TaxTMI Updates e-Newsletter
May 07,2024

Condonation of delay in filing statutory appeals - jurisdiction of the Appellate Authority under Section 107(4) to entertain time barred appeals - applicability of Section 5 of the Limitation Act, 1963 by virtue of Section 29(2) of the Limitation Act - implied exclusion of general limitation provisions by a self contained fiscal code

Jurisdiction of the Appellate Authority under Section 107(4) to entertain time barred appeals - applicability of Section 5 of the Limitation Act, 1963 by virtue of Section 29(2) of the Limitation Act - implied exclusion of general limitation provisions by a self contained fiscal code - Appellate Authority has power to condone delay beyond the one month period prescribed by Section 107(4) of the West Bengal GST Act. - HELD THAT: - The Court examined whether the statute operates as a complete code excluding Section 5 of the Limitation Act. Relying on the Division Bench decision in S.K. Chakraborty & Sons and the principle in Superintending Engineer/Dehar Power House Circle (as applied by that Division Bench), the Court held that in absence of an express non obstante clause or specific exclusion of Section 5, implied exclusion cannot be read in. Consequently the Appellate Authority is not denuded of power to entertain an appeal with delay beyond one month where an application under Section 5 of the Limitation Act is filed and appropriate cause is shown. The Appellate Authority's contrary observation that there is no scope in the Act for condoning delay beyond four months was found unsustainable and was set aside. [Paras 11, 12, 15]

The Appellate Authority may exercise jurisdiction to condone delay beyond the one month period under Section 107(4); the Appellate Authority's finding to the contrary is set aside.

Condonation of delay in filing statutory appeals - exercise of discretion under Section 5 of the Limitation Act, 1963 - Petitioner's failure to file any application for condonation before the Appellate Authority precludes the Court from deciding whether sufficient cause exists; petitioner permitted to seek fresh consideration before the Appellate Authority. - HELD THAT: - Although the Court held that the Appellate Authority has jurisdiction to condone delay, the petitioner had not actually filed an application under Section 5 before that Authority. Because the substantive question of sufficiency of cause was not presented for adjudication, the Court declined to decide it on merits. The writ petition was disposed of without granting substantive relief but with liberty to the petitioner to file an appropriate application for condonation within two weeks. The Appellate Authority is directed to consider any such application in accordance with law and in light of the observations in this order. [Paras 16, 17, 19, 20]

No relief granted on merits for condonation; petitioner may file an application for condonation within two weeks and the Appellate Authority shall consider it afresh.

Final Conclusion: The Appellate Authority's view that the Act precludes condonation of delay beyond the statutory one month period is set aside; however, since no application for condonation was filed below, the writ is disposed of without deciding sufficiency of cause and the petitioner is permitted to apply to the Appellate Authority within two weeks for fresh consideration.

Power of appellate authority to condone delay beyond prescribed period - applicability of Section 5 of the Limitation Act, 1963 - exercise (or failure) of jurisdiction by appellate authority - implied exclusion of general limitation provisions in a self-contained tax code

Power of appellate authority to condone delay beyond prescribed period - exercise (or failure) of jurisdiction by appellate authority - implied exclusion of general limitation provisions in a self-contained tax code - Appellate authority's refusal to condone delay in filing the appeal under Section 107 of the West Bengal GST Act on the ground that the appeal was beyond the maximum period of four months from communication of the order. - HELD THAT: - The Court considered whether Section 107(4) operates as a complete code excluding the applicability of Section 5 of the Limitation Act, 1963, and whether the appellate authority was thereby deprived of jurisdiction to condone delay beyond the one month window. The Division Bench decision in S.K. Chakraborty & Sons and the Supreme Court decision in Superintending Engineer/Dehar Power House Circle Bhakra Beas Management Board (PW) Slapper and another versus Excise and Taxation Officer Sunder Nagar/Assessing Authority were noted for the principle that in absence of an express non obstante clause or specific exclusion, Section 29(2) of the Limitation Act prevents implied exclusion of Section 5. Relying on this reasoning and on a like view in Kajal Dutta , the Court held that the appellate authority is not divested of power to condone delay beyond one month and that rejecting the condonation application solely because the appeal lay beyond the maximum four month period amounted to failure to exercise vested jurisdiction. The contrary approach in M/s Yadav Steels was considered unpersuasive in the light of the Division Bench precedent and the applicable principles governing implied exclusion. [Paras 9, 12, 13]

Appellate authority failed to exercise its jurisdiction in rejecting the condonation application; its order dated 27th March, 2024 is set aside.

Applicability of Section 5 of the Limitation Act, 1963 - power of appellate authority to condone delay beyond prescribed period - Whether the Court should itself consider the Section 5 application and, on that consideration, condone the delay in preferring the appeal under Section 107 of the Act. - HELD THAT: - The Court declined to remand the matter for fresh consideration of the Section 5 application, holding that no useful purpose would be served by remand. Having independently considered the explanation furnished in the Section 5 application, the Court found the explanation satisfactory and the delay sufficiently explained. Consequential directions were given to restore the appeal to its original file and number and to have the appellate authority decide the appeal on merits within a specified time frame without unnecessary adjournments. [Paras 14, 15]

Delay in preferring the appeal is condoned; appeal restored and appellate authority directed to decide the appeal on merits within two months.

Final Conclusion: The order of the appellate authority dated 27th March, 2024 rejecting the appeal on the ground of delay is set aside; the Court condoned the delay after considering the Section 5 application, restored the appeal, and directed the appellate authority to decide the appeal on merits within two months.

Notice under Section 46 for non-filing of returns - assessment following search and seizure under Chapter XIV - recorded statement under Section 70 and right to cross-examination - application of non-obstante provision in Section 62 vis-a -vis assessment under Sections 73/74 - principles of natural justice in adjudication and personal hearing - availability of alternative remedy by statutory appeal

Notice under Section 46 for non-filing of returns - Requirement of issuing notice under Section 46 where the registered person had filed NIL returns - HELD THAT: - The Court found that Section 46 notice for failure to furnish return is directed to a registered person who has not furnished returns. In the facts of this case the petitioner had submitted a NIL return for the relevant year; therefore the mandatory notice envisaged for non-filers under Section 46 was not required. The adjudication did not suffer for want of a Section 46 notice because the proceedings did not arise from a failure to file returns but from subsequent action under Chapter XIV after search and seizure. [Paras 7]

No requirement to issue a notice under Section 46 where the petitioner had filed a NIL return; absence of such notice did not vitiate the proceedings.

Assessment following search and seizure under Chapter XIV - application of non-obstante provision in Section 62 vis-a -vis assessment under Sections 73/74 - Competence to proceed with assessment following search and seizure under Chapter XIV despite the non-obstante provision in Section 62 - HELD THAT: - The Court held that the present proceedings arose from search and seizure under Chapter XIV and notices issued thereunder (including under Section 70) and were not proceedings initiated solely under Section 62 for non-filers. Consequently, the non-obstante language of Section 62 did not oust the power of the proper officer to proceed under Chapter XIV and thereafter under the regular assessment provisions applicable on the basis of evidence obtained during search/seizure. [Paras 7]

Proceedings and assessment undertaken after search and seizure under Chapter XIV were competent and not barred by Section 62.

Recorded statement under Section 70 and right to cross-examination - principles of natural justice in adjudication and personal hearing - Whether principles of natural justice were violated by lack of cross-examination and by proceeding after offering opportunities for personal hearing - HELD THAT: - The Court observed that the petitioner appeared pursuant to notices under Chapter XIV and his statement was recorded; thereafter he was given three opportunities for personal hearing. The petitioner admitted his GST liability in the recorded evidence and had himself placed incriminating material on record. A person who has given evidence cannot demand cross-examination of himself through his counsel. Given the three hearings afforded (and the statutory limitation on adjournments), the Court found no breach of natural justice in the conduct of the adjudication. [Paras 7]

No violation of principles of natural justice; absence of cross-examination and the conduct of hearing did not vitiate the assessment.

Availability of alternative remedy by statutory appeal - Maintainability of the writ petition in view of the alternative statutory remedy of appeal - HELD THAT: - The Court noted that the assessees have an alternative and efficacious remedy by way of statutory appeal against the assessment order. In view of the lack of any demonstrable breach of natural justice or jurisdictional error on the face of the record, the High Court declined to entertain the writ petition and directed that the petitioner may raise all objections before the appellate authority. The Court further directed that the appellate authority should consider sympathetically the time spent in High Court proceedings, if an appeal is filed. [Paras 7, 9, 10]

Writ petition dismissed; petitioner is permitted to pursue statutory appeal and the appellate authority to consider the time spent before this Court sympathetically.

Final Conclusion: Writ petition dismissed: the assessment made after search and seizure was held to be competent, no notice under Section 46 was required where NIL returns were filed, principles of natural justice were not breached, and the petitioner is left to pursue the remedy of appeal, with a direction that the appellate authority consider sympathetically time spent in High Court proceedings.

