dispute as to liability and delivery. Having found a bona fide pre existing dispute, the Tribunal held that the operational creditors were not entitled to proceed under Section 9 to initiate CIRP. [Paras 14, 16, 17]

Application under Section 9 dismissed as a pre existing dispute exists in respect of the invoices; CIRP not initiated.

Final Conclusion: The Tribunal dismissed the Section 9 petition: on the record a genuine pre existing dispute existed regarding the invoices and delivery/quality issues, and therefore initiation of CIRP was not warranted.

Liquidation under the Insolvency and Bankruptcy Code - liquidator appointment and disqualification - effect of liquidation on moratorium - investigation of corporate debtor's financial affairs by liquidator - condonation of procedural delay - claims for CIRP costs and ratification by Committee of Creditors - administrative referral to Insolvency and Bankruptcy Board of India for verification of conduct

Liquidation under the Insolvency and Bankruptcy Code - liquidation commencement and appointment of liquidator - Corporate Debtor ordered into liquidation and a liquidator appointed to carry out the liquidation process. - HELD THAT: - The Adjudicating Authority found that the CIRP period had expired on 17.01.2021, no resolution plan or any proposal remained pending and the Corporate Debtor was not a going concern. In consequence, the Authority exercised its power to order liquidation of the Corporate Debtor and appointed a new liquidator to conduct the liquidation in accordance with the Code and applicable regulations. The appointment is subject to the terms and directions set out by the Authority, including public announcement, investigation obligations and periodic reporting. [Paras 4, 13, 14]

IA/649/IB/2020 allowed; Corporate Debtor ordered to be liquidated and Mr. C. Ramasubramaniam appointed as liquidator subject to specified directions.

Liquidator appointment and disqualification - administrative referral to Insolvency and Bankruptcy Board of India for verification of conduct - The incumbent Resolution Professional was not appointed as liquidator and the record was directed to be forwarded to the IBBI for verification of alleged lapses. - HELD THAT: - Although allegations of mismanagement and procedural lapses were made by Financial Creditors (who together hold majority voting rights), the Authority declined to adjudicate the merits of those allegations in the liquidation order. Given the serious allegations raised by the majority CoC members concerning the conduct of the Resolution Professional, the Authority held that the RP would not be appointed as liquidator and directed the Registry to forward the order and the relevant application to the Insolvency and Bankruptcy Board of India to verify whether any lapses occurred in the CIRP. [Paras 11, 12]

The RP shall not be appointed as liquidator; Registry to forward the order and application to the IBBI for verification of any lapses.

Effect of liquidation on moratorium - liquidation commencement and statutory moratorium - The earlier moratorium under the CIRP ceases and a fresh moratorium under the liquidation commencement operates from the date of liquidation. - HELD THAT: - The Authority directed that the moratorium previously in force under Section 14 (during CIRP) shall cease to have effect and that a fresh moratorium under the liquidation provisions shall commence, thereby giving legal effect to the change of regime from CIRP to liquidation and imposing the statutory consequences attendant on liquidation status. [Paras 13]

Prior moratorium under CIRP ceases; fresh moratorium under liquidation commences.

Investigation of corporate debtor's financial affairs by liquidator - powers and duties of liquidator to file applications for preferential/undervalued/fraudulent transactions - The appointed liquidator is directed to investigate the financial affairs of the Corporate Debtor and take appropriate action including filing applications in respect of preferential, undervalued or fraudulent transactions. - HELD THAT: - As part of the liquidation directions, the Authority mandated that the liquidator shall investigate the Corporate Debtor's financial affairs with particular reference to preferential and undervalued transactions and similar transactions including fraudulent preferences, and file suitable applications before the Adjudicating Authority. The liquidator is also required to act in accordance with the Code and applicable liquidation regulations and to submit preliminary and other statutory reports within prescribed timeframes. [Paras 13]

Liquidator to investigate financial affairs and file necessary applications; to comply with liquidation regulations and file statutory reports.

Condonation of procedural delay - Delay of six days in filing the liquidation application was condoned. - HELD THAT: - An interlocutory application for condonation of delay in filing the liquidation petition was considered and allowed, permitting the late filing to be treated as valid for the purposes of the liquidation proceedings. [Paras 5]

IA/648/IB/2020 allowed and the six-day delay condoned.

