TaxTMI Updates e-Newsletter
May 14,2021

Summary order. CM APPLs. 16073/2021 and 16074/2021 allowed subject to just exceptions; CM APPL. 16075/2021 allowed to the extent of granting temporary exemption from filing attested affidavits, subject to the petitioners filing the attested affidavits within three days of the resumption of the Court's normal functioning; notice issued in W.P.(C) 5237/2021 challenging the vires of specified provisions of the CGST Act and Rules, with directions for filing counter-affidavits within four weeks and rejoinders, and the petition listed for hearing on 26.07.2021 along with connected matters.

Exemption from filing attested affidavits - refund of input tax credit - interest on delayed refund - export proceeds realisation - reasonable steps for repatriation of foreign exchange - relation between FEMA obligations and IGST Act entitlement

Exemption from filing attested affidavits - Application seeking exemption from filing attested affidavits with the writ petition. - HELD THAT: - The Court allowed the petitioner's application for exemption from filing attested affidavits subject to the petitioner placing the attested affidavits on record within three days of the resumption of the court's normal work pattern. The allowance is conditional and the petitioner must file the required affidavits when normal working resumes. [Paras 1, 2, 3, 4]

Application allowed subject to compliance with the condition to file attested affidavits within three days of resumption of normal court work.

Refund of input tax credit - interest on delayed refund - export proceeds realisation - reasonable steps for repatriation of foreign exchange - relation between FEMA obligations and IGST Act entitlement - Claim for refund of input tax credit relating to exported goods for February 2020 and the respondents' reliance on non-production of bank realisation certificates under Section 8 of FEMA to justify rejection. - HELD THAT: - The Court did not decide the merits of the refund claim under Section 16 of the IGST Act. The respondents contend that the refund rejection is justified because bank realisation certificates were not produced and invoke Section 8 of FEMA which requires a person to take reasonable steps for realisation and repatriation of foreign exchange. The Court observed that a direct connection between Section 8 of FEMA and Section 16 of the IGST Act had not been demonstrated by the respondents and held that the matter requires further examination. Consequently, the Court issued notice, directed the respondents to file a counter-affidavit within two weeks, permitted the petitioner to place on record correspondence and material demonstrating that reasonable steps were taken to realise export proceeds (to be supported by affidavit and furnished to respondents), and listed the matter for further hearing. [Paras 7, 8, 9, 10, 11]

Notice issued; respondents to file counter-affidavit in two weeks; petitioner granted liberty to file evidence showing reasonable steps for realisation of export proceeds (with affidavit); matter listed for further hearing.

Final Conclusion: The Court granted conditional exemption from filing attested affidavits and proceeded to issue notice in the writ petition contesting rejection of the refund claim for February 2020, directing limited procedural steps including filing of pleadings and evidence on the question of realisation of export proceeds, and listed the matter for further consideration.

Amendment to Section 50 of the CGST Act, 2017 made effective from 01.07.2017 - Operation of Clause 112 of the Finance Act, 2021 conferring retrospective effect

Amendment to Section 50 of the CGST Act, 2017 made effective from 01.07.2017 - Operation of Clause 112 of the Finance Act, 2021 conferring retrospective effect - The petitioners' grievance was satisfied by the Government's communication that the amendment to Section 50 of the CGST Act, 2017 has been made effective from 01.07.2017 by Clause 112 of the Finance Act, 2021 and that this would meet the petitioners' claim. - HELD THAT: - The Assistant Solicitor General placed on record a letter from the Principal Commissioner, Central Tax, Hyderabad, stating that the amendment to Section 50 of the CGST Act, 2017 has been made effective from 01.07.2017 by the Finance Act, 2021 and that the provisions of Clause 112 of the Finance Act, 2021 would satisfy the petitioners' claim. Counsel for the petitioners recorded their acceptance of the contents of that letter and sought closure of the matter. The court accordingly recorded the letter and, on the basis of the petitioners' submission, concluded the proceedings. [Paras 4, 5]

The letter of 26.04.2021 was placed on record and the writ petition was closed; no order as to costs.

Final Conclusion: The court recorded the Government communication that the amendment to Section 50 of the CGST Act, 2017 operates from 01.07.2017 under Clause 112 of the Finance Act, 2021, accepted the petitioners' concession, and closed the writ petition; connected miscellaneous petitions, if any, stand closed.

