TaxTMI Updates e-Newsletter
May 09,2022

Appeal under Section 107 - period of limitation and extension - suspension of limitation due to unavailability of forum - effect of electronic portal malfunction on filing of appeal - electronic filing and final acknowledgement as date of filing under Rule 108 - statutory right of appeal must be effective and not illusory

Suspension of limitation due to unavailability of forum - effect of electronic portal malfunction on filing of appeal - Appeal under Section 107 - period of limitation and extension - electronic filing and final acknowledgement as date of filing under Rule 108 - Whether the first appeal filed on 20.09.2021 was time-barred in view of the cancellation order dated 28.02.2019 and the petitioner's inability to file electronically due to GSTN portal glitches, and whether the appeal must be treated as filed within time. - HELD THAT: - The Court found clear evidence that the petitioner was prevented from filing the appeal within the statutory period because of persistent technical errors in the GSTN portal, and that the GSTN authority itself acknowledged and resolved those errors on 17.09.2021. Given that the forum and prescribed electronic mode of filing were not meaningfully available to the petitioner until the technical difficulty was remedied, the limitation period for instituting the appeal remained suspended for the period during which filing was impossible. The statutory right of appeal is an effective remedy and cannot be rendered illusory by lack of access to the prescribed filing mechanism. Applying Section 107 (which permits the Appellate Authority to extend time where appellant was prevented by sufficient cause) and the filing principles under Rule 108 (which treats the appeal as filed when final acknowledgement is issued), the Court held that the period of limitation began to run from 17.09.2021, the date on which the portal malfunction was resolved, and accordingly the appeal instituted on 20.09.2021 fell within time. The Appeal Authority's rejection of the appeal as time barred was therefore erroneous and the matter is remitted for decision on merits. [Paras 11, 12, 13, 14, 15]

The appeal filed on 20.09.2021 is to be treated as filed within time because the limitation was suspended until the GSTN portal malfunction was remedied on 17.09.2021; the impugned order rejecting the appeal as time barred is quashed and the matter is remitted to the Appellate Authority to decide the appeal on merits.

Final Conclusion: Writ petition allowed; order dated 12.10.2021 quashed and the appeal remitted to the Appellate Authority for expeditious adjudication on merits treating the appeal as filed within time (portal difficulty deemed to have suspended limitation until 17.09.2021).

Interest on delayed refunds - relevant date for refund consequent to appellate order - requirement to file refund application in FORM GST RFD-01/RFD-01A - temporary ID/password impediment to online refund - no one can take advantage of one's own wrong / suppressing the mischief

Interest on delayed refunds - relevant date for refund consequent to appellate order - requirement to file refund application in FORM GST RFD-01/RFD-01A - Entitlement of the petitioner to interest under the refund provisions where refund arising from a final appellate order was paid after delay. - HELD THAT: - The Court held that the appellate order dated 30.06.2018, communicated to the respondents on 09.07.2018, fixed the relevant date for the refund claim under the Explanation to Section 54. The proviso to Section 56 therefore applies where a refund arises from an appellate order which has attained finality. Once the application consequent to that order was made (communication dated 09.07.2018), interest becomes payable if the refund is not made within sixty days from the date of receipt of that application. The respondents admitted that the petitioner could not file the online RFD-01/RFD-01A because the department itself had created a temporary ID and failed to provide password/access; consequently the petitioner's physical refund application dated 09.07.2018 must be treated as the operative application for refund purposes. Having withheld the refund until 31.03.2022 (paid 04.04.2022) the respondents were liable to pay interest under Section 56 for the period after the sixty-day statutory window expired. The Court therefore directed payment of interest for the period from 09.09.2018 to 31.03.2022 at the rate notified under Section 56. [Paras 21, 22, 23, 25, 28]

Petitioner entitled to interest under Section 56 on the refund arising from the appellate order, payable for the period 09.09.2018 to 31.03.2022.

Temporary ID/password impediment to online refund - no one can take advantage of one's own wrong / suppressing the mischief - Liability of the respondents where departmental act of creating a temporary ID and failing to provide access prevented timely online filing and resulted in unjustified delay. - HELD THAT: - The Court found on the admitted facts that the proper officer had, when accepting the deposit, created a temporary ID (and deposited the amount under an incorrect head) and did not provide the petitioner with the password or access required to file the prescribed online refund form. That departmental action made it impossible for the petitioner to comply with the online filing requirement. The Court applied the principle that a party cannot take advantage of its own wrong and that constructions which permit such advantage must be avoided. Consequently the respondents could not rely on the petitioner's inability to file online (caused by the respondents themselves) to deny interest on the delayed refund. The Court also noted the procurement of a letter at the time of sanctioning refund and recorded its concern, but accepted the unconditional apology and did not refer the matter for contempt. [Paras 18, 22, 26, 27]

Respondents culpable for creating impediment to online filing and cannot avoid payment of interest by relying on that impediment; respondents directed to pay interest and the Court declined to proceed with contempt referral in view of apology.

Final Conclusion: Writ petitions allowed; respondents directed to pay interest to the petitioner within one month for the period 09.09.2018 to 31.03.2022 at the rate notified under Section 56 of the Act.

Restoration of cancelled GST registration - Revocation of cancellation of registration based on appellate order - Introduction and deployment of online functionality for restoration of registration - Circulation of Registration Advisory to give effect to appellate/judicial orders - Facilitation of statutory compliance and filing of returns following retrospective restoration - Fundamental right to carry on business under Article 19(1)

Restoration of cancelled GST registration - Revocation of cancellation of registration based on appellate order - Retrospective restoration of registration - Registration cancelled earlier was restored on the portal in pursuance of the appellate order and the petitioner's grievance in that regard has been redressed. - HELD THAT: - The Court recorded that the respondents filed a short counter-affidavit stating that the petitioner's registration had been restored on 19.04.2022 and communicated by GSTN Legal on 20.04.2022. The Court noted Annexure SCA-4 reflecting the effective date of registration and accordingly held that the relief seeking restoration of GST registration is granted and the grievance in that regard stands redressed. The Court further observed the creation and deployment of a permanent functionality named "Restoration of Cancelled Registration" with effect from 23.03.2022 to enable jurisdictional officers to give effect to appellate/judicial orders, and that the temporary back-end mechanism earlier relied upon has been regularised by Registration Advisory No.07/2022. [Paras 6, 7, 11, 12]

Writ petition disposed insofar as restoration of the petitioner's GST registration is concerned; registration restored with retrospective effect and grievance redressed.

Facilitation of statutory compliance and filing of returns following retrospective restoration - Protection of right to carry on business under Article 19(1) - Court addressed the petitioner's prayer regarding late fees/penalty for failure to file returns for August 2021 to March 2022 and directed that the authorities should ensure the petitioner is not impeded in filing returns following restoration. - HELD THAT: - The Court did not grant an express waiver of late fees or penalties but observed that in view of the retrospective restoration of registration the authorities should see that the petitioner does not face any hurdle in filing returns for the period mentioned. The observation flows from the Court's concern that lack of coordination among authorities had impeded the petitioner's ability to carry on business, implicating the freedom under Article 19(1), and from the factual finding that a system functionality and advisory have since been put in place to address such problems. [Paras 8, 11]

No categorical order waiving fees; expectation and direction that authorities shall facilitate filing of returns and avoid causing harassment to the petitioner.

Introduction and deployment of online functionality for restoration of registration - Circulation of Registration Advisory to give effect to appellate/judicial orders - Court directed dissemination of the Registration Advisory and requested GST Council and authorities to circulate it among officers and trade/tax associations to prevent recurrence of the problem. - HELD THAT: - Relying on the Registration Advisory No.07/2022 dated 23.03.2022, which the respondents placed on record, the Court noted that a functionality had been developed and deployed to enable restoration of cancelled registrations in pursuance of appellate/judicial orders. The Court directed that the Advisory be circulated forthwith by the GST Council among officers under the Act and among associations of traders, industries and Tax Bar Associations at the district level in Uttar Pradesh, so that similar harassment and failures in implementing appellate orders do not recur. [Paras 11]

Directed immediate circulation of Registration Advisory No.07/2022 and urged GST Council and authorities to be sensitive in addressing genuine problems of dealers in implementing appellate and judicial orders.

Final Conclusion: The writ petition is disposed of: the petitioner's GST registration has been restored with retrospective effect and the Court directed dissemination of the Registration Advisory and that authorities facilitate filing of returns so the petitioner is not hindered in statutory compliance; no express waiver of late fees/penalties was granted.

Requirement of registration in any State in which business is carried on and has place of business on a regular basis - registration by casual taxable person where supplies are made in a State with no fixed place of business - statutory obligation to register notwithstanding existing registration in another State - tender condition requiring GST registration to conform with CGST Act

Requirement of registration in any State in which business is carried on and has place of business on a regular basis - statutory obligation to register notwithstanding existing registration in another State - tender condition requiring GST registration to conform with CGST Act - Interpretation and validity of the NIT clause mandating GST registration in the State where the work is to be taken up, vis-a -vis the petitioner's existing registration in Delhi. - HELD THAT: - The Court examined Section 22 read with Section 25 of the CGST Act and held that a person is required to register in any State in which he carries on business and has a place of business on a regular basis; therefore an existing registration in Delhi does not automatically exempt the petitioner from registration requirements in another State where work is to be executed. The tender condition requiring registration in the State where the work is to be taken up is not inconsistent with the registration requirements under the CGST Act; the petitioner must take steps to meet both statutory and tender requirements. [Paras 4]

The petitioner's contention that registration in Delhi alone suffices was rejected and the petitioner was directed to take appropriate steps to meet the CGST Act and tender requirements.

Registration by casual taxable person where supplies are made in a State with no fixed place of business - statutory obligation to register notwithstanding existing registration in another State - Whether the concept of casual taxable person and Section 24 of the CGST Act address the petitioner's lack of fixed place of business in the State where supplies under the tender will be required. - HELD THAT: - The Court relied on the definition of casual taxable person in Section 2(20) and the proviso in Section 24 to conclude that persons who occasionally undertake taxable supplies in a State where they have no fixed place of business are nonetheless required to register. The petitioner's concern about not having a place of business in Hyderabad is therefore met by the statutory regime which mandates registration for casual taxable persons making taxable supplies in that State. [Paras 5, 6]

The statutory regime for casual taxable persons was held applicable; the petitioner may comply with registration requirements under Section 24 as appropriate.

Final Conclusion: The petition is disposed of by rejecting the plea that Delhi registration alone suffices; the petitioner is left free to take appropriate steps to comply with the CGST Act and the tender requirements. Parties to bear their own costs.

Mandatory compliance with Rule 68 of the Central Goods and Services Tax Rules, 2017 - requirement of electronic notice in form GSTR-3A to a registered person - quashing of administrative order for non-compliance with statutory procedure - remand for fresh consideration after compliance with prescribed procedure

Mandatory compliance with Rule 68 of the Central Goods and Services Tax Rules, 2017 - requirement of electronic notice in form GSTR-3A to a registered person - quashing of administrative order for non-compliance with statutory procedure - Validity of the impugned orders passed without issuing the electronic notice mandated by Rule 68 of the CGST Rules, 2017. - HELD THAT: - The Court found that Rule 68 prescribes issuance of an electronic notice in form GSTR-3A to a registered person who fails to furnish returns under the specified provisions. It was admitted by the State that the prescribed electronic notice was not issued and that instead a postal registered notice was sent. The court applied the settled principle that where legislation prescribes a particular procedure that procedure must be followed. Because the statutory procedure in Rule 68 was not complied with, the impugned administrative orders were unsustainable and required to be set aside. [Paras 6, 7, 8]

Impugned orders dated 26.06.2021 and 28.09.2019 were quashed for being passed without issuance of the electronic notice mandated by Rule 68.

Remand for fresh consideration after compliance with prescribed procedure - mandatory compliance with Rule 68 of the Central Goods and Services Tax Rules, 2017 - Relief and further direction as to the course to be followed by the authority after quashing the impugned orders. - HELD THAT: - Having quashed the orders for procedural non-compliance, the Court directed that the concerned authority must comply with Rule 68 and issue the electronic notice as prescribed. The matter is to be reconsidered by the authority in accordance with law after following the mandated procedure. This is a remand for fresh consideration limited to compliance with the statutory procedure and reconsideration on merits thereafter. [Paras 9]

The matter is remitted to the authority to comply with Rule 68 and to reconsider the petitioner's case afresh in accordance with law.

Final Conclusion: Writ petition allowed; impugned orders quashed and the matter remitted to the authority to issue the electronic notice as required by Rule 68 of the CGST Rules, 2017 and to reconsider the petitioner's case in accordance with law.

Jurisdiction of inspecting officer - requirement to forward inspection report to the jurisdictional proper officer - transfer of adjudicatory power to jurisdictional officer after inspection - interim relief where show cause notice issued without jurisdiction

Jurisdiction of inspecting officer - requirement to forward inspection report to the jurisdictional proper officer - Whether the inspecting officer who conducted the inspection could issue the show cause notice dated 12.10.2021 after the Circular dated 04.10.2021 - HELD THAT: - The Court examined Circular No.23/2021 dated 04.10.2021 which directs that where inspections are completed and adjudication has not been initiated by the inspecting officers, the inspecting officers must submit a detailed inspection report (paras 5.1-5.3) and, once approved, forward the report to the jurisdictional proper officer for issuance of show cause notice and adjudication (para 6 and transition para 14). Applying that administrative directive, the Court formed a prima facie view that, from 04.10.2021, the inspecting officer ceases to be the proper officer entitled to initiate adjudication and issue show cause notices in cases where the inspection report has not been forwarded to the jurisdictional officer. On that basis the Court concluded, at the interim stage, that the show cause notice dated 12.10.2021 issued by the inspecting officer appears to have been issued without jurisdiction under the post-04.10.2021 regime, warranting interim interference. [Paras 7]

Prima facie the inspecting officer was not the proper officer to issue the show cause notice dated 12.10.2021 in view of the Circular dated 04.10.2021; interim relief granted.

Final Conclusion: Issue notice to respondents; interim stay granted on the impugned show cause notice dated 12.10.2021; matter posted after four weeks for counter.

Supply of services versus supply of goods - Support services to mining (Heading 9986) - Value of supply under Section 15 - Inclusion of taxes, duties and royalties in transaction value

Supply of services versus supply of goods - Support services to mining (Heading 9986) - The nature of the activity performed by the applicant under the Mining Agreement and its classification for GST purposes. - HELD THAT: - From a reading of the Agreement the applicant was appointed as Mine Developer and Operator to perform services including development, operation and maintenance of the mines, excavation, washing (if required) and delivery of coal to KPCL. The Agreement expressly vests ownership of the mines and the coal in KPCL and does not contemplate sale of coal by the applicant. The applicant therefore does not have ownership or rights to sell the excavated coal. Consequently the activity performed by the applicant is a supply of services and not a supply of goods. Notification No. 11/2017 - Central Tax (Rate) as amended places support services to mining (other than specified petroleum activities) under the entry covering Heading 9986 (introduced/clarified by amendment dated 25.01.2018). The impugned services fall within that entry and attract GST at the notified rate applicable to support services to mining, namely 18% (IGST 18% or CGST/SGST as per place of supply rules). [Paras 5, 6]

The impugned activity is a supply of services and is taxable as Support Services to Mining under Heading 9986 at 18% GST.