Claims for CIRP costs and ratification by Committee of Creditors - requirement of CoC ratification for CIRP expenditures - The RP's separate prayer under the liquidation application for direction to release CIRP costs under Section 33(1) is not maintainable; RP must submit claimed CIRP bills to the CoC for ratification and the CoC must respond within three weeks. - HELD THAT: - The Authority held that a direction to CoC members to pay CIRP costs could not be granted under Section 33(1) in the liquidation application. The RP's claim for CIRP costs is the subject matter of a separate IA and, on review of the record, the RP had not shown whether expenses were ratified by the CoC or identified the meetings where ratification was sought. As respondents had not filed a counter to the IA concerning CIRP costs, the RP was directed to place all bills before the CoC for approval and the CoC was directed to reply to those bills within three weeks from 20.04.2021. [Paras 15, 16, 17]

Prayer for release of CIRP costs under Section 33(1) not maintainable in IA/649; RP to submit bills to CoC and CoC to respond within three weeks.

Administrative closure of interlocutory applications - Several interlocutory applications including impleadment and e-voting restoration applications were closed consequent to the liquidation order. - HELD THAT: - Following the order for liquidation and related directions, the Authority recorded closure of IA/648/IB/2020, IA/650/IB/2020, IA/651/IB/2020 and IA/364/IB/2020. This administrative disposal follows from the principal order of liquidation and the ancillary directions provided by the Tribunal. [Paras 19]

IA/648/IB/2020, IA/650/IB/2020, IA/651/IB/2020 and IA/364/IB/2020 closed.

Final Conclusion: The Tribunal ordered liquidation of Padmaadevi Sugars Limited on the ground that CIRP concluded without any resolution plan or viable proposal, appointed a new liquidator with specified investigatory and reporting directions, declined to appoint the incumbent RP as liquidator and referred allegations against the RP to the IBBI for verification; condoned the short delay in filing, declined to grant payment of CIRP costs under the liquidation prayer and directed procedural steps for determination of those costs by the CoC.

Existence of financial debt - default for the purposes of Section 7 of the Insolvency and Bankruptcy Code, 2016 - maintainability of Section 7 application - authority to file and verification of application - evidentiary weight of receipts and balance confirmation - imposition of moratorium under Section 14 of the Code - appointment of interim resolution professional

Existence of financial debt - default for the purposes of Section 7 of the Insolvency and Bankruptcy Code, 2016 - maintainability of Section 7 application - The Financial Creditor established existence of a financial debt and that default has occurred, rendering the Section 7 application maintainable. - HELD THAT: - The Tribunal examined the loan facility documentation, including the sanction letter, financing documents and the balance confirmation dated 18.09.2018, and applied the statutory threshold under Section 7 requiring proof that a financial debt exists and that default has occurred. The Tribunal held that the channel finance facility advanced to the Corporate Debtor constituted a financial debt and that the Corporate Debtor had defaulted in repayment. Reliance on precedent and the formality of documents was treated as sufficient for admission at the stage of Section 7, since the Adjudicating Authority's role is to determine completeness of Form 1 and supporting documents and not to adjudicate disputed factual issues in detail. [Paras 10, 11, 13]

Section 7 petition is maintainable as financial debt and default are established.

Authority to file and verification of application - maintainability of Section 7 application - Defects alleged in authorization and verification were considered and treated as cured or explained; they did not preclude admission of the petition. - HELD THAT: - The Tribunal noted the respondent's objection to the competence of the deponent and the adequacy of the board resolution authorising filing. The Financial Creditor explained the authorization chain, averring that the MD & CEO was empowered to appoint officers including the deponent and produced the board resolution and supplementary affidavit. The Tribunal accepted the explanation and rectification steps taken by the Financial Creditor, treating the alleged procedural defects as addressed for purposes of admission under Section 7. [Paras 5, 6]

Authorization and verification defects do not bar admission after the Financial Creditor's curative affidavit and supporting material.

Evidentiary weight of receipts and balance confirmation - existence of financial debt - Receipts relied on by the Corporate Debtor did not adequately prove repayment of the amounts claimed as due to the Financial Creditor. - HELD THAT: - The Corporate Debtor produced receipts it said evidenced repayment of the loan. The Tribunal examined those receipts and observed they related to payments to the Hindalco account (dealer code HIN0001) and not to the Vedanta account covered by the financing arrangement. No receipts evidencing payment towards the Vedanta account were on record. In view of this, the Tribunal concluded the documents did not establish discharge of the alleged debt and therefore supported the Financial Creditor's claim of default. [Paras 12, 13]

Receipts produced by the Corporate Debtor do not rebut the Financial Creditor's claim of outstanding debt.

