TaxTMI Updates e-Newsletter
May 10,2021

Violation of principles of natural justice - right to notice and opportunity to be heard - reliance on third-party statement - supply of documents relied upon - speaking order

Violation of principles of natural justice - right to notice and opportunity to be heard - reliance on third-party statement - supply of documents relied upon - Assessment order set aside for failure to supply and permit confrontation of a third party statement relied upon, causing breach of natural justice; matter remanded for fresh consideration after supply and hearing. - HELD THAT: - The Assessing Officer based the impugned assessment on a statement recorded from a third party supplier which, according to the assessment, indicated that the supplier had not received inward goods nor made outward supply. The petitioner had specifically requested a copy of the statement and reserved the right to cross examine the third party and to file objections, but the assessment was finalized without furnishing the statement or affording the petitioner an opportunity to be heard. Because the third party statement formed the basis of the adverse conclusion, denial of access to that material and of a hearing amounted to a breach of the principles of natural justice. The appropriate remedy is to set aside the assessment and direct the officer to supply the statement and other particulars relied upon, grant the petitioner an opportunity to make submissions and objections, and thereafter pass a fresh, reasoned (speaking) order after considering those submissions. [Paras 3, 4, 5]

Impugned assessment order set aside; officer directed to supply the statement and particulars within three weeks, afford the petitioner a hearing to file submissions and objections, and thereafter pass a speaking order within six weeks of the first hearing.

Final Conclusion: Writ petition allowed by consent; assessment order quashed on natural justice grounds and remitted for fresh adjudication after supply of relied upon material and hearing, with timelines directed by the Court.

Input Tax Credit carry forward - TRAN-1 rectification - inadvertent/human error - procedural relief in nascent GST regime - transition of credit - Assessing Officer's authority on utilization

Input Tax Credit carry forward - TRAN-1 rectification - inadvertent/human error - procedural relief in nascent GST regime - Whether the petitioner should be permitted to correct an inadvertent error in TRAN-1 and carry forward the correct input tax credit into the GST regime despite earlier rejection of the rectification request. - HELD THAT: - The petitioner filed TRAN-1 within time but an inadvertent mistake led to understatement of the credit and a subsequent correction was entered into the wrong table. The rectification application filed later was rejected. The Revenue contended that opportunities for rectification were available during the extended period and therefore the present request should not be allowed. The Court found the error to be inadvertent and attributable to human error, a fact not disputed by the Revenue. Having regard to the nascent stage of the GST regime and the procedural character of the mistake, a rigid approach was not warranted. The Court also observed that permitting the transition affects only the availment of credit and not its utilization, which remains subject to assessment by the Assessing Officer at the appropriate stage. On these grounds the petitioner was permitted to effect the necessary modification and transition of credit. [Paras 2, 3, 4, 5]

Petition allowed; respondent (Deputy Commissioner, Nodal Officer) to enable modification and transition of the credit within four weeks of uploading of the order upon application by the petitioner.

Final Conclusion: Writ petition allowed; petitioner permitted to correct TRAN-1 and transition the input tax credit into the GST regime, with the Deputy Commissioner to enable the modification within four weeks on application; no costs.

Mandamus - extension of timelines under amnesty scheme - Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 - policy intervention of the Union Government - scope of judicial review under Article 32

Mandamus - extension of timelines under amnesty scheme - policy intervention of the Union Government - scope of judicial review under Article 32 - Prayer for a mandamus directing respondents to extend the date for payment under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019. - HELD THAT: - The writ petition seeking a direction to extend the date for full and final settlement under the amnesty scheme was rejected on the authoritative basis that timelines and terms of an amnesty scheme are policy matters. The court applied the ratio of Satyakam Arya v. Union of India, noting that requests for extension of an Amnesty Scheme and related reliefs fall within executive policy and are inappropriate for adjudication under Article 32. The petitioner's procedural conduct - seeking adjournments for filing a rejoinder which was never filed - was noted but did not attract costs. [Paras 1, 2, 3]

Writ petition dismissed; connected miscellaneous petition closed; no costs.

Final Conclusion: The High Court dismissed the petition for a mandamus to enlarge the payment date under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019, holding that extension of timelines under an amnesty scheme is a policy matter not amenable to relief under Article 32; connected miscellaneous petition closed and no costs awarded.

Taxability of transportation of passengers by motor cycles not having contract carriage permit - scope of the GST exemption entry at Sl. No.15(b) of Notification No.12/2017-Central Tax (Rate) - uniform levy of Central GST and State GST on ride hailing services - mandamus to direct administrative decision on representations regarding GST liabilities - state competence in issuance of contract carriage permits

Taxability of transportation of passengers by motor cycles not having contract carriage permit - scope of the GST exemption entry at Sl. No.15(b) of Notification No.12/2017-Central Tax (Rate) - mandamus to direct administrative decision on representations regarding GST liabilities - Whether the petitioner was entitled to a mandamus directing the Board to decide its representations on the taxability of receipts from ride hailing services using motor cycles without contract carriage permit and the legal position on taxability under the exemption notification. - HELD THAT: - The Board conducted a hearing with major stakeholders including the petitioner and other operators and summarised the discussions in its counter. The stakeholders agreed that the GST exemption entry at Sl. No.15(b) of Notification No.12/2017-Central Tax (Rate) does not exempt services of transportation of passengers using motor cycles which do not have a contract carriage permit. The Board recorded that, in view of the absence of ambiguity in the exemption entry and the stakeholders' agreement, no further action on the representations was required; representatives (for example Rapido) were advised to discharge GST as per existing provisions and the Board would take appropriate action where suppliers were not complying. The court recorded these averments and the petitioner's submission that the matter had been heard and resolved satisfactorily, treating the prayer for mandamus as fulfilled.

Petition dismissed as the mandamus sought stood achieved in view of the Board's consideration and the stated position that transportation by motor cycles without contract carriage permit is taxable under the cited exemption entry; matter closed with no costs.

Final Conclusion: The writ petition seeking a mandamus was closed as the Board heard stakeholders, recorded that the exemption entry at Sl. No.15(b) does not exempt passenger transport by motor cycles without contract carriage permit, advised compliance and indicated enforcement where necessary; the court found the relief sought satisfied and dismissed the petition with no costs.

Bail under Section 437 Cr.P.C. - grant of bail where accused have remained in custody pending filing of charge-sheet beyond approaching statutory period of 60 days - custodial interrogation and need for custody - prima facie satisfaction in bail applications - risk of tampering with evidence and witnesses

Bail under Section 437 Cr.P.C. - grant of bail where accused have remained in custody pending filing of charge-sheet beyond approaching statutory period of 60 days - custodial interrogation and need for custody - prima facie satisfaction in bail applications - Applicants Manish and Vikas were admitted to bail pending further proceedings on furnishing bonds and complying with specified conditions. - HELD THAT: - The Court, applying established principles for grant of bail, took into account the nature of the accusations and the supporting material on record, the period of pre-trial incarceration (about 57 days), and the prosecution's inability to state whether a complaint/charge-sheet would be filed within the statutory 60-day period. The Court noted that the main accused had already been released on bail and that the applicants contended they were not required for further custodial interrogation and had retracted statements. The prosecution relied on material seized from the main accused to link the applicants, but the Court, weighing the totality of circumstances including the prolonged custody without filing of the charge-sheet, the observations in a similar High Court order relied upon by the applicants, and the prevailing pandemic situation, formed prima facie satisfaction to grant bail. Standard protective conditions were imposed to guard against flight and tampering with evidence and witnesses.

Applicants Manish and Vikas admitted to bail on furnishing bonds with surety and subject to conditions including surrender of passports/permission to leave India, attendance, prohibition on committing similar offences, and non-interference with witnesses or evidence.

Final Conclusion: Bail granted to the two applicants on conditions, primarily due to the prolonged pre-charge custody and the prosecution's inability to assure filing of the charge-sheet within the statutory period, with safeguards imposed to prevent flight and tampering.

Regular bail under section 437 Cr.P.C. - economic offences and bail jurisprudence - territorial jurisdiction - illegal arrest outside jurisdiction - protection against self incrimination under Article 20(3) - Section 132(5) of the CGST Act, 2017

Regular bail under section 437 Cr.P.C. - economic offences and bail jurisprudence - Whether the accused, Anil Kumar Jain, should be released on regular bail. - HELD THAT: - After hearing the parties and perusal of the record, the Court concluded that the accused is not entitled to bail. The Court treated the allegations as relating to economic fraud which, in its view, are grave offences affecting public interest and the economy; such offences warrant restrictive treatment on bail grounds. Relying on established principle that calculated economic offences are to be weighed differently from spontaneous crimes, the Court found no justifiable ground for grant of bail and declined to decide the merits of the allegations. The application was therefore dismissed without prejudice to the trial or final adjudication on merits. [Paras 17, 18]

Bail application dismissed; papers to be tagged with the main case file.

Territorial jurisdiction - illegal arrest outside jurisdiction - protection against self incrimination under Article 20(3) - Validity of the trial court's territorial jurisdiction and related objections to the arrest and post arrest procedures. - HELD THAT: - The Court noted the defence contention that the arrest was effected outside the territorial jurisdiction and that post arrest procedures (including recording of statement) were impermissible and violative of Article 20(3). The Court observed that the offence was alleged to have been partly committed within the Court's jurisdiction, cognizance had been taken and that cognizance had not been challenged; accordingly the territorial jurisdiction was treated as proper for the present proceedings. The Court, however, declined to undertake a detailed adjudication of the merits of the arrest legality or admissibility of statements in the bail proceedings and proceeded to refuse bail on the basis of the gravity of the allegations. [Paras 15, 17]

Territorial jurisdiction affirmed for the present proceedings; objections to arrest and statement did not persuade the Court to grant bail.

Final Conclusion: The regular bail application was dismissed: the Court upheld its territorial jurisdiction for the proceedings and, treating the allegations as serious economic offences, refused bail without adjudicating the merits of the prosecution case.