Value of supply under Section 15 - Inclusion of taxes, duties and royalties in transaction value - Whether amounts such as Royalty, MMDR, DMF Fund and Reserve Price payable/paid directly by KPCL to governmental authorities are includible in the applicant's taxable transaction value. - HELD THAT: - Section 15 defines transaction value as the price actually paid or payable for the supply and specifies that the value shall include taxes, duties, cesses and charges that are part of the price or which the supplier is liable to pay but are incurred by the recipient. The Mining Agreement (Articles 6.1.3, 5.6 and 29.1.2) clearly provides that amounts towards Royalty, MMDR, DMF Fund, Reserve Price and other statutory charges are payable by KPCL directly to the government instrumentality and are not payable to or received by the applicant. The applicant does not record any liability for these government payments in its books and such amounts are neither payable nor paid to the applicant. Thus the conditions in Section 15 that would require inclusion of these amounts in the supplier's transaction value are not satisfied. The Authority therefore finds that such components, when payable and paid directly by KPCL to the government, are not includible in the applicant's value of supply. The Authority, however, records that if in future these amounts are agreed to be made payable to and paid through the applicant by KPCL, they will then be includible in the value of supply and taxable accordingly. [Paras 5, 6]

Amounts like Royalty, MMDR, DMF Fund and Reserve Price payable and paid directly by KPCL to government authorities are not includible in the applicant's value of supply for levy of GST; if such amounts are made payable to the applicant in future they will be includible.

Final Conclusion: The Advance Ruling holds that the applicant's activities under the Mining Agreement constitute a supply of services taxable as Support Services to Mining under Heading 9986 at 18% GST, and that government payments (Royalty, MMDR, DMF, Reserve Price, etc.) paid directly by the recipient (KPCL) to governmental authorities are not includible in the applicant's transaction value for GST so long as they are neither payable to nor received by the applicant.

Concessional GST rate for construction of affordable residential apartments - promoter under Residential Real Estate Project (RREP) - works contract services by sub-contractor - interpretation of notification entry applicability

Concessional GST rate for construction of affordable residential apartments - promoter under Residential Real Estate Project (RREP) - interpretation of notification entry applicability - Applicability of entry Serial No.3(i) of Notification No.11/2017 (as amended by Notification No.03/2019) granting concessional rate to promoter for construction of affordable residential apartments. - HELD THAT: - The authority examined the description of service in entry 3(i) of the principal notification as amended, which expressly applies the concessional rate of 0.75% CGST to the "construction of affordable residential apartments by a promoter in a Residential Real Estate Project (RREP)" commencing on or after 1st April, 2019 (or ongoing RREP where the promoter has not exercised the specified option). The entry is framed in terms of the promoter carrying out the construction and contains conditions directed to the promoter and the project. Since the statutory entry is expressly confined to a promoter in a RREP, its benefit cannot be extended to persons who are not promoters. [Paras 12]

Entry Serial No.3(i) is applicable only to a promoter in a RREP as described in the notification and not to others.

Works contract services by sub-contractor - concessional GST rate for construction of affordable residential apartments - Whether a sub-contractor supplying works contract services to the main contractor/promoter is eligible for the concessional CGST rate of 0.75% under the said entry. - HELD THAT: - The applicant is an admitted sub-contractor engaged by the main contractor/promoter for construction work. The authority found that the concessional rate under entry 3(i) is available only to promoters and, therefore, the applicant as a sub-contractor does not fall within the class of persons to whom the entry grants relief. Consequently, there is no need to examine other conditions of the notification once inapplicability on the ground of person (promoter vs sub-contractor) is established. [Paras 13, 14]

The concessional CGST rate of 0.75% under entry 3(i) is not available to the applicant as a sub-contractor; it applies only to promoters.

Final Conclusion: The Authority rules that the concessional CGST rate of 0.75% under entry Serial No.3(i) of the notification applies only to promoters in a Residential Real Estate Project (RREP) commencing on or after 1st April, 2019, and is not available to the applicant who is a sub-contractor.

Claim for deduction under section 80IB(10) - requirement of filing return within the due date under section 139(1) as condition for claiming Chapter VIA/section 80AC benefits - mandatory versus directory nature of statutory pre condition for claiming a deduction

Claim for deduction under section 80IB(10) - requirement of filing return within the due date under section 139(1) as condition for claiming Chapter VIA/section 80AC benefits - mandatory versus directory nature of statutory pre condition for claiming a deduction - Deduction under section 80IB(10) cannot be allowed where the return claiming the deduction was not filed within the due date prescribed by section 139(1); the filing requirement is a mandatory condition. - HELD THAT: - The Tribunal examined the assessee's claim of deduction under section 80IB(10) for AY 2011-12 and the lower authorities' rejection on the ground that the return claiming the deduction was not filed within the due date under section 139(1). Relying on the view adopted by the lower authorities and the precedents cited in the order, the Tribunal held that the requirement of timely filing the return to claim Chapter VIA deductions is mandatory and not directory. The order refers to the decision in EBR Enterprises vs. Union of India and to the principle applied in Commissioner of Customs vs. Dilip Kumar in support of treating the filing requirement as mandatory. An application made by the assessee to the CBDT under section 119(2)(b) for condonation of delay was noted to have been rejected; while the assessee had a pending writ challenging that rejection, the Tribunal found no merit in adjourning the appeal and declined to await the outcome because the return was filed beyond the due date. Consequently, the deduction was not allowable and the lower authorities' action was affirmed. [Paras 3, 4, 5]

The disallowance of the section 80IB(10) deduction was affirmed because the return claiming the deduction was not filed within the due date under section 139(1), a mandatory condition; the appeal was dismissed.

Final Conclusion: Appeal dismissed; claim for deduction under section 80IB(10) refused because the return claiming the deduction was filed after the due date under section 139(1) and the filing requirement is treated as mandatory.

Reassessment on ground of change of opinion - reason to believe standard for reopening assessment - original assessment under Section 143(3) and subsequent rectification under Section 154

Reassessment on ground of change of opinion - knowledge of Assessing Officer in original assessment - Validity of reassessment proceedings where the Assessing Officer relied on rent of 'A Barracks' despite having knowledge of that expenditure during original assessment and rectification proceedings - HELD THAT: - The Court examined whether the reassessment initiated by the Assessing Officer could be sustained where the rent element (rent of 'A Barracks') had been placed before the Assessing Officer during original scrutiny proceedings and was expressly dealt with in the assessee's replies and in response to a notice under Section 154. The Court observed the settled principle that post 1 April 1989 reopening is permissible only if the Assessing Officer has 'reason to believe' that income has escaped assessment, and that this standard excludes a mere change of opinion by the Assessing Officer. Relying on the established test that 'change of opinion' is a check on abuse of reassessment powers, the Court noted that the Assessing Officer had before him notices issued during scrutiny, the assessee's replies dated 22 January 2009 and 9 February 2009 explaining decline in gross profit due to rent and other provisions, and a break-up of 'Other Provisions' submitted in response to the Section 154 notice which specifically included the rent of 'A Barracks'. In those circumstances the Court agreed with the Tribunal's conclusion that the reassessment was founded on a change of opinion rather than on fresh tangible material showing escapement of income, and therefore the reassessment could not be sustained. [Paras 4, 5, 6, 7, 8]

Reassessment held to be invalid as it proceeded from a change of opinion when the Assessing Officer had knowledge of the rent item in original assessment and rectification; ITAT's order setting aside reassessment upheld.

Final Conclusion: The appeal is dismissed; no substantial question of law arises and the ITAT's decision setting aside the reassessment proceedings on the ground of change of opinion is affirmed.

Validity of reopening notice issued under section 148 - sanction for reopening under section 151(1) - competent authority for sanction after expiry of four years - extension of limitation by the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020

Sanction for reopening under section 151(1) - competent authority for sanction after expiry of four years - validity of reopening notice issued under section 148 - Approval for issuance of notice under section 148 obtained from the Additional Commissioner of Income Tax after four years from the end of the relevant assessment year is invalid and vitiates the notice and consequential proceedings. - HELD THAT: - Sub section (1) of section 151 requires that where a notice under section 148 is issued after the expiry of four years from the end of the relevant assessment year, the satisfaction on the reasons recorded must be given by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In the present case four years had expired in relation to AY 2015 2016 before issuance of the notice, but approval was accorded by the Additional Commissioner. The court held that such approval is not in accordance with the mandate of section 151(1) and therefore is not a competent sanction. The contention based on the Relaxation Act 2020 was considered and rejected as inapplicable to the facts: even if limitation was extended for certain cases expiring on 31.03.2020, that extension does not alter the statutory scheme in section 151 nor render the Additional Commissioner competent to give sanction where four years have expired for AY 2015 2016. On this ground alone the notice under section 148 and the consequential scrutiny notice and order must be set aside. [Paras 6, 7, 8]

Notice dated 27.03.2021 issued under section 148, the subsequent scrutiny notice dated 07.12.2021 and the order dated 03.02.2022 are quashed for lack of competent sanction under section 151(1).

Final Conclusion: The petition is allowed; the reopening notice dated 27.03.2021, the scrutiny notice dated 07.12.2021 and the order dated 03.02.2022 stand quashed because the sanction required by section 151(1) after the expiry of four years was not validly obtained from the competent authority.

Faceless assessment - procedure under Section 144B of the Income tax Act, 1961 - non est of proceedings for non compliance with statutory procedure - retrospective omission of a statutory provision - maintainability of writ petition in presence of efficacious alternative remedy - efficacious alternative remedy of appeal to appellate authority

Procedure under Section 144B of the Income tax Act, 1961 - non est of proceedings for non compliance with statutory procedure - retrospective omission of a statutory provision - Whether assessment proceedings could be quashed for alleged non compliance with Section 144B(9) of the Income tax Act, 1961. - HELD THAT: - Petitioner challenged the assessment completed under the Faceless Assessment Scheme on the ground that its request for personal/virtual hearing pursuant to Section 144B(9) was not complied with and, therefore, the proceedings were non est. The Court noted that sub section (9) of Section 144B had been omitted by a Gazette Notification dated 30.3.2022 with effect from 1.4.2021. By reason of that omission the specific statutory ground relied upon by the petitioner was no longer available. In these circumstances the contention that the assessment is void for failure to follow Section 144B(9) could not be sustained before the High Court on writ jurisdiction. The court therefore declined to entertain the writ petition on that ground.

The challenge based on non compliance with Section 144B(9) was not entertained because sub section (9) was omitted retrospectively and thus the asserted statutory ground was unavailable.

Maintainability of writ petition in presence of efficacious alternative remedy - efficacious alternative remedy of appeal to appellate authority - Whether the writ petition is maintainable when an efficacious statutory appellate remedy exists against the assessment order. - HELD THAT: - The Court observed that the assessment order is appealable under the statutory appellate scheme and that the petitioner has an efficacious alternative remedy by way of statutory appeal. Having found the specific statutory ground raised in the writ unavailable (by omission of Section 144B(9)), the Court was not inclined to exercise writ jurisdiction. In the interest of orderly adjudication, the Court directed that the petitioner may agitate all its grievances before the appellate authority and permitted filing of an appeal within thirty days, directing the appellate authority to consider and decide the appeal on its merits in accordance with law.

Writ petition dismissed as not maintainable in view of the availability of an efficacious alternative statutory remedy; petitioner permitted to approach the appellate authority and, if an appeal is preferred within thirty days, the appellate authority shall decide it on merits.

Final Conclusion: Writ petition dismissed. The challenge based on non compliance with Section 144B(9) could not be entertained because that provision was omitted with retrospective effect; petitioner may pursue statutory appeal and, if filed within thirty days, the appellate authority shall decide it on merits in accordance with law.

Notice under section 148 of the Income Tax Act, 1961 - Mandatory pre-condition of issuing notice under section 148A as amended by the Finance Act, 2021 - Validity of notice issued on or after 1st April 2021 where section 148A compliance is not observed - Quashing of assessment notice and subsequent proceedings for non-compliance of mandatory statutory procedure - Power to issue fresh notice in accordance with law after quashing

Notice under section 148 of the Income Tax Act, 1961 - Mandatory pre-condition of issuing notice under section 148A as amended by the Finance Act, 2021 - Validity of notice issued on or after 1st April 2021 where section 148A compliance is not observed - Whether the impugned notice under section 148 was vitiated for want of compliance with the mandatory pre-conditions introduced by section 148A as amended by the Finance Act, 2021, having regard to the date on which the notice was communicated. - HELD THAT: - The court accepted the respondent's concession and documentary record that, although the impugned notice bears a signature dated 31st March, 2021, it was uploaded for communication on 1st April, 2021 at 6:40 a.m., and therefore falls within the ambit of the amended regime. Under the amended law, issuance of a notice under section 148 on or after 1st April, 2021 requires prior observance of the procedural requirements in section 148A. The record showed that those statutory formalities were not complied with before issuing the impugned notice. Reliance was placed on this Court's earlier decisions which applied the amended scheme to notices issued on or after 1st April, 2021 and invalidated non-compliant proceedings. In consequence, the impugned notice and all subsequent proceedings based thereon could not be sustained.

Impugned notice under section 148 and all subsequent proceedings quashed for failure to comply with the mandatory section 148A requirements applicable to notices issued on or after 1st April, 2021.

Power to issue fresh notice in accordance with law - Quashing of proceedings without precluding re-initiation - Whether quashing the impugned notice prevents the revenue authority from issuing a fresh notice in accordance with law. - HELD THAT: - The court clarified that its order quashing the notice and proceedings for statutory non-compliance did not operate as a bar on the revenue authority issuing a fresh notice in the future, provided the authority complies with the statutory requirements prescribed by law before doing so. The observation preserves the authority's power to reinitiate action subject to lawful procedure.

Quashing does not debar the revenue authority from issuing a fresh notice in future in accordance with law.

Delay in filing writ petition and imposition of costs - Whether the writ petition should be allowed without any admonition despite inordinate delay in filing. - HELD THAT: - The court noted that the impugned notice was issued on 31st March, 2021 and the writ petition was filed in April 2022, approximately ten months after receipt of the notice, without any explanation for the delay. In the exercise of its discretion the court allowed the petition but imposed costs to the Calcutta High Court Legal Services Committee to account for the unexplained delay in seeking relief.

Writ petition allowed subject to payment of costs of Rs.5,000 to the Calcutta High Court Legal Services Committee within seven days and production of the receipt.

Final Conclusion: The impugned notice under section 148 of the Income Tax Act, 1961 and all consequent proceedings were quashed for non-compliance with the mandatory section 148A requirements applicable to notices issued on or after 1st April, 2021; the revenue authority remains free to issue a fresh notice in accordance with law; the writ petition is allowed subject to payment of specified costs.