Imposition of moratorium under Section 14 of the Code - appointment of interim resolution professional - The Tribunal admitted the petition, ordered initiation of CIRP, imposed moratorium under Section 14 and appointed the proposed interim resolution professional. - HELD THAT: - After appreciation of pleadings and documents and hearing counsel, the Tribunal found the Section 7 requirements satisfied and admitted the petition. Consequentially, the statutory moratorium as prescribed by Section 14 was imposed with the usual operative terms. The Tribunal also appointed the proposed interim resolution professional to carry forward the CIRP and directed him to act in terms of the Code and file requisite reports within the stipulated time. [Paras 14, 15, 16]

Petition admitted; CIRP initiated; moratorium imposed; proposed IRP appointed.

Final Conclusion: The Tribunal admitted the Section 7 petition after finding that a financial debt existed and default had occurred, treated the applicant's authorisation defects as cured, found the Corporate Debtor's receipts insufficient to discharge the claim, imposed the moratorium under Section 14 and appointed the interim resolution professional to carry forward the CIRP.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution for liquidation - Nil cash flow and absence of assets as ground for liquidation - Resolution Professional's inability to act as Liquidator - Appointment of Liquidator under Section 34(5) and 34(6) of the Insolvency and Bankruptcy Code, 2016

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution for liquidation - Nil cash flow and absence of assets as ground for liquidation - Liquidation of the corporate debtor was to be initiated pursuant to the Committee of Creditors' decision due to nil cash flow and absence of assets. - HELD THAT: - The sole member of the Committee of Creditors (reconstituted as a sole financial creditor) informed the Resolution Professional that the corporate debtor had nil cash flow and no assets available for realisation. The minutes of the first CoC meeting recorded a 100% vote in favour of initiating liquidation proceedings straightaway under Section 33(2) of the Code. Having regard to the CoC's unanimous decision premised on the absence of realizable assets and cash flow, the Adjudicating Authority directed liquidation of the corporate debtor in accordance with Chapter III of the Code. [Paras 6, 7]

The Adjudicating Authority ordered initiation of liquidation proceedings against the corporate debtor based on the CoC's resolution recording nil cash flow and absence of assets.

Resolution Professional's inability to act as Liquidator - Appointment of Liquidator under Section 34(5) and 34(6) of the Insolvency and Bankruptcy Code, 2016 - Since the incumbent Resolution Professional declined to act as liquidator, the IBBI was directed to propose another Insolvency Professional for appointment as liquidator and the matter was posted for consequential directions thereafter. - HELD THAT: - The Resolution Professional expressed unwillingness to act as liquidator. Under the provisions governing appointment of a liquidator where the RP is not to act, the Adjudicating Authority directed the Insolvency and Bankruptcy Board of India to propose the name of another Insolvency Professional and to obtain written consent in the specified form within ten days. The IA was kept pending to enable the appointment process and for passing consequential directions once IBBI proposes a name. [Paras 11, 12]

IBBI to propose a name of an Insolvency Professional (with consent) for appointment as liquidator; the application is held for further orders once the proposal is received.

Final Conclusion: Liquidation of Rocana Infrastructure Private Limited was ordered pursuant to the CoC's unanimous resolution citing nil cash flow and absence of assets; because the incumbent Resolution Professional declined to act as liquidator, the NCLT directed IBBI to propose an alternative Insolvency Professional for appointment and kept the application for consequential directions after such proposal.