Interim protection against coercive tax action - prior notice before enforcement - extension/relief of statutory timelines during pandemic - waiver/relief from interest, penalty and other fiscal charges - provision of counter-affidavits and rejoinders - appointment of amicus curiae

Interim protection against coercive tax action - prior notice before enforcement - Limited interim direction requiring written prior notice before undertaking coercive action against assessees. - HELD THAT: - The Court has directed that, as an ad-interim measure, no coercive action shall be taken against any assessee (not confined to the petitioners) without first issuing at least three weeks' written notice to the concerned assessee. The notice is to enable the assessee to approach the Court or an appropriate statutory authority for relief. The direction is limited and without prejudice to the respondents' right to seek appropriate directions from the Court where following this direction would be detrimental to revenue interests. [Paras 5]

Ad-interim direction issued that at least three weeks' written notice must be given before any coercive action is taken, subject to liberty for the revenue to apply to Court for appropriate directions.

Extension/relief of statutory timelines during pandemic - waiver/relief from interest, penalty and other fiscal charges - Invitation to the respondents to file a response on the petitioners' claims for pandemic-related reliefs; no merit determination on reliefs at this stage. - HELD THAT: - The Court recognised the petitioners' contention that the COVID-19 pandemic has impaired compliance with statutory timelines and that reliefs such as extensions or waivers (including of interest and penalties) have been sought. Rather than deciding the substantive claims at this stage, the Court directed issuance of notice to the respondents and called for counter-affidavits to enable adjudication on the merits after hearing the parties. [Paras 2, 3, 4]

Notice issued to respondents and counter-affidavits directed to be filed; substantive claims for pandemic-related reliefs not decided at this stage.

Provision of counter-affidavits and rejoinders - Timelines for filing pleadings in response to the petition. - HELD THAT: - The Court ordered that counter-affidavits be filed by the respondents within three days and that rejoinders, if any, be filed before the next date of hearing. This is a procedural direction to facilitate expedited consideration of the petition. [Paras 4]

Counter-affidavits to be filed within three days; rejoinders to be filed before the next hearing.

Appointment of amicus curiae - Appointment of an independent amicus curiae to assist the Court. - HELD THAT: - The Court appointed Mr. Zoheb Hossain as amicus curiae to assist in the matter and directed that the petitioners ensure service of the case papers on him, including by email. This appointment is intended to assist the Court in adjudication of the issues raised. [Paras 7]

Mr. Zoheb Hossain appointed as amicus curiae and petitioners directed to serve case papers on him.

Procedural regularisation of applications - Grant of interim leave to cure defects in miscellaneous applications. - HELD THAT: - The Court allowed the captioned miscellaneous applications on condition that the applicants cure the deficiencies in those applications within five days of the resumption of normal functioning of the Court. This is a conditional allowance to regularise procedural defects. [Paras 1]

Miscellaneous applications allowed subject to curing the stated deficiencies within five days of resumption of normal Court functioning.

Case listing - Fixing of the next date of hearing. - HELD THAT: - The Court listed the matter for further hearing on the specified date to enable continued adjudication after the filing of responses and rejoinders, and in light of the interim directions issued. [Paras 6]

Matter listed for further hearing on the specified date.

Final Conclusion: The Court issued a limited ad interim direction requiring at least three weeks' written notice before any coercive tax action, directed respondents to file counter-affidavits within three days with rejoinders before the next hearing, allowed miscellaneous applications subject to curing of deficiencies, appointed an amicus curiae, and listed the matter for further hearing; substantive reliefs sought in relation to pandemic era extensions or waivers were not finally adjudicated at this stage.

On-money receipts - seized documents as evidence - taxation of profit element and not undisclosed receipts - reasonable profit estimation at 8% - telescoping / set-off of cash outgoings against common cash flow - Rule 46A - documentary evidence and additional evidence - use of third-party statement and requirement of furnishing for rebuttal - CBDT Circular No. 17 of 2019 - dismissal for low tax effect

On-money receipts - taxation of profit element and not undisclosed receipts - reasonable profit estimation at 8% - Extent of taxable income from on-money receipts reflected in seized documents and appropriate method of computation. - HELD THAT: - The Tribunal held that the seized loose papers represented on-money receipts arising from the assessee's construction business and that what is taxable is the undisclosed income (profit element) and not the entire undisclosed receipts. Applying the principle that seized material must be considered in entirety (including expenditures reflected therein) and following a coordinate bench decision, the Tribunal directed the assessing officer to compute undisclosed income by applying a net profit ratio of 8% on total on-money receipts for the assessment years 2006-07 to 2011-12. Expenditures shown in the seized material are to be deemed allowed once profit is so estimated; any shortfall between profit and personal outgoings is to be added in the year of shortfall, while positive balances may be carried forward as opening cash for subsequent years.

Only a reasonable profit on on-money receipts is taxable; profit to be estimated at 8% of on-money receipts for the relevant years and computations to be carried out year-wise allowing deemed expenses and telescoping as explained.

Seized documents as evidence - telescoping / set-off of cash outgoings against common cash flow - Whether entries in seized documents relating to receipts and payments could be aggregated and telescoped between the assessee and spouse and how outgoings are to be met from common cash flow. - HELD THAT: - The Tribunal accepted that the notings in seized papers were owned up by Shri Haresh Mohanlal Mehta and that cash receipts and outgoings recorded therein represent a common cash flow. Having fixed profit at 8% on gross on-money receipts, the Tribunal treated business expenditures as deemed allowed and considered personal expenditures and investments against available cash flow; where personal outgoings exceed the profit (resulting in negative cash balance) the excess is taxable in that year, while any positive cash balance is carried forward to meet future outgoings. The Tribunal prepared a year-wise tabulation (annexure) applying this approach and held that no separate additions in the hands of the spouse are necessary where amounts are covered by the common cash flow and already accounted for in the computations.

Entries in the seized material are to be considered in entirety; personal and business outgoings are to be met from the common cash flow with telescoping and carry forward adjustments as reflected in the Tribunal's tabulation.

Rule 46A - documentary evidence and additional evidence - seized documents as evidence - Whether Tally accounts prepared by assessee from seized materials and filed before the Commissioner (Appeals) constitute inadmissible additional evidence under Rule 46A. - HELD THAT: - The Tribunal found that the Tally accounts were prepared solely on the basis of the seized documents already on record before the assessing officer and were submitted at appellate stage to provide clarity of the seized notings. The Commissioner (Appeals) independently verified the Tally accounts against the seized material rather than accepting them uncritically. On this basis the Tribunal held that submission of the Tally accounts did not amount to filing additional evidence within the meaning of Rule 46A and that there was no violation of Rule 46A.

Tally accounts prepared from seized documents and placed before the Commissioner (Appeals) are not inadmissible additional evidence; no breach of Rule 46A is made out where the documents are derived from records already with the assessing officer and are independently verified.

Use of third-party statement and requirement of furnishing for rebuttal - Validity of addition based on a third-party statement recorded under section 131 where that statement was not furnished to the assessee for rebuttal. - HELD THAT: - The Tribunal held that reliance by the assessing officer and Commissioner (Appeals) on a statement of a third party recorded under section 131 (here, Shri Jerry D' Cunha) which was not furnished to the assessee for rebuttal was impermissible. The statement did not establish any cash payment by the assessee and only referred to an outstanding amount much smaller than the addition. Moreover, audited books of the hotel proprietor (the assessee) disclosed additions to fixed assets for the year under consideration. In view of the absence of confrontation/rebuttal opportunity and the lack of substantive support in the third-party statement, the Tribunal held the addition based on that statement to be without basis and deleted it.

Addition founded on an undisclosed third-party statement is invalid where the statement was not placed before the assessee for rebuttal and otherwise does not substantiate the addition; the addition is deleted.

CBDT Circular No. 17 of 2019 - dismissal for low tax effect - Maintainability of revenue appeals where disputed tax effect is less than the threshold specified in CBDT Circular No.17/2019. - HELD THAT: - The Tribunal applied CBDT Circular No.17 of 2019 and observed that where the tax effect on disputed issues is below the prescribed threshold (less than 50 lakhs as applied in the orders), the revenue appeal must be dismissed unless an exception in paragraph 10 of the Circular applies. The Departmental representative could not demonstrate applicability of any exception; accordingly the Tribunal dismissed the revenue appeals noted for low tax effect.

Revenue appeals concerning issues with tax effect below the threshold specified in CBDT Circular No.17/2019 are dismissed as not maintainable in the absence of established exceptions.

Final Conclusion: The Tribunal partly allowed the appeals of Shri Haresh Mohanlal Mehta for A.Y. 2006-07 to 2011-12 by directing taxability of an 8% profit on on-money receipts (with deemed allowance of expenditures and year-wise telescoping/carry forward of cash balances), rejected additions based on an undisclosed third party statement, held that Tally accounts prepared from seized materials do not violate Rule 46A, dismissed specified revenue appeals for low tax effect under CBDT Circular No.17/2019, and allowed the appeals of Smt. Hema Haresh Mehta for A.Y. 2006-07 to 2011-12 (with the revenue's appeal for A.Y. 2011-12 dismissed).