Penalty under Section 271(1)(c) - furnishing inaccurate particulars of income - bona fide claim - presumption of concealment under Explanation 1 to Section 271(1)(c) - requirement of recorded satisfaction before levy of penalty

Penalty under Section 271(1)(c) - furnishing inaccurate particulars of income - bona fide claim - Whether the penalty imposed under Section 271(1)(c) for furnishing inaccurate particulars of income was rightly deleted by the Commissioner (Appeals). - HELD THAT: - The Tribunal found that the Assessing Officer did not record any conclusive finding that the particulars furnished were inaccurate to the knowledge of the assessee; material facts were disputed. The assessee had disclosed the sale consideration as income from capital gains and produced three registered sale deeds, each reciting that the plots were situated beyond the municipal limits. The AO relied upon technical enquiries, online maps and local revenue assistance to reach a contrary conclusion, but did not expressly discredit the assessee's explanation that she acted on advice of the local Patwari and on the basis of registration. The evidence showed a bona fide claim and bonafide misunderstanding of technical municipal limits; the assessee also deposited tax on becoming aware of the factual position. In these circumstances the First Appellate Authority was justified in applying authorities on bona fide claims and concluding that the ingredients for imposing penalty under Section 271(1)(c) were not made out. The Tribunal agreed with the CIT(A) that the penalty was levied in an automatic manner without establishing mala fides or knowledge of inaccuracy, and that the case fell within exceptions where penalty should not be sustained. [Paras 7, 8, 9]

Penalty under Section 271(1)(c) deleted; revenue's grounds dismissed.

Presumption of concealment under Explanation 1 to Section 271(1)(c) - requirement of recorded satisfaction before levy of penalty - Whether the presumption of concealment or failure to record requisite satisfaction justified sustaining the penalty. - HELD THAT: - The Tribunal observed that Explanation 1 raises a presumption when a difference is noticed, but the burden remains on the revenue to rebut bona fides by cogent evidence. The AO's action of seeking technical inputs and reaching a conclusion did not amount to a clear finding of deliberate concealment or knowledge of inaccuracy by the assessee. Further, the CIT(A) had relied on precedent establishing that mere incorrect claims not shown to be mala fide do not attract penalty. The Tribunal noted absence of any reasoned discrediting of the assessee's explanation that she acted on advice and registration acts, and found the statutory presumption was not satisfactorily displaced. Any defect in recording satisfaction by the AO (as contended in cross objections) supported the view that penalty proceedings were not properly sustained. [Paras 7, 8, 9]

Presumption of concealment not held to be rebutted; absence of requisite satisfaction and bona fide explanations led to deletion of penalty.

Final Conclusion: The revenue appeal is dismissed; the order of the Commissioner (Appeals) deleting the penalty is affirmed. Cross objections are dismissed as infructuous.

Maintainability of appeal in audit objection cases - effect of CBDT circular on filing appeals - admissibility of supplementary partnership deed as evidence - interpretation and application of section 40(b)(v) of the Income-tax Act - rectification under section 154

Maintainability of appeal in audit objection cases - effect of CBDT circular on filing appeals - Maintainability of the revenue appeal under the CBDT instructions in view of an audit objection despite the monetary threshold - HELD THAT: - The Tribunal examined the challenge to maintainability based on CBDT Circulars, noting the department relied on Circular No.17/2019 but that earlier instructions and the exceptional clause in Circular No.03/2018 (and its amendments) continued to have effect in the absence of clarification. The Tribunal found that the matter arose from a Revenue Audit objection and, therefore, fell within the exception permitting departmental appeals notwithstanding the monetary limit. The Tribunal accordingly rejected the assessee's contention that the appeal was not maintainable and proceeded to decide the appeal on merits. [Paras 5, 7, 8]

The appeal by the Revenue is maintainable because the issue arises from a Revenue Audit objection and the earlier circularal exception continues to apply in the absence of contrary clarification.

Admissibility of supplementary partnership deed as evidence - interpretation and application of section 40(b)(v) of the Income-tax Act - rectification under section 154 - Whether the excess remuneration of Rs. 5,80,000 was rightly disallowed under section 40(b)(v) after rectification under section 154, having regard to the supplementary partnership deed - HELD THAT: - The Tribunal reviewed the assessment history, the AO's rectification under section 154 and the appellant's grounds before the CIT(A)/NFAC. The Assessing Officer had treated the original partnership deed as authorising a maximum remuneration of Rs.3,00,000 and, on that basis, passed a rectification adding the alleged excess. The CIT(A)/NFAC considered the supplementary partnership deed dated 1/4/2011 (placed on record by the assessee and forming part of assessment records for an earlier year) which authorised a much higher maximum remuneration. The Tribunal noted that the supplementary deed was before the adjudicating authority and that the remuneration actually allowed in the year under appeal fell within the limit authorised by the supplementary deed and by section 40(b)(v). On these facts the CIT(A)/NFAC correctly allowed the appeal and there was no requirement to remit the matter back to the AO for further remand report where the material documentary evidence was already in the record. [Paras 9, 11, 13]

The deletion of the disallowance of Rs.5,80,000 is upheld: the supplementary partnership deed authorises the remuneration paid and the amount is within the limit under section 40(b)(v), therefore the rectification disallowing the amount is not sustained.

Final Conclusion: The Tribunal held the departmental appeal maintainable because the issue arose from a Revenue Audit objection, and on merits dismissed the appeal by upholding the CIT(A)/NFAC's deletion of the addition: the supplementary partnership deed authorised the remuneration and the payment fell within the limit under section 40(b)(v), consequently the rectification was unsustainable.

Charitable purpose - religious purpose - registration under section 12AA as charitable or religious trust - eligibility for deduction under Section 80G - predominant object / public benefit test - distinction between public religious trust and private religious trust

Charitable purpose - religious purpose - predominant object / public benefit test - registration under section 12AA as charitable or religious trust - Whether the trust is to be recognised and registered under section 12AA as a trust existing for charitable purpose rather than solely for religious purpose. - HELD THAT: - The Tribunal found that the trust's objects, as disclosed in the original will and the supplementary deed, encompass both religious and charitable activities but that the predominant object is public benefit rather than benefit of any private individual or of a particular religious community. The Court applied the principle that where the primary or predominant object is to promote the welfare of the general public, the purpose is charitable and incidental religious activities do not oust charitable status. The Tribunal noted the trust carries out charitable activities - free food, hostel facilities, free education, coaching, medical camps and other welfare measures available without distinction of caste, creed or community - and that audited financial statements and supporting material corroborate the charitable nature of major activities. Since the trust does not channel benefits to a particular religious community, it cannot be characterised as existing solely for religious purposes, and therefore is eligible for registration as existing for charitable purpose under section 12AA. [Paras 14, 15, 16]

The trust is both charitable and religious in objects but is not exclusively for a particular religious community; its predominant object is public benefit and it is to be registered under section 12AA as existing for charitable purpose.

Final Conclusion: The appeal is allowed and the registration shall be granted treating the Assessee as existing for charitable purpose.

Unexplained cash deposits - application of peak deposit principle - opening and closing cash balance in cash-flow reconciliation - credit for cash sale consideration supported by registered sale deeds - recalculation of addition after allowing proved cash receipts

Unexplained cash deposits - application of peak deposit principle - opening and closing cash balance in cash-flow reconciliation - credit for cash sale consideration supported by registered sale deeds - Whether the addition of Rs.34,15,725 on account of alleged unexplained cash deposits should be upheld, or reduced by allowing proved cash receipts. - HELD THAT: - The Tribunal accepted that cash deposits in the bank account were not disputed but observed that the Assessing Officer computed the addition by applying the peak deposit principle after allowing benefit for cash withdrawals. The Tribunal found that neither the Assessing Officer nor the CIT(A) had taken into account the assessee's cash-flow statement showing opening and closing cash balances and recorded inflows and outflows. The cash-flow statement (paper book) showed an opening cash balance which could not be considered in isolation; opening and closing balances must be applied together in reconciliation. Further, the assessee produced and the Tribunal accepted eight registered sale deeds evidencing cash sale consideration of Rs.24,45,000 received in the relevant previous year, which the Assessing Officer had not credited against the bank deposits. The Tribunal held that these proved cash receipts are plausible and sustainable, and directed the Assessing Officer to give credit for the said amount and to recompute the addition under the relevant provision correspondingly. [Paras 5, 6]

Appeal partly allowed; directed the Assessing Officer to recalculate the addition by crediting Rs.24.45 lacs received as cash sale consideration, thereby sustaining the remaining addition of Rs.9,70,725.

Final Conclusion: The Tribunal partly allowed the appeal: it directed recomputation of the addition by allowing credit of Rs.24.45 lacs proved by registered sale deeds and upheld the balance addition of Rs.9,70,725; appeal otherwise dismissed.

Cost of acquisition for shares allotted on demutualization - proximate nexus between pre existing expenditures and cost of demutualized shares - burden of proof and requirement of corroborative/documentary evidence for additions to cost - application of cost determination under section 55(2)(ab) vis a vis adoption of fair market value on 01 04 1981

Proximate nexus between pre existing expenditures and cost of demutualized shares - burden of proof and requirement of corroborative/documentary evidence for additions to cost - Claim that payments made to creditors aggregating Rs.1.58 crores constitute part of the cost of shares allotted on corporatization/demutualization was rejected. - HELD THAT: - The Tribunal upheld the findings of the authorities below that the assessee failed to establish a proximate nexus between the disputed payments to creditors and the cost of the shares received on corporatization/demutualization. The claim was unsupported by cogent, contemporaneous documentary evidence; the details later supplied at appellate stage were sketchy and did not substantiate that the payments were made for acquisition of membership or for securing the allotment of shares. In the absence of corroborative material linking the payments to the allotment or acquisition cost, the addition to cost was not sustainable and the authorities were justified in rejecting the claim. [Paras 5, 7, 12]

Claim for including the payments to creditors as part of the cost of the shares is rejected for want of proximate nexus and adequate documentary corroboration.

Application of cost determination under section 55(2)(ab) vis a vis adoption of fair market value on 01 04 1981 - Where shares were allotted to a member on corporatization/demutualization, their cost is governed by the provision applicable to such allotment and the option to adopt fair market value as on 01 04 1981 under the separate provision was not available. - HELD THAT: - The Assessing Officer applied the special cost determination rule for shares allotted on demutualization, taking the cost as the original cost of the membership in terms of the specific provision relied upon. The authorities below treated the alternative provision permitting adoption of fair market value on 01 04 1981 as inapplicable where the special demutualization cost rule governs. The assessee did not dispute the AO's computation or the application of the demutualization cost rule before the Tribunal. [Paras 5, 7]

Cost of the shares was to be determined in accordance with the provision applicable to shares allotted on demutualization and the claim to adopt fair market value on 01 04 1981 was not allowable in the circumstances.

Final Conclusion: The Tribunal dismissed the appeal: the claim to enhance cost by including payments to creditors was rejected for lack of nexus and corroboration, and the cost of shares allotted on corporatization/demutualization was to be determined under the specific demutualization cost provision rather than by adopting 01 04 1981 fair market value.

Disallowance under section 14A read with Rule 8D - Requirement of Assessing Officer to record satisfaction before applying Rule 8D - Exclusion of section 14A disallowance while computing book profits under section 115JB - Allowability of royalty as revenue expenditure under section 37(1) - Assessment of notional income based on TDS/Form 26AS - Claim of TDS credit to be allowed in the year the income is offered to tax

Disallowance under section 14A read with Rule 8D - Requirement of Assessing Officer to record satisfaction before applying Rule 8D - Whether the Assessing Officer was justified in making disallowance under section 14A r.w. Rule 8D when he had not recorded any satisfaction or given findings as to the incorrectness of the assessee's voluntary apportionment. - HELD THAT: - The Tribunal held that where the assessee has made a suo motu disallowance or claimed a specific apportionment of expenditure relatable to exempt income, the Assessing Officer cannot invoke the apportionment mechanism under Rule 8D without first recording satisfaction that the assessee's apportionment is incorrect and giving reasons. The Tribunal applied and followed the principle in Maxopp Investment Ltd. v. CIT as accepted by coordinate benches: in absence of findings by the Assessing Officer on the correctness of the assessee's claim, resort to Rule 8D is impermissible. On the facts, the Assessing Officer made additional disallowance without recording any such satisfaction or findings; consequently the disallowance under section 14A was held unjustified and deleted. [Paras 3]

Disallowance under section 14A r.w. Rule 8D deleted as AO had not recorded required satisfaction or findings; assessee's ground allowed.

Allowability of royalty as revenue expenditure under section 37(1) - Whether the royalty payments to Shriram Ownership Trust for use of logo are to be treated as revenue expenditure and allowed in the hands of the assessee. - HELD THAT: - Applying the Tribunal's earlier decisions in the assessee's own cases for earlier assessment years, the Tribunal agreed with the view that payments to the Trust for use of the logo constituted allowable business expenditure under section 37(1). The Tribunal observed that a Trust is an independent entity and payments for using its logo, if at market rate and made in the course of business, are revenue in nature. The Assessing Officer's treatment of the payment as capital leading to depreciation was reversed, and the Commissioner (Appeals) direction to treat the payment as revenue expenditure was upheld. [Paras 4]

Royalty payments treated as revenue expenditure and allowed; revenue appeal on this ground dismissed.

Assessment of notional income based on TDS/Form 26AS - Claim of TDS credit to be allowed in the year the income is offered to tax - Whether the Assessing Officer could assess notional interest income based on TDS entries in Form 26AS where the assessee had not offered the receipts to tax and there was no material evidence of suppression. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) finding that an Assessing Officer cannot assess notional income solely on the basis of TDS entries in Form 26AS in the absence of material evidence indicating suppression of income. The assessee had explained that the corresponding cheques bounced and there was uncertainty of realization; consequently the CIT(A) rightly deleted the addition and directed that TDS credit and assessment of the corresponding interest income should be given/undertaken in the assessment year in which the income is actually offered. The Tribunal found no reason to interfere with that conclusion. [Paras 5]

Addition of notional interest based on Form 26AS deleted; TDS credit to be allowed in the year the income is offered and Assessing Officer to assess interest in the relevant year.

Exclusion of section 14A disallowance while computing book profits under section 115JB - Whether a notional disallowance under section 14A (computed under Rule 8D) can be added back to book profits while computing book profit under section 115JB. - HELD THAT: - Relying on the decision of the Karnataka High Court in Sobha Developers Ltd. v. DCIT, the Tribunal held that the notional character of a section 14A disallowance precludes its addition to book profits under section 115JB. The explanation to section 115JB contemplates adding back amounts actually debited to the profit and loss account; a notional disallowance under section 14A is not a debited item and thus cannot be imported into MAT computation. The Tribunal, finding no contrary higher-court decision presented, followed Sobha Developers and directed exclusion of the section 14A disallowance from book profits. [Paras 6]

Disallowance under section 14A excluded from book profit computation under section 115JB; revenue appeal on this ground dismissed.

Final Conclusion: The Tribunal allowed the assessee's challenge to the section 14A disallowance (as AO had not recorded requisite satisfaction), upheld treatment of the royalty payments as revenue expenditure, sustained deletion of notional interest additions based solely on Form 26AS (with TDS to be allowed when income is offered), and held that section 14A disallowance cannot be added to book profits under section 115JB; accordingly the revenue appeal is dismissed and the assessee's appeal is partly allowed.