Input tax credit - utilisation of IGST credit for payment of SGST - apportionment and transfer of IGST to the appropriate State Government - assessment rendered otiose by subsequent administrative compliance - refund of pre-deposit

Input tax credit - utilisation of IGST credit for payment of SGST - apportionment and transfer of IGST to the appropriate State Government - Whether the IGST input tax credit utilized to discharge SGST liability had been apportioned and transferred to the State of West Bengal as alleged by the appellant. - HELD THAT: - The Court directed the State to obtain specific written instructions and verification from its records. The Department produced a verification by the Deputy Commissioner, Bowbazar Charge, stating that IGST ITC adjustments made by the assessee in 2018, aggregating to the stated amount, had been adjusted against SGST liabilities and, upon verification through the Information Systems Division, the amounts in question were transferred to the Government of West Bengal. The Court accepted the departmental verification that the IGST credit, so utilised, was apportioned and transferred to West Bengal. [Paras 6, 7]

The Court found that the departmental verification establishes that the IGST ITC utilised for SGST was apportioned and transferred to the Government of West Bengal.

Assessment rendered otiose by subsequent administrative compliance - refund of pre-deposit - Whether the impugned assessment order could survive after the departmental verification of transfer, and what relief should follow. - HELD THAT: - Having accepted that the contested IGST credits were apportioned and transferred to West Bengal, the Court held that the assessment order under challenge could no longer survive. In consequence, the appeal was allowed, the earlier order in the writ petition was set aside, and the impugned assessment order dated 21st August, 2023 was quashed. The Court further directed refund of the 10% pre-deposit made pursuant to the interim order, to be refunded by the department within eight weeks from receipt of the order copy. [Paras 8, 9, 10]

The assessment order was set aside as unsustainable in view of the transfer; the writ petition was allowed and the 10% pre-deposit was ordered to be refunded within eight weeks.

Final Conclusion: The departmental verification that the IGST credit utilised for SGST was apportioned and transferred to the Government of West Bengal rendered the impugned assessment order unsustainable; the High Court allowed the appeal, set aside the assessment dated 21st August, 2023, and directed refund of the 10% pre-deposit within eight weeks.

Condonation of delay - appellate authority's jurisdiction to condone delay beyond prescribed period - applicability of Section 5 of the Limitation Act, 1963 - non obstante / implied exclusion of general limitation provisions - statute as self-contained code for limitation

Appellate authority's jurisdiction to condone delay beyond prescribed period - applicability of Section 5 of the Limitation Act, 1963 - Whether the appellate authority erred in refusing to entertain an application under Section 5 of the Limitation Act on the ground that condonation beyond one month from the prescribed period under Section 107(4) of the WBGST Act, 2017 was impermissible. - HELD THAT: - The Court examined the scope of Section 107(4) of the WBGST Act, 2017 and the question whether the general power under Section 5 of the Limitation Act, 1963 is excluded, expressly or impliedly. Relying on the reasoning of the Division Bench in S.K. Chakraborty & Sons and the principles in the decision relied upon therein, the Court held that in absence of an express non obstante clause or clear statutory language excluding Section 5, the Limitation Act's saving provision in Section 29(2) must be given effect and Section 5 remains available. The Court rejected the contention that the GST appellate provision operates as a complete self-contained code that implicitly excludes general limitation provisions, finding that such implied exclusion was not justified on the facts. The Allahabad High Court single-judge decision in M/s Yadav Steels was considered but found not persuasive in the light of the Division Bench view and governing principles on implied exclusion. [Paras 10, 11, 12, 13]

The appellate authority was vested with jurisdiction to consider an application under Section 5 of the Limitation Act even though filed beyond one month from the prescribed period under Section 107(4), and its refusal on that ground constituted failure to exercise jurisdiction.

Condonation of delay - judicial remedy by court instead of remand - Whether the High Court should remit the application for condonation to the appellate authority or decide the condonation itself and what relief should follow. - HELD THAT: - The Court declined to remit the matter for fresh consideration by the appellate authority, observing that remand would serve no useful purpose. Having examined the applicant's explanation filed under Section 5 of the Limitation Act, the Court found the delay satisfactorily explained. Consequently, rather than leaving the parties to repeat proceedings, the Court exercised its powers to condone the delay, set aside the appellate authority's order dated 28th February 2024, restored the appeal to its original file and number, and directed the appellate authority to hear and dispose of the appeal on merits within a specified short period without unnecessary adjournments. [Paras 14, 15, 16]

Delay in preferring the appeal is condoned; the appellate authority's order refusing condonation is set aside; the appeal is restored and the appellate authority directed to decide the appeal on merits within one month.

Final Conclusion: The High Court set aside the appellate authority's refusal to entertain the Section 5 application as a failure to exercise jurisdiction, held that Section 5 of the Limitation Act, 1963 applies unless expressly excluded, condoned the delay on the merits, restored the appeal, and directed the appellate authority to hear and dispose of the appeal on merits within one month.

Refund under the CGST Act - computation of limitation period - exclusion of limitation period due to COVID-19 related notifications - extension of limitation by judiciary - remand for fresh consideration

Refund under the CGST Act - computation of limitation period - exclusion of limitation period due to COVID-19 related notifications - remand for fresh consideration - Impugned appellate order dismissing the refund claim set aside and the refund claim remitted to the assessing authority for fresh consideration in light of the notification excluding the period from 1.3.2020 to 28.2.2022 for computation of limitation. - HELD THAT: - The petitioner exported consignments between 24.04.2018 and 25.022019 and filed a refund claim under Section 54 of the CGST Act. The last date for filing the refund claim fell during the period when COVID-19 restrictions commenced (from the third week of March 2020). The Supreme Court had earlier extended limitation and the Central Government promulgated the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Ordinance, 2020 (later TOLA Act, 2020). Subsequently, notification No.13/2022-Central Tax dated 15.07.2022 excluded the period 1.3.2020 to 28.2.2022 from computation of limitation for filing refund claims under the CGST Act. The appellate and adjudicating authorities had not had the benefit of that notification when they rejected the refund. In those circumstances the appellate order dated 27.09.2021, which upheld rejection of the refund claim, was set aside and the matter was remitted to the second respondent for fresh consideration of the refund claim in the light of the stated notification. The court directed that the respondent decide the claim expeditiously and permitted a hearing of the petitioner if required. [Paras 3, 4]

Impugned order quashed; refund claim remitted to the assessing authority for fresh consideration in light of the notification excluding 1.3.2020 to 28.2.2022 from computation of limitation, with a direction to decide preferably within six months and permit hearing of the petitioner if necessary.

Final Conclusion: Writ petition allowed; appellate order set aside and the refund claim remitted for de novo consideration in the light of the notification excluding the COVID-19 period from limitation, with a direction for expeditious decision and liberty to hear the petitioner.

Export of services - the supplier of service and the recipient of service are not merely establishments of a distinct person - Explanation 1 to Section 8 of the IGST Act, 2017 - Section 2(6)(v) of the IGST Act, 2017 - separate legal entity / separate persons for GST purposes - CBIC Circular No.161/17/2021-GST dated 20.09.2021 - refund under Section 54/55 of the CGST Act, 2017 - authority for advance ruling

Section 2(6)(v) of the IGST Act, 2017 - the supplier of service and the recipient of service are not merely establishments of a distinct person - Explanation 1 to Section 8 of the IGST Act, 2017 - separate legal entity / separate persons for GST purposes - export of services - Whether the petitioner's supplies to its foreign subsidiary qualify as 'export of services' because the supplier and recipient are not 'merely establishments of a distinct person' under Section 2(6)(v) read with Explanation 1 to Section 8 of the IGST Act, 2017. - HELD THAT: - The Court found that the petitioner and its Australian subsidiary are distinct legal entities and, on the material before it, the petitioner satisfied the conditions in Section 2(6)(i)-(iv). The first respondent's conclusion that the entities were 'merely establishments of a distinct person' was rejected. The AAR decision in Segoma was held inapplicable to the facts of this case. The Court accepted that where a company is incorporated in India and the related body corporate is incorporated outside India, they are separate persons for GST purposes and such supplies are not barred by clause (v) of Section 2(6), subject to fulfillment of other statutory conditions. Applying that legal position, the Court concluded that the petitioner's services to its foreign subsidiary qualify as export of services. [Paras 12, 13, 14]

The impugned finding that the supplies were not 'export of services' under clause (v) of Section 2(6) was set aside and the petitioner held to have satisfied that condition.

CBIC Circular No.161/17/2021-GST dated 20.09.2021 - separate legal entity / separate persons for GST purposes - refund under Section 54/55 of the CGST Act, 2017 - Whether the Board's clarification in CBIC Circular No.161/17/2021-GST dated 20.09.2021 is a correct statement of law applicable to the dispute and whether it warrants setting aside the revenue orders rejecting the refund claim. - HELD THAT: - The Court observed that the circular clarifies that an Indian company and a body corporate incorporated outside India are separate persons under the GST law and hence supplies by the Indian-incorporated company to related establishments outside India would not be treated as supply between 'merely establishments of a distinct person' under Explanation 1 to Section 8. Although administrative circulars are not strictly binding on the Court, the Court regarded the Board's view as a correct clarification of the legal position. The Court noted the Delhi High Court's adoption of the same view and held that the revenue could not legitimately contend against its own circular. In consequence, the Court applied the clarification to the petitioner's refund claim and directed remedial action. [Paras 14, 15, 16]

The Board s circular was treated as correctly stating the legal position and was applied to set aside the revenue orders; the refund claim was directed to be processed with interest.