Set off of brought forward business loss against short-term capital gains computed under section 50 of the Income-tax Act - nature of income versus head of assessment (income from business in character though chargeable as capital gains) - limitations on adjustments made by CPC under section 143(1) - debatable legal issues outside scope of summary processing - condonation of delay for filing cross-objection

Set off of brought forward business loss against short-term capital gains computed under section 50 of the Income-tax Act - nature of income versus head of assessment (income from business in character though chargeable as capital gains) - Set off of brought forward business loss against short-term capital gains determined under section 50 was permissible and the CIT(A)'s direction to allow such set off was sustained. - HELD THAT: - The Tribunal accepted the view, followed by the CIT(A) and consistent with its own precedent and other Tribunal decisions, that gains arising from sale of a depreciable asset though taxed as short-term capital gains under the legal fiction of section 50 may nonetheless be in the nature of business income. For the purpose of carry forward and set off under section 72, what matters is the character of the gains as being 'of business' and not the head under which they are assessed. Reliance was placed on the distinction recognised by the Supreme Court in Cocanada Radhaswami Bank Ltd. that carry forward and set off provisions require the gains to be 'of business' even if taxed under another head. In that view the assessee was entitled to set off brought forward business losses against the short-term capital gains determined under section 50 and the AO was directed to allow the set off and modify the order accordingly. [Paras 6]

Assessee entitled to set off brought forward business losses against short-term capital gains for A.Y. 2015-16; CIT(A)'s order allowing set off upheld and AO directed to give effect.

Limitations on adjustments made by CPC under section 143(1) - debatable legal issues outside scope of summary processing - Adjustments made by the CPC under section 143(1) involving debatable legal and factual questions are not permissible to be finally decided at the summary processing stage. - HELD THAT: - The Tribunal observed that the question whether brought forward business losses can be set off against short-term capital gains is debatable and requires detailed consideration of legal and factual aspects. It relied on prior Tribunal authority holding that adjustments of this nature are not within the scope of summary adjustments under section 143(1)(a) (CPC processing) and that the proviso to section 143(1)(a) requires prior intimation before making such adjustments. Accordingly, the Tribunal found that such matters ought not to be determined by CPC summary adjustment and accepted the CIT(A)'s approach in entertaining the claim on merits. [Paras 6]

Adjustment by CPC under section 143(1) challenging eligibility of set off was not a permissible summary determination; matter properly considered and decided by the CIT(A), and Tribunal saw no reason to interfere.

Condonation of delay for filing cross-objection - Cross-objection filed by the assessee was dismissed in limine for want of condonation of delay. - HELD THAT: - The Tribunal recorded that the cross-objection was filed with a delay of 126 days and that no petition for condonation of delay had been filed by the assessee. In consequence the Tribunal dismissed the cross-objection without considering its merits. [Paras 7]

Cross-objection dismissed in limine for failure to seek condonation of delay.

Final Conclusion: Revenue's appeal dismissed and CIT(A)'s order allowing set off of brought forward business losses against short-term capital gains for A.Y. 2015-16 sustained; assessee's cross-objection dismissed in limine for delay.

Assessment under section 153A read with section 143(3) - incriminating material - search and seizure - reopening of completed assessments - natural justice - right to cross-examination - genuineness of share transactions - onus of proof in post-search proceedings

Assessment under section 153A read with section 143(3) - incriminating material - reopening of completed assessments - Addition could not be sustained in an unabated, completed assessment year in the absence of incriminating material found during the search. - HELD THAT: - The Tribunal followed the settled jurisprudence that section 153A is a provision linked to search under section 132 and that, while assessments for six preceding years may be made or reassessed, completed assessments can be interfered with under section 153A only on the basis of incriminating material unearthed during the search or requisition. The authorities of various High Courts and benches of ITAT (as discussed at length in the order) establish that where no incriminating material pertains to the particular assessment year, the earlier completed assessment must be reiterated and cannot be disturbed merely by post-search inferences unrelated to material seized during the search. Applying that principle to the facts, the Tribunal found that the papers marked SFGO/9 (pages 1-41) were part of the assessee's official records and not incriminating material; consequently the addition made in the unabated assessment year could not be sustained. [Paras 6, 7]

Addition under section 68 in the assessment for AY 2012-13 was not maintainable because no incriminating material relating to that year was found during the search.

Natural justice - right to cross-examination - post-search statements and investigational material - onus of proof in post-search proceedings - Statements and other post-search material collected behind the assessee's back could not be relied upon without furnishing copies to the assessee and providing opportunity for cross-examination. - HELD THAT: - The Tribunal reiterated the principle that if the Revenue intends to use statements or investigation reports obtained post-search that were not produced to the assessee during the search, the assessee must be confronted with that material and afforded the opportunity to cross-examine the declarants. Reliance was placed on Supreme Court and High Court authorities establishing that denial of such opportunity amounting to non grant of cross examination is a violation of natural justice; evidence thus used without confrontation and opportunity to test it is bad in law. On the facts, the Tribunal observed that the Assessing Officer had not confronted the assessee with the post-search statements and had not given a chance for cross-examination, rendering that material legally infirm for sustaining the addition. [Paras 6]

Post-search statements/reports not furnished to the assessee and not subject to cross-examination could not be validly used to sustain the addition.

Genuineness of share transactions - assessment under section 153A read with section 143(3) - onus of proof - On the facts, the assessee had produced documentary and bank evidence (contract notes, demat statements, bank payments, STT) establishing the genuineness of the long term capital gain transactions, and the Revenue failed to discharge the onus to show these were bogus. - HELD THAT: - The Tribunal examined the seized documents and the material on record and found that the papers seized (purchase bills, contract notes, demat statements, books of account) were disclosed official records relied upon by the assessee to prove genuineness. The assessee's transactions were routed through banking channels, reflected in demat statements and attracted securities transaction tax, supporting their genuineness. Absent incriminating material specific to that assessment year and without lawful reliance on infirm post-search material, the Assessing Officer had no valid basis to make additions by drawing adverse inferences. The Tribunal also relied on precedents of the Calcutta High Court and other authorities holding that non production of brokers or inability to summon third parties does not automatically render share transactions bogus where documentary and banking evidence exists. Applying these principles, the Tribunal concluded the additions were unsustainable on merits. [Paras 6, 7, 8, 9]

The long term capital gain addition was deleted on merits as the assessee established the genuineness of the share transactions and the Revenue failed to rebut that case with admissible incriminating material.

Final Conclusion: The Tribunal allowed the appeal for AY 2012-13, holding that the addition made under section 68 in the assessment framed u/s 153A read with section 143(3) is unsustainable because no incriminating material relating to that year was found during the search, post search material relied upon was not properly confronted or tested by cross examination, and the assessee had satisfactorily established the genuineness of the share transactions; the additions were deleted.

Capital receipt - taxability of carbon credits - reopening of assessment under Section 147/148 - reasons recorded for reopening - twin-stage scrutiny of reasons for reopening (GKN Driveshafts) - non-retrospective application of Finance Act amendment

Capital receipt - taxability of carbon credits - non-retrospective application of Finance Act amendment - Whether the receipts from sale of carbon credits are taxable income or capital receipts and whether subsequent statutory amendment renders them taxable for AY.2008-09. - HELD THAT: - The Tribunal held that the receipts from sale of carbon credits are capital in nature and therefore not taxable for AY.2008-09, following the coordinate decision in M/s My Home Power Ltd. and the confirmation by the jurisdictional High Court. The Court noted that Parliament later inserted a provision treating carbon credits as taxable with effect from 01-04-2018, but there was no contention that the amendment had retrospective effect. Consequently, for AY.2008-09 the amendment did not apply and the addition treating the carbon credits as taxable was erroneous. [Paras 5]

The addition made in respect of carbon credits is deleted as the receipts are capital in nature and the Finance Act amendment is not retrospective for AY.2008-09.

Reopening of assessment under Section 147/148 - reasons recorded for reopening - twin-stage scrutiny of reasons for reopening (GKN Driveshafts) - Whether the reassessment initiated by the Assessing Officer was sustainable in law in view of the reasons recorded for reopening and the established findings in the appellate proceedings. - HELD THAT: - Applying the principle of dual scrutiny of reopening reasons as explained in GKN Driveshafts and followed by the Tribunal in Joginder Singh, the Tribunal found that the reasons recorded for reopening were unsustainable. The Tribunal observed that the deletions granted by the CIT(A), which were founded on the same reasons, had attained finality and that those findings logically and legally required quashing the reassessment itself. On these facts the reopening was held not sustainable and the reassessment proceedings were quashed. [Paras 6]

The reassessment proceedings are quashed as the reasons recorded for reopening are not sustainable in law.

Section 43B disallowance - Whether the disallowance under Section 43B concerning provisions for gratuity and leave encashment survives after the findings on the other issues. - HELD THAT: - The Tribunal held that the determination on the Section 43B disallowance was rendered infructuous by its conclusion on the primary issues (deletion of the carbon credits addition and quashing of reassessment). Given the quashing of the reassessment and deletion of the principal addition, the challenge to the 43B disallowance required no separate adjudication. [Paras 6]

The challenge to the Section 43B disallowance is rendered infructuous in view of the decision on the other issues.

Final Conclusion: The appeal is allowed: the addition in respect of carbon credits for AY.2008-09 is deleted as capital receipt, the reassessment is quashed for unsustainable reasons of reopening, and the challenge to the Section 43B disallowance is rendered infructuous.