Liquidation pending appeal - irreversibility of liquidation - continuance of CIRP in absence of stay - maximization of assets - Committee of Creditors' commercial decision

Liquidation pending appeal - irreversibility of liquidation - continuance of CIRP in absence of stay - Whether an order for liquidation could be passed by the Adjudicating Authority while an appeal against the admission order was pending before the Appellate Tribunal. - HELD THAT: - The Tribunal observed that although an appeal against the admission order had been filed before the Appellate Tribunal and no stay had been granted, the potential irreversibility of a liquidation order weighed against directing liquidation at this stage. The Code's object of reviving the corporate debtor and maximizing assets was noted, but where the sole asset is a readily distributable fixed deposit, ordering liquidation and distributing that asset could render the appellate remedy otiose and could not be satisfactorily reversed later. In view of the pending appeal and the practical difficulty of restoring the status quo once the fixed deposit is distributed, the Tribunal was not persuaded to pass a liquidation order at that stage and accordingly declined to order liquidation, while permitting the RP to seek an earlier hearing if Appellate orders were received. [Paras 28, 29, 30, 31, 33]

Application for liquidation stood over for consideration on 14.07.2021; no order for liquidation was made at this stage and liberty granted to the Resolution Professional to mention earlier if Appellate orders are received.

Committee of Creditors' commercial decision - continuance of CIRP in absence of stay - Whether the challenge to the CoC's resolution to file for liquidation (by a member of the suspended Board of Directors) should be entertained at this stage. - HELD THAT: - Having refused to pass a liquidation order while the appeal remains pending, the Tribunal treated the challenge to the CoC resolution as effectively moot insofar as it sought immediate injunctive relief against steps to give effect to liquidation. The Tribunal recorded that the CoC had resolved by 100% to proceed for liquidation, but since liquidation itself was not to be ordered until the Appellate Tribunal decides the appeal, the IA challenging the CoC resolution did not merit a separate interim order and was dismissed. [Paras 31, 32, 34]

Application challenging the CoC resolution was dismissed as moot in the circumstances; no separate injunctive relief granted against the Resolution Professional.

Final Conclusion: The application for liquidation was refused at this stage and adjourned for further consideration on 14.07.2021 (with liberty to the Resolution Professional to mention earlier if Appellate orders arrive); the application challenging the CoC's resolution was dismissed.

Condonation of delay - liquidator's powers under Section 35 of the Insolvency and Bankruptcy Code, 2016 - protection and preservation of assets in liquidation - adjudicating authority's supervisory jurisdiction under Section 60(5) - direction to police to take action and report

Condonation of delay - liquidator's claim adjudication unaffected by condonation - Delay in filing the application in IA 400/KB/2021 was condoned and the claim form was directed to be filed by the liquidator by the specified date; the liquidator to adjudicate the claim on its merits uninfluenced by the grant of condonation. - HELD THAT: - The Tribunal, after perusal of the application and noting that the Liquidator raised no objection to condonation, exercised its discretion to condone the delay in filing IA 400/KB/2021. The order required the claim form to be filed complete in all respects on or before 25.04.2021, and directed that if already filed the Liquidator shall adjudicate the claim on its own merits without being influenced by the fact that delay was condoned. The direction preserves the primacy of merits-based adjudication notwithstanding procedural leniency. [Paras 2]

IA 400/KB/2021 disposed of by condoning the delay and directing filing/adjudication of the claim by the liquidator.

Liquidator's powers under Section 35 of the Insolvency and Bankruptcy Code, 2016 - protection and preservation of assets in liquidation - adjudicating authority's supervisory jurisdiction under Section 60(5) - direction to police to take action and report - The Tribunal directed the local police authorities to take immediate action against miscreants who trespassed, stole, or caused fire at the corporate debtor's factory and to place a report before the Adjudicating Authority through an officer not below the rank of Inspector by the next date of hearing. - HELD THAT: - Petitioner-liquidator, appointed pursuant to initiation of liquidation, reported repeated trespass, theft and arson at the corporate debtor's factory and inability of private security to prevent such acts despite complaints and an FIR. The Tribunal observed that the police, duty bound to protect life and property and to prevent crime, had failed to take adequate steps and that such inaction undermined the liquidator's statutory duty to protect and preserve the assets under Section 35. Invoking supervisory jurisdiction under Section 60(5), the Tribunal directed the Superintendent of Police and the Officer in Charge to take immediate action against the miscreants and to file a report through an officer not below Inspector by the next hearing. The matter was listed for hearing on the next date. [Paras 9, 10]

IA 414/KB/2021 disposed of in part by issuing directions to the police to act immediately and report; matter listed for further hearing on 11/06/2021.