Final Conclusion: Writ petition allowed; the appellate order rejecting the refund was set aside. The respondent-department is directed to process the petitioner's refund claim, with interest as payable under the Act, expeditiously (preferably within 12 weeks).

Writ jurisdiction under Article 226 - Maintainability of writ where statutory remedy of appeal is available and not availed - Limitation and condonation of delay in filing statutory appeal - Finality of assessment where no appeal is preferred - Proceedings under Section 74 of the RGST Act/CGST Act

Writ jurisdiction under Article 226 - Maintainability of writ where statutory remedy of appeal is available and not availed - Limitation and condonation of delay in filing statutory appeal - Finality of assessment where no appeal is preferred - Proceedings under Section 74 of the RGST Act/CGST Act - Challenge to assessment/order under Section 74 by way of writ petition is not maintainable where the assessee did not prefer the statutory appeal within the prescribed period or seek condonation of delay. - HELD THAT: - The Court held that the remedy of appeal is a creature of statute and, where the assessee allows the assessment order arising from proceedings under Section 74 to become final by not preferring an appeal within the statutory period or obtaining condonation, the High Court should not ordinarily entertain a writ petition under Article 226. Reliance was placed on the decision in Glaxo Smith Kline Consumer Health Care Limited which declined to permit writ jurisdiction to substitute the statutory appellate remedy where no sufficient explanation for failure to file a timely appeal was furnished. The facts showed that the petitioner was issued show cause notice and an opportunity of hearing was available; no plausible explanation was offered for not availing the appellate remedy under Section 107, and the petitioner consciously permitted the order to attain finality. In those circumstances the writ petition was held to be not maintainable and liable to be dismissed. [Paras 6, 7]

Writ petition dismissed as not maintainable for failure to prefer statutory appeal or satisfactorily explain non availing of the appellate remedy.

Final Conclusion: The writ petition challenging the order passed under Section 74 for financial year 2018-19 is dismissed as not maintainable because the petitioner did not avail the statutory appellate remedy nor furnished a plausible justification for the delay.

Maintainability of writ petition under Article 226 - appeal under Section 107 of the RGST Act/CGST Act and effect of non-availment - statutory remedy of appeal and limitation - condonation of delay in filing appeal - finality of assessment on non-appeal - precedential effect of Glaxo Smith Kline decision

Maintainability of writ petition under Article 226 - appeal under Section 107 of the RGST Act/CGST Act and effect of non-availment - statutory remedy of appeal and limitation - finality of assessment on non-appeal - precedential effect of Glaxo Smith Kline decision - Writ petition challenging order under Section 74 (levy of tax, interest and penalty) is not maintainable where the statutory appeal under Section 107 was not filed within the prescribed period and no plausible explanation for non availment of the statutory remedy is shown. - HELD THAT: - The Court applied the principle laid down in Glaxo Smith Kline that the remedy of appeal being a creature of statute, a writ under Article 226 ordinarily should not be entertained where the assessee has failed to avail the statutory appeal within the prescribed or extended period and has not satisfactorily explained the delay. On the facts, the petitioner received notice, participated in proceedings and allowed the assessment order to become final without filing any appeal or offering a credible reason for not doing so. The Court found no case of breach of principles of natural justice or any circumstance warranting exercise of extraordinary writ jurisdiction in place of the statutory appellate remedy. In these circumstances and in view of the cited precedent, the petition was dismissed as not maintainable. [Paras 6, 7, 8]

Writ petition dismissed as not maintainable for failure to prefer the statutory appeal within the prescribed period and absence of any plausible explanation for not availing the statutory remedy.

Final Conclusion: The writ petition challenging the show cause notice and the order dated 13.03.2023 for financial year 2018-19 is dismissed as not maintainable because the petitioner did not avail the statutory appeal under Section 107 and has not furnished a plausible explanation to justify substitution of writ remedy for the statutory appellate remedy.

Denial of input tax credit on account of invoice GSTIN mismatch - amendment introducing GSTR 2A with effect from 01.01.2022 - penalty for short payment of tax under Section 122(1)(iii) read with Section 73(9) - reduced penalty where tax and interest are paid within thirty days of show cause notice - interest on belated tax payment under Section 50(3) - maintainability of writ petition in presence of alternate remedy under Section 107

Denial of input tax credit on account of invoice GSTIN mismatch - amendment introducing GSTR 2A with effect from 01.01.2022 - Denial of input tax credit on account of mismatch in supplier GSTIN was not interfered with in writ; petitioner may obtain supplier certification and agitate the claim before the appellate authority. - HELD THAT: - The Court found that the material facts were not in dispute and there existed a discrepancy between the GSTIN and the number shown in the supplier's invoices. The petitioner was directed to procure a suitable certificate from the supplier confirming the sale to the petitioner. The Court declined to grant the relief sought in the writ petition in respect of the disputed input tax credit and observed that the petitioner may raise the matter before the Appellate Commissioner, who shall decide independently and without being influenced by the observations in this order. The Court also noted the petitioner's contention regarding the amendments relating to GSTR 2A but did not accept that contention as a ground to set aside the denial of credit in the writ proceedings. [Paras 12, 16]

Denial of input tax credit on account of GSTIN/invoice discrepancy not set aside; petitioner permitted to pursue remedy before Appellate Commissioner.

Penalty for short payment of tax under Section 122(1)(iii) read with Section 73(9) - interest on belated tax payment under Section 50(3) - reduced penalty where tax and interest are paid within thirty days of show cause notice - maintainability of writ petition in presence of alternate remedy under Section 107 - Imposition of interest and penalties for belated payment and belated filing of returns was sustained; writ petition dismissed as not maintainable in view of alternate appellate remedy and factual position on payment dates. - HELD THAT: - The Court recorded that returns for 2017-2018 were filed belatedly and the tax for July 2017 was paid only on 04.06.2022, while interest was remitted on 27.12.2022-after issuance of the show cause notice dated 22.09.2022. Because payment of tax with interest was not made within thirty days of the show cause notice, the benefit under the provision limiting penalty where payment (with interest) is made within thirty days did not apply. The learned counsel for the respondent also relied on the availability of an alternate remedy by appeal under Section 107; the Court held the writ petition not maintainable and dismissed it while granting liberty to file the statutory appeal within 30 days. [Paras 13, 14, 15]

Interest and penalties upheld; writ dismissed as not maintainable; liberty granted to file appeal under Section 107 within 30 days.

Final Conclusion: Writ petition dismissed; denial of input tax credit and imposition of interest and penalties were not disturbed by this Court; petitioner granted liberty to file an appeal before the Appellate Commissioner within 30 days, and the appellate authority to decide independently.

Statutory appeal - constitution of the Appellate Tribunal (GSTAT) - extension of limitation pending constitution of Appellate Tribunal - refund of amount encashed against bank guarantee subject to furnishing fresh bank guarantee - liberty to prefer appeal upon constitution of GSTAT

Refund of amount encashed against bank guarantee subject to furnishing fresh bank guarantee - Respondent directed to refund the sum encashed from the petitioner's bank guarantee on specified conditions. - HELD THAT: - The Court, after noting the parties' submissions and the material on record, directed the respondent to refund the amount encashed on 01.02.2024. The refund is to be effected within one month. Immediately upon refund, the petitioner is required to furnish a fresh bank guarantee within one week thereafter, the fresh guarantee to remain valid for one year. The order balances the petitioner's entitlement to restoration of the encashed amount with the respondent's security concern by conditioning refund on prompt re furnishing of a bank guarantee. [Paras 7]

Respondent to refund the encashed amount within one month; petitioner to furnish a fresh one year bank guarantee within one week of refund.

Statutory appeal - constitution of the Appellate Tribunal (GSTAT) - extension of limitation pending constitution of Appellate Tribunal - liberty to prefer appeal upon constitution of GSTAT - Petitioner granted liberty to file a statutory appeal challenging the impugned order after constitution of the GSTAT within the extended period prescribed by the relevant circular. - HELD THAT: - Relying on the Circular dated 18.03.2020 (which explains that the time limit for filing appeals to the Appellate Tribunal will be counted from the date on which the President or State President enters office), the Court recognised that the appellate forum (GSTAT) has not been constituted and that the limitation period is accordingly to be extended. The Court therefore reserved liberty for the petitioner to prefer a statutory appeal against the impugned order upon constitution of the GSTAT, within the extended period of limitation as stipulated in the Circular. This preserves the petitioner's appellate remedy without depriving the respondent of interim security by imposing the bank guarantee condition tied to the refund. [Paras 4, 5, 7]

Liberty reserved to the petitioner to prefer a statutory appeal upon constitution of GSTAT within the extended period of limitation provided by the Circular dated 18.03.2020.