Market value - arm's length price (ALP) - Comparable Uncontrolled Price (CUP) method - specified domestic transaction - Explanation to Section 80IA(8) - tested party - transfer pricing adjustment - captive power plant (CPP) and captive consumption

Market value - arm's length price (ALP) - Comparable Uncontrolled Price (CUP) method - specified domestic transaction - tested party - captive power plant (CPP) and captive consumption - transfer pricing adjustment - Whether the transfer price of electricity for computing deduction under Section 80IA(8) should be benchmarked by reference to the tariff notified by the State Electricity Board (SEB) for supply to consumers (as market value) or by reference to the price realised by the CPP under regulated long term PPAs (as ALP) leading to the TPO's downward transfer pricing adjustment. - HELD THAT: - The Explanation to Section 80IA(8) permits market value to be adopted either as the price the goods or services would ordinarily fetch in the open market or as the arm's length price as defined in Section 92F(ii) where the transfer is a specified domestic transaction; therefore either limb may provide the benchmark. The parties accept that the most appropriate transfer pricing method (MAM) is the CUP method. The Tribunal analysed internal and external CUP concepts and concluded that the price at which non-eligible manufacturing units procure power from the SEB in uncontrolled market conditions is a reliable external CUP to benchmark the captive transfer. Regulated long term PPAs under statutory approvals and tariffs are not transactions in uncontrolled conditions and therefore the PPA price (internal sale by CPP to distribution licensee or regulated sale under PPA) is not a reliable indicator of market value for Section 80IA(8) purposes. The Tribunal further held that identification of the tested party is required even when CUP is the MAM and that treating the non eligible manufacturing unit as the tested party to determine the price it would pay in the open market is appropriate on the facts. The Tribunal relied on and followed earlier coordinate bench and High Court decisions distinguishing the Calcutta High Court decision in CIT v. ITC Ltd. where facts prevented third party sales, and instead accepted authorities holding that SEB/distribution company consumer tariffs represent the market value for computing the captive unit's eligible profits. Applying that reasoning, the Tribunal found the TPO/AO's downward adjustment unjustified and directed deletion of the transfer pricing adjustment and recomputation of the deduction in accordance with the transfer price of Rs. 8.30 per unit adopted by the assessee, after giving opportunity of hearing for computation. [Paras 8, 9, 13]

The ALP/market value for the captive transfer is the SEB/distribution tariff (external CUP), the TPO/AO's downward transfer pricing adjustment is deleted and the deduction under Section 80IA is to be computed on the transfer price adopted by the assessee (Rs. 8.30/unit), subject to recomputation on record.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the transfer pricing adjustment, holding that for the facts of this case the market value/ALP for captive supply of power is the tariff at which the manufacturing units procure power from the State Electricity Board; the AO/TPO is directed to recompute the Section 80IA deduction accordingly after hearing the assessee.

Depreciation on intangible assets - recomputation of asset allocation following prior Tribunal direction - effect of revised land valuation on intangible asset valuation - remand to Assessing Officer for fresh computation and hearing

Depreciation on intangible assets - effect of revised land valuation on intangible asset valuation - recomputation of asset allocation following prior Tribunal direction - remand to Assessing Officer for fresh computation and hearing - Deletion of disallowance of depreciation on intangible assets by the CIT(A) set aside and matter remitted to the Assessing Officer to recompute values and allow depreciation only after giving effect to the Tribunal's prior direction in para 69. - HELD THAT: - The Tribunal noted that its earlier order (referred to at para 69) had directed that the value of the Panki land be taken at a revised figure thereby reducing the allocation to intangible assets and affecting the quantum of depreciation admissible. The CIT(A) had deleted the disallowance without applying the reduction mandated by para 69. Following the precedent established in the earlier Tribunal order, the Tribunal set aside the CIT(A)'s deletion and remitted the matter to the Assessing Officer with specific instructions to recompute the values of tangible and intangible assets in conformity with the Tribunal's direction regarding the Panki land valuation, and thereafter to allow depreciation accordingly. The assessee is to be afforded an opportunity of hearing in the remanded proceedings. The same course was applied to both assessment years as the facts were mutatis mutandis similar. [Paras 6, 7]

Impugned deletion set aside and matters remitted to the Assessing Officer for recomputation of asset values and allowance of depreciation consistent with the Tribunal's prior direction; assessee to be heard.

Final Conclusion: Both Revenue appeals are partly allowed for statistical purposes by setting aside the CIT(A) deletion and remitting the issue to the Assessing Officer to recompute asset allocations and allow depreciation after giving effect to the Tribunal's direction in para 69; the assessee shall be heard in the fresh proceedings.

Bogus purchases - estimation of profit element in unsubstantiated purchases - onus of proof on the assessee to substantiate purchases - acceptance of primary purchase documents and banking payments as evidentiary basis - reopening of assessment on receipt of information from investigation wing

Bogus purchases - onus of proof on the assessee to substantiate purchases - estimation of profit element in unsubstantiated purchases - acceptance of primary purchase documents and banking payments as evidentiary basis - Whether additions made by the Assessing Officer on account of alleged bogus purchases could be sustained and whether the Commissioner (Appeals)'s estimation of 12.5% profit on the disputed purchases was justified. - HELD THAT: - The Tribunal examined the material facts including that the case was reopened after information from the investigation wing, the assessee produced primary purchase documents and evidence of payments through banking channels, but failed to produce transportation details and the suppliers themselves. The Assessing Officer accepted a portion of the purchases while making additions in respect of others. On remand the Commissioner (Appeals) accepted purchases of Rs. 198.62 Lacs and, relying on precedent, estimated the profit element at 12.5% on the balance. The Tribunal found that sales turnover was not in dispute, the assessee held primary purchase documents and payments were through banking channels, and there could be no sale without actual purchase given the nature of business. In the circumstances it was proper to estimate the profit element embedded in the transactions; the 12.5% estimation by the Commissioner (Appeals) was fair and reasonable on the facts of the case. Consequently the Tribunal concurred with the appellate authority's approach and sustained the limited estimation rather than wholly upholding the Assessing Officer's additions. [Paras 3, 4, 5]

The additions were not sustained to the full extent made by the Assessing Officer; the Commissioner (Appeals)'s acceptance of a portion of purchases and estimation of 12.5% on the balance was upheld and the revenue's appeal dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals)'s limited relief to the assessee by accepting a substantial part of the purchases and validating a 12.5% estimated profit on the remaining disputed purchases; the revenue's appeal was dismissed.

Addition under section 68 - bogus entries in balance sheet - entries in books are not determinative - real income principle - assessment under presumptive taxation scheme - reopening and recomputation of income by reference to earlier years

Addition under section 68 - bogus entries in balance sheet - entries in books are not determinative - real income principle - Deletion of the addition made under section 68 in respect of sundry creditors and advances shown in the balance sheet for AY 2016-17 - HELD THAT: - The Tribunal found on facts that the amounts shown as sundry creditors and advances from customers were merely balance sheet figures used to counterbalance fixed deposits brought into the asset side and did not represent any actual receipts. The assessee did not maintain books of account and the figures were the result of incorrect bookkeeping by the accountant. Relying on the principle that taxability depends on substantive law and not on book entries, and on authorities and CBDT instructions that officers should not take advantage of an assessee's ignorance, the Tribunal held that additions under section 68 cannot be sustained where the alleged creditors/advances are bogus and there was no real credit of money to the assessee. Accordingly, on the real income touchstone the addition based on false balance sheet entries was deleted. [Paras 6]

The addition under section 68 for AY 2016-17 is deleted.

Reopening and recomputation of income by reference to earlier years - assessment under presumptive taxation scheme - Remand for fresh adjudication on whether investments in fixed deposits and interest thereon were offered to tax in earlier assessment years and whether addition under section 69 is maintainable - HELD THAT: - The Tribunal observed that the fixed deposits in question were created over prior years (AYs 2012-13 to 2015-16) and that the question whether the investments and interest had been brought to tax in those earlier years is material to any claim of taxation in the current year. The Tribunal did not decide the merits of any addition under section 69 but directed restoration of the matter to the file of the Assessing Officer for verification and fresh adjudication in accordance with law, including the AO's statutory power to reopen earlier assessments if warranted. [Paras 6]

Matter remanded to the Assessing Officer to verify and decide whether the fixed deposits and interest were taxed in AYs 2012-13 to 2015-16 and to proceed on section 69 if legally permissible.

Final Conclusion: The appeal is allowed in part: the addition made under section 68 for AY 2016-17 is deleted; however the question of taxation under section 69 is remanded to the Assessing Officer for verification of earlier years (AYs 2012-13 to 2015-16) and fresh adjudication in accordance with law.

Remand for fresh enquiry and speaking order - addition as unexplained cash credit - failure to make adequate enquiries by tax authorities - duty to investigate real beneficiary of bank transactions - requirement of forensic examination of disputed signature - non-reliance on non tested documentary identification

Addition as unexplained cash credit - failure to make adequate enquiries by tax authorities - duty to investigate real beneficiary of bank transactions - requirement of forensic examination of disputed signature - remand for fresh enquiry and speaking order - Whether the addition of Rs. 27,00,000 made in the assessee's hands on account of cash deposits in his bank account could be sustained or the matter required remand for further enquiry and a speaking order. - HELD THAT: - The Tribunal found that the tax authorities and the CIT(A) failed to undertake adequate, impartial and reliable enquiries before confirming the addition. Material facts on record remained unaddressed: the deposit slip for the disputed cash deposit lacked currency denomination details and PAN/address of the depositor, the deposits were alleged by the assessee to be unauthorized and subsequently transferred to an account identified by the assessee as belonging to a bank manager, and the disputed signature on the deposit/withdrawal documents was not subjected to forensic examination despite being consistently denied by the assessee. In these circumstances the sole reliance on an alleged signature on an 'aharan' (withdrawal) slip without appropriate verification was held to be an arbitrary and irresponsible lapse. Given the absence of cogent, rebutting evidence and the need to determine the real beneficiary of the transactions, the Tribunal held that the impugned appellate order could not stand and directed remand for fresh consideration. The tax authorities were directed to address specifically the unrebutted assertions (currency details, missing PAN details, identity of the beneficiary account) and to pass a reasoned, speaking order after making necessary enquiries and verifications, including such forensic examination as may be appropriate. [Paras 9, 11, 16]

The CIT(A)'s confirmation of the addition is set aside and the matter is remanded to the tax authorities for fresh enquiry and a speaking order; the appeal is allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the appellate order confirming the addition, remanded the matter for fresh, reasoned enquiry into the disputed cash deposits and the identity of the beneficiary (including appropriate verification/forensic steps), and allowed the appeal for statistical purposes.