Cancellation of registration under section 12AA(3) - retrospective cancellation of charitable registration - application of proviso to section 2(15) and its effect on charitable status - distinction between registration under section 12A/12AA and denial of exemption under section 11 read with section 13(8) - year-to-year application of proviso to charitable purpose

Cancellation of registration under section 12AA(3) - genuineness of activities and adherence to objects - Validity of the DIT(E)'s cancellation of SRA's registration under section 12AA(3) on the basis that SRA earned interest and fees - HELD THAT: - The Tribunal found that the DIT(E) did not record any finding that the Slum Rehabilitation Authority had acted beyond or contrary to its notified objects or that its activities were not genuine. The statutory test for cancellation under section 12AA(3) requires demonstration that the trust or institution is carrying out non-genuine activities or activities beyond its objects. Mere receipt of interest or fees, and investment of such receipts, without any finding of deviation from objects or lack of genuineness, does not satisfy the requirement for cancellation of registration. Reliance on authorities emphasizing that commercial receipts may attract taxation under the proviso to section 2(15) does not cure the absence of a finding that the institution's activities are not in accordance with its objects. Consequently the cancellation order cannot be sustained on the basis applied by the DIT(E). [Paras 6]

The cancellation of registration was set aside because no finding was recorded that the SRA's activities were non-genuine or beyond its objects.

Retrospective cancellation of charitable registration - temporal effect of cancellation - Lawfulness of cancelling the SRA's registration with retrospective effect to the date of original registration - HELD THAT: - The Tribunal held that withdrawing registration with retrospective effect from the date of grant (01.04.2002) was bad in law in the absence of any finding of deviation from objects or non-genuine activity. The order of DIT(E) that cancelled registration retrospectively was therefore set aside. The Tribunal emphasised that retrospective cancellation cannot be justified merely by the fact that certain receipts in a particular year fall within the ambit of the proviso to section 2(15). [Paras 6]

The retrospective cancellation of registration was quashed and the appeal allowed.

Application of proviso to section 2(15) and its effect on charitable status - distinction between registration under section 12A/12AA and denial of exemption under section 11 read with section 13(8) - year-to-year application of proviso to charitable purpose - Whether the proviso to section 2(15) mandates cancellation of registration or only denial of exemption for the relevant year(s) - HELD THAT: - The Tribunal applied the principle that the proviso to section 2(15) operates on a year-to-year basis to determine whether particular receipts are commercial, thereby affecting entitlement to exemption under section 11 for that previous year. The insertion of the proviso is complementary to the insertion of section 13(8), which operates to deny exemption for income affected by the proviso. Prior authorities, including the Tribunal and the Bombay High Court, were noted for distinguishing registration (a one-time exercise) from year-wise denial of exemption. Thus, where receipts fall within the proviso to section 2(15), the correct remedy is denial of exemption for the relevant year(s) rather than automatic cancellation of registration under section 12A/12AA. [Paras 6]

Application of the proviso to section 2(15) may lead to denial of exemption for the relevant year(s) but does not, by itself, justify cancellation of registration under section 12AA.

Final Conclusion: The appeal is allowed. The order of the Director of Income Tax (Exemption) dated 27.03.2014 cancelling the Slum Rehabilitation Authority's registration (including its retrospective effect) is set aside; receipts falling within the proviso to section 2(15) may be brought to tax for the relevant year(s) but such receipt-based consequences do not automatically warrant cancellation of registration under section 12AA in the absence of findings of deviation from objects or non-genuine activity.

Treatment of unexplained cash under Section 69A as income (substance over form) - principle of substance over form - test of human probabilities and surrounding circumstances - reliability of books and documentary evidence - application of burden of proof in relation to unexplained receipts under section 68 - discretion to make lump sum addition where neither party can fully substantiate transactions

Treatment of unexplained cash under Section 69A as income (substance over form) - reliability of books and documentary evidence - test of human probabilities and surrounding circumstances - discretion to make lump sum addition where neither party can fully substantiate transactions - Correctness and quantum of addition of Rs. 37.35 lakhs made under Section 69A on account of seized cash - HELD THAT: - The Tribunal examined the materials relied upon by the Assessing Officer and the CIT(A), including the police seizure, the appellant's statements recorded during investigation, the absence of adequate receipts or reliable books of account, discrepancies in cash book balances, and the denominations of seized currency. The CIT(A) had upheld the addition on the basis that the appellant could not satisfactorily substantiate the cash as genuine liquor sales and that the cash book and supporting documents were unreliable. The Tribunal observed that, however, the assessee had placed prima facie material in the return, computation and balance sheet indicating accumulated balances and cash sales, and the Department had not altogether rebutted that evidence. Applying the principle of substance over form and the test of human probabilities, and in view of the inconclusive character of proof on both sides, the Tribunal exercised its discretionary power to moderate the addition. Rather than sustaining the full addition, the Tribunal found a lump sum reduction to be just and proper, thereby balancing the competing prima facie contentions while noting that the order should not operate as a precedent. [Paras 2, 5]

Addition sustained in principle but reduced in quantum: instead of Rs. 37.35 lakhs, a lump sum addition of Rs. 25 lakhs is made; appeal is partly allowed and computations to follow; order not to be treated as precedent.

Final Conclusion: The Tribunal upheld the departmental view that the seized cash could be taxed as unexplained income but, in exercise of its discretion given the inconclusive proof on either side, reduced the addition from Rs. 37.35 lakhs to a lump sum Rs. 25 lakhs, partly allowing the appeal; necessary computation to follow and the order is not to be treated as a precedent.

Penalty under section 271B - compulsory audit under section 44AB - reasonable cause under section 273B - ignorance of law not a reasonable cause - turnover threshold for audit

Penalty under section 271B - compulsory audit under section 44AB - reasonable cause under section 273B - ignorance of law not a reasonable cause - Whether the penalty under section 271B for failure to get accounts audited under section 44AB could be set aside on the ground that the assessee, being a salaried employee, was unaware of the audit obligation and thus had reasonable cause under section 273B. - HELD THAT: - The Tribunal upheld the conclusions of the CIT(A) and the AO that the assessee's trading turnover exceeded the statutory threshold obliging audit under section 44AB and that no audit report was furnished within the due date. The appellate forum accepted that ignorance of the statutory obligation, pleaded on account of the assessee being a salaried employee, does not constitute a reasonable cause under section 273B. Reliance was placed on precedents emphasising that explanations for delay must be plausible and convincing to a man of ordinary prudence, and that mere unfamiliarity with the law is not a valid defence to avoid levy of penalty under section 271B. In the facts of the case the assessee failed to produce cogent evidence or a plausible justification for non-compliance; accordingly the penalty was properly levied and required confirmation. [Paras 2, 4, 5]

The Tribunal confirmed the penalty imposed under section 271B, holding that ignorance of the requirement to get accounts audited did not amount to reasonable cause under section 273B, and dismissed the appeal.

Final Conclusion: The appeal is dismissed; the penalty levied under section 271B for failure to comply with the audit obligation under section 44AB is confirmed, the plea of ignorance of law being rejected as not constituting reasonable cause.

Penalty under section 271(1)(c) - penalty under section 275(1A) read with section 271(1)(c) - merger of superseded order - rectifiable procedural defect (prior approval of JCIT) - binding effect of an ITAT order on assessing officer and Commissioner (CIT(A)) - remand for rectification and fresh adjudication

Rectifiable procedural defect (prior approval of JCIT) - penalty under section 275(1A) read with section 271(1)(c) - remand for rectification and fresh adjudication - Validity of the second revised penalty order dated 25.09.2018 which was cancelled by the CIT(A) on the ground that prior approval of the JCIT was not indicated - HELD THAT: - The Tribunal found that the CIT(A) had cancelled the second revised penalty order solely on the procedural ground that the Assessing Officer had not indicated prior approval of the JCIT. The Tribunal held that such omission is a rectifiable procedural defect. Applying the principle that a revisional/modified order which supersedes an earlier order becomes the operative order, the Tribunal observed the practical difficulty (Catch-22) if the superseding order is set aside without allowing correction. In view of this, the Tribunal remitted the second revised penalty order to the file of the Assessing Officer with direction to obtain proper approval of the JCIT and to pass the order afresh, thereby allowing the Revenue's grounds 2 and 3 for statistical purposes and providing the assessee opportunity to agitate merits before the AO upon rectification. [Paras 13, 14]

Second revised penalty order set aside for rectifiable procedural defect and remitted to the Assessing Officer to obtain JCIT approval and pass the order afresh.

Binding effect of an ITAT order on assessing officer and Commissioner (CIT(A)) - penalty under section 271(1)(c) - merger of superseded order - Whether the CIT(A) erred in directing recomputation of penalty only to the extent of additions confirmed by the ITAT, while the Revenue had challenged the ITAT order before the High Court - HELD THAT: - The Tribunal held that once the ITAT has adjudicated the quantum appeal and rendered its order, that determination is binding on both the CIT(A) and the Assessing Officer for the purpose of recomputing penalty. The fact that the Revenue had challenged the ITAT order before the High Court did not disentitle the Assessing Officer or CIT(A) from giving effect to the ITAT's decision in the penalty proceedings. Consequently, the direction to recompute penalty only to the extent of additions confirmed by the ITAT was sustained and the Revenue's ground on this point was dismissed. [Paras 15, 16]

Direction to recompute penalty only to the extent of additions confirmed by the ITAT upheld; Revenue's challenge on this point dismissed.

Merger of superseded order - penalty under section 275(1A) read with section 271(1)(c) - remand for rectification and fresh adjudication - Whether the later penalty order dated 25.09.2018 superseded the earlier penalty order dated 27.03.2018 and the consequences of such supersession for directions issued by the CIT(A) - HELD THAT: - The Tribunal agreed with the assessee that the later revised penalty order dated 25.09.2018, passed under section 275(1A) read with section 271(1)(c), superseded the earlier order dated 27.03.2018; consequently, directions given by the CIT(A) with respect to the earlier order did not survive. Further, because the Tribunal remitted the second revised order to the AO for rectification of the procedural defect, it also remitted the assessee's substantive grounds (including estimation and concealment-related contentions) to the AO so that the assessee may present its submissions on merits before the authority which will pass the fresh order. [Paras 18, 19, 20]

Held that the later penalty order supersedes the earlier one; CIT(A)'s directions tied to the earlier order do not survive and the assessee's substantive contentions remitted to the Assessing Officer for fresh consideration after rectification.

Final Conclusion: The Tribunal partly allowed the appeals for statistical purposes: it remitted the second revised penalty order dated 25.09.2018 to the Assessing Officer to obtain proper JCIT approval and pass the order afresh (allowing Revenue's procedural grounds for statistical purposes), upheld the CIT(A)'s direction to recompute penalty only to the extent of additions confirmed by the ITAT (dismissing Revenue's challenge on that point), accepted that the later penalty order superseded the earlier order (allowing the assessee's related grounds), and remitted the assessee's remaining substantive grounds to the Assessing Officer for fresh adjudication; the same conclusions were applied to A.Y. 2011-12 and A.Y. 2012-13.

Dispensing with convening of meetings of shareholders and creditors where unanimous consent affidavits are filed - treatment of nil secured creditors in convening requirement for scheme of amalgamation - confirmation of appointed date for scheme of amalgamation - accounting treatment in conformity with Section 133 of Companies Act, 2013 - directions for service of notice on statutory authorities in scheme proceedings

Dispensing with convening of meetings of shareholders and creditors where unanimous consent affidavits are filed - Whether convening of meetings of equity shareholders and unsecured creditors of Transferor Company No.1 may be dispensed with. - HELD THAT: - The Tribunal recorded that Transferor Company No.1 had three equity shareholders who filed consent affidavits constituting 100% voting share and that there were no secured creditors, while the sole unsecured creditor also filed a consent affidavit. On that basis the Tribunal dispensed with convening meetings of equity shareholders and unsecured creditors for Transferor Company No.1 and held that no meeting for secured creditors was required since there were none.

Convening of meetings of equity shareholders and unsecured creditors of Transferor Company No.1 dispensed with; no meeting required for secured creditors.

Dispensing with convening of meetings of shareholders and creditors where unanimous consent affidavits are filed - Whether convening of meetings of equity shareholders and unsecured creditors of Transferor Company No.2 may be dispensed with. - HELD THAT: - The Tribunal noted that Transferor Company No.2 had two equity shareholders who filed consent affidavits constituting 100% voting share and that there were no secured creditors, while the sole unsecured creditor filed a consent affidavit. Relying on these filings, the Tribunal dispensed with convening meetings of equity shareholders and unsecured creditors for Transferor Company No.2 and observed that no meeting for secured creditors was necessary as none existed.

Convening of meetings of equity shareholders and unsecured creditors of Transferor Company No.2 dispensed with; no meeting required for secured creditors.

Dispensing with convening of meetings of shareholders and creditors where unanimous consent affidavits are filed - Whether convening of meetings of equity shareholders and unsecured creditors of the Transferee Company may be dispensed with. - HELD THAT: - The Tribunal recorded that the Transferee Company had two equity shareholders who filed consent affidavits constituting 100% voting share and that there were no secured creditors, while the sole unsecured creditor filed a consent affidavit. On this basis the Tribunal dispensed with convening meetings of equity shareholders and unsecured creditors for the Transferee Company and held that no meeting for secured creditors was required.

Convening of meetings of equity shareholders and unsecured creditors of the Transferee Company dispensed with; no meeting required for secured creditors.

Confirmation of appointed date for scheme of amalgamation - Whether the appointed date specified in the Scheme is to be confirmed. - HELD THAT: - The Tribunal considered the Scheme and the materials on record and confirmed the appointed date as specified by the parties. The appointed date as specified in the Scheme and confirmed by the Tribunal is 01st April, 2021.

Appointed date of the Scheme affirmed as 01st April, 2021.

Accounting treatment in conformity with Section 133 of Companies Act, 2013 - Whether the proposed accounting treatment for the amalgamation conforms with applicable law. - HELD THAT: - Certificates from the statutory auditors of the applicant companies were placed on record certifying that the accounting treatment proposed in the Scheme conforms with the applicable provisions and, in particular, is in conformity with the requirements under Section 133 of the Companies Act, 2013. The Tribunal recorded this certification in support of the Scheme.

Accounting treatment as proposed in the Scheme recorded as conforming with applicable provisions including Section 133 of the Companies Act, 2013.

Directions for service of notice on statutory authorities in scheme proceedings - What statutory authorities and other parties must be served with notice of the application. - HELD THAT: - The Tribunal directed that notice of the application be served on the Regional Director (MCA), the Registrar of Companies, the Official Liquidator, the Income Tax Department (with disclosure of PAN, ward numbers and assessing officers for their response) and any other sectoral regulators required to be served, so as to enable statutory authorities to file appropriate replies or take necessary steps.

Notices to be served on Regional Director (MCA), Registrar of Companies, Official Liquidator, Income Tax Department (with requisite disclosure) and other sectoral regulators as required.

Final Conclusion: The joint application under Sections 230-232 was allowed on the terms recorded: meetings of shareholders and unsecured creditors of the three applicant companies were dispensed with where unanimous consent affidavits were filed and there were no secured creditors; the appointed date of the Scheme was confirmed as 01st April, 2021; accounting treatment was recorded as conforming with the applicable law; and directions were issued for service of notices on specified statutory authorities. The application is disposed of accordingly.