Final Conclusion: Petition disposed by directing refund of the amount encashed on 01.02.2024 within one month, subject to the petitioner furnishing a fresh one year bank guarantee within one week of refund; petitioner granted liberty to file a statutory appeal on constitution of GSTAT within the extended limitation period as per the Circular dated 18.03.2020.

Non-consideration of reply - unauthorised reply - personal hearing - validity of assessment order - remand for fresh consideration

Non-consideration of reply - unauthorised reply - validity of assessment order - Impugned assessment order is vitiated for disregarding the petitioner's reply by branding it as an 'unauthorised reply'. - HELD THAT: - The audit generated a show cause notice and the petitioner submitted a reply to the audit report on 28.11.2023. The assessment order dated 29.12.2023 treats the petitioner's response as an 'unauthorised reply' and records that the reply was not accepted because the taxpayer did not appear for personal hearing. The court found no clear basis in the order for categorising the reply as unauthorised and held that the impugned order is vitiated by non-consideration of the petitioner's reply. Consequently the assessment cannot stand without fresh consideration of the reply. [Paras 4]

Impugned order set aside as vitiated for failure to consider the petitioner's reply.

Personal hearing - remand for fresh consideration - Matter remanded for reconsideration with directions to afford a reasonable opportunity including personal hearing and to pass a fresh order within a specified time. - HELD THAT: - Having set aside the impugned order for non-consideration of the reply, the court remanded the matter to the respondent for fresh adjudication. The respondent is directed to provide the petitioner a reasonable opportunity, including a personal hearing, to place its contentions. A fresh order is to be passed after such opportunity is afforded, within two months from receipt of the court's order. All substantive contentions are left open for determination in the remanded proceedings. [Paras 5]

Matter remanded for fresh consideration with direction to afford personal hearing and to pass a fresh order within two months.

Final Conclusion: The writ petition is allowed by setting aside the assessment order dated 29.12.2023; the matter is remanded for fresh consideration after affording the petitioner a reasonable opportunity including personal hearing, and a fresh order shall be issued within two months.

Denial of personal hearing - failure to consider request for adjournment - transitional Input Tax Credit - breach of sub-section (4) of Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017 - quash and remand for fresh consideration - reasonable opportunity of hearing including personal hearing

Denial of personal hearing - failure to consider request for adjournment - breach of sub-section (4) of Section 75 of the Tamil Nadu Goods and Services Tax Act, 2017 - Impugned assessment order set aside for failure to consider the petitioner's request for adjournment and for not affording a personal hearing as required under the statutory provision. - HELD THAT: - The petitioner replied to the reminder and show cause notice on 20.12.2023 seeking further time on account of the death in the family of a partner and annexed a death certificate. The respondent did not accept or respond to that request for adjournment and proceeded to pass the impugned assessment order dated 29.12.2023. The Court found that while an earlier intimation had been issued in August 2022, the specific request made in December 2023 for an adjournment and for a personal hearing arising from the family bereavement was not considered, and no personal hearing was afforded pursuant to that reply. On that basis the order was held to be unsustainable as it involved denial of the statutory entitlement to a hearing under sub-section (4) of Section 75 of the Tamil Nadu GST Act. The Court therefore exercised its supervisory jurisdiction to quash the assessment order and remit the matter for fresh consideration with directions to afford a reasonable opportunity of hearing including personal hearing and to consider the petitioner's reply. [Paras 3, 5, 6]

Impugned order quashed; matter remanded for reconsideration with direction to accept petitioner's reply, afford a reasonable opportunity including a personal hearing, and pass a fresh order.

Final Conclusion: The assessment order dated 29.12.2023 is quashed for failure to consider the petitioner's adjournment request and for not granting a personal hearing; the matter is remanded for re-consideration on receipt of the petitioner's reply with directions to provide a reasonable opportunity including a personal hearing and to pass a fresh order within the prescribed time.

Natural justice - opportunity to be heard - quash and remand - remand for fresh consideration - condition precedent of payment for reconsideration - show cause notice - personal hearing - service by registered post

Natural justice - opportunity to be heard - quash and remand - service by registered post - Impugned adjudication order set aside for breach of principles of natural justice and remanded for reconsideration. - HELD THAT: - The Court found that the tax demand arose from a mismatch between GSTR 1 and GSTR 3B and that the petitioner had been a registered person only until cancellation of registration on 27.02.2019, reducing the likelihood that he would monitor the GST portal. Given these facts and the consequence that the petitioner did not have the practical means or reason to follow portal proceedings, the principles of natural justice required that the petitioner be afforded an opportunity to contest the demand. Although the respondent contended that notices and the impugned order were dispatched by registered post, the Court concluded that procedural fairness mandated setting aside the order and remanding the matter for fresh consideration to enable the petitioner to be heard before any final adjudication is made. [Paras 5, 7]

Impugned order quashed and matter remanded for reconsideration to afford the petitioner an opportunity to contest the tax demand.

Remand for fresh consideration - condition precedent of payment for reconsideration - show cause notice - personal hearing - Remand was ordered subject to specified conditions including interim remittance, time limits for submission, and direction for fresh hearing and decision. - HELD THAT: - As a condition of remand the petitioner agreed to remit 10% of the disputed tax demand, and the Court imposed this as a precondition to exercise of respondent's power to proceed. The petitioner was permitted to submit a reply to the show cause notice within two weeks of receipt of the order, and upon receipt of the reply and satisfaction that the 10% remittance was made, the respondent was directed to provide a reasonable opportunity including a personal hearing and to issue a fresh order within two months from receipt of the petitioner's reply. The Court thus conditioned the remand on specific temporal and procedural steps to ensure both fairness and expedition of the reconsideration. [Paras 6, 7]

Remand subject to petitioner remitting 10% of disputed demand within two weeks, filing a reply within that period, and respondent affording a personal hearing and issuing a fresh order within two months thereafter.

Final Conclusion: Writ petition allowed in part: impugned order quashed and matter remanded for fresh consideration on the conditions and within the timelines specified by the Court; no order as to costs.

Opportunity of hearing - remand for fresh adjudication - conditional setting aside of assessment order - compliance with Circular No.183/15/2022-GST - disparity between GSTR-3B and GSTR-2A

Disparity between GSTR-3B and GSTR-2A - compliance with Circular No.183/15/2022-GST - opportunity of hearing - Validity of the assessment order in light of documents submitted by the petitioner and whether the petitioner was afforded a reasonable opportunity before adjudication - HELD THAT: - The Court found that the assessment order proceeded after issuance of a show cause notice following observation of disparity between the petitioner's GSTR-3B returns and auto-populated GSTR-2A. The petitioner had responded to the show cause notice with various supporting documents, and subsequently obtained a supplier's certificate in terms of Circular No.183, albeit after the impugned order. The Court noted that those documents and the supplier's certificate bear on the explanation of the disparity. Given that relevant documents were either submitted before adjudication or obtained shortly thereafter, and that the adjudicating authority did not have the benefit of the supplier's certificate at the time of passing the order, it is just and necessary to permit the petitioner an effective opportunity to address the disputed demand. The Court did not decide the merits of the tax liability on the documentary record but directed fresh consideration so that the authority may adjudicate after giving the petitioner adequate opportunity including personal hearing.

Impugned assessment order set aside and matter remanded for fresh adjudication with direction to afford the petitioner a reasonable opportunity, including personal hearing.

Conditional setting aside of assessment order - remand for fresh adjudication - Appropriate interim/conditional relief and procedural directions upon remand - HELD THAT: - The Court exercised its remedial discretion to set aside the impugned order on condition that the petitioner remit a sum towards the disputed tax demand. On receiving the specified remittance, the respondent is directed to provide the petitioner a reasonable opportunity, including personal hearing, and thereafter pass a fresh order within two months from receipt of the remittance. The direction is procedural: it places the petitioner on terms to ensure effective adjudication and requires the authority to decide afresh within a fixed timeframe. The Court thereby preserved the authority's power to re-examine the claim while ensuring the petitioner is heard.

Assessment order set aside on condition of petitioner's remittance; upon receipt, respondent to afford hearing and pass fresh order within two months.

Final Conclusion: The assessment order dated 30.12.2023 is set aside and the matter remanded for fresh adjudication; the petitioner must remit the directed sum as a condition of remand, after which the respondent shall provide a reasonable opportunity including personal hearing and decide the matter within two months of receiving the remittance.