Penalty under section 271(1)(c) for concealment of income by furnishing inaccurate particulars - genuine gifts - voluntary disclosure of additional income - onus to prove genuineness and creditworthiness of donors - duty of the Assessing Officer to verify donors / summon witnesses

Penalty under section 271(1)(c) for concealment of income by furnishing inaccurate particulars - genuine gifts - voluntary disclosure of additional income - onus to prove genuineness and creditworthiness of donors - duty of the Assessing Officer to verify donors / summon witnesses - Whether penalty under section 271(1)(c) is leviable where the assessee claimed gifts supported by declarations and donor particulars but could not procure donor confirmations and thereafter voluntarily offered the amounts as income. - HELD THAT: - The Tribunal examined the material and proceedings following restoration to the Assessing Officer. The assessee had furnished gift deeds, names, PANs and other particulars of donors and, when donors did not cooperate after many years, voluntarily offered the gift amounts as additional income and filed a revised return which the AO did not accept on limitation grounds. The AO treated the gifts as not genuine and initiated penalty for concealment, but made no effort to verify donor creditworthiness or to obtain corroborative evidence by issuing notices under the relevant provisions or summons to donors. The Tribunal found that the claim was bonafide and accompanied by documentary evidence, even if not conclusively proved by donor confirmations, and that the AO had not endeavoured to procure adverse evidence. On these facts, treating the claim as deliberate concealment and levying penalty was not justified. The Tribunal therefore took an independent view on the merits and held that penalty under section 271(1)(c) should be deleted. [Paras 8, 9]

Penalty under section 271(1)(c) deleted; appeal allowed.

Final Conclusion: The Tribunal deleted the penalty levied under section 271(1)(c) on the grounds that the assessee made a bonafide claim supported by documentary evidence, the AO did not verify donors or seek corroborative evidence, and therefore the case was not fit for penalty; appeal allowed for AY 2003-04.

Principles of natural justice - ex-parte order - addition under section 68 treated as unexplained credit - remand for de novo assessment - verification of identity, genuineness and creditworthiness of share subscribers - obligation to co-operate with assessment proceedings

Principles of natural justice - ex-parte order - Whether the orders below violated principles of natural justice and require setting aside. - HELD THAT: - The Tribunal found that the assessee did not receive proper notice of the hearing before the CIT(A) and that the Assessing Officer proceeded to draw adverse inferences after issuing summons under section 131 without affording a fair opportunity to the assessee or the directors of subscriber companies. The Revenue did not controvert the assessee's claim of non-service. In these circumstances the Tribunal held there was a violation of principles of natural justice and that the matter could not be finally adjudicated in the absence of adequate opportunity to the assessee. [Paras 6, 7, 9]

Orders below set aside insofar as they were passed without affording proper opportunity; matter restored for fresh consideration.

Addition under section 68 treated as unexplained credit - remand for de novo assessment - verification of identity, genuineness and creditworthiness of share subscribers - obligation to co-operate with assessment proceedings - Whether the addition made under section 68 should be sustained or the matter remanded to the Assessing Officer for fresh adjudication. - HELD THAT: - Having noted that the Assessing Officer drew adverse inferences on account of non-appearance and that initial enquiries and documents had been filed by the assessee, the Tribunal concluded that the issue could not be finally resolved without conducting a proper inquiry into the source and nature of the share capital and premium. The Tribunal relied on consistent decisions of co-ordinate Benches and higher courts addressing similar facts, and observed that effective inquiry into the identity, genuineness and creditworthiness of the contributors is required. Accordingly, the Tribunal directed de novo assessment by the Assessing Officer, permitting examination of the evidence on record and any further documentary evidence the assessee may file, while emphasising that the assessee must cooperate and produce persons summoned for examination. [Paras 7, 8, 9]

Addition under section 68 set aside and remanded to the Assessing Officer for fresh adjudication in accordance with law after affording opportunity; assessee directed to cooperate.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the impugned orders for breach of natural justice, and remanded the disputed addition under section 68 to the file of the Assessing Officer for de novo assessment after granting the assessee adequate opportunity and directing the assessee to cooperate with the authorities.

Crystallisation of liability - mercantile system of accounting and allowability of expenditure - application of section 43B in relation to payments made before filing return - capital v. revenue expenditure and admissibility of depreciation - allowability of trade losses and sundry balances written off under business loss principles - deductibility of business expenses (residential electricity) where incurred as per terms of employment - obligation to deduct tax at source under section 195 - chargeability of recipient's income in India - penalty under section 271(1)(c) - difference of opinion not attracting penalty - deemed concealment under Explanation 1 to section 271(1)(c)

Crystallisation of liability - mercantile system of accounting and allowability of expenditure - application of section 43B in relation to payments made before filing return - Allowability of excise duty and interest paid pursuant to an interim order received during the relevant financial year. - HELD THAT: - The Tribunal found that an interim order dated 15-04-2004 directed payment of excise duty and interest within 30 days and the assessee paid the amounts before the due date for filing the return; only a small additional sum was determined after year-end. Applying the mercantile system of accounting and noting that the liability had crystallized during the relevant financial year, the Tribunal held the expenditure admissible. The assessing officer's view that the liability crystallized only on the final settlement was rejected and the assessing officer was directed to delete the disallowance. [Paras 5]

Disallowance of excise duty and interest deleted; expenditure allowed.

Capital v. revenue expenditure and admissibility of depreciation - Allowability of depreciation claimed on furniture provided to an individual associated with a sister concern. - HELD THAT: - The Tribunal recorded that the assessee did not produce evidence to establish that the recipient had any employment or causal nexus with the assessee and that the furniture was used for the assessee's business. The lower authorities' conclusion that the expenditure was not wholly and exclusively for business was upheld. The CIT(A)'s restriction of depreciation was affirmed. [Paras 8]

Claim for depreciation disallowance sustained; CIT(A)'s order affirmed.

Allowability of trade losses and sundry balances written off under business loss principles - Allowability of various sundry balances written off as trading/business losses. - HELD THAT: - The Tribunal examined each category of write-off (including reversal of export rebate, unadjusted advances to workers, unencashable soiled notes, differences in opening balances, trade deposits not refunded, advances for stores not supplied, advance licence for imports, Techno Economic Viability expenses, and advances to a company later declared sick). Finding the explanations reasonable and the amounts arising from business transactions, the Tribunal held those items to be allowable as business losses under the relevant provisions governing trading losses/expenses and allowed the claims. [Paras 12]

Sundry balances written off accepted as allowable business losses; disallowance deleted.

Deductibility of business expenses (residential electricity) where incurred as per terms of employment - Allowability of electricity expenses borne by the assessee for residences provided to employees and director. - HELD THAT: - Although documentary evidence such as board resolutions or appointment letters was not produced due to lapse of time, the Tribunal noted that details of premises and rent recoveries (which were offered to tax) were on record, and the assessing officer did not investigate genuineness. Considering the totality of facts and that the lower authorities did not dispute allotment of residential units, the Tribunal held the electricity expenses to be business expenditure and directed allowance. [Paras 16]

Electricity expenses allowed in full.

Obligation to deduct tax at source under section 195 - chargeability of recipient's income in India - Whether brokerage and commission paid to non-resident agents for services rendered outside India required deduction of tax under section 195. - HELD THAT: - The Tribunal noted that commission was paid to non-resident agents for services performed outside India and the Assessing Officer did not produce material showing the recipients' income was taxable in India. Applying the ratio of the Apex Court in GE India Technology (as relied upon by the assessee) and relevant precedents, the Tribunal held that where the payment does not give rise to income taxable in India, section 195 is not attracted and there is no obligation to deduct tax at source. The decision relied upon by the lower authorities was held inapplicable on the facts. [Paras 20]

Disallowance under section 40(a)(i) for non-deduction of TDS on brokerage/commission deleted.

Penalty under section 271(1)(c) - difference of opinion not attracting penalty - deemed concealment under Explanation 1 to section 271(1)(c) - Sustenance of penalty under section 271(1)(c) in respect of additions/disallowances. - HELD THAT: - The Tribunal observed that several additions/disallowances (excise duty, sundry write-offs, electricity expenses) were deleted in the quantum appeal, and the remaining depreciation issue arose from a difference of opinion between assessee and AO. The Tribunal held that mere difference of opinion or disallowance does not justify penalty. Regarding the addition of municipal interest, the Tribunal found no specific charge identified by the AO when levying penalty and noted reliance on Explanation 1 without clear initiation; accordingly that penalty aspect was also unsustainable. The CIT(A)'s confirmation was set aside. [Paras 28]

Penalty under section 271(1)(c) deleted in entirety; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal in part on quantum (deleting disallowances relating to excise duty and interest, sundry write offs, electricity expenses and TDS disallowance on certain commissions) while affirming the depreciation finding; consequentially, the penalty under section 271(1)(c) was deleted and the assessee's appeals were allowed.

Penalty under section 271(1)(c) - estimated additions - penalty not leviable on estimated additions - peak credit doctrine - separate and independent penalty proceedings - reasonable explanation and evidence in penalty proceedings

Estimated additions - penalty not leviable on estimated additions - Sustainability of penalty under section 271(1)(c) in respect of additions made on estimated basis. - HELD THAT: - The Tribunal found that two of the additions sustained by the Revenue (cash-bank deposits and certain share transactions) were upheld by the authorities on an estimated basis (including restriction to peak credit and a percentage of sale proceeds). It applied the settled principle that penalty under section 271(1)(c) cannot be sustained where the addition is purely an estimate rather than a definitive finding of concealed income. Having examined the orders below and the manner in which the additions were determined (peak credit and percentage estimation), the Tribunal concluded that penalty could not survive in respect of those estimated additions. [Paras 9]

Penalty under section 271(1)(c) is not sustainable in respect of additions that are based on estimation; the penalty levied on the first two estimated additions is deleted.