Final Conclusion: The Tribunal condoned the delay in IA 400/KB/2021 and directed filing and merits-adjudication of the claim by the liquidator; and, in IA 414/KB/2021, directed local police to take immediate action to protect the corporate debtor's assets and to report to the Adjudicating Authority through an officer not below the rank of Inspector by the next hearing date.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - final report under Regulation 38(1) of the Liquidation Regulations, 2017 - dissolution of a corporate person upon winding up - notice to Registrar of Companies and tax authorities and absence of objection

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016 - declaration of solvency - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - final report under Regulation 38(1) of the Liquidation Regulations, 2017 - notice to Registrar of Companies and tax authorities and absence of objection - Whether the company satisfied the statutory and regulatory requirements for voluntary liquidation and dissolution and the Tribunal should order dissolution under Section 59(8) of the Code. - HELD THAT: - The Tribunal examined the directors' declaration of solvency, audited financial statements (including the balance sheet for year ended 31.03.2018), the board resolution and members' special resolution approving voluntary winding up and appointment of the liquidator, the estimate of assets and liabilities, the final report and audited statement of accounts filed by the liquidator, and proof of public announcement and intimation to ROC, Income Tax authorities and IBBI. The directors' affidavit and the auditors' report certify that the company has no outstanding debts, no loans or borrowings payable to financial institutions, banks or government, and that no fraud was observed or reported. The liquidator filed the final statement of accounts and served the required authorities; no objections were received from the Registrar of Companies or the concerned Income Tax authorities within the stipulated time. On the materials placed on record the Tribunal was satisfied that the conditions and procedural requirements of Section 59, read with the Liquidation Regulations, were complied with and that the affairs of the corporate person had been wound up and its assets liquidated, entitling the Tribunal to pass an order of dissolution under Section 59(8). [Paras 18, 19, 20]

The Tribunal held that the statutory and regulatory requirements for voluntary liquidation and dissolution were satisfied and ordered dissolution of the company under Section 59(8) of the Code, with directions to communicate the order to the ROC, IBBI and Regional Director.

Final Conclusion: The Tribunal approved the voluntary liquidation process as compliant with Section 59 of the Insolvency and Bankruptcy Code, 2016 and the Liquidation Regulations, 2017, and ordered dissolution of Lipika Collection Private Limited under Section 59(8), directing communication of the order to the Registrar of Companies, Insolvency and Bankruptcy Board of India and the Regional Director.

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Failure to receive a resolution plan and expiry of the CIRP period - Appointment of a liquidator under section 34(4)(c) of the Code - Obligations of the resolution professional to hand over records to the liquidator - Commencement and conduct of liquidation process under Chapter III and Liquidation Process Regulations - Prohibition on suits during liquidation subject to section 52 and the liquidator's right to sue under section 33(5) - Deemed discharge of officers, employees and workmen under section 33(7) - Filing of liquidation order with the Registrar of Companies

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Failure to receive a resolution plan and expiry of the CIRP period - Corporate Debtor ordered to be liquidated. - HELD THAT: - The Tribunal found that no resolution plan had been received for Duckbill Drugs Private Limited and that the 180 days CIRP period had expired on 14.06.2020. In light of the absence of any resolution plan and the expiry of the CIRP period, the Tribunal concluded there was no alternative but to order liquidation of the Corporate Debtor and allowed the application filed by the Resolution Professional for liquidation. The factual finding that the CIRP period had ended and no plan was on record formed the basis for invoking the liquidation provision of the Code. [Paras 13, 14]

Application allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(2) of the Code.

Appointment of a liquidator under section 34(4)(c) of the Code - Obligations of the resolution professional to hand over records to the liquidator - Appointment of an independent liquidator on the resignation/unwillingness of the RP and direction to hand over assets and records. - HELD THAT: - The Resolution Professional expressed unwillingness to act as liquidator. Consequently, the Tribunal appointed Mr. Santanu Brahma as liquidator under the provision for appointment where the RP does not consent, subject to possession of a valid Authorisation for Assignment (AFA) as required by the relevant regulations. The Tribunal further directed the outgoing RP to hand over all documents in his possession relating to the Corporate Debtor to the appointed liquidator within 15 days, ensuring continuity and enabling the liquidator to commence the liquidation process. [Paras 11, 14]

Mr. Santanu Brahma is appointed as liquidator (subject to valid AFA) and the RP is directed to hand over all documents to the liquidator within 15 days.