Applicability of Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) - time limit for issuance of notice under Section 148 and the restriction in Section 149 - first proviso to Section 149 - effect of 'at that time' and prospective application - requirement of Document Identification Number (DIN) for departmental communications - Scheme under Section 151A - faceless issuance of notice and automated allocation - escapement of income represented in the form of an asset, expenditure or entry (Explanation to Section 149) - change of opinion doctrine - limits on reassessment and review - consequence of non-compliance with CBDT Circular No.19/2019 (DIN) on validity of notice

Applicability of Taxation and Other Laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) - travel back/traveling back of notices issued after 1st April 2021 - TOLA is not applicable for Assessment Year 2015-2016 and notices issued after 31st March 2021 do not 'travel back' to an earlier date for applying erstwhile provisions. - HELD THAT: - The Court followed earlier decisions holding that TOLA (Relaxation Act) cannot be invoked to extend or revive limitation for AY 2015-16 because the period for which TOLA applied did not encompass the limitation expiry for that year. Section 3(1) of TOLA merely extended specified time limits but did not postpone or revive substantive amendments enacted by the Finance Act, 2021; absent a savings clause Parliament intended the amended provisions (with effect from 1 April 2021) to apply. The CBDT's administrative interpretation and Instruction No.1/2022 attempting to treat post-1 April 2021 notices as relating back was rejected as contrary to statutory text and judicial precedents relied upon by the Court.

No

Time limit for issuance of notice under Section 148 and the restriction in Section 149 - first proviso to Section 149 - meaning of 'at that time' - The notice dated 27th August 2022 is barred by limitation under the first proviso to Section 149. - HELD THAT: - The Court construed the first proviso to Section 149 to refer to the date on which the notice under Section 148 is issued ('at that time'). If on that date a notice could not have been issued under the erstwhile Section 149(1)(b) (six-year rule as it stood before Finance Act, 2021), then the new provisions do not permit issuance. For AY 2015-16 the erstwhile six-year period expired on 31 March 2022; the impugned notice dated 27 August 2022 was therefore beyond that limit. The Court held that interpreting the proviso otherwise would render parts of the proviso otiose and conflict with settled principles on limitation and prospective amendments.

Yes

Document Identification Number (DIN) requirement - CBDT Circular No.19/2019 - mandatory quoting of DIN or prescribed regularisation - The impugned notice dated 27th August 2022 is invalid for lack of a DIN and failure to comply with the Circular's prescribed procedure for manual communications without DIN. - HELD THAT: - The Court applied CBDT Circular No.19/2019 which mandates that departmental communications must quote a computer-generated DIN, and where an exception is claimed the communication must record reasons and prior written approval as prescribed. The notice to petitioner lacked a DIN and the separate intimation referred to a different-dated DIN; the prescribed regularisation/format and approvals for omission of DIN were not shown. Reliance on precedents holding communications without required DIN to be invalid supported quashing of the notice.

Yes

Scheme under Section 151A - faceless issuance of notice and automated allocation - jurisdiction of Jurisdictional Assessing Officer (JAO) versus National Faceless Assessment Centre (NFAC) - The impugned notice issued by the JAO is invalid as contravening the Scheme framed under Section 151A which mandates automated allocation and faceless issuance of notices. - HELD THAT: - Section 151A empowers CBDT to frame a Scheme for faceless issuance of notices; the notified Scheme provides that issuance of notices under Section 148 shall be through automated allocation and in a faceless manner. The Court held that the Scheme is binding, was laid before Parliament, and cannot be sidestepped by internal/confidential guidelines or ITBA manuals. Where the Scheme assigns faceless issuance by automated allocation, the JAO may not unilaterally issue the notice; concurrent jurisdiction would defeat the Scheme's object and render it otiose. Internal guidelines and Office Memoranda inconsistent with the Scheme were rejected.

Yes

Escapement of income represented in the form of an asset/expenditure/entry (Explanation to Section 149) - scope of clause (b) of Section 149(1) - The matters relied upon in the impugned order do not amount to escapement of income represented in the form of an asset, expenditure in relation to an event, or entries in books as required by Section 149(1)(b). - HELD THAT: - The Court examined the reasons recorded and the reassessment order and found them confined to alleged incorrectness of claims (deduction under Section 80JJAA, adjustments in forex), and transactions of a merged subsidiary already reflected in petitioner's accounts. Explanation to Section 149 defines 'asset' narrowly (immovable property, shares, loans/advances, bank deposits). A mere dispute over correctness of a deduction or consequential adjustment in profit/loss does not amount to escapement in the statutory forms; no undisclosed asset or qualifying expenditure/entry was shown to satisfy Section 149(1)(b). Thus the statutory threshold for extended reassessment was not met.

No

Change of opinion doctrine - limits on reassessment where information was placed and considered in original assessment - Reopening based on a mere change of opinion is impermissible; respondent proposed reopening on that forbidden basis. - HELD THAT: - The Court reiterated that an Assessing Officer cannot review his own assessment where the information was available, answered and considered in original proceedings; reassessment cannot be used to revisit issues already examined. Petitioner had disclosed the claim, filed prescribed reports and answered queries during assessment; the AO had passed an order allowing the deduction. The impugned reopening sought to revisit those already-considered questions, constituting change of opinion and failing the requirement of fresh tangible material justifying reassessment.

Yes

Consistency of earlier allowances - relevance to belief of escapement - Section 80JJAA - nature of deduction and prior acceptance - Where a deduction under Section 80JJAA has been consistently allowed in earlier years on identical facts, the Assessing Officer cannot reasonably form a belief of escapement of income for the subject year. - HELD THAT: - The Court noted Section 80JJAA's statutory scheme and that petitioner had consistently obtained the deduction in earlier years; the present claim was a continuation on identical business facts. Such historical acceptance reduces the prospect that new 'books or documents' reveal an undisclosed asset or transaction of the character required by Section 149(1)(b). Consequently, the AO's belief of escapement on that basis was unsustainable and amounted to change of opinion rather than discovery of qualifying material.

No

Sanction/approval for issuance of notice under Section 151 and validity of such approval - The approval granted by the Sanctioning Authority for issuance of the original notice was valid on the facts of the case. - HELD THAT: - Although several precedents were considered regarding correct sanctioning authority where reopening occurs beyond specified periods, on the facts the Court found no failure of application of mind by the approving authority in the present record and was unable to hold the approval invalid. Therefore the specific challenge to the application-of-mind by the approving authority was rejected.

Yes

Final Conclusion: Writ petition allowed. The Court quashed and set aside the impugned notices/orders dated 25th May 2022, 26th August 2022 and 27th August 2022 insofar as they relate to Assessment Year 2015-2016, holding the reopening invalid on grounds of limitation, absence of DIN, non-compliance with the faceless Scheme under Section 151A, failure to satisfy the threshold of Section 149(1)(b) and unlawful reopening by way of change of opinion; sanction was held valid on the facts.

Limitation for sale of attached property under Rule 68B of the Second Schedule - deemed vacation of attachment on expiry of limitation - conclusiveness of assessment/order under Chapter XX and section 245-I - authority's liberty to recover dues by other provisions of the Act

Limitation for sale of attached property under Rule 68B of the Second Schedule - deemed vacation of attachment on expiry of limitation - conclusiveness of assessment/order under Chapter XX and section 245-I - Validity of the attachment order dated 20.12.2018 and the sale notice/proclamation dated 27.03.2019 in view of Rule 68B of the Second Schedule to the Income-tax Act, 1961. - HELD THAT: - Rule 68B prescribes a time limit (originally three years, subsequently amended to seven years) from the end of the financial year in which the order giving rise to the demand became conclusive under section 245-I or final under Chapter XX, within which a sale of attached immovable property may be made; sub rule (4) provides that where sale is not made in accordance with sub rule (1), the attachment shall be deemed vacated on expiry of the specified period. The facts are undisputed that the order giving rise to the demand became conclusive in the financial year ending 31.03.2010, while the attachment was effected on 20.12.2018 and the proclamation of sale issued on 27.03.2019. The sale proclamation therefore falls beyond the period of limitation prescribed by Rule 68B. Applying sub rule (4), the attachment is thereby deemed to have been vacated and the proclamation of sale is barred by limitation. [Paras 29, 30]

The proclamation of sale dated 27.03.2019 is barred by limitation under Rule 68B and is set aside; consequently the attachment over the immovable property is deemed vacated.

Authority's liberty to recover dues by other provisions of the Act - Whether the respondents are precluded from pursuing alternate recovery measures under the Act following setting aside of the sale notice and deemed vacating of attachment. - HELD THAT: - The Court, while quashing the time barred sale proclamation and deeming the attachment vacated under Rule 68B(4), recognised that the tax liability itself does not extinguish by efflux of time and that the department may resort to other provisions and modes of recovery available under the Act and the Second Schedule. Accordingly, the respondents were granted liberty to initiate such recovery proceedings as permissible under law. [Paras 30]

Respondents are at liberty to proceed for recovery of dues by other provisions of the Act and Rules.

Final Conclusion: Writ petition allowed: the sale proclamation dated 27.03.2019 is quashed as time barred under Rule 68B and the attachment is set aside, subject to the respondents' liberty to pursue recovery by other lawful methods under the Act.