Separate and independent penalty proceedings - reasonable explanation and evidence in penalty proceedings - penalty under section 271(1)(c) - Sustainability of penalty under section 271(1)(c) in respect of the addition of Rs. 3,42,400 where the assessee had placed confirmations and explanations before the CIT(A) but no findings were recorded. - HELD THAT: - The Tribunal noted that the addition in question comprised identified transactions (loan and receipts) for which the assessee had produced confirmations and explanations during penalty proceedings before the Commissioner (CIT(A)). The Tribunal emphasised that penalty proceedings are distinct and the authority imposing penalty must consider whether the assessee offered reasonable explanation and evidence. As the CIT(A) did not examine or record findings on the evidence presented, and having found that the assessee had reasonably explained the transactions, the Tribunal held that levying penalty on that addition was not justified. [Paras 9, 10]

Penalty under section 271(1)(c) cannot be sustained in respect of the third addition where the assessee furnished explanations and evidence before the CIT(A) and no adverse finding was recorded; the penalty is deleted.

Final Conclusion: The assessee's appeal is allowed; the penalty of Rs. 8,66,167 levied under section 271(1)(c) is deleted because two additions were based on estimation (on which penalty cannot be sustained) and the remaining addition was accompanied by explanations/evidence before the appellate authority on which no adverse findings were recorded.

Proximate nexus for disallowance under Section 14A - exclusion of investments not yielding exempt income while computing disallowance under Rule 8D(2) - requirement of "expenditure incurred in relation to" exempt income under Section 14A - distinction between Section 14A and provisions for computation of book profits - deductibility of education cess for computing business income under Section 40(a)(ii) - legislative omission of "cess" from Section 40(a)(ii) and consequent interpretive rule in taxing statutes - power of appellate authorities to allow claims not made in the original return

Proximate nexus for disallowance under Section 14A - exclusion of investments not yielding exempt income while computing disallowance under Rule 8D(2) - requirement of "expenditure incurred in relation to" exempt income under Section 14A - Whether, for computing disallowance under Section 14A read with Rule 8D of the Rules, investments which have not yielded exempt income must be excluded from the average value on which the disallowance is computed. - HELD THAT: - The Tribunal held that Section 14A applies only where expenditure has been incurred "in relation to" earning exempt income and that there must be a proximate nexus between the expenditure and the exempt income. Applying this principle, investments which did not yield exempt income are not attributable to the exempt income and therefore must be excluded while assessing the expenditure under Rule 8D(2). The Tribunal set aside the CIT(A)'s contrary finding and directed the Assessing Officer to recompute the disallowance in accordance with the decision in ACIT v. Vireet Investment P. Ltd. (2017) 82 taxmann.com 415 (Del), thereby applying the test that only the portion of investments relatable to exempt receipts should be taken into account for the Section 14A disallowance under Rule 8D(2). [Paras 5]

Issues 1 to 7 decided in favour of the assessee; investments not yielding exempt income are to be excluded while computing disallowance under Section 14A read with Rule 8D(2).

Deductibility of education cess for computing business income under Section 40(a)(ii) - legislative omission of "cess" from Section 40(a)(ii) and consequent interpretive rule in taxing statutes - power of appellate authorities to allow claims not made in the original return - Whether education cess paid on income tax is allowable as a deduction in computing income chargeable under the head 'profits and gains of business or profession'. - HELD THAT: - Relying on the Full Bench decision in Sesa Goa and the legislative history showing the deliberate omission of the word "cess" from Section 40(a)(ii), the Tribunal concluded that "cess" is not encompassed within the expression "any rate or tax levied" in Section 40(a)(ii). Applying established rules of interpretation of taxing statutes and the CBDT circular clarifying the omission, the Tribunal held that education cess paid during the year is deductible while computing business profits. The Tribunal also observed that appellate authorities have power to allow such a deduction even if not claimed in the original return where the claim was raised during appellate proceedings. [Paras 6, 7]

Issue 8 decided in favour of the assessee; deduction in respect of education cess on income tax paid during the year is to be allowed.

Final Conclusion: The appeal is partly allowed: (i) the disallowance under Section 14A read with Rule 8D(2) is to be recomputed excluding investments that did not yield exempt income; and (ii) deduction for education cess paid on income tax for the year is allowed.

Constitutional right to life under Article 21 - exemption from IGST on imported goods - interim relief pending challenge to a tax notification - deposit of disputed tax with the court as condition for release - investment of deposited tax in interest-bearing fixed deposit - prohibition on additional levy by respondent where court deposit made - appointment of Amicus Curiae to assist the Court

Interim relief pending challenge to a tax notification - deposit of disputed tax with the court as condition for release - exemption from IGST on imported goods - Interim release of the imported oxygen concentrator subject to deposit of an amount equivalent to the IGST presently payable in accordance with the impugned notification. - HELD THAT: - The Court, recognising the exceptional public-health context and the petitioner's invocation of Article 21, directed that if the oxygen concentrator reaches the customs barrier it shall be released on the petitioner depositing with the Court an amount equivalent to the IGST presently payable under the impugned notification. The Court accepted the petitioner's undertaking to make the deposit within three days and treated the deposit as a protective measure pending adjudication of the writ petition. The direction is conditional on compliance with any other formalities necessary for clearance and is intended to avoid immediate denial of access while preserving the respondent's revenue claim for adjudication. [Paras 5, 7]

Release permitted on deposit of IGST-equivalent amount with the Court within three days and compliance with clearance formalities.

Investment of deposited tax in interest-bearing fixed deposit - prohibition on additional levy by respondent where court deposit made - Treatment of the deposited amount and consequences as regards levy on the importing agency. - HELD THAT: - The Court directed the Registry to place the deposited amount in an interest-bearing fixed deposit with a nationalised bank and to inform the respondent's counsel of such investment. The Court further ordered that, so long as the requisite IGST-equivalent is deposited with the Court, the respondent shall not levy that charge on the importing agency (FedEx Corporation). These directions secure the revenue in court while preventing double collection from the importer. [Paras 7]

Deposited sum to be invested in an interest-bearing fixed deposit and the respondent shall not levy the IGST charge on the importing agency while the deposit stands.

Interim relief pending challenge to a tax notification - procedural directions for interlocutory filings - Issuance of notice in the writ petition and the interim application, and timetable for filing of counter-affidavit and rejoinder. - HELD THAT: - The Court ordered issuance of notice in both the writ petition and the captioned interim application. Service was accepted on behalf of the respondent. A counter-affidavit and/or reply is directed to be filed within one week, with any rejoinder to be filed before the next date of hearing. These directions structure interlocutory proceedings and ensure expeditious hearing given the subject-matter urgency. [Paras 6]

Notice issued; respondent to file counter-affidavit/reply within one week; rejoinder, if any, before next hearing.

Appointment of Amicus Curiae to assist the Court - registry recording and numbering of applications - Recording of the interim application and appointment of Amicus Curiae. - HELD THAT: - The Court took the petitioner's directly filed application on record and directed the Registry to number it. Further, the Court appointed Mr. Arvind Datar, learned senior counsel, as Amicus Curiae to assist in the matter and ordered service of the case papers and orders on him via email. These steps were directed to ensure proper presentation and assistance in adjudicating the legal issues raised. [Paras 4, 8]

Application taken on record and to be numbered by Registry; Amicus Curiae appointed and served with case papers.

Final Conclusion: The Court issued interim directions permitting release of the petitioner's imported oxygen concentrator on deposit of IGST-equivalent amount with the Court (to be invested in a fixed deposit), ordered that the respondent shall not levy that charge on the importing agency while the deposit stands, issued notice with a one week timetable for the respondent's reply, took the interim application on record for numbering, and appointed an Amicus Curiae to assist; further hearing listed.

Mandamus for refund - refund of redemption fine and penalty - revision under Section 129DD of the Customs Act, 1962 - interim protection in revision proceedings - obligation to seek interim protection where assets are to be retained - direction for expeditious disposal of revision applications

Interim protection in revision proceedings - obligation to seek interim protection where assets are to be retained - Whether the Customs Department's filing of revisions under Section 129DD without seeking interim protection permits continued retention of amounts/assets and affects the entitlement to refund. - HELD THAT: - The Court held that although Section 129DD does not expressly provide for interim protection, an implicit right to seek or grant interim protection arises in any provision for appeal or revision. Authorities invoking revision before the Government and wishing to retain seized assets must seek interim protection; failure to do so disentitles them from continuing to withhold return/refund of assets or amounts remitted by the affected party. The Court relied on settled principle as illustrated by precedent in the context of analogous revision/appeal provisions and applied that principle to the Customs revision regime. The determinative reasoning is that seeking revision without concurrent interim relief cannot be used as a passive means to indefinitely retain assets or amounts otherwise refundable. [Paras 4]

Filing revision under Section 129DD without obtaining interim protection does not justify continued retention of assets/amounts; failure to seek interim protection entitles the affected party to seek return/refund.

Mandamus for refund - refund of redemption fine and penalty - revision under Section 129DD of the Customs Act, 1962 - direction for expeditious disposal of revision applications - Remedy by way of writ where petitioners sought refund of redemption fine and penalty following favourable appellate orders, and appropriate interlocutory direction where revision applications are pending. - HELD THAT: - The petitioners relied on appellate orders setting aside confiscation and allowing redemption; they sought refund of fines and penalties paid. Although the Court observed the legal consequence of non-obtaining interim protection (see paragraph 4), the petitioners did not press for immediate positive relief. Instead, the Court exercised supervisory jurisdiction to direct the Principal Commissioner (Revision Application)/Ex Officio Additional Secretary (R4) to hear and dispose of the pending revision applications (F.Nos.16, 17, 18, 19 & 20/2018-(Prev. Refunds)) expeditiously. The Court fixed a definite time frame for disposal after hearing the petitioners and in accordance with law, thereby requiring fresh consideration and final decision by the revision authority within the stipulated period. [Paras 2, 5, 6]

The revision applications are to be heard and disposed of by R4 within twelve weeks from the date of the order after hearing the petitioners and in accordance with law; writ petitions disposed in these terms with no costs.