Commencement and conduct of liquidation process under Chapter III and Liquidation Process Regulations - Public notice of liquidation - Prohibition on suits during liquidation subject to section 52 and the liquidator's right to sue under section 33(5) - Deemed discharge of officers, employees and workmen under section 33(7) - Filing of liquidation order with the Registrar of Companies - Ancillary directions for the conduct of the liquidation process and related statutory consequences were issued. - HELD THAT: - The Tribunal ordered that the liquidator shall initiate the liquidation process in accordance with Chapter III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. It directed issuance of public notice in specified newspapers stating that the Corporate Debtor is in liquidation. The Tribunal declared that, on initiation of liquidation (subject to section 52), no suit or other proceeding shall be instituted by or against the Corporate Debtor except as permitted (and that the liquidator may institute suits on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority). The order also recorded that the liquidation order shall be deemed to be a notice of discharge to officers, employees and workmen except to the extent business is continued by the liquidator, and directed filing of a copy of the order with the Registrar of Companies, West Bengal, Kolkata. [Paras 14]

Liquidator to commence liquidation under Chapter III and applicable regulations; public notice to be issued; statutory moratorium and the liquidator's rights and duties, deemed discharges, and ROC filing directed.

Final Conclusion: The Tribunal allowed the Resolution Professional's application and ordered liquidation of Duckbill Drugs Private Limited on the ground that no resolution plan was received and the CIRP period had expired; an independent liquidator was appointed, the outgoing RP was directed to hand over records, and consequential procedural directions for conducting the liquidation were issued.

Financial debt arising from amounts paid by allottees in a real estate project - treatment of allottee payments as having the commercial effect of a borrowing - ascertainability of default for admission of a Section 7 application - limitation under Article 137 and time barred Section 7 applications - maintainability of CIRP against joint venture partners - necessity to proceed against both partners - requirement of proving date of default under Clause 13 of Agreement of Sale

Financial debt arising from amounts paid by allottees in a real estate project - treatment of allottee payments as having the commercial effect of a borrowing - requirement of proving date of default under Clause 13 of Agreement of Sale - Whether the Applicants' claims arise as a "financial debt" in their capacity as allottees or only as decree holders - HELD THAT: - The Tribunal examined the statutory definition of "financial debt" under Section 5(8) and the Explanation to sub clause (f) (as amended) which deems amounts raised from an allottee under a real estate project to have the commercial effect of a borrowing. Attention was directed to Clause 13 of the Agreement of Sale which provides for liquidated damages payable by the builder on delay and thereby demonstrates that consideration was paid against the time value of money. On that basis the Tribunal held that the transaction between the Applicants and the Corporate Debtor falls within the scope of a "financial debt" as envisaged by the Code and its enabling provisions, rather than being merely a decree for civil recovery; consequently the nature of the claim is prima facie that of a financial creditor/allottee entitled to invoke insolvency provisions subject to other admissibility requirements. [Paras 14, 15, 16, 17]

The Applicants' claims constitute a financial debt arising from allottee payments for the real estate project and are within the scope of Section 5(8) read with the Explanation to sub clause (f).

Ascertainability of default for admission of a Section 7 application - limitation under Article 137 and time barred Section 7 applications - Whether the Section 7 application is barred by limitation - HELD THAT: - The Tribunal noted that admission under Section 7 requires ascertainment of both an ascertainable debt and the occurrence of default. Clause 13 was examined to determine when default crystallised - the clause contemplates a notice by the allottee and a two week period thereafter for delivery of possession, failing which liquidated damages accrue. The record showed that possession was not delivered and that the events giving rise to default (including execution of sale deeds and the failure to hand over possession) had occurred more than three years prior to filing. Applying the relevant limitation principles and precedents cited, the Tribunal found that the cause of action had arisen earlier and that the application, when viewed against Article 137, was time barred. [Paras 18, 19, 20, 21]

The Section 7 application is barred by limitation and therefore not maintainable.