Penalty for non-payment or short payment of tax under Section 122(2)(a) of the CGST/APGST Acts - Procedural requirement of a show cause/assessment notice under Section 73 prior to demand and recovery - Statutory ceiling on penalty and prohibition of imposing penalty in excess of prescribed limits - Remand for fresh assessment to be conducted strictly in accordance with law

Penalty for non-payment or short payment of tax under Section 122(2)(a) of the CGST/APGST Acts - Procedural requirement of a show cause/assessment notice under Section 73 prior to demand and recovery - Statutory ceiling on penalty and prohibition of imposing penalty in excess of prescribed limits - Validity of the assessment order imposing penalty equal to the tax amount without following the notice procedure and contrary to the statutory limits prescribed under Section 122(2)(a) and related provisions. - HELD THAT: - The petitioner challenged the assessment order insofar as it imposed a penalty equal to the tax demand without being preceded by the assessment/notice procedure required under the statutory scheme. The Court accepted the contention that imposition of penalty under the statutory provision in question is subject to the procedural requirements for demand and recovery (notably the notice procedure under the assessment provisions), and that the quantum of penalty must conform to the limits prescribed by the statute rather than resulting in a penalty equal to the tax demand. The respondents' counsel did not oppose setting aside the impugned order and remanding the matter. In view of these findings, the Court set aside the impugned order and remitted the matter for a fresh assessment and determination of tax and penalty by an authorized officer strictly in accordance with the governing law and rules.

Impugned assessment order set aside; matter remitted for fresh assessment of tax and penalty to be completed by an authorized officer within four weeks from receipt of this order, strictly in accordance with law.

Final Conclusion: Writ petition allowed; the assessment order imposing the penalty is set aside and the matter is remitted for fresh assessment and determination of tax and penalty in accordance with law within four weeks; miscellaneous applications, if any, closed; no costs.

Fresh GST registration for corporate debtor under CIRP - Corporate debtor undergoing CIRP treated as distinct person - Applicability of Ministry of Finance Circular No. 134/04/2020-GST - Supremacy of insolvency law under Section 238 - Maintaining corporate debtor as going concern and RP's powers - Invalidity of suo-moto cancellation as ground to deny registration

Fresh GST registration for corporate debtor under CIRP - Corporate debtor undergoing CIRP treated as distinct person - Applicability of Ministry of Finance Circular No. 134/04/2020-GST - Invalidity of suo-moto cancellation as ground to deny registration - Maintaining corporate debtor as going concern and RP's powers - Supremacy of insolvency law under Section 238 - RP of a corporate debtor undergoing CIRP is entitled to obtain a fresh GST registration notwithstanding a prior suo moto cancellation of the corporate debtor's GST registration. - HELD THAT: - The Tribunal found that during CIRP the RP is operating the corporate debtor as a going concern under the powers conferred by the IB Code and that GST registration is necessary for those commercial transactions (para 6-8). The Ministry of Finance Circular No. 134/04/2020-GST dated 23.03.2020 treats the corporate debtor undergoing CIRP as a distinct person and requires the IRP/RP to obtain a new registration in each State/UT where the corporate debtor was earlier registered, within the stipulated timeline. The Circular therefore precludes the GST authority from treating a prior suo moto cancellation as a bar to grant fresh registration to the corporate debtor under CIRP (paras 10, 13-14). Further, the Tribunal relied on the overriding effect of the insolvency statute under Section 238 to hold that the insolvency regime and the Circular govern the position during CIRP and must be given effect to by the GST authority (para 15). The respondent's rejection of the registration applications without applying the Circular or recognising the RP's role was held to be unsustainable. In view of these conclusions, the respondent was directed to allow fresh GST registration of the corporate debtor so that the RP may continue to run the business as a going concern and comply with applicable GST obligations. [Paras 8, 10, 13, 14, 15]

Application allowed; respondent directed to permit fresh GST registration of the corporate debtor.

Final Conclusion: The Tribunal allowed the RP's application and directed the Commercial Tax Officer to register the corporate debtor under GST, holding that the Ministry of Finance circular and the overriding effect of the insolvency law require grant of fresh registration notwithstanding an earlier suo moto cancellation.