Scheme of Amalgamation - Sanction under Section 230 and Section 232 - Appointed Date - Transfer and vesting of assets and liabilities - Continuation of pending proceedings - Dissolution without winding up - Employee transfer/engagement - Filing of Schedule of Assets and Liabilities in Form CAA-7 - Undertakings treated as obligations to Tribunal - Payment of applicable stamp duty - Compliance with statutory notice and advertisement requirements

Scheme of Amalgamation - Sanction under Section 230 and Section 232 - Appointed Date - Sanction of the Scheme of Amalgamation and fixation of the appointed date as 1st April 2021. - HELD THAT: - The Tribunal considered the unanimous board approvals, statutory compliance regarding notices and advertisement, auditor's certificate on accounting treatment, valuation report for the share exchange ratio, and the absence of adverse reports from the Official Liquidator. The Regional Director's observations were addressed by the petitioners through rejoinder and undertakings. Having perused the records and heard counsels, the Tribunal concluded that the Scheme is bona fide and in the interest of the companies and their stakeholders and sanctioned the Scheme, fixing the appointed date as 1st April 2021. [Paras 1, 6]

The Scheme of Amalgamation is sanctioned and the appointed date is fixed as 1st April 2021.

Transfer and vesting of assets and liabilities - Continuation of pending proceedings - Transfer of the Transferor Companies' property, rights, interests, debts, liabilities and continuation of pending proceedings by or against the Transferee Company. - HELD THAT: - Pursuant to the sanctioned Scheme and in accordance with Section 232(4) as applied by the Tribunal, all property, rights and interests of the Transferor Companies are to transfer to and vest in the Transferee Company without further act or deed, subject to existing charges. Similarly, all debts, liabilities, duties and obligations of the Transferor Companies stand transferred and become the obligations of the Transferee Company. The Tribunal provided that all suits, appeals and proceedings pending by or against the Transferor Companies shall be continued by or against the Transferee Company and no objection shall be taken thereto. [Paras 6]

Assets, rights, liabilities and pending proceedings of the Transferor Companies are transferred to and vest in the Transferee Company as provided in the Scheme.

Employee transfer/engagement - Engagement of employees of the Transferor Companies by the Transferee Company as provided in the Scheme. - HELD THAT: - The Tribunal sanctioned the contractual and employment-related provision of the Scheme which provides for the engagement of all employees of the Transferor Companies by the Transferee Company, thereby ensuring continuity of employment on the terms set out in the Scheme. [Paras 6]

All employees of the Transferor Companies shall be engaged by the Transferee Company in accordance with the Scheme.

Dissolution without winding up - Dissolution of the Transferor Companies without winding up from the effective date. - HELD THAT: - Upon sanction of the Scheme and vesting of assets and liabilities in the Transferee Company, the Tribunal ordered that the Transferor Companies shall stand dissolved without winding up from the effective date, consistent with the statutory effect of a sanctioned amalgamation. [Paras 6]

The Transferor Companies shall stand dissolved without winding up from the effective date.

Filing of Schedule of Assets and Liabilities in Form CAA-7 - Undertakings treated as obligations to Tribunal - Payment of applicable stamp duty - Compliance with statutory notice and advertisement requirements - Procedural and compliance directions including filing of schedules, treatment of petitioners' undertakings, payment of stamp duty (if applicable), and delivery of certified copy to the Registrar of Companies. - HELD THAT: - The Regional Director's observations were met with specific undertakings by the petitioners, which the Tribunal directed shall be treated as undertakings to it and binding on the petitioners. The Transferee Company accepted liability to pay applicable stamp duty on transfer of immovable property, if applicable. The Tribunal directed the petitioners to file the Schedule of Assets and Liabilities in the Form No. CAA-7 format within three weeks and to deliver a certified copy of the order to the Registrar of Companies within thirty days, and ordered the Registry to append a verified legible printout of the Scheme and schedules to the certified copy. [Paras 5, 6, 7]

Petitioners' undertakings are treated as obligations to the Tribunal; the Transferee Company shall pay applicable stamp duty if applicable; schedules must be filed in Form CAA-7 within three weeks and a certified copy of the order delivered to the Registrar of Companies within thirty days.

Final Conclusion: The Tribunal granted sanction to the Scheme of Amalgamation between the named companies with appointed date 1st April 2021, directed transfer and vesting of assets and liabilities and continuation of proceedings in the Transferee Company, ordered engagement of employees and dissolution of the Transferor Companies without winding up, and issued procedural directions including filing of schedules in Form CAA-7, compliance with undertakings and delivery of the certified copy to the Registrar of Companies.

Production of books and records - inspection and disclosure in company proceedings - stay of board resolutions - interim reliefs in company petitions - mismanagement in company affairs - interrelation with regulatory remedies (TRAI)

Production of books and records - inspection and disclosure in company proceedings - Respondents directed to produce specified documents and agreements in a sealed cover before the Tribunal at the time of final hearing of the Company Petition. - HELD THAT: - The respondents, in their counter-affidavit, stated readiness to disclose on oath the nature of arrangements with broadcasters and to produce interconnection agreements and related documents when directed by the Tribunal. Having regard to the dispute between the parties and the respondents' assurance, the Tribunal exercised its discretion to avoid immediate disclosure into the public domain by directing production in a sealed cover for consideration at the final hearing. The Tribunal balanced the applicant's claim for disclosure against respondents' contention about confidentiality and commercial prejudice and confined production to the adjudicatory stage of the main petition rather than granting immediate open disclosure. [Paras 19, 20]

Respondents directed to produce the specified documents in a sealed cover before the Tribunal during final hearing of the Company Petition.

Stay of board resolutions - interim reliefs in company petitions - mismanagement in company affairs - The application for stay of operation of the Board minutes (Annexure A10) was refused and the request for interim restraint was dismissed. - HELD THAT: - The Tribunal observed that the allegations of mismanagement and the propriety of the Board's decisions are matters subsisting in the main Company Petition and require adjudication at final disposal. The applicant, formerly chairman, had not challenged certain transactions while in office and sought interim relief after his removal; the Tribunal found that a separate interim order to stay Annexure A10 was unnecessary at this stage. The substantive questions regarding mismanagement, outsourcing of accounts, procurement of set-top boxes and related board decisions will be examined while finally disposing of the main petition, and are not suitable for interlocutory determination in the present IA. [Paras 18, 20, 21]

Prayer for stay of Annexure A10 refused; IA dismissed.

Final Conclusion: IA(C/ACT)/8/KOB/2021 dismissed. Respondents shall produce the specified documents and interconnection agreements in a sealed cover before the Tribunal at the final hearing of the Company Petition; the request to stay the Board minutes (Annexure A10) is declined and issues of alleged mismanagement reserved for final disposal of the main petition.

Maintainability under Sections 241-242 - Removal of directors under Section 169 - Shareholders' statutory right to requisition an Extraordinary General Meeting - Oppression and mismanagement test under Sections 241-242 - Tribunal's powers under Section 242 and absence of implied power to reinstate

Maintainability under Sections 241-242 - Shareholders' statutory right to requisition an Extraordinary General Meeting - Petitioner's entitlement to maintain the company petition under Sections 241-242 with the consent produced under Section 244(2). - HELD THAT: - The Tribunal examined the letter of consent filed under Section 244(2) and found that the petitioner produced consent from 56 shareholders constituting 13.21% of total shareholders and representing about 20% of paid-up capital. The consenters were aware that their consent authorised the petitioner to challenge the EGM decisions before the Tribunal under Sections 98, 169, 241 and 242. On that basis the Tribunal held that the petitioner was eligible to file the company petition under Sections 241-242. [Paras 23]

Petitioner is eligible to maintain the Company Petition under Sections 241-242.

Removal of directors under Section 169 - Shareholders' statutory right to requisition an Extraordinary General Meeting - Whether the removal of the petitioner from directorship was illegal in view of the statutory procedure for removal of directors. - HELD THAT: - The Tribunal reviewed Section 169 (procedure for removal) and Section 100 (requisition of EGM) and the special notices placed before the company. Relying on the statutory scheme and authorities recognising shareholders' right to call and move resolutions at an EGM without disclosing reasons, the Tribunal concluded that the EGM convened by requisitionists on 03.03.2020 complied with mandatory requirements. The act of shareholders in appointing or removing directors being part of corporate democracy is not ordinarily amenable to judicial intrusion merely because the removed director objects; therefore the removal was not shown to be illegal. [Paras 24, 26, 27, 31, 34]

Removal of the petitioner from directorship was not illegal.

Oppression and mismanagement test under Sections 241-242 - Tribunal's powers under Section 242 and absence of implied power to reinstate - Whether the removal of the petitioner was oppressive or prejudicial so as to attract relief under Sections 241-242, and whether the Tribunal could grant reinstatement. - HELD THAT: - The Tribunal applied the principle that under Section 241-242 the focus is whether conduct was oppressive or prejudicial to members, not merely whether removal was legally valid. Citing the Supreme Court's exposition that the Tribunal lacks an implied power to reinstate a director, the Tribunal found no evidence of conduct amounting to oppression or mismanagement in the present case. As the removal followed mandatory requirements and no continuing oppressive acts were proved, the statutory threshold for relief under Section 242 was not met. [Paras 32, 33, 34, 35]

Removal was not oppressive or prejudicial; no relief under Sections 241-242 can be granted.

Final Conclusion: Although the petitioner was held entitled to maintain the petition with shareholder consent, the Tribunal found the removal to have complied with statutory procedure and no oppression or mismanagement was established; the Company Petition is dismissed as bereft of merit and connected interlocutory applications stand disposed of.

Reliance on information memorandum for submission of resolution plan - right to information of a resolution applicant during CIRP - duty of the resolution professional to furnish information in possession after plan approval - power of the Adjudicating Authority to refuse interim relief pending decision on plan approval

Reliance on information memorandum for submission of resolution plan - right to information of a resolution applicant during CIRP - duty of the resolution professional to furnish information in possession after plan approval - power of the Adjudicating Authority to refuse interim relief pending decision on plan approval - Validity of the Adjudicating Authority's rejection of the application directing the Resolution Professional to supply additional information to the resolution applicant. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's rejection of the application seeking directions to the Resolution Professional to supply further information. The court observed that the appellant had submitted its resolution plan on the basis of the published Information Memorandum and that the Adjudicating Authority correctly took the view that no additional information need be provided at that interlocutory stage while the application for approval of the plan was pending. The Tribunal recorded the Resolution Professional's undertaking that, if the plan is approved, all necessary information in the Resolution Professional's possession will be provided to the appellant. In these circumstances the Adjudicating Authority did not err in refusing the interim relief sought and the matter of furnishing further documentation was appropriately left contingent on the outcome of the plan approval process. [Paras 8, 9]

The Adjudicating Authority's order rejecting the application for directions to furnish additional information is upheld and the appeal is dismissed.

Final Conclusion: Appeal dismissed; the Adjudicating Authority rightly refused interlocutory directions for supply of documents where the resolution plan had been filed on the basis of the Information Memorandum and the Resolution Professional undertook to supply requisite information in his possession if the plan is approved.

Transactions liable to be set aside as preferential transfers under the Insolvency and Bankruptcy Code - avoidance of transactions and recovery for benefit of the corporate debtor - ex parte adjudication for non compliance with procedural directions - onus on alleged transferee to furnish explanation and evidence to the Resolution Professional - pre existing commercial dispute not automatically immunising challenged transfers

Transactions liable to be set aside as preferential transfers under the Insolvency and Bankruptcy Code - avoidance of transactions and recovery for benefit of the corporate debtor - onus on alleged transferee to furnish explanation and evidence to the Resolution Professional - The transfers made from the corporate debtor's accounts to entities/individuals associated with the ex Director during the period specified in the record were not shown to be in the ordinary course of business and were liable to be returned to the corporate debtor. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the RP's e mail identified 25 transactions amounting to the impugned aggregate and that the appellant failed to furnish satisfactory documentary proof that the debited amounts represented bona fide supplies or consideration. The ledger produced was maintained by an associated entity and did not clarify the purpose of debits; assertions about a genset purchase lacked documentary proof. The fact that some management control changed as of 5.2.2018 and that the challenged transactions occurred thereafter reinforced the inference that the amounts were not transacted in the normal course and were hit by the avoidance provisions. While an earlier NCLAT decision recognised a pre existing commercial dispute between Seitz GmbH and Simran Technologies, the Tribunal held that this did not establish that the specific withdrawals disputed in CA No. 574/2019 were legitimate or in the ordinary course; the Adjudicating Authority did not err in applying the avoidance/recovery provisions and directing restitution to the corporate debtor. [Paras 10, 12, 13]

The Adjudicating Authority correctly directed restitution of the monies identified in the impugned order to the corporate debtor; the appellant must transfer those monies within two weeks of this judgment.

Ex parte adjudication for non compliance with procedural directions - Proceeding ex parte against the appellant before the Adjudicating Authority was justified because the appellant failed to obtain permission to place his belated reply on record and was remiss in complying with the court's directions. - HELD THAT: - The record shows an undertaking by proxy counsel to file a reply within two weeks which was not complied with; the reply reached other parties but was not placed on record by leave of the Adjudicating Authority. The matter had been ordered to be heard ex parte and no application for recalling that order or for condoning the delay in filing the reply was made. The Tribunal therefore found no infirmity in the Adjudicating Authority conducting the proceedings and deciding the case on an ex parte basis. [Paras 11]

The ex parte adjudication stood; the appellant's contention about non opportunity to be heard was rejected as he failed to secure permission to file his reply.

Final Conclusion: The appeal is dismissed. The direction of the Adjudicating Authority that the appellant transfer the identified monies back to the corporate debtor within two weeks is upheld. No order as to costs.

Committee of Creditors' power to consider and revise CIRP costs and professional fees - Scope and effect of the proviso to Regulation 12(3) of the CIRP Regulations - Adjudicating Authority's power to direct the reconstituted Committee of Creditors - Replacement of Resolution Professional and handover of records

Committee of Creditors' power to consider and revise CIRP costs and professional fees - Adjudicating Authority's power to direct the reconstituted Committee of Creditors - Whether the Adjudicating Authority erred in directing the reconstituted Committee of Creditors to consider the CIRP fees and costs claimed by the outgoing Resolution Professional after the CoC had earlier approved fees. - HELD THAT: - The Adjudicating Authority noted that a substantial portion of the CIRP costs and professional fees claimed related to the period subsequent to the CoC resolution dated 17th May, 2021 and were set out in tabular form in the record. Given that the factual entitlement to fee and CIRP cost depends on events and expenditures occurring during the CIRP (including periods after an earlier CoC decision), the reconstituted CoC is the appropriate forum to examine those factual aspects and pass an appropriate decision. Accordingly, directing the reconstituted CoC to consider the CIRP costs claimed by the outgoing Resolution Professional was not in error. [Paras 6, 8]

Direction of the Adjudicating Authority that the reconstituted CoC consider the CIRP costs and professional fee was justified and not erroneous.