Service of notice - jurisdictional notice - re-assessment jurisdiction under Section 147/148 of the Income Tax Act, 1961 - deemed service - personal hearing - remand for fresh consideration - appellate powers under Section 251(1)(a) of the Income Tax Act, 1961

Service of notice - jurisdictional notice - deemed service - Validity of the reassessment proceedings in light of non-proved service of the jurisdictional and procedural notices - HELD THAT: - The Court found that the notices preceding the reassessment order were dispatched but returned to the assessing officer, and that the assessing officer recorded service notwithstanding the postal reports showing return to sender. The assessing officer did not rely on a deemed service theory but treated the notices as actually served. The Court held that subsequent service of the assessment order cannot be read as proving prior service of jurisdictional and procedural notices; independent proof of service of those notices is required because without it the assessee may have been effectively prevented from participating in the proceedings. On this basis the Court concluded that the impugned reassessment order could not be sustained.

Impugned order dated 28.03.2024 set aside; petitioner permitted to treat the reassessment order as a procedural notice and to file detailed objections on jurisdiction and merits within three weeks; assessing authority to consider those objections after affording personal hearing.

Re-assessment jurisdiction under Section 147/148 of the Income Tax Act, 1961 - remand for fresh consideration - Whether reassessment notice was issued to a non-existent entity (dissolved partnership) and the consequences thereof - HELD THAT: - The Court recorded that the partnership firm was alleged to have been dissolved with effect from 31.03.2006 and that the business had been carried on by a sole proprietor, but declined to decide the issue on the writ petition. Instead the Court left the question open for the assessing authority to examine on merits. The Court observed that the assessing authority should consider this contention when addressing the objections to jurisdiction and merits and afford an opportunity of personal hearing.

Issue left open and remitted to the assessing authority for fresh consideration on merits in the course of dealing with the petitioner's objections.

Final Conclusion: Writ petition disposed by setting aside the reassessment order for failure to establish service of jurisdictional and procedural notices; petitioner granted three weeks to file detailed objections and the assessing authority directed to decide jurisdictional and merits objections after affording personal hearing; the question of issuance of notice to a dissolved partnership remitted to the assessing authority for fresh consideration.

Validity of proceedings against a non existing entity - effect of amalgamation and dissolution without winding up - reopening notice under Section 148 - reassessment on best judgment basis - quashing of assessment and recovery notices

Validity of proceedings against a non existing entity - effect of amalgamation and dissolution without winding up - reopening notice under Section 148 - reassessment on best judgment basis - quashing of assessment and recovery notices - Notices dated 30th March 2021 under Section 148, reassessment orders dated 24th March 2022 and recovery notices dated 23rd August 2022 issued in the name of Sterlite Energy Limited (an entity alleged to have ceased to exist) are invalid and liable to be quashed. - HELD THAT: - The petitioner demonstrated that pursuant to a court approved scheme of amalgamation Sterlite Energy Limited (SEL) stood amalgamated with the petitioner with effect from the appointed date of 1st January 2011 and that SEL was dissolved without winding up; consequently SEL ceased to exist. The Department had been notified and the amalgamation was reflected in earlier assessment records. The reopening notices and ensuing reassessments impugned in these petitions were issued in the name of the non existent entity. The reassessments were completed on a best judgment basis after attempts to serve notices (including service via a consultant and by the AO to the DVU) were unsuccessful. In these circumstances the Court concluded that proceedings issued and assessments passed in the name of an entity that had ceased to exist could not be sustained and therefore quashed the impugned notices, reassessment orders and consequent recovery notices.

Impugned reopening notices, reassessment orders and recovery notices issued in the name of SEL are quashed and set aside.

Final Conclusion: Writ petitions allowed; reopening notices dated 30th March 2021, reassessment orders dated 24th March 2022 and recovery notices dated 23rd August 2022 in the name of the non existent entity are quashed and set aside. If the Revenue obtains a favourable result in the pending SLP, it may approach the Supreme Court for appropriate reliefs including leave to issue fresh notices; this Court expresses no opinion on that course. Petitions disposed of with no order as to costs.

Penalty under section 271(1)(c) - Concealment of income - Voluntary withdrawal of deduction - Assessment under section 147/notice under section 148 - Deduction under section 80GGA - Weighted deduction under section 35(1)(ii)

Penalty under section 271(1)(c) - Concealment of income - Voluntary withdrawal of deduction - Deduction under section 80GGA - Assessment under section 147/notice under section 148 - Levy of penalty under section 271(1)(c) for A.Y. 2014-15 upheld by lower authorities despite assessee having offered the previously claimed deduction to tax before issuance of notice under section 148. - HELD THAT: - The Tribunal examined record showing the assessee donated to Navjeevan Charitable Trust, claimed deduction under section 80GGA in the original return, but suo-moto offered the Rs. 6 lakh to tax and paid the tax liability on 16.05.2015, supported by payment challan, Form 26AS and a letter withdrawing the claim. The approval to the trust under section 35AC was withdrawn only later (30.11.2016). Thus the Tribunal found that the assessee had voluntarily withdrawn the deduction and paid tax well before the notice under section 148 was issued on 28.03.2019. On that basis, the Tribunal held there was no concealment of income by the assessee that would justify levy of penalty under section 271(1)(c)

Penalty under section 271(1)(c) deleted for A.Y. 2014-15; appeal allowed.

Penalty under section 271(1)(c) - Concealment of income - Voluntary withdrawal of deduction - Weighted deduction under section 35(1)(ii) - Assessment under section 147/notice under section 148 - Levy of penalty under section 271(1)(c) for A.Y. 2016-17 where assessee withdrew weighted deduction and paid tax and interest before or contemporaneous with issuance of notice under section 148. - HELD THAT: - For A.Y. 2016-17 the facts mirrored the earlier year: the assessee had made donations to Rural Development Society and claimed weighted deduction under section 35(1)(ii). The assessee withdrew the weighted deduction by letter dated 29.03.2019 (and paid tax and interest, with challan and Form 26AS on record dated 25.03.2019). The notice under section 148 was issued on 28.03.2019 based on information about bogus donations, but the Tribunal found that the assessee had in any event withdrawn the claim and discharged the tax liability. Consequently, there was no concealment of income warranting penalty under section 271(1)(c)

Penalty under section 271(1)(c) deleted for A.Y. 2016-17; appeal allowed.

Final Conclusion: Both appeals are allowed and the penalties under section 271(1)(c) for A.Y. 2014-15 and A.Y. 2016-17 are deleted, the Tribunal finding no concealment of income as the assessee voluntarily withdrew the claimed deductions and paid the tax (with interest) prior to or contemporaneous with initiation of proceedings under section 147/notice under section 148.

Bogus purchases - accommodation bills - genuineness of transactions - addition of 100% of alleged bogus purchases - profit margin addition

Bogus purchases - addition of 100% of alleged bogus purchases - profit margin addition - genuineness of transactions - Whether the Assessing Officer was justified in making 100% disallowance of purchases treated as bogus, or whether only the assessee's profit margin should have been added - HELD THAT: - The Tribunal noted that the assessee failed to establish identity of suppliers or genuineness of transactions and did not deny procurement of accommodation bills. The question was whether, in such circumstances, disallowance should be confined to the profit margin or whether the entire alleged bogus purchase amount could be added. The Tribunal relied on the decision of the Hon'ble Gujarat High Court in N.K. Industries Ltd., which holds that where there is a categorical finding that amounts represent bogus purchases from bogus suppliers, it is not incumbent to restrict disallowance to profit margin and a 100% addition of the alleged bogus purchases is permissible. The SLP against that decision was dismissed by the Supreme Court, and the First Appellate Authority had followed that precedent. No contrary or distinguishing decision favouring the assessee was placed before the Tribunal. Applying this binding approach, the Tribunal upheld the addition of the entire amount treated as bogus purchases. [Paras 8, 9]

Addition of 100% of the alleged bogus purchases upheld; no reduction to profit margin

Genuineness of transactions - Dismissal of Ground No. 3 as not pressed - HELD THAT: - Counsel for the assessee expressly stated that the contention raised as Ground No. 3 (relating to alleged invalid service of notices) was not pressed before the Tribunal. The Tribunal recorded that ground as not pressed and dismissed it on that basis without further adjudication. [Paras 3]

Ground No. 3 dismissed as not pressed

Final Conclusion: The appeal is dismissed; the Tribunal upheld the addition treating the purchases as bogus and sustained the 100% disallowance for A.Y. 2010-11.