Maintainability of CIRP against joint venture partners - necessity to proceed against both partners - Whether the Section 7 application is maintainable against the Corporate Debtor alone in a project undertaken as a joint venture - HELD THAT: - The Tribunal analysed the Joint Venture Agreement between the Corporate Debtor and M/s Cherupushpam Films Pvt. Ltd., focusing on provisions evidencing joint participation in financing, management of construction funds, sharing of net income and cooperative duties (Clauses 7-12). On construction of those clauses and having regard to NCLAT precedent treating collaborating corporate entities in a joint venture real estate project as a single commercial entity for CIRP purposes, the Tribunal observed that both corporate parties to the joint venture ought to be treated jointly for initiation of CIRP rather than proceeding against one partner alone. [Paras 24, 25, 26, 27, 28]

In a joint venture real estate project the corporate parties should be treated jointly for the purposes of initiating CIRP; an application against one partner alone is not maintainable in that context.

Final Conclusion: Applying the foregoing conclusions on nature of the debt, limitation and the effect of the joint venture, the Tribunal found the Section 7 application to be not maintainable and dismissed the petition as devoid of merit.

Fixation of special rate representing actual value addition under Clause 3(1) of Notification No.20/2008-Central Excise - right to administrative consideration before recovery of refunded excise duty - interim restraint on coercive recovery pending administrative decision

Fixation of special rate representing actual value addition under Clause 3(1) of Notification No.20/2008-Central Excise - right to administrative consideration before recovery of refunded excise duty - The petitioners' application dated 01.04.2021 under Clause 3(1) seeking fixation of a special rate on the basis of add ons must be considered by the Principal Commissioner before any recovery action is taken under the Notification dated 27.03.2008. - HELD THAT: - The notification provides a statutory option to a manufacturer to apply for fixation of a special rate representing actual value addition where the manufacturer finds that four fifths of the ratio of actual value addition to value of goods exceeds the tabled rate. The petitioner invoked that option by filing the application dated 01.04.2021. Given that the Supreme Court restored Notification No.20/2008, the department proposes to apply the tabled rates; however, the statutory scheme entitles the manufacturer to an administrative determination of any claim for a special rate before recovery is effected. Absent an appropriate decision on the petitioners' Clause 3(1) claim, it would be inappropriate to proceed with coercive recovery or apply the tabled rates without first adjudicating the application. Accordingly, the Principal Commissioner is directed to consider and decide the application on merits within the time fixed, and only thereafter may departmental recovery action, if any, proceed in accordance with the decision. [Paras 7, 8, 9]

The Principal Commissioner of GST is directed to consider and decide the petitioners' application under Clause 3(1) of Notification No.20/2008 within six weeks; until such decision is taken, no coercive recovery or pursuit of the communication dated 22.03.2021 shall be undertaken.

Final Conclusion: Writ petition allowed to the extent that the petitioners' Clause 3(1) application dated 01.04.2021 shall be decided by the Principal Commissioner of GST within six weeks and, pending that decision, no coercive measures for recovery of refund shall be taken.

Interim protection / stay applications - prima facie case - financial stringency - balance of convenience - non-speaking order - discretionary power to grant stay - automatic charge under Section 42 - Input Tax Credit (ITC) - pro-rata applicability

Non-speaking order - interim protection / stay applications - Impugned first appellate orders on stay applications were non-speaking and therefore liable to be set aside - HELD THAT: - The court held that an application for interim protection must be decided on the established trifecta of prima facie case, financial stringency and balance of convenience. While the petitioner had advanced detailed submissions including reliance on the law relating to Input Tax Credit (ITC) - pro-rata applicability and the automatic charge under Section 42, the first appellate authority failed to apply these factors and instead passed a routine, mechanical order calling for further remittance and a bank guarantee. Such rote disposal, lacking application of mind and reasoning on the determinative factors, rendered the orders non-speaking and amenable to being set aside. [Paras 4, 7, 8]

Impugned orders set aside for being non-speaking and mechanically passed without considering the requisite factors for interim relief.

Discretionary power to grant stay - prima facie case - balance of convenience - financial stringency - Matter remitted to the first appellate authority to decide stay applications afresh applying the three-factor test and recording reasons - HELD THAT: - The court reiterated that the grant or refusal of stay is an exercise of discretion which must be exercised by applying the three factors and by passing a speaking order addressing applicability of the petitioner's contentions, including the legal position on Input Tax Credit (ITC) and the automatic charge under Section 42. Consequently, the petitioner is to be heard and the appellate authority directed to decide the stay applications afresh within a stipulated time-frame, ensuring reasons are recorded and the factors applied to the facts and submissions presented. [Paras 7, 9]

Remitted for fresh decision on stay applications with directions to hear the petitioner and record reasons within four weeks.