Scope and effect of the proviso to Regulation 12(3) of the CIRP Regulations - Committee of Creditors' power to consider and revise CIRP costs and professional fees - Whether the proviso to Regulation 12(3) of the CIRP Regulations prevents the CoC from reconsidering or affecting the validity of an earlier decision approving fees. - HELD THAT: - The proviso to Regulation 12(3) provides that inclusion of a creditor later admitted shall not affect the validity of any decision taken by the committee prior to such inclusion. However, the Court held that this proviso does not fetter the CoC from reconsidering fee and expense claims in light of changed circumstances, additional expenditures, or the length and developments of the CIRP. Where claimed expenses relate to periods after an earlier CoC approval, the reconstituted CoC remains competent to examine and determine entitlement to fees and costs. [Paras 7, 8]

The proviso to Regulation 12(3) does not preclude the CoC from considering or revising fee and expense claims; the CoC may examine such claims in light of subsequent developments.

Final Conclusion: The Appeal is dismissed; the Adjudicating Authority's directions that the reconstituted Committee of Creditors consider the CIRP costs and professional fee claimed by the outgoing Resolution Professional are upheld.

Privity of contract - financial debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - prerequisites for admission of an application under Section 7 of the Code - distinction between an LLP as a separate legal entity and its partners - requirement of crystallisation of liability for invocation of IBC - cheque issuance and balance-sheet acknowledgement as evidence of debt - IBC is not a recovery forum for collateral disputes

Privity of contract - distinction between an LLP as a separate legal entity and its partners - financial debt under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - Whether the Supplementary Retirement Deed and related documents establish a contractual privity and a financial debt owed by the Corporate Debtor (Tridhaatu Aranya Developers LLP). - HELD THAT: - The Tribunal found that both the LLP Retirement Deed and the Supplementary Retirement Deed were executed between constituent members/groups (the 'Tridhaatu Group' and the 'Prince Care Group') and that the Corporate Debtor, an LLP, was not a party to those deeds. Given that an LLP is a body corporate distinct from its partners, the deeds do not create privity of contract between the Appellant and the Corporate Debtor. The terms of repayment and post-dated cheques recorded in the Supplementary Deed are obligations between the partners/groups and do not, without more, import a liability of the LLP that meets the statutory definition of financial debt under Section 5(8). The Tribunal therefore concluded that the essential ingredients of a financial debt-an ascertained sum disbursed against consideration for the time value of money and owed by the Corporate Debtor-were not established on the record. [Paras 11, 12]

No privity of contract or established financial debt of the Corporate Debtor under the deeds; the claim against the LLP was not established.

Cheque issuance and balance-sheet acknowledgement as evidence of debt - requirement of crystallisation of liability for invocation of IBC - prerequisites for admission of an application under Section 7 of the Code - IBC is not a recovery forum for collateral disputes - Whether issuance of cheques, entries in balance sheets and attendant correspondence amount to sufficient evidence of an outstanding financial debt and justify admission of a Section 7 petition against the Corporate Debtor. - HELD THAT: - The Tribunal held that the mere issuance of cheques, their dishonour, and an acknowledgment of amounts in financial statements for accounting purposes do not, in isolation, establish an ascertained, crystallised financial debt owed by the Corporate Debtor. The balance-sheet entries were held to be capable of being read only in the context of the deeds and the overall relationship between the parties, which showed disputes and settlements inter se the partner-groups. The Tribunal reiterated that liability must be crystallised and attributable to the Corporate Debtor to sustain a Section 7 petition; absent documentary evidence showing that the cheques or acknowledgements created a debt fulfilling the statutory test, the IBC cannot be used as a forum for recovery of disputed or non-crystallised claims. [Paras 12, 13]

Cheques and balance-sheet acknowledgements were not sufficient to demonstrate a crystallised financial debt by the Corporate Debtor; thus admission under Section 7 was not warranted.

Final Conclusion: The Tribunal dismissed the appeal, upholding the Adjudicating Authority's conclusion that the deeds and contemporaneous documents did not establish privity or a crystallised financial debt of the LLP and that the Section 7 petition was therefore not maintainable; no interference was warranted.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process (CIRP) initiation - Existence of default in repayment of financial debt - English mortgage and enforceability of security as a bar to initiation under Section 7 - Overriding effect of Section 238 of the Insolvency and Bankruptcy Code - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional

Existence of default in repayment of financial debt - Admission of application under Section 7 of the Insolvency and Bankruptcy Code - The Section 7 petition filed by the Financial Creditor was admissible on the ground that a financial debt exceeding Rs.1 crore was due and payable and default stood established. - HELD THAT: - The Tribunal examined the Debenture Trust Deed and the documents filed by the Financial Creditor, noted that Non-Convertible Debentures were issued aggregating to Rs.310 crore and that the Corporate Debtor did not dispute the claim or the Debenture Trust Deed. On perusal of the records, including account statements and reports filed with the petition, the Bench concluded that the Corporate Debtor had defaulted in payment and that the threshold financial debt requirement for a Section 7 filing was satisfied. Consequently, the application was found to be complete and in proper form and fit for admission. [Paras 12, 13, 16]

Section 7 petition admitted; CIRP to be initiated.

English mortgage and enforceability of security as a bar to initiation under Section 7 - Overriding effect of Section 238 of the Insolvency and Bankruptcy Code - The defence based on the Debenture Trust Deed and English mortgage-which permitted sale/enforcement of security without court intervention-does not prevent initiation of CIRP under Section 7 and is not a bar to admission of the petition. - HELD THAT: - The Corporate Debtor relied on clauses of the Debenture Trust Deed granting the Financial Creditor various remedies (possession, sale without court intervention, appointment of receiver) and placed reliance on a coordinate bench order in Beacon Trusteeship v. Neptune Ventures. The Tribunal observed that the NCLAT has held that such coordinate-bench decisions are not binding where they fail to consider the overriding effect of the IBC, particularly Section 238. Applying that reasoning, the Bench held that recourse to contractual remedies under an English mortgage does not oust the Financial Creditor's statutory right to initiate proceedings under Section 7 for recovery of a financial debt. The Corporate Debtor's reliance on mortgage remedies was therefore rejected as a ground to deny admission. [Paras 14, 15]

Mortgage-based enforcement rights under the Debenture Trust Deed do not preclude initiating CIRP under Section 7; the mortgage defence is not accepted.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - Upon admission, moratorium under Section 14 is declared and an Interim Resolution Professional is appointed with consequential directions. - HELD THAT: - Following admission of the Section 7 petition, the Tribunal directed the declaration of moratorium in terms of Section 14, restrained specified actions against the corporate debtor, directed public announcement of CIRP, appointed the proposed registered insolvency professional as Interim Resolution Professional and required the Financial Creditor to deposit amounts for IRP expenses. The standard consequential directions for communication to statutory authorities and registry compliance were also issued. [Paras 18]

Moratorium imposed; IRP appointed; consequential directions issued.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by Beacon Trusteeship Limited against Modella Textile Industries Limited, holding that a financial debt and default existed; it rejected the Corporate Debtor's contention that English mortgage enforcement rights barred initiation of CIRP, declared moratorium under Section 14 and appointed an Interim Resolution Professional with appropriate consequential directions.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Recovery of property by an owner or lessor during moratorium - Institution or continuation of proceedings against the corporate debtor during moratorium - Jurisdiction of the Adjudicating Authority under its residuary power in relation to insolvency proceedings - Distinction between public law actions of statutory authorities and matters arising out of insolvency - Effect of an approved resolution plan on pre existing rights and liabilities of the corporate debtor

Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Recovery of property by an owner or lessor during moratorium - Institution or continuation of proceedings against the corporate debtor during moratorium - Whether the lessor could cancel the lease and take possession of the leased land after initiation of CIRP and during the period of moratorium - HELD THAT: - The Court held that once CIRP commenced on 11.03.2019 and moratorium under Section 14 came into effect, the Appellant was precluded from taking coercive steps to cancel the lease or recovering possession of the plot. The object of the moratorium is to preserve the status quo so that the insolvency resolution process may proceed unhindered; accordingly, actions covered by Section 14(1)(a) and (d) are prohibited during the moratorium. The court observed that although the Appellant may have had independent contractual or public law powers to terminate the lease, those powers were fettered for the duration of the moratorium; once CIRP concludes, the Appellant is free to pursue remedies for breach of the lease. The quashing of the termination notice issued during the moratorium was therefore sustainable to protect the statutory freeze, without creating any permanent bar on the Appellant's post CIRP rights. [Paras 29, 30, 31]

Appellant could not cancel the lease or take possession during the moratorium; the Adjudicating Authority's order quashing the notice dated 08.11.2019 is upheld insofar as it protects the moratorium, and the Appellant's rights are preserved after CIRP.

Jurisdiction of the Adjudicating Authority under its residuary power in relation to insolvency proceedings - Distinction between public law actions of statutory authorities and matters arising out of insolvency - Whether the Adjudicating Authority had jurisdiction to entertain the application challenging cancellation of the lease and to pass interim directions - HELD THAT: - The Court recognized that the Adjudicating Authority/NCLT lacks jurisdiction to judicially review certain public law actions of governmental or statutory authorities where those are outside the realm of insolvency (as explained in precedents). However, where actions affect preservation of the corporate debtor's assets or status as a going concern during CIRP, the Adjudicating Authority may exercise its jurisdiction under the Code to protect the moratorium and the insolvency process. Applying these principles, the Court found no error in the Adjudicating Authority entertaining MA No. 3691 of 2019 and issuing interim directions (viz., restraining coercive action during hearing of the resolution plan) insofar as such directions sought to uphold the moratorium and preserve the status quo. [Paras 30]

Adjudicating Authority had jurisdiction to entertain the application and issue interim protection to enforce the moratorium and preserve the status quo; this exercise of jurisdiction is upheld.

Effect of an approved resolution plan on pre existing rights and liabilities of the corporate debtor - Whether a resolution applicant, pursuant to inclusion of the plot in a resolution plan, can acquire better rights than those held by the corporate debtor or extinguish the lessor's pre existing liabilities and rights - HELD THAT: - The Court clarified that where the plot is included in a resolution plan, the Resolution Applicant can at best step into the shoes of the corporate debtor with respect to rights and liabilities that the corporate debtor possessed; the Resolution Applicant cannot acquire superior rights nor can a resolution plan wash away the Appellant's pre existing rights or liabilities under the lease. Consequently, inclusion of the plot in a resolution plan does not fetter the Appellant's rights to take appropriate action after the CIRP concludes. [Paras 31, 32]

Resolution Applicant cannot acquire better rights than those of the corporate debtor; the Appellant's rights and liabilities under the lease survive and may be enforced after CIRP.

Final Conclusion: The appeal is disposed of by upholding the Adjudicating Authority's order insofar as it quashed the termination notice issued during the moratorium and restrained coercive action until the resolution plan proceedings were heard; the moratorium prevented the Appellant from cancelling the lease or taking possession during CIRP, but the Appellant remains free to enforce its contractual and statutory rights in accordance with law once CIRP is complete, and a Resolution Applicant cannot obtain superior rights to those of the corporate debtor.

Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code - proof of financial debt and record of default - limitation and acknowledgment of debt - requirement of Information Utility records and bankers' books - non-compliance with Regulation 2A of the Insolvency Resolution Process Regulations, 2016

Proof of financial debt and record of default - requirement of Information Utility records and bankers' books - non-compliance with Regulation 2A of the Insolvency Resolution Process Regulations, 2016 - Sufficiency of proof of financial debt and record of default for admitting an application under Section 7 IBC. - HELD THAT: - The Bench found that the petitioner did not produce a Record of Default registered with an Information Utility as contemplated by Section 7(3)(a), nor did the petitioner file a certified copy of entries in the relevant account from the bankers' books or an adjudicating order as required by Regulation 2A. On the basis of the documents before it, the tribunal concluded that the petitioner failed to discharge the statutory evidentiary requirements necessary to establish the existence of an unpaid financial debt for the purposes of initiating CIRP under Section 7. Consequently the petition could not be admitted on the ground of inadequate proof of debt. [Paras 8]

Petition dismissed for failure to prove financial debt and record of default in accordance with statutory and regulatory requirements.

Limitation and acknowledgment of debt - initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code - Whether the claim was barred by limitation or sufficiently revived/acknowledged to permit initiation of CIRP. - HELD THAT: - The tribunal examined the chronology: loan and MOU dated 03.01.1997 with initial default in 1999, a letter of acknowledgment dated 13.09.2002, a settlement deed dated 28.07.2014, and a demand notice with the respondent's reply of 28.05.2021. The Bench observed an unexplained gap between 14.09.2002 and 27.07.2014, and a further period from 28.07.2014 to the demand notice in 2021. The recent admission of inability to repay contained in the reply to the demand notice was insufficient, in the view of the tribunal, to cure the long periods of inaction and to satisfy the requirement that limitation be properly addressed for the purpose of admitting a Section 7 application. The petitioner therefore failed to satisfy the bench on the question of limitation. [Paras 7, 8]

Claim not shown to be within limitation or effectively revived; limitation objection not overcome.

Final Conclusion: The application under Section 7 IBC was dismissed as the petitioner failed to establish the existence of a provable financial debt by producing the requisite Record of Default or bankers' book entries and also failed to satisfactorily address the objection of limitation; no case on merits was made out.

Admission of Section 7 petition under Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt and effect on limitation - appointment of Interim Resolution Professional and duties - moratorium under Section 14 - prohibition on institution or continuation of proceedings and enforcement - public announcement and submission of claims - duty of personnel to cooperate with the Interim Resolution Professional - protection and preservation of corporate debtor's assets as a going concern - deposit for meeting Interim Resolution Professional's expenses

Admission of Section 7 petition under Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt and effect on limitation - The Section 7 application filed by the Financial Creditor was maintainable and admitted and the claim was not barred by limitation. - HELD THAT: - The Tribunal accepted the Financial Creditor's case that financial advances were made to the Corporate Debtor and that payments towards interest and part of the principal were made during 2015-2019 but outstanding dues remained. The Tribunal noted dishonour of a cheque and that the Corporate Debtor had repeatedly acknowledged the debt and made representations about settlement, which gave rise to a fresh period of limitation. The Corporate Debtor did not genuinely dispute the bank statements, ledger entries or the fact of the advance. On these findings the Tribunal concluded that the Section 7 petition lies within limitation and is otherwise maintainable, and admitted the application and initiated the Corporate Insolvency Resolution Process. [Paras 11]

Section 7 petition admitted; claim held within limitation and not barred by law.

Appointment of Interim Resolution Professional and duties - moratorium under Section 14 - prohibition on institution or continuation of proceedings and enforcement - public announcement and submission of claims - duty of personnel to cooperate with the Interim Resolution Professional - protection and preservation of corporate debtor's assets as a going concern - deposit for meeting Interim Resolution Professional's expenses - Upon admission, the Tribunal appointed an Interim Resolution Professional, declared moratorium and issued consequential directions to the IRP, parties and registry. - HELD THAT: - Following admission the Tribunal appointed the IRP proposed by the applicant and required the IRP to perform functions under the Code, including making the public announcement and calling for claims. The moratorium under Section 14 was declared effective from the date of the order until completion of CIRP or earlier orders; the Tribunal prohibited institution or continuation of suits, execution of decrees, enforcement of security or disposal of assets and directed continuity of supply of essential goods or services. Personnel connected with the Corporate Debtor, promoters and management were placed under an obligation to assist the IRP, and the IRP was directed to protect and preserve the value of the Corporate Debtor as a going concern. The applicant was directed to deposit a specified sum to meet IRP expenses and the registry was directed to communicate and upload the order and inform statutory authorities.