Final Conclusion: Writ petitions disposed by directing the Principal Commissioner (Revision Application)/Ex Officio Additional Secretary (R4) to hear and dispose of revision applications F.Nos.16, 17, 18, 19 & 20/2018-(Prev. Refunds) within twelve weeks after hearing the petitioners and in accordance with law; no costs.

Corporate Insolvency Resolution Process - operational debt and default - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium - appointment of Interim Resolution Professional - public announcement and calling for claims - protection and preservation of corporate debtor as a going concern - obligation to assist and cooperate with the Interim Resolution Professional

Operational debt and default - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The application under Section 9 was maintainable and the Corporate Debtor was liable to be admitted into CIRP by reason of admitted operational debt and default. - HELD THAT: - The Operational Creditor filed an application under Section 9 alleging non-payment for goods supplied and reliance was placed on invoices and post-dated cheques. The Corporate Debtor expressly admitted the existence of the operational debt and that payment was not made despite receipt of the demand notice, attributing non-payment to its weakened financial position arising from the pandemic. Given the Corporate Debtor's admission of debt and default and the absence of any pleaded and substantiated pre-existing dispute, the Tribunal found the statutory threshold for admission under Section 9 to be satisfied and admitted the Corporate Debtor into the Corporate Insolvency Resolution Process.

Application under Section 9 is allowed; the Corporate Debtor is admitted into CIRP.

Moratorium - protection and preservation of corporate debtor as a going concern - A moratorium under Section 14 was to be declared with the statutory prohibitions and to remain in force for the duration of the CIRP. - HELD THAT: - On admission into CIRP, the Tribunal declared the moratorium and specified its scope consistent with Section 14(1): prohibition on institution or continuation of suits or execution proceedings, prohibition on transfer or disposal of assets, prohibition on enforcement of security interests, and protection of lessor/owner recovery rights where property is in possession of the corporate debtor. The moratorium was made operative from the date of the order until completion of the CIRP or until approval of a resolution plan or an order for liquidation, as applicable, thereby securing the corporate debtor's assets and business for the resolution process.

Moratorium declared as specified and to remain effective for the CIRP period.

Appointment of Interim Resolution Professional - public announcement and calling for claims - obligation to assist and cooperate with the Interim Resolution Professional - An Interim Resolution Professional was to be appointed and directed to perform statutory functions, make public announcement, invite claims, and manage the corporate debtor as a going concern; the Operational Creditor was directed to provide interim funds. - HELD THAT: - The Tribunal, exercising its discretion, appointed the named Insolvency Professional as IRP and directed him to perform duties under the Code and regulations, including making a public announcement and calling for submission of claims. The order emphasised the statutory duty of the corporate debtor's personnel, promoters and management to assist and cooperate with the IRP and authorised the IRP to seek the Tribunal's intervention where assistance is withheld. To enable conduct of the CIRP, the Tribunal directed the Operational Creditor to pay an initial advance to the IRP and permitted the IRP to raise further interim fund demands as per rules. Additional directions included protection of ongoing supplies during the moratorium and preservation of the corporate debtor's value.

IRP appointed with directions to perform statutory functions, make public announcement, manage the corporate debtor, and receive interim funding as ordered.

Final Conclusion: The Tribunal admitted M/s. Decent Laminates Pvt. Ltd. into the Corporate Insolvency Resolution Process under Section 9, declared the moratorium with its statutory scope, appointed an Interim Resolution Professional with directions to make public announcement and manage the CIRP, and directed interim funding and cooperation by the corporate debtor's personnel.

Admission of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - acknowledgement of debt and commencement of fresh period of limitation under Section 18 of the Limitation Act, 1963 - confirmation of balance as implied ratification of debt - application of the Limitation Act to proceedings under the IBC by virtue of Section 238A - entitlement to contractual rate of interest where rate is not stipulated in invoice - appointment of Interim Resolution Professional - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016

Admission of application under section 9 of the Insolvency and Bankruptcy Code, 2016 - confirmation of balance as implied ratification of debt - Whether the Company Petition filed under Section 9 of the IBC, 2016 by the Operational Creditor against the Corporate Debtor is liable to be admitted. - HELD THAT: - The Tribunal found that invoices were raised for supplies and that the Corporate Debtor had, by confirmations of account balance for financial years 2016-17, 2017-18 and 2018-19, acknowledged the outstanding liability. The allegation that the confirmations were forged or signed without authority by the Purchase Manager was not supported by any documentary evidence. The purchase orders and the absence of a denial of the sum due and payable weighed in favour of the Operational Creditor. On the material placed before it, the Bench concluded that the Operational Creditor had made out a prima facie case and satisfied the Adjudicating Authority for admitting the application under Section 9. [Paras 14, 15, 17]

Application under Section 9 admitted.

Acknowledgement of debt and commencement of fresh period of limitation under Section 18 of the Limitation Act, 1963 - application of the Limitation Act to proceedings under the IBC by virtue of Section 238A - Whether the claim was barred by limitation or was saved by acknowledgements and confirmations of balance. - HELD THAT: - The Corporate Debtor contended that the cause of action arose on the date of the last invoice (09.12.2014) and the petition filed on 29.11.2019 was time barred. The Tribunal applied Section 238A to acknowledge that the Limitation Act applies to IBC proceedings and examined the confirmations of balance dated 01.04.2015 through 01.04.2019. Relying on the principle that a written acknowledgement of present subsisting liability signed by the party against whom the right is claimed restarts the limitation period, the Bench held that the confirmations operated to save the application from the bar of limitation under Sections 18 and 19 of the Limitation Act. [Paras 6, 7, 15, 16]

The petition is not barred by limitation; acknowledgements/confirmations restart the limitation period.

Entitlement to contractual rate of interest where rate is not stipulated in invoice - Whether the Operational Creditor is entitled to interest at the rate of 36% per annum as claimed. - HELD THAT: - The Tribunal noted that the rate of interest claimed was not expressly mentioned in the invoices. In absence of a contractual stipulation for the rate of interest in the invoices, the applicant could not be allowed interest at the claimed rate of 36% per annum. The finding limits the relief to the admitted principal amount as per the confirmation of balance. [Paras 17]

Interest at the rate of 36% per annum is not allowable as it is not stipulated in the invoices.

Appointment of Interim Resolution Professional - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Administrative consequences upon admission: appointment of Interim Resolution Professional and declaration of moratorium. - HELD THAT: - As the Operational Creditor had not proposed a name for the Insolvency Resolution Professional in Part III of the application, the Tribunal appointed an Interim Resolution Professional subject to standard conditions including disclosures and absence of pending disciplinary proceedings. Consequent to admission under Section 9(5), the Bench directed that the moratorium under Section 14(1) would follow, and set out the usual prohibitions and effects of the moratorium and the requirement for public announcement of the corporate insolvency resolution process. [Paras 18]

Interim Resolution Professional appointed and moratorium declared.

Final Conclusion: The Section 9 petition by the Operational Creditor was admitted: the Tribunal held that confirmations of balance constituted sufficient acknowledgement to save the claim from limitation, declined the claim for interest at 36% per annum as not stipulated in the invoices, appointed an Interim Resolution Professional and directed the commencement of the moratorium and related consequences under the Code.

Definition of 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - financial creditor - advance for purchase of immovable property - time value of money - maintainability of an application under Section 7 of the IBC

Definition of 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy Code, 2016 - advance for purchase of immovable property - time value of money - Whether the amount paid by the applicant as advance under Agreements of Sale constitutes a 'financial debt' making the applicant a 'financial creditor' for the purposes of initiating CIRP under Section 7 of the IBC. - HELD THAT: - The transaction between the parties arose from Agreements of Sale dated 04.01.2016 under which the applicant paid an advance for purchase of immovable properties. Subsequently the agreement was cancelled by the applicant and the applicant sought refund of the advance. The Tribunal examined whether such an advance falls within the statutory concept of 'financial debt' in Section 5(8) of the IBC, which imports the notion of disbursement of money against consideration for the time value of money. The Tribunal found that the advance paid under an agreement of sale, followed by cancellation and a claim for refund, does not qualify as a financial debt within the meaning of Section 5(8). The arrangement was contractual as purchaser and vendor and the admitted facts - including cancellation and refund claim - demonstrate that the claim does not arise from a disbursement for the time value of money. On that basis the applicant cannot be treated as a financial creditor for instituting proceedings under Section 7. The Tribunal recorded this conclusion after considering the parties' contentions and the documents on record. [Paras 11, 12]

The advance does not constitute a 'financial debt' under Section 5(8) of the IBC; the applicant is not a financial creditor and the Section 7 application is not maintainable.

Final Conclusion: The application under Section 7 filed by Tatia Global Venture Limited is dismissed as the claimed advance under the agreement of sale does not constitute a 'financial debt' and the applicant is not a 'financial creditor' under the IBC.

Withdrawal of Corporate Insolvency Resolution Process under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Role and duties of the Interim Resolution Professional - Committee of Creditors' no objection to withdrawal - Liability of the Corporate Debtor for Insolvency Resolution Process costs - Effect of withdrawal on pending applications and restoration of powers of Board of Directors

Withdrawal of Corporate Insolvency Resolution Process under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' no objection to withdrawal - Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Application for withdrawal of the CIRP was allowed and the CIRP was withdrawn. - HELD THAT: - The Tribunal recorded that the Operational Creditor filed Form-FA seeking withdrawal of its Section 9 petition and that the Interim Resolution Professional had made the statutory public announcement and received the sole claim from the Respondent bank, which became the sole member of the Committee of Creditors. The Respondent bank, as sole member of the CoC, expressly recorded no objection to the withdrawal. Having regard to the request in Form-FA, compliance by the IRP with initiation formalities and the CoC member's no-objection, the Tribunal permitted the withdrawal of the CIRP and allowed the IA seeking withdrawal.

The application for withdrawal of the CIRP is allowed and the CIRP initiated against the corporate debtor stands withdrawn.