Interim protection / stay applications - Interim protection granted until fresh orders are passed; recovery proceedings stayed - HELD THAT: - Pending the fresh decision by the first appellate authority within four weeks, the court stayed initiation of any recovery proceedings. This interim protection preserves the petitioner's position while the appellate authority considers the stay applications afresh and records its reasoning applying the established test for interim relief. [Paras 9]

No recovery proceedings shall be initiated until the appellate authority decides the stay applications afresh within four weeks.

Final Conclusion: Impugned non-speaking orders in the first appeals were set aside; the matters were remitted to the appellate authority to decide the stay applications afresh by applying and recording reasons on the three-factor test (prima facie case, financial stringency, balance of convenience) within four weeks, and no recovery proceedings shall be initiated until such fresh decision.

Forfeiture clause in reservation form - unenforceability of unconscionable or one-sided contractual clauses - right of allottee to withdraw reservation - inapplicability of model agreement / Section 18 where no agreement for sale is executed - inherent powers of the Authority and Tribunal to meet the ends of justice - object of RERA to protect consumer / allottee interests

Forfeiture clause in reservation form - unenforceability of unconscionable or one-sided contractual clauses - right of allottee to withdraw reservation - object of RERA to protect consumer / allottee interests - Validity and enforceability of clause 17 of the printed request for reservation (forfeiture on withdrawal) signed only by the Allottees. - HELD THAT: - The printed form titled 'request for reservation' was signed only by the Allottees and not by the Promoter; there is no booking form on record signed by both parties. Clause 17, which purports to bar withdrawal and permits forfeiture of amounts on withdrawal, is a one-sided condition imposed only on Allottees. Such a restraint on the right to withdraw a reservation and a provision allowing forfeiture is ex facie unfair, unreasonable and inequitable, contrary to the protective object of RERA and unenforceable as an unconscionable clause where the parties are unequal in bargaining power. Consequently the Promoter is not entitled to forfeit any amount under clause 17 and the clause is not binding on the parties. [Paras 9, 11]

Clause 17 in the printed request for reservation is unreasonable and not enforceable; Promoter cannot forfeit amounts under that clause.

Inapplicability of model agreement / Section 18 where no agreement for sale is executed - object of RERA to protect consumer / allottee interests - Whether the Allottees' refund claim can be sustained on the basis of clause 18 of the model agreement or Section 18 of RERA in the absence of an executed agreement for sale. - HELD THAT: - The parties had not reached the stage of a concluded agreement for sale: no confirmation letter, allotment letter or agreement for sale was executed and there was no attempt by either party to execute such agreement. Clause 18 of the model agreement and Section 18 of RERA relate to rights and refunds in the context of an executed agreement and failure to give possession or complete the project; they do not govern an initial-stage cancellation where only a reservation request was made. Thus the Allottees' claim cannot be supported on the basis of clause 18 of the model agreement or Section 18 of RERA, although the protective object of RERA supports redress of consumers in appropriate cases. [Paras 12, 13]

Claim for refund is not maintainable under clause 18 of the model agreement or Section 18 of RERA because no agreement for sale was executed.

Inherent powers of the Authority and Tribunal to meet the ends of justice - object of RERA to protect consumer / allottee interests - Whether the Appellate Tribunal can direct refund of amounts paid by the Allottees in exercise of its inherent powers and consistent with RERA's object. - HELD THAT: - Regulation 39 of the Authority's regulations and Regulation 25 of the Tribunal's regulations preserve inherent powers to pass orders necessary to meet the ends of justice or to prevent abuse of process. Although the refund claim did not fall squarely under the model agreement or Section 18, the Tribunal may, in exercise of these inherent powers and in furtherance of RERA's consumer-protective purpose, direct such relief. Applying those inherent powers and the statutory object, the Tribunal found it just to direct the Promoter to refund the total amount paid by the Allottees. [Paras 14, 15, 16]

Tribunal validly exercised inherent powers to direct the Promoter to refund the total amount paid to the Allottees.

Final Conclusion: Appeal allowed; impugned MahaRERA order set aside and, in exercise of the Tribunal's inherent powers consonant with RERA's object to protect consumers, the Promoter directed to refund the total amount paid by the Allottees; parties to bear their own costs.