Validity of reopening of assessment and reasons to believe - Jurisdiction to issue notice based on returned income and investigation-wing information - Service of notice when handed to postal authorities - Approval by competent authority for reopening - Treatment of purchases as bogus and estimation of income - Transfer of case under section 127

Validity of reopening of assessment and reasons to believe - Jurisdiction to issue notice based on returned income and investigation-wing information - Approval by competent authority for reopening - Service of notice when handed to postal authorities - Validity of issuance of notice under section 148 and procedural regularity of reopening - HELD THAT: - The Tribunal found that the AO recorded reasons to believe based on specific and credible information received from the Investigation Wing indicating bogus purchases and escapement of income; the assessee was given opportunity by notice under section 133(6) to produce ledger and supporting documents. As the returned income for the relevant year exceeded the prescribed monetary threshold, the ACIT possessed jurisdiction to issue the section 148 notice. Approval from the competent authority was obtained (recorded as 'Yes, I am satisfied') and the mere brevity of that recorded satisfaction, without evidence to show lack of application of mind, did not vitiate the approval. Service was held valid because the notice was handed over to the postal authorities (acting as agent) on 31/03/2017; handing over within time renders issuance effective even if actual receipt by the assessee occurred later. Objections regarding non-provision of reasons prior to notice under section 143(2) and related procedural timings were not found to have merit on the facts. Accordingly, the reopening and procedure followed were upheld. [Paras 6]

Reopening under section 148 was valid; jurisdiction, approval and service were proper and procedural objections are rejected.

Treatment of purchases as bogus and estimation of income - Transfer of case under section 127 - Whether purchases from M/s. Prerna Inc. were to be treated as bogus and the quantum of addition - HELD THAT: - The Tribunal noted that the notice under section 133(6) to M/s. Prerna Inc., at the address provided by the assessee, was returned with the remark 'Not Known' and the assessee failed to produce the vendor or documentary evidence (such as transport bills or delivery proofs) to establish genuineness. On this material, the AO rejected the reliability of the books and estimated net profit at 30% of disputed purchases; the CIT(A) reduced the addition to 12.5%. Applying the material on record and reasoning of the lower authorities, the Tribunal considered the reduction by the CIT(A) reasonable and upheld the addition to the extent accepted by the CIT(A). The Tribunal also recorded that the case was subsequently transferred under section 127 from the ACIT to the ITO, which did not affect the validity of the actions taken prior to transfer. [Paras 6, 7]

Treating the purchases as bogus was justified on the evidence; the addition sustained by the CIT(A) at 12.5% of disputed purchases is upheld.

Final Conclusion: The appeal is dismissed; reopening of assessment for A.Y. 2010-11 is upheld as valid and the addition in respect of disputed purchases is sustained to the extent allowed by the CIT(A).

Depreciation on goodwill arising on amalgamation - amalgamation between group companies sanctioned by High Court - application of proviso to section 32 restricting depreciation where predecessor claimed depreciation - treatment of amalgamation under purchase method of accounting (AS-14) - precedent of coordinate bench in assessee's own case

Depreciation on goodwill arising on amalgamation - application of proviso to section 32 restricting depreciation where predecessor claimed depreciation - precedent of coordinate bench in assessee's own case - treatment of amalgamation under purchase method of accounting (AS-14) - Deletion of disallowance of depreciation claimed on goodwill arising on amalgamation was upheld - HELD THAT: - The Tribunal found that the goodwill arose because the total consideration for the High Court sanctioned amalgamation exceeded the identifiable net assets of the amalgamating company and was recorded as an intangible asset in the amalgamated company's books under the purchase method prescribed by AS 14. In assessing the claim the Tribunal followed its coordinate bench decision in the assessee's own case for the preceding year, where depreciation on the same goodwill was allowed. The Tribunal accepted the reasoning that the proviso to section 32 (inserted to prevent double claims of depreciation) was not attracted because the amalgamating company had not claimed depreciation on the goodwill. For the year under consideration (second year of claim) the eligibility question was largely academic since depreciation would be computed on the opening written down value. On these grounds the Tribunal found no infirmity in the CIT(A)'s order deleting the disallowance and declined to disturb the prior allowance. [Paras 8, 9, 10, 11]

The CIT(A)'s deletion of the disallowance of depreciation on goodwill is upheld and the Revenue's grounds are dismissed.

Final Conclusion: Both appeals filed by the Revenue for assessment years 2017 18 and 2018 19 are dismissed; the deletion of the depreciation disallowance on goodwill is sustained following the coordinate bench precedent and because the proviso to section 32 was not attracted.

Capital gains - exemption under section 54 - deposit in Capital Gains Scheme Account before filing return - time of accrual of capital gains - transfer - period for purchase or construction under section 54 - under-construction property and three-year period - remand for verification of construction status and applicability of three-year period

Transfer - time of accrual of capital gains - deemed income of previous year - Whether capital gains from the sale of the immovable property are taxable in assessment year 2013-14 or in assessment year 2014-15. - HELD THAT: - The Tribunal accepted the undisputed facts that the deed of conveyance was executed and physical possession handed over on 24.04.2012. Applying the definition of "transfer" and the charging provision, the Tribunal concluded that the transfer took place in the previous year relevant to AY 2013-14 and that profits and gains arising from that transfer are chargeable in that previous year. The assessee's receipt of the balance sale consideration on a later date did not alter the year of transfer for taxation under section 45 read with the definition of transfer. [Paras 10]

Capital gains are taxable in assessment year 2013-14.

Exemption under section 54 - deposit in Capital Gains Scheme Account before filing return - due date of filing return for audited accounts - Whether the assessee complied with section 54(2) by depositing the unutilised capital gains amount in the Capital Gains Scheme Account before the due date of filing the return such that exemption under section 54 could be claimed. - HELD THAT: - The Tribunal examined the assessee's original return filed on 01.10.2013 and the audit status which fixed the due date for audited assessees as 30.09.2013, noting the CBDT extension to 31.10.2013. The Tribunal found it undisputed that the entire sale consideration was deposited in the Capital Gains Scheme Account on 26.09.2013, which is before the due date for filing the return. On that basis the Tribunal held that the assessee had complied with the requirement of section 54(2) to deposit the amount before furnishing the return and found no basis for the lower authority's contrary conclusion. [Paras 12]

Assessee complied with section 54(2) by depositing the amounts in the Capital Gains Scheme Account before the due date of filing the return.

Period for purchase or construction under section 54 - under-construction property and three-year period - remand for verification - Whether the residential property purchased on 29.09.2014 was a ready-to-move-in property (triggering the two-year purchase period) or an under-construction property (bringing into play the three-year construction period) and, consequently, whether the assessee is entitled to exemption under section 54. - HELD THAT: - The Tribunal observed that the lower authorities had not examined or verified documentary evidence regarding the construction status and the stage of occupation certificate at the time of purchase. The assessee produced a developer's letter indicating that the occupation certificate was in process, but the factual determination of whether the flat was under-construction and whether the three-year period for construction applies required verification and adjudication. For this reason the Tribunal set aside the impugned order on this aspect and directed the jurisdictional AO to examine the documents, verify facts and adjudicate the question afresh after giving the assessee an opportunity of hearing. [Paras 13]

Issue remanded to the AO for examination and adjudication of whether the purchased property was under-construction (thus attracting the three-year period) and for verification of supporting documents.

Final Conclusion: The Tribunal held that the capital gains accrued and are taxable in AY 2013-14; it found the assessee complied with section 54(2) by depositing the sale proceeds in the Capital Gains Scheme Account before the due date of filing the return; but it remanded the question whether the new property was under-construction (and thus whether the three-year construction period under section 54 applies) to the AO for fresh examination and adjudication after verification of records. The appeal is allowed for statistical purposes.

Penalty under Section 271(1)(c) - Disallowance under section 40A(3) of the Income-tax Act - Deeming provision - Concealment of income - Absence of contumacious conduct - Reliance on judicial precedent

Penalty under Section 271(1)(c) - Disallowance under section 40A(3) of the Income-tax Act - Deeming provision - Concealment of income - Absence of contumacious conduct - Whether penalty under Section 271(1)(c) is leviable where the only adverse finding is a disallowance under section 40A(3) (a deeming provision) in respect of cash business expenses - HELD THAT: - The Tribunal held that levy of penalty under Section 271(1)(c) is not justified where the addition arises from the application of a deeming provision under section 40A(3). The Tribunal accepted the assessee's reliance on judicial authorities (including the Madras High Court decision in CIT v. MSK Constructions (P) Ltd. and the Apex Court decision in CIT v. Reliance Petro Products) to the effect that mere disallowance under a deeming provision does not amount to concealment of income attracting penalty. The Tribunal also noted the absence of contumacious conduct by the assessee. Applying these legal principles to the facts, the Tribunal found that the circumstances did not warrant invocation of the penal provision and accordingly set aside the penalty confirmed by the Commissioner (Appeals). [Paras 7]

Penalty under Section 271(1)(c) deleted

Final Conclusion: The appeal is allowed and the penalty imposed under Section 271(1)(c) for Assessment Year 2016-17 is deleted on the ground that the disallowance under section 40A(3) being a deeming provision does not constitute concealment and there was no contumacious conduct by the assessee.