IRP appointed; moratorium declared; directions issued for public announcement, claims process, cooperation with IRP, preservation of assets and deposit for IRP expenses.

Final Conclusion: The Company Petition under Section 7 is allowed; CIRP of the Corporate Debtor is commenced from the date of the order, an Interim Resolution Professional is appointed and statutory moratorium and ancillary directions are made operative.

Proceeds of crime - reasonable belief - exoneration on merits - prima facie case - higher standard of proof in criminal cases - adjudication proceedings and criminal prosecution are independent - abuse of process - Radheshyam Kejriwal principle

Proceeds of crime - exoneration on merits - prima facie case - Radheshyam Kejriwal principle - Whether the PMLA proceedings (ECIR CEZO/19/2016 and related complaint) could be sustained when the scheduled offences leading to them were investigated and subsequently closed/exonerated and the Income Tax Department recorded that the seized cash was explained and taxed. - HELD THAT: - The Court analysed the closure of the main CBI FIR RC MA1 2016 A0040 by way of an accepted closure report for lack of sufficient evidence, the quashment of two related FIRs by the High Court, the Adjudicating Authority's refusal to confirm provisional attachment on grounds of non identification of banks/bank officials and absence of material, and the Income Tax Department's communication dated 16.05.2019 recording that the seized new currency belonged to the partnership (M/s SRS Mining), was reflected in books and tax was paid for Financial Year 2016 17. Applying the principle in Radheshyam Kejriwal that while adjudication and criminal proceedings are independent, an exoneration on merits in adjudication proceedings (or equivalent finding that allegations are not sustainable on merits) precludes continuation of criminal prosecution as an abuse of process, the Court held that the material collected did not make out a prima facie case under PMLA. The Court emphasised that allegations under PMLA must be proved beyond reasonable doubt and that the Enforcement Directorate had not produced incriminating material over a lengthy period; consequently the prospects of proving money laundering beyond reasonable doubt were bleak. For these reasons the Court concluded that continuation of PMLA proceedings was not justified. [Paras 16, 18, 19]

PMLA proceedings ECR CEZO/19/2016 and the complaint could not be sustained in view of closure/quashment of the scheduled offence proceedings and the I.T. Department's findings; no prima facie case was made out.

Reasonable belief - adjudication proceedings and criminal prosecution are independent - abuse of process - Whether the Adjudicating Authority's order refusing confirmation of attachment and its observations could be treated as a bar to criminal proceedings under PMLA. - HELD THAT: - The Court noted the Adjudicating Authority's detailed findings that the Deputy Director's formation of "reasonable belief" was impaired by lack of identification of banks or bank officers and by attaching the entire seized amount despite forming belief only as to part. While adjudication and criminal proceedings are not mutually dependent, the nature of the Adjudicating Authority's exculpatory findings (that the reasonable belief was baseless/speculative and attachments were not supported) was relevant to assess whether a prima facie case existed. Given those findings together with the CBI closure and the I.T. Department's tax/accounting explanation, the Court found that the reasonable belief underpinning the PMLA action was not sustained and that continuing prosecution would amount to misuse of process. [Paras 16, 18]

The Adjudicating Authority's findings materially undermined the "reasonable belief" required for attachment and supported setting aside the PMLA proceedings.

Final Conclusion: The High Court order is set aside; the Supreme Court allowed the appeal and quashed ECR CEZO/19/2016 including Complaint No. 2 of 2017, holding that in the circumstances-closure/quashment of scheduled offence proceedings, the Adjudicating Authority's findings and the I.T. Department's tax/accounting record-no sustainable prima facie case under PMLA existed and continuation of prosecution would be an abuse of process.

Exemption from electricity duty for captive power generation - promissory estoppel - legitimate expectation - industrial policy as public representation - follow-up notification to give effect to policy - interpretation of policy clauses regarding scope and single time incentives - inadmissibility of fresh reasons by executive in appellate affidavit - remand for fresh assessment and consequential refund

Exemption from electricity duty for captive power generation - industrial policy as public representation - promissory estoppel - legitimate expectation - Entitlement of the petitioner to ten years' exemption from electricity duty in respect of its 30 MW captive power plant under Clause 15.2.2 of the Jharkhand Industrial Policy-2001. - HELD THAT: - Clause 15.2.2 of the Industrial Policy-2001 promises exemption from electricity duty for captive power generation for ten years from date of commercial production and was intended to encourage establishment of CPPs to meet industrial demand. The Court treated the Policy as a public representation giving rise to legitimate expectation and, applying the principles of promissory estoppel as recognised by the Supreme Court, held that delay by the State in issuing the follow-up notification cannot defeat the entitlement of an industrial unit which established a CPP during the subsistence of the Policy. The petitioner's 30 MW CPP commenced commercial production on 04.05.2009 during the extended subsistence of the Policy; the follow-up notification was eventually amended to extend validity up to 31.03.2011 and the petitioner obtained a certificate of commercial production. In these circumstances the Assessing Authority, Appellate Authority and Tribunal were wrong to deny the benefit on the ground of delayed notification or non-production of the certificate when both defects were cured. The Court therefore granted the exemption in respect of the 30 MW CPP under Clause 15.2.2. [Paras 29, 31, 35, 36, 48]

Petitioner entitled to ten years' exemption from electricity duty for the 30 MW CPP from 04.05.2009 under Clause 15.2.2 of the Jharkhand Industrial Policy-2001; earlier orders denying exemption set aside.

Interpretation of policy clauses regarding scope and single time incentives - definition of industrial unit versus captive power plant - Whether the Industrial Policy-2001 limited exemption from electricity duty to only one CPP or treated incentives as available only once to a unit such that subsequent CPPs would be ineligible. - HELD THAT: - Clause 29.2 expressly states that certain fiscal incentives listed therein are admissible only once to a unit; Clause 29.4 (Captive Power Generating Subsidy) is a monetary subsidy and is confined by that 'only once' language. Clause 15.2.2, by contrast, deals with exemption from electricity duty for captive power generation and uses distinct terminology ('Captive Power Generation Plant' and 'Industrial Unit'), indicating different treatment. The Policy thus demonstrates that where a restriction to 'only once' was intended it was expressly provided; exemption under Clause 15.2.2 is not so limited and applies to captive power generation irrespective of number of CPPs. Further, the definition of 'Industrial Unit' does not encompass CPPs, and expansion rules relate to industrial units, not separate CPPs. Accordingly the State's contention that only one CPP could receive exemption was rejected. [Paras 45, 46, 47]

Exemption under Clause 15.2.2 is not restricted to only one CPP; the 10 MW and 30 MW CPPs are not excluded on the ground urged by the State.

Follow-up notification to give effect to policy - inadmissibility of fresh reasons by executive in appellate affidavit - tribunal exceeding jurisdiction by raising new grounds - Validity of the Tribunal's reliance on (a) alleged suppression by petitioner of the Business Transfer Agreement and (b) rejection of the Director of Industries' certificate for want of an enquiry report. - HELD THAT: - The Tribunal drew adverse inferences and dismissed the revision petitions on grounds not urged by the State before it, namely suppression of the transfer to Tata and doubting the commercial production certificate for lack of an enquiry report, despite no objection being raised by the State to those matters. The Court held such findings to be perverse and beyond the Tribunal's competence to invent new bases for upholding the denial of exemption. The State itself did not dispute issuance or genuineness of the certificate, and the transfer did not affect liability for past taxes; accordingly the Tribunal erred in rejecting the certificate and in holding the petitioner guilty of concealment. [Paras 37, 38, 41]

Findings of concealment and rejection of the Director of Industries' certificate by the Tribunal were perverse and set aside.

Remand for fresh assessment - Direction to the assessing authority following quashing of the Tribunal orders. - HELD THAT: - Having declared the petitioner entitled to exemption for the 30 MW CPP and set aside the Tribunal's orders, the Court remitted the matter to the Deputy Commissioner of Commercial Taxes, Adityapur Circle, Jamshedpur, to pass fresh assessment orders to give effect to the exemption and to issue consequential excess demand notices for refund of any electricity duty realized in respect of the 30 MW CPP. The remand is for the assessing authority to pass fresh orders consistent with the Court's findings and to effect consequential adjustments/refunds. [Paras 48]

Matter remanded to the Deputy Commissioner for fresh assessment and issuance of consequential excess demand/refund notices consistent with the Court's directions.

Final Conclusion: Writ petitions allowed. Orders of the Commercial Taxes Tribunal dated 29.01.2020 are quashed and set aside; the petitioner is entitled to ten years' exemption from electricity duty in respect of the 30 MW captive power plant from 04.05.2009 under Clause 15.2.2 of the Jharkhand Industrial Policy-2001. The matter is remanded to the Deputy Commissioner, Adityapur Circle, for fresh assessment and consequential refund/adjustment as directed.

Bank attachment - lifting of attachment on deposit - protection pending fresh assessment - opportunity of personal hearing - redo the assessment

Bank attachment - lifting of attachment on deposit - protection pending fresh assessment - Validity of the attachment of the appellant's bank account and the condition for its lifting by payment to the Revenue. - HELD THAT: - The Court recognised that the original assessment orders for the assessment years in question had been set aside and that no fresh assessment had been passed. Noting the financial hardship pleaded by the appellant and the prior payments and objections filed, the Court found it appropriate to modify the conditional order made by the writ Court which required payment of 50% of a stated amount for lifting the attachment. While upholding the requirement that a security deposit/partial payment be made for conditional relief, the Court reduced the quantum to be deposited to facilitate the appellant's ability to carry on business, while keeping intact the requirement that the assessment be redone and that other directions previously issued be complied with. [Paras 8]

The earlier direction for payment of 50% was reduced and the appellant was ordered to deposit Rs.15,00,000/- within six weeks; upon such payment the attachment would be lifted, other conditions remaining in force.

Opportunity of personal hearing - redo the assessment - Obligation of the Revenue to reconsider and pass fresh assessment after treating the impugned orders as show cause notices and after considering the appellant's objections. - HELD THAT: - The Court recorded that earlier orders had set aside the impugned assessment orders and had directed the respondent to treat those orders as show cause notices, consider the objections filed by the appellant (including the objections dated 02.08.2018), afford an effective opportunity of personal hearing, inspect the equipment if necessary and thereafter pass fresh assessment orders in accordance with law. The present decision leaves those directions intact and requires the respondent to complete the assessment proceedings after giving the appellant an opportunity of hearing and considering the materials already filed, with final orders to be passed within the timeframe stipulated by the earlier directions as read with the present order. [Paras 3, 6, 8]

The matter is to be reconsidered and fresh assessments are to be framed after affording the appellant a personal hearing and considering its objections; the directions in the earlier orders remain operative.

Final Conclusion: The writ appeal is allowed to the extent of reducing the conditional deposit required for lifting the bank attachment to Rs.15,00,000/-, to be paid within six weeks; all other directions to the Revenue to afford hearing and to redo/pass fresh assessment orders remain unaltered. The appeal is dismissed in other respects. No costs.

Attachment of bank account - compliance with conditional order - treatment of assessment orders as show cause notices - personal hearing before reassessment - remand for reconsideration on deposit

Attachment of bank account - compliance with conditional order - treatment of assessment orders as show cause notices - Validity of the impugned order of attachment in light of the petitioner's alleged compliance with the earlier conditional order dated 19.06.2018. - HELD THAT: - The Court examined whether the petitioner had complied with the two conditions imposed by the earlier order: payment of 15% of the tax demanded and filing a reply treating the assessment orders as show cause notices. It was accepted that the 15% payment was made within the stipulated time, but the Court found no proof that the petitioner filed the reply on 02.08.2018. In view of the Revenue's stand that no such reply was received and in absence of any acknowledgment or evidence from the petitioner, the Court treated the second condition as not complied with. Consequentially, under the terms of the earlier direction, the Revenue was not precluded from initiating recovery proceedings; the impugned attachment therefore did not suffer procedural illegality on that ground. [Paras 13, 14, 15, 16]

Attachment challenged in the petition is not procedurally irregular insofar as it was made after the petitioner failed to establish compliance with the second condition of the earlier order.

Remand for reconsideration on deposit - personal hearing before reassessment - Whether the matter should be remitted for reconsideration and on what conditions, including the quantum to be deposited and the procedure to be followed on remand. - HELD THAT: - The Court noted that part of the demand related to an entry tax assessment which had earlier been set aside; deducting that component from the total demand produced an adjusted figure. To balance interests, the Court exercised its discretion to remit the matter for reconsideration on a conditional basis: the petitioner was to deposit 50% of the adjusted demand within two weeks. Upon such deposit, the respondent must consider any reply said to have been filed on 02.08.2018, afford the petitioner a personal hearing and pass final assessment orders within six weeks. The Court also ordered that, if the 50% deposit is made as directed, the impugned attachment shall be lifted; if not, the Revenue is at liberty to pursue recovery under the impugned attachment or other modes. [Paras 17, 18, 19, 20]

Matter remitted to respondent for reconsideration on condition of deposit of 50% of the adjusted demand within two weeks; on deposit, respondent to consider the petitioner's reply, grant personal hearing and pass final orders within six weeks, and the bank attachment shall be lifted; failure to deposit permits Revenue to proceed with recovery.

Final Conclusion: Writ petition disposed by remitting the assessment back to the respondent for reconsideration on specified conditions: deposit of 50% of the adjusted demand within two weeks, consideration of the petitioner's reply and personal hearing, final orders within six weeks, and lifting of the bank attachment upon compliance; failure to comply permits Revenue to pursue recovery.

Termination of mandate of an arbitrator under section 14(1)(a) - jurisdiction of the court under section 14(2) to decide termination of mandate - maintainability of an application under section 11(6) of the Arbitration and Conciliation Act, 1996 - distinction between section 11(5) and section 11(6) - appointment of arbitrator by mutual consent in absence of a written arbitration agreement - scope of Order VII Rule 11 CPC at the threshold

Maintainability of an application under section 11(6) of the Arbitration and Conciliation Act, 1996 - Application under section 11(6) is not maintainable where there is no written contract containing an arbitration agreement and the arbitrator was appointed by the parties by mutual consent. - HELD THAT: - The Court examined subsection (2), (5) and (6) of section 11 and held that subsection (6) is attracted only where there is an appointment procedure agreed upon in a written arbitration agreement. If parties, even in absence of a written arbitration clause, by mutual consent refer the dispute to a sole arbitrator and nominate one, subsection (6) does not apply. In such circumstances applications under section 11(6) seeking appointment or substitution are not maintainable because there is no written agreement prescribing an appointment procedure as contemplated by subsection (6). [Paras 6, 7]

Application under section 11(6) was not maintainable in the present case where the sole arbitrator was appointed by mutual consent in the absence of a written arbitration agreement.