Liability of the Corporate Debtor for Insolvency Resolution Process costs - Role and duties of the Interim Resolution Professional - The Corporate Debtor was directed to pay the balance estimated Insolvency Resolution Process cost to the IRP on production of proof. - HELD THAT: - The Tribunal examined the statement of expenditure placed on record by the IRP and noted that an amount had already been paid by the Operational Creditor to the IRP. Additional expenditure, largely legal costs incurred by the IRP in pursuing statutory steps and defending related applications, remained unpaid. In view of those incurred costs and non-cooperation by corporate debtor personnel during the process, the Tribunal held that the balance sum claimed by the IRP should be defrayed by the Corporate Debtor, subject to production of sufficient proof by the IRP.

The corporate debtor shall pay the balance sum claimed by the IRP to defray the Insolvency Resolution Process expenditure on production of proof.

Effect of withdrawal on pending applications and restoration of powers of Board of Directors - Pending IAs related to director compliance and challenges to the IRP were closed and the powers of the Board of Directors were restored upon withdrawal. - HELD THAT: - As a consequence of allowing the application for withdrawal, the Tribunal directed that the related applications filed in the proceedings (including the IRP's application under Section 19(2) and the erstwhile directors' application under Section 60(5)) stand closed. The Tribunal further recorded that on and from the date of the order the duties of the IRP shall stand discharged and the powers of the Board of Directors, which had been suspended on initiation of CIRP, stand restored.

The related IAs are closed; the IRP's duties are discharged and the powers of the Board of Directors are restored.

Final Conclusion: The Tribunal allowed the Operational Creditor's application for withdrawal of the CIRP, closed attendant interlocutory applications, directed the corporate debtor to pay the balance IRP expenses on proof, discharged the IRP and restored the powers of the Board of Directors.

Settlement and withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Moratorium - Constitution of Committee of Creditors - Liberty to restore appeal - Adjudicating Authority to decide Section 12A application

Settlement and withdrawal under Section 12A of the Insolvency and Bankruptcy Code, 2016 - Liberty to restore appeal - Appeal permitted to be withdrawn with liberty to seek restoration if settlement under Section 12A does not materialise - HELD THAT: - The Tribunal accepted the appellants' submission that the Operational Creditor and Corporate Debtor have reached a settlement and that an application for withdrawal under Section 12A has been filed through the IRP. Having regard to the objects of the IBC and the absence of a constituted CoC, the Tribunal found no reason to frustrate consensual resolution by technical objections and therefore allowed the appeal to be withdrawn. The Tribunal expressly granted the appellant liberty to move for restoration of the appeal in the event the attempt to effect settlement in terms of Section 12A fails or runs into difficulty. [Paras 6, 7]

Appeal withdrawn with liberty to seek restoration if settlement under Section 12A does not materialise

Adjudicating Authority to decide Section 12A application - Constitution of Committee of Creditors - Moratorium - Committee of Creditors shall not be constituted until the Adjudicating Authority decides the pending Section 12A application - HELD THAT: - The Tribunal noted that an application under Section 12A has been filed and that the IRP had reported payment made potentially in breach of the moratorium. In order to preserve the efficacy of the Section 12A process and to avoid pre-empting the outcome of the settlement application, the Tribunal directed that the CoC should not be constituted until the Adjudicating Authority has adjudicated the Section 12A application. This direction is intended to enable the Adjudicating Authority to consider the withdrawal/settlement application without the process of corporate insolvency resolution proceeding being progressed by constitution of the CoC. [Paras 6, 7]

CoC shall not be constituted until the Adjudicating Authority decides the Section 12A application

Final Conclusion: The appeal is disposed of: it is permitted to be withdrawn with liberty to restore if the Section 12A settlement fails, and the Adjudicating Authority is directed to decide the Section 12A application while constitution of the CoC is stayed until such decision.

Summary order. Appeal disposed of as withdrawn without liberty to challenge the impugned order.

Summary order. Permission granted to withdraw the appeal; the appeal is dismissed as withdrawn with liberty to file a fresh appeal at an appropriate stage.

Summary order. Appeal dismissed as withdrawn with liberty to the appellant to pursue any other remedy available under law; respondents do not object and the embargo on constitution of the Committee of Creditors stands removed in terms of the order dated 4th February, 2021.

Summary order. Appellant permitted to withdraw the appeal; appeal disposed of.

Summary order. Company Appeal (AT) (Insolvency) No. 928 of 2020 was withdrawn by the appellant and is dismissed as not pressed.

Withdrawal of appeal with liberty to apply - expunction of adverse observations against Resolution Professional - communication of appellate order to the Adjudicating Authority

Withdrawal of appeal with liberty to apply - expunction of adverse observations against Resolution Professional - Withdrawal of the appeal was permitted with liberty to the appellant to seek expunction of observations against the Resolution Professional before the Adjudicating Authority. - HELD THAT: - The Appellant, aggrieved by adverse observations in the impugned order and alleging non-communication of the admission and commencement order for seven months, sought leave to withdraw the appeal while reserving the right to approach the Adjudicating Authority for expunction of stigma-casting remarks. The Tribunal allowed the prayer to withdraw the appeal and granted the Appellant liberty to file an application before the Adjudicating Authority (NCLT, Division Bench-I, Chennai) for revisiting the impugned order and expunging the observations/remarks made against the Appellant as Resolution Professional. The Tribunal fixed a one-week window for filing that application. [Paras 2]

Appeal withdrawn; liberty granted to the Appellant to approach the Adjudicating Authority within one week for expunction of the adverse observations against the Resolution Professional.

Communication of appellate order to the Adjudicating Authority - Direction to communicate the Tribunal's order to the Adjudicating Authority. - HELD THAT: - In order to enable the Adjudicating Authority to consider any application for expunction on an informed basis, the Tribunal directed that a copy of its order be communicated to the Adjudicating Authority. This instruction ensures that the forum before which the expunction application is to be filed has the appellate order on record. [Paras 2]

Copy of this order to be communicated to the Adjudicating Authority.

Final Conclusion: The appeal is permitted to be withdrawn; the Appellant is granted liberty to approach the NCLT (Division Bench-I, Chennai) within one week for expunction of observations made against the Resolution Professional, and a copy of the Tribunal's order is to be communicated to the Adjudicating Authority.

Summary order. Appeal dismissed as withdrawn as the parties have settled the claim and the company petition before the Adjudicating Authority has been disposed of; no grievance survives.

Creation of second charge - attachment confirmed under Section 5(1) of PMLA - safeguarding priority of the investigating agency - interim judicial permission in absence of Appellate Tribunal - placing documents before Appellate Tribunal for consideration

Creation of second charge - attachment confirmed under Section 5(1) of PMLA - safeguarding priority of the investigating agency - interim judicial permission in absence of Appellate Tribunal - Permission to avail loan under the ECLGS by creating a second charge on the attached property while maintaining the ED's attachment and priority. - HELD THAT: - The Court noted that the Adjudicating Authority has confirmed provisional attachment of the Hotel Holiday Inn to the extent of the specified sum. The Yes Bank had independently valued the property and approved the loan under the ECLGS, subject to permission for creation of a second charge. Considering the non-functioning Appellate Tribunal and the time-sensitive threat to the hotel's continued operation, the Court granted interim permission to avail the sanctioned loan up to the specified amount by creating a second charge, provided that the ED's existing attachment and its priority are maintained and safeguarded. The permission is limited and conditional on preserving the ED's rights resultant from the confirmed attachment. [Paras 11, 12, 15, 16, 17]

Petitioner permitted to avail the loan under the ECLGS by creating a second charge on the property, subject to maintaining and safeguarding the ED's confirmed attachment and priority.

Placing documents before Appellate Tribunal for consideration - remand for consideration - Direction to place details of the facility and the charge before the Appellate Tribunal for consideration and further orders. - HELD THAT: - The Court recorded that because the Appellate Tribunal is not currently functional, the interim permission is being granted without its prior approval. The Court mandated that a detailed affidavit along with relevant documents and copies of the charge created be placed on record before the Appellate Tribunal once the facility is released. The Appellate Tribunal under the PMLA is to consider the material and pass any further orders as required by law. [Paras 17]

A detailed affidavit and relevant documents, including copies of the charge, must be placed before the Appellate Tribunal, which shall consider the matter and pass further orders in accordance with law.

Final Conclusion: Writ petition disposed by permitting interim creation of a second charge and disbursement of the sanctioned ECLGS loan while retaining and safeguarding the ED's confirmed attachment and priority; the Appellate Tribunal to be furnished with full particulars and to consider and pass any further orders in accordance with law.

Reasonable opportunity - personal hearing - remand for fresh consideration - Section 27 of the Tamil Nadu Value Added Tax Act, 2006

Reasonable opportunity - personal hearing - Section 27 of the Tamil Nadu Value Added Tax Act, 2006 - Whether the assessment order is vitiated for denial of reasonable opportunity including personal hearing and requires setting aside and remand. - HELD THAT: - The Court found that although summons were issued to the petitioner to produce accounts, the petitioner did not produce them on account of the serious illness and subsequent death of his son and had placed the death certificate on record. Section 27 contemplates giving a reasonable opportunity, which includes a personal hearing. The court noted that the petitioner was not afforded a personal hearing and relied on the principle that failure to submit objections does not entitle the authority to deny a personal hearing. In view of these facts and statutory requirement, the impugned order could not be sustained without affording the petitioner the opportunity envisaged by Section 27 and therefore the matter required fresh adjudication after such opportunity is given. [Paras 7, 8]

Impugned order dated 30.05.2019 set aside and matter remanded to the second respondent for fresh consideration after giving reasonable opportunity including personal hearing, to be completed within eight weeks.

Final Conclusion: Writ petition allowed; impugned assessment order set aside and remitted for fresh consideration after affording reasonable opportunity including personal hearing under Section 27 within eight weeks.