Interest under sections 234A and 234B - Regular assessment - Effect of setting aside an assessment - Compensatory nature of interest - Remand for fresh adjudication

Regular assessment - Effect of setting aside an assessment - Validity of assessments made on 31.07.2014 consequent to the Tribunal's set-aside and directions for fresh assessment - HELD THAT: - The Tribunal held that the assessments framed on 31.07.2014 in compliance with the appellate directions are maintainable. The AO was proceeding pursuant to the Tribunal's order of 10.07.2013 directing fresh assessments; challenge, if any, lay to that appellate direction and not to the AO's compliance. The Bench noted settled jurisprudence that a set-aside may vacate the earlier order but does not render the subsequent compliance proceedings invalid where directions for fresh assessment have been lawfully given and followed. The Tribunal rejected a contention that assessments so framed were time-barred under s.153B and treated the assessments as valid for adjudication of issues including interest, leaving only the period of interest for determination. [Paras 4, 5]

Assessments made on 31.07.2014 are maintainable and valid for further adjudication.

Interest under sections 234A and 234B - Compensatory nature of interest - Remand for fresh adjudication - Period up to which interest under ss.234A and 234B is to be charged where the original assessment was set aside and a fresh assessment was thereafter framed - HELD THAT: - The Bench examined whether interest crystallises up to the date of the first (original) assessment or up to the date of the subsequent assessment framed after the set-aside. It analysed the statutory scheme, the compensatory character of interest, Explanation 3 to s.234A and Explanation 2 to s.234B, and precedents addressing the effect of setting aside an assessment. Finding conflicting approaches in earlier orders and that legislative and jurisprudential changes bearing on the issue required fresh judicial examination, the Tribunal declined to adopt the earlier decision relied upon by the assessee and also found the Tribunal's contrary view in a group decision not to have addressed the legal effect of a set-aside. In view of these considerations the Tribunal restored the question of computation/period of interest under ss.234A and 234B to the file of the CIT(A) for a speaking decision after affording opportunity to the parties; all contentions remain open to be urged and decided afresh. [Paras 4]

Computation of interest under ss.234A and 234B remanded to the CIT(A) for fresh consideration and a speaking order after hearing the parties.

Final Conclusion: The appeals are allowed for statistical purposes: the assessments framed on 31.07.2014 are held maintainable, but the question of the period and computation of interest under sections 234A and 234B is remitted to the CIT(A) for fresh, speaking adjudication after giving both sides an opportunity to be heard.

Approval under section 80G - provisional registration under the First Proviso to section 80G(5) - final/regular registration under clause (iii) of the First Proviso to section 80G(5) - limitation for filing application for approval under section 80G(5) - applicability of CBDT extension for applications under clause (i) of the First Proviso to section 80G(5) - effect of commencement of activities prior to grant of provisional approval on eligibility to apply for final registration

Final/regular registration under clause (iii) of the First Proviso to section 80G(5) - effect of commencement of activities prior to grant of provisional approval on eligibility to apply for final registration - limitation for filing application for approval under section 80G(5) - Entitlement and timeliness of an application for final registration under clause (iii) of the First Proviso to section 80G(5) after grant of provisional registration. - HELD THAT: - The Tribunal held that an institution which has been granted provisional registration under the First Proviso to section 80G(5) is eligible to apply for final registration under clause (iii) of that proviso irrespective of whether the institution had commenced activities prior to grant of provisional registration. The proviso must be read to permit filing of the application for final registration only after the grant of provisional approval; the period for counting commencement of activities (for the six month limb) is to be computed with reference to activities undertaken after the grant of provisional registration. Consequently, an application filed after provisional approval cannot be rejected as time barred merely because the institution had earlier carried on activities before provisional approval was granted.

Application for final registration filed after grant of provisional registration is within limitation and not time barred; the impugned rejection on that ground is set aside.

Applicability of CBDT extension for applications under clause (i) of the First Proviso to section 80G(5) - provisional registration under the First Proviso to section 80G(5) - Scope and applicability of CBDT extensions of the time for filing under clause (i) of the First Proviso to section 80G(5) vis a vis institutions which applied for fresh provisional registration under clause (iv). - HELD THAT: - The Tribunal explained that CBDT circulars extending the date for filing applications under clause (i) were intended to assist institutions which were already approved prior to the amendment and sought renewal under clause (i); those extensions do not operate to curtail or alter the statutory limitation regime for institutions that have applied for fresh provisional registration under clause (iv) and thereafter seek final registration under clause (iii). Thus, the extended date under the CBDT circular is not applicable to institutions which pursued fresh provisional approval under clause (iv).

CBDT extension for clause (i) applicants does not preclude or govern the limitation for final registration applications by institutions which obtained provisional registration under clause (iv).

Final Conclusion: The appeal is allowed; the impugned order rejecting the application for final registration is set aside and the CIT(Exemption) is directed to grant provisional approval under clause (iii) to the First Proviso to section 80G(5) if the assessee is otherwise eligible, and to decide the application for final registration within three months of receipt of this order.

Condonation of delay - section 69A unexplained investments - onus of explanation under section 69A - preponderance of probability - application of section 115BBE enhanced rate for AY 2017-18

Condonation of delay - Condonation of delay of 50 days in filing the appeal - HELD THAT: - The Tribunal examined the assessee's explanation that filing was delayed due to reliance on counsel's advice that a certified copy of the digitally signed order was required. The Bench concluded that the order being digitally signed dispensed with the need for a certified copy and that the misunderstanding constituted a sufficient cause. Reliance was placed on the principle in Collector, Land Acquisition v. Katiji (sufficient cause) to accept the explanation and exercise discretion in the interest of justice. On this basis the Tribunal found the 50-day delay to be reasonable.

Delay of 50 days in filing the appeal is condoned.

Section 69A unexplained investments - onus of explanation under section 69A - preponderance of probability - application of section 115BBE enhanced rate for AY 2017-18 - Validity of addition made by AO under section 69A (read with section 115BBE) in respect of cash deposits claimed to be sale proceeds of agricultural produce - HELD THAT: - The AO treated cash deposits as unexplained and made additions under section 69A, observing doubts raised by the Krishi Upaj Mandi regarding the invoices and relying on statements suggesting limited knowledge of the assessee about sale particulars. The CIT(A) had upheld the addition and considered applicability of section 115BBE and the enhanced 60% rate for AY 2017-18. The Tribunal, however, examined the material on record and found that the assessee possessed agricultural land, storage facilities and supporting revenue records; witnesses including the cultivator were examined and there was no complaint registered by the Mandli. Applying the preponderance of probability where agricultural income was the sole or predominant source and no other source was established by the Revenue, the Tribunal accepted the assessee's explanation that the deposits emanated from agricultural receipts. On this factual appraisal the Tribunal concluded interference with the AO's addition was warranted and directed deletion.

Addition of Rs. 10,75,000 made under section 69A (and consequential adjustments) is deleted; appeal allowed.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and on merits allowed the appeal by deleting the addition treated as unexplained under section 69A (and related consequences), concluding that on the preponderance of probabilities the deposits were attributable to agricultural receipts and no other taxable source was established.

Addition as unexplained cash deposits - burden of proof for source of cash deposits - acceptance of prior cash withdrawals as source for subsequent deposits - allocation of agricultural income among co-sharers - penalty under section 271(1)(c) treated as premature

Addition as unexplained cash deposits - burden of proof for source of cash deposits - allocation of agricultural income among co-sharers - acceptance of prior cash withdrawals as source for subsequent deposits - Validity of addition of Rs. 17,09,000 as unexplained cash deposits to assessee's income - HELD THAT: - Tribunal examined whether the assessee had satisfactorily explained cash deposits of Rs. 17,09,000 by attributing them to agricultural receipts and earlier cash withdrawals. It accepted that the assessee was an agriculturist and had no other source of income, and also accepted bank evidence of significant cash withdrawals which could explain some subsequent deposits. However, the Tribunal found that the agricultural land was jointly held and that the assessee had not produced corroborative evidence (affidavits/confirmations, ITRs or account details of co-owners and father) to show transfer or exclusive retention of the entire agricultural proceeds by him. On that basis the Tribunal reduced the claimed agricultural income, allowing a portion (treated as the assessee's share) and disallowing the remainder. Applying the accepted position that prior cash withdrawals may explain later deposits where not disproved, the Tribunal upheld part of the AO's addition to the extent the agricultural claim was not proved and deleted the balance of the addition as explained by withdrawals and the portion accepted as the assessee's share of agricultural income. [Paras 9]

Addition sustained in part (disallowance of the portion of agricultural claim not proved) and deleted in part; of the Rs. 17,09,000 addition, Rs. 2,24,000 is sustained and the remaining amount is deleted.

Penalty under section 271(1)(c) treated as premature - Maintainability of initiation of penalty proceedings under section 271(1)(c) - HELD THAT: - Ld. CIT(A) had held the challenge to initiation of penalty proceedings to be premature. The Tribunal found no reason to interfere with that view in absence of relevant details or a concluded penalty adjudication and therefore declined to adjudicate on the merit of penalty proceedings at this appellate stage. [Paras 10]

Ground attacking initiation of penalty proceedings dismissed as premature.

Final Conclusion: Appeal partly allowed: the Tribunal deleted a substantial part of the addition of Rs. 17,09,000 by accepting prior cash withdrawals and allowing a portion of agricultural income as assessee's share, sustained a residual addition, and declined to interfere with the view that penalty proceedings under section 271(1)(c) are premature.