Regular bail under Section 439 CrPC - investigation concluded and chargesheet filed - documentary evidence attracting maximum punishment up to five years - role attributed to the accused - risk of tampering with evidence - conditional bail by deposit - surrender of passport and travel restriction - periodic attendance before police station as bail condition - application of Sanjay Chandra principles

Regular bail under Section 439 CrPC - investigation concluded and chargesheet filed - documentary evidence attracting maximum punishment up to five years - role attributed to the accused - risk of tampering with evidence - conditional bail by deposit - application of Sanjay Chandra principles - Grant of regular bail to the applicant arrested in connection with the arrest memorandum dated 03.01.2021. - HELD THAT: - The High Court, exercising jurisdiction under Section 439 CrPC, declined to examine the evidence in detail at the bail stage but was inclined to release the applicant on regular bail after considering multiple factors: the applicant's custodial period since 03.01.2021; the role attributed to the accused; the fact that investigation was complete and a chargesheet/complaint had been filed; that the case was founded on documentary material which, on the face of it, attracted a maximum punishment of up to five years; and that the prosecution had not established a risk of the applicant tampering with evidence. The Court noted and applied the principles laid down by the Apex Court in Sanjay Chandra . Balancing these considerations, the Court concluded that bail should be granted subject to specific conditions to secure attendance and protect the interests of prosecution and investigation. [Paras 6, 7, 8]

Application allowed; applicant released on regular bail on execution of a personal bond with one local surety, subject to deposit of Rs. 2,00,000 before the State Tax Officer and an undertaking to deposit the remaining Rs. 13,00,000 within eight weeks, surrender of passport, travel restrictions, periodic attendance at the police station, furnishing and not changing residence without permission, and other standard conditions; failure to comply will result in automatic cancellation of bail.

Final Conclusion: Bail application allowed and rule made absolute: applicant to be released on regular bail on compliance with the Court's monetary deposit and ancillary conditions; trial court not to be influenced by the preliminary observations made while enlarging the applicant on bail.

Re-opening of assessment under Section 148 - challenge to notice under Section 148 and consequential reassessment - infructuousness of writ petition upon completion of reassessment - alternative remedy by challenging the assessment order

Re-opening of assessment under Section 148 - infructuousness of writ petition upon completion of reassessment - alternative remedy by challenging the assessment order - Whether the writ petition attacking the notice under Section 148 and consequential proceedings should be entertained after reassessment has been completed - HELD THAT: - The Court recorded that during the pendency of this writ petition the Assessing Officer had passed the final order of assessment pursuant to the notice issued under Section 148. Because reassessment has already been carried out and the petitioner has challenged the assessment order in a separate writ petition (W.P.No.369 of 2019), the cause of action which gave rise to the present petition no longer exists. The Court therefore declined further adjudication of the present petition and left it open to the petitioner to raise in the other petition all grounds relied upon in the present proceedings. The petition was disposed as infructuous in view of the completed reassessment and the existence of the alternative proceeding challenging the assessment order. [Paras 1, 3, 4]

Petition disposed as infructuous; petitioner permitted to raise the same grounds in the writ petition challenging the assessment order.

Final Conclusion: The writ petition challenging the notice under Section 148 and consequential proceedings is disposed of as infructuous in view of the completed reassessment; the petitioner may pursue the grievances in the separate writ petition filed against the assessment order. No costs.

Validity of reassessment proceedings under section 147 - Approval under section 151 requiring independent application of mind - Mechanical or ritualistic sanction by competent authority is invalid - Quashing of reopening where sanction is mechanical - Consequential deletion of additions made pursuant to quashed reassessment

Approval under section 151 requiring independent application of mind - Mechanical or ritualistic sanction by competent authority is invalid - Quashing of reopening where sanction is mechanical - Consequential deletion of additions made pursuant to quashed reassessment - Whether the reassessment initiated under section 147 was vitiated by mechanical approval under section 151 and therefore liable to be quashed, with consequential deletion of additions. - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the proforma of approval placed before the Pr.CIT. The approval proforma contained only the word "Yes" in the column recording the Pr.CIT's satisfaction, and there was no material on record to show that the Pr.CIT applied his mind to the reasons or to the information relied upon by the Assessing Officer. Further, the proforma incorrectly referred to "147(b)", a provision not in operation at the relevant time, which, taken together with the bare approval, indicated a ritualistic or mechanical exercise rather than a considered satisfaction by the sanctioning authority. Applying the principle that section 151 contemplates an independent application of mind by the competent authority and following the precedents relied upon (including the approach in NC Cable Ltd. and the Tribunal's decision in Madhu Apartment Pvt. Ltd.), the Tribunal held that the sanction was mechanical and therefore invalid. As the reassessment proceedings were founded on that invalid sanction, the reopening was quashed. Because the reassessment was annulled on this ground, the additions made by the Assessing Officer under section 68 and the consequential commission could not be sustained and were rendered unenforceable. [Paras 10]

Reassessment quashed for mechanical approval under section 151; additions consequentially cannot be sustained.