Distinction between section 11(5) and section 11(6) - Section 11(5) and section 11(6) serve different circumstances and must be applied accordingly. - HELD THAT: - The Court explained that section 11(5) applies where no appointment procedure under subsection (2) is agreed and the court is called upon to appoint an arbitrator in an arbitration with a sole arbitrator; section 11(6) applies where a written appointment procedure exists and that procedure has failed. Thus, where parties have agreed a procedure in writing subsection (6) applies; where there is no such written agreement subsection (5) (or consensual appointment followed by section 11(5) remedy if needed) governs. The Court reiterated that once an arbitrator is appointed by mutual consent the arbitration agreement cannot be invoked a second time for appointment under section 11(6). [Paras 6, 7, 11]

There is a clear distinction: section 11(5) governs appointments absent an agreed procedure in writing; section 11(6) governs failures under an agreed written appointment procedure.

Termination of mandate of an arbitrator under section 14(1)(a) - jurisdiction of the court under section 14(2) to decide termination of mandate - A controversy as to termination of an arbitrator's mandate under section 14(1)(a) must be decided by the 'court' under section 14(2) and cannot be finally determined in proceedings under section 11(6). - HELD THAT: - The Court analysed sections 13, 14 and 15 and observed that events under section 14(1)(a) (de jure/de facto inability or failure to act without undue delay) constitute a disqualification which the statute requires to be adjudicated by the 'court' defined in section 2(e). While challenges under section 13 proceed before the arbitral tribunal, disputes about termination under section 14(1)(a) must be raised under section 14(2) before the competent court. Consequently, an application under section 11(6) is not the proper forum to decide whether the arbitrator's mandate has terminated under section 14(1)(a). [Paras 6, 8, 11]

Disputes concerning termination of mandate under section 14(1)(a) are to be decided by the court under section 14(2), not in proceedings under section 11(6).

Appointment of arbitrator by mutual consent in absence of a written arbitration agreement - Where parties appoint a sole arbitrator by mutual consent in the absence of a written arbitration agreement, the subsequent invocation of section 11(6) for appointment or substitution is impermissible. - HELD THAT: - The Court held that parties may, even without a written contract, agree on appointment procedure and nominate a sole arbitrator; once so appointed the arbitration agreement cannot be re-invoked to seek appointment under section 11(6). If replacement becomes necessary after a valid termination under section 14(1)(a) the substitute must be appointed according to the rules applicable to the original appointment (and, if parties cannot agree, appropriate recourse under section 11(5) may be sought). The Court relied on prior precedent to the same effect and applied it to the facts where the sole arbitrator had been appointed by mutual consent. [Paras 6, 7, 9, 11]

An arbitrator appointed by mutual consent in absence of a written arbitration agreement cannot be displaced by an application under section 11(6).

Scope of Order VII Rule 11 CPC at the threshold - The Trial Court rightly dismissed the Order VII Rule 11 application because contested questions of undue delay under section 14(1)(a) are matters of defence to be adjudicated on merits and cannot be resolved at the threshold by considering material beyond the plaint/averments. - HELD THAT: - The Court reiterated the settled principle that at the stage of an Order VII Rule 11 dismissal only the averments in the plaint or initiating application are to be considered and not the defence or disputed factual matters. The allegation that there was no undue delay by the arbitrator is a substantive defence which must be decided by the court seised of the section 14(2) application on merits. Accordingly, the Trial Court did not err in refusing to reject the section 14 application on the basis pleaded by the appellant. [Paras 4, 12]

The Trial Court correctly dismissed the Order VII Rule 11 application; the issue of undue delay is to be decided on merits by the court under section 14(2).

Final Conclusion: High Court's order terminating the sole arbitrator's mandate and appointing a substitute under section 11(6) is quashed and set aside. Proceedings under section 14(2) filed before the competent court are to be revived and decided on merits in accordance with law within the directed time; if termination under section 14(1)(a) is finally found, substitution must follow by the procedure applicable to the original appointment (or by resort to section 11(5) if parties do not agree). The Trial Court's rejection of the Order VII Rule 11 challenge is sustained; appeals against the High Court order are allowed, while appeals challenging the Trial Court's Order VII Rule 11 decision are dismissed.

Acquittal Appeal - Section 138 Negotiable Instruments Act - Presumption under Section 139 of Negotiable Instruments Act - Re-appreciation of evidence on appeal - Benefit of doubt and presumption of innocence - Scope of interference in appeals against acquittal - When two views are possible appellate restraint

Section 138 Negotiable Instruments Act - Presumption under Section 139 of Negotiable Instruments Act - Proof of consideration and payment - Whether the acquittal of the accused for the offence under Section 138 of the Negotiable Instruments Act was justified on the evidence produced by the complainant. - HELD THAT: - The trial court acquitted the accused on the basis that the complainant failed to establish the alleged transaction and payments: no documentary evidence such as bank passbook, banakhat or third party deposition was produced; account extracts were not properly proved as the preparer was not examined; the complainant admitted that the property was not in the accused's name and no registered sale (banakhat) had been executed; and there was no written proof of substantial cash payment notwithstanding statutory limits on cash transactions. On re appreciation, the High Court held that these findings are supported by the record and that the complainant did not discharge the burden of proving receipt of the monies by the accused. The Court reiterated that although Section 139 creates a rebuttable presumption in favour of the holder, the accused may rebut it on the preponderance of probabilities and that here the materials and inconsistencies in the complainant's evidence justified the trial court's conclusion of non proof of the requisite consideration and transaction. [Paras 7, 8]

The acquittal of the accused under Section 138 N.I. Act is upheld as the complainant failed to prove the transaction and payments.

Re-appreciation of evidence on appeal - Benefit of doubt and presumption of innocence - When two views are possible appellate restraint - Whether the High Court should interfere with the trial court's order of acquittal on the material on record. - HELD THAT: - The High Court recognized its power to review and re appreciate evidence in an appeal against acquittal but emphasized the well settled principle that an appellate court must be slow to disturb a finding of acquittal, particularly where two views are reasonably possible. Relying on the principle that the presumption of innocence is reinforced by an acquittal and that the trial court's appreciation of witness credibility merits deference, the Court found no perversity or manifest unsustainability in the trial court's conclusions. In absence of special reasons to overturn the acquittal, interference was not warranted. [Paras 6, 9]

No interference with the trial court's order of acquittal; appellate restraint applied and the appeal dismissed.

Final Conclusion: Criminal Appeal dismissed. The judgment and order of acquittal passed by the trial court in respect of the offence under Section 138 of the Negotiable Instruments Act is affirmed; no grounds exist for interference as two views were possible and the complainant failed to prove the transaction and payments.

Section 138 of the Negotiable Instruments Act - cheque issued as security - legally enforceable debt or liability - dishonour for insufficiency of funds - agreement void for uncertainty (Section 29, Contract Act) - revisional and inherent jurisdiction

Section 138 of the Negotiable Instruments Act - cheque issued as security - legally enforceable debt or liability - Whether dishonour of a cheque issued as security attracts the penal consequences under Section 138 of the N.I. Act where a legally enforceable debt or liability exists. - HELD THAT: - The Court applied the settled principle that the decisive question is whether, at the time of presentation, a legally enforceable debt or liability existed in favour of the complainant. Reliance was placed on Supreme Court decisions holding that a cheque described as 'security' does not lose its character as an instrument for discharge of debt if the underlying liability has become due; mere labelling as 'security' is not decisive. Where the agreement and contemporaneous facts show that money was owing and payable, presentation of a cheque issued as security and its subsequent dishonour falls within Section 138. Applying those principles to the admitted agreement of 5th March 2013, the Court found the petitioner had acknowledged a liability of Rs. 9.50 lacs when the cheque was issued and failed to liquidate it, so the cheque matured for presentation and the penal provision is attracted. [Paras 14, 15, 16, 17, 18]

Held that Section 138 is attracted despite the cheque being described as security because a legally enforceable debt existed when the cheque was issued; conviction under Section 138 is sustained.

Agreement void for uncertainty (Section 29, Contract Act) - Whether the agreement of 5th March 2013 is void for uncertainty under Section 29 of the Contract Act on account of allegedly contradictory covenants. - HELD THAT: - The Court examined the covenants and declined to treat them as mutually repugnant. The agreement unequivocally acknowledged the petitioner's liability and his positive undertaking to pay. The clause describing the cheque as 'not to be presented for encashment' was treated as subordinate to the overall obligation to discharge the debt; the covenant must be construed so as to give effect to the parties' intention rather than render obligations illusory. The Delhi authority relied on by the petitioner was distinguished on its facts where consideration was unlawful; in the present case the transaction was lawful and the agreement sufficiently certain. [Paras 19, 20, 21]

Agreement is not void for uncertainty; the covenant not to present the cheque is to be disregarded so as to give effect to the admitted liability and obligation to pay.

Dishonour for insufficiency of funds - Whether complainant proved that the cheque was dishonoured for insufficiency of funds despite the bank witness stating he had not seen the petitioner's account. - HELD THAT: - The bank witness gave evidence of online verification of the dishonour memo. The Court observed that in modern banking a branch official may access account information online without physically inspecting the passbook, and the memo of dishonour remains admissible. Further, the petitioner failed to rebut the memo by producing account statements in defence; having not done so, the presumption in favour of correctness of the dishonour memo stands. [Paras 24, 25]

Proof of dishonour for insufficiency of funds was held sufficient; the contention based on the bank witness's lack of physical inspection was rejected.

Revisional and inherent jurisdiction - Whether this Court should interfere with concurrent findings of conviction recorded by the trial and appellate courts in exercise of revisional or inherent jurisdiction. - HELD THAT: - The Court emphasised the limited scope of interference under Section 561-A Cr.P.C. read with the revisional power invoked: interference is warranted only where there is illegality, impropriety writ large, or failure of justice. Concurrent findings of fact by subordinate courts cannot be reappreciated unless they are patently illegal or perverse. Applying that standard, the Court found no such patent illegality or perversity in the reasoning or findings of the courts below. [Paras 10]

No interference; the petition under revisional/inherent jurisdiction dismissed.

Final Conclusion: The petition is dismissed. The concurrent findings of the trial and appellate courts upholding conviction under Section 138 of the N.I. Act are sustained; the trial court is directed to proceed to execute the sentence as modified by the appellate court.

Offences by companies under Section 141 of the Negotiable Instruments Act - Offences under Section 138 of the Negotiable Instruments Act (dishonour of cheque) - Liability of persons in charge of and responsible for conduct of companya TMs business - Requirement of specific role attribution in complaint for prosecution of company officers - Prima facie satisfaction for framing of trial and prohibition of roving inquiry at pre-trial stage

Liability of persons in charge of and responsible for conduct of companya TMs business - Prima facie satisfaction for framing of trial and prohibition of roving inquiry at pre-trial stage - Whether basic averments that certain directors and the cheque-signatory were "in charge of, and responsible to, the company for the conduct of business" are sufficient in the complaint without detailing a specific role for each of them. - HELD THAT: - The Court recorded that the complaint expressly avers that A.1 is a company, A.2 signed cheques on behalf of A.1, and A.3 to A.5 are directors who were "in charge of, and responsible to," the day to day affairs of the company. Noting the admitted facts regarding purchase of goods, issuance of the cheque by A.2 and its dishonour, the Court held that the basic ingredients of Section 141(1) are prima facie satisfied. The Court emphasised that at the criminal petition stage it would be inappropriate to conduct a roving inquiry into the details of the transactions, and that specific role-attribution beyond the pleaded averments is not necessary for these accused where complicity is prima facie made out by the complaint. [Paras 5, 6, 9, 10]

Complaint is sufficient as against A.1 (the company), A.2 (the cheque-signatory), and A.3 to A.5 (directors); no further specific role-attribution is required at the pre-trial stage and proceedings will not be quashed.

Requirement of specific role attribution in complaint for prosecution of company officers - Offences by companies under Section 141 of the Negotiable Instruments Act - Whether the complaint adequately alleges a specific role against A.6 so as to attract liability under Section 141(2) and permit trial to proceed. - HELD THAT: - The Court examined the complaint and accompanying material which included messages and letters attributed to A.6. On a prima facie reading those communications indicated active involvement by A.6 in the transactions between the complainant and the accused, and that he acted on behalf of the other accused. Given that Section 141(2) addresses liability where an offence is committed with the consent, connivance or neglect of an officer, the Court found that a specific role has been pleaded against A.6. The veracity of those allegations is a matter for trial; at the present stage the Court declined to undertake detailed fact-finding. [Paras 6, 11]

Complaint sufficiently attributes a specific role to A.6 for the purposes of proceeding under Section 141(2); the petition to quash is dismissed and the allegations against A.6 are to be adjudicated at trial.

Final Conclusion: Criminal Petitions under Section 482 Cr.P.C. seeking quashing of C.C. No.582 of 2015 are dismissed; the complaint prima facie satisfies the requirements of Sections 138 and 141 of the Negotiable Instruments Act so that trial may proceed, and no roving enquiry will be conducted at the pre-trial stage.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Quashing of conviction pursuant to settlement between parties - Judicial recognition of compromise in cheque dishonour cases - Direction for disbursement/withdrawal of amounts deposited pending litigation

Compounding of offence under Section 138 of the Negotiable Instruments Act - Quashing of conviction pursuant to settlement between parties - Judicial recognition of compromise in cheque dishonour cases - Impugned convictions under Section 138 N.I. Act were to be quashed and the accused acquitted in view of an amicable settlement between the parties and the principle permitting compromise in cheque dishonour matters. - HELD THAT: - The High Court noted that the complainant (respondent No.1) filed an affidavit recording that the dispute between the parties stood settled and that he had no objection to quashing the convictions. Applying the ratio of the Apex Court in Vinay Devanna Nayak - which recognises the object of Section 138 and that compromise between parties in cheque dishonour cases may be permitted - the Court held there was no reason to refuse compounding. Having considered the affidavits, the parties' confirmations of settlement and the submissions, the Court found that nothing required adjudication on merits and permitted the parties to compound the offence. Accordingly the criminal revision was allowed and the judgments and orders of the trial and first appellate courts were quashed, and the accused acquitted of the Section 138 charge (subject to there being no conviction for any other offence). [Paras 6, 7, 9]

Revision allowed; convictions under Section 138 N.I. Act quashed and accused acquitted in view of settlement and compounding.

Direction for disbursement/withdrawal of amounts deposited pending litigation - Verification before release of deposited amount - Whether the amount deposited in the subordinate Court could be released to the complainant in accordance with the settlement. - HELD THAT: - The Court recorded the terms of the affidavit filed by the complainant and the parties' request for disposal on the basis of settlement. In consequence, the Court permitted the complainant (respondent No.1) to withdraw the amount deposited before the trial Court pursuant to the earlier order, but directed that the Trial Court shall release the said amount only after due verification. The Court therefore disposed of the miscellaneous application for withdrawal/disbursement subject to verification by the subordinate Court.

Applicant (Proprietor of Joy Corporation) permitted to withdraw the deposited amount subject to verification by the Trial Court; miscellaneous application disposed of.

Final Conclusion: The Criminal Revision Application was allowed: the convictions and orders under Section 138 N.I. Act by the trial and first appellate courts were quashed and the accused acquitted in view of the settlement and recognized compounding; separately, the complainant was permitted to withdraw the amount deposited in the trial Court subject to due verification, and the miscellaneous application was disposed of accordingly.