Final Conclusion: The Tribunal quashed the reassessment proceedings as the Pr.CIT's approval under section 151 was given mechanically without application of mind; accordingly the assessee's appeal is allowed and the Revenue's appeal is dismissed, with the additions made in reassessment rendered unsustainable.

Capital receipt - income from other sources - inextricably linked - pre-operative expenses - surplus funds

Capital receipt - income from other sources - inextricably linked - pre-operative expenses - surplus funds - Whether interest receipts and miscellaneous income assessed under the head 'Income from other sources' are in fact capital receipts inextricably linked with the setting up of the power project and therefore liable to be capitalized against pre-operative expenses. - HELD THAT: - The Tribunal upheld the view of the learned CIT(A) that the interest on bank deposits and on advances to contractors, and the miscellaneous receipt from sale of scrap, were received during the construction phase of the power project and were applied or adjusted against expenditure during construction. Following the decisions of the Supreme Court in CIT v. Bokaro Steel Ltd. and the Delhi High Court authorities (including Indian Oil Panipat Power Consortium Ltd. and NTPC Sail Power Company (P) Ltd.), the Tribunal reasoned that where funds (including share capital and borrowed funds) are not shown to be surplus and are held or temporarily parked only in the course of construction to maintain liquidity, the interest earned is "inextricably linked" with setting up of the plant. Such receipts therefore reduce the cost of construction and are capital in nature, not taxable as income from other sources. The Tribunal relied on identical earlier decisions involving the assessee and closely similar facts for prior assessment years, which had been affirmed on further appeal, and concluded there was no basis to disturb the CIT(A)'s deletion of the additions. [Paras 5]

The additions made by the Assessing Officer treating the interest and miscellaneous receipts as income from other sources were correctly deleted as capital receipts linked to the project; the Revenue's appeal is dismissed.

Final Conclusion: Appeal dismissed; the Tribunal affirms that interest and related receipts earned during the construction period were capital in nature, inextricably linked to the project and to be capitalized against pre-operative expenses, and therefore the additions under "income from other sources" were rightly deleted.

Rectification under section 154 - statutory time limit for disposal of rectification applications - scope of 'record' for rectification of e-filed returns - right to be heard / principles of natural justice (audi alteram partem) - requirement of a speaking order and opportunity of hearing on maintainability

Statutory time limit for disposal of rectification applications - rectification under section 154 - Whether the rectification order was passed within the statutory six month period and the consequence of non compliance with that time limit - HELD THAT: - The Tribunal examined the record and found that the rectification application was e filed on 01-12-2017, transferred to the assessing officer on 05-12-2017 and the AO's order was dated 09-11-2018, thereby exceeding the six month period prescribed by sub section (8) of section 154. The AO treated a subsequently filed manual application by the counsel as the operative application, but the Tribunal held that substitution of the original e filed application by a later manual filing could not be used to the assessee's prejudice; any defects in the e filing should have been notified to the assessee for cure. Because the issue of timely disposal was obfuscated in the proceedings below and remained unaddressed on the merits, the Tribunal remanded the question for fresh consideration rather than deciding it finally. [Paras 9, 11]

The issue of whether the rectification order was passed within the statutory time limit is remanded to the lower authority for fresh consideration.

Scope of 'record' for rectification of e-filed returns - rectification under section 154 - What constitutes the 'record' for the purposes of rectification proceedings in cases of e filed returns - HELD THAT: - The Tribunal held that where returns are e filed the 'record' for section 154 purposes is not confined to the data entered on the e portal alone but includes the facts and evidence that informed the entries - including orders and documents from connected authorities (for example, Land Acquisition Officer certificates) which were used in preparing the return. Bonafide mistakes arising from ignorance of facts, misinterpretation or incorrect understanding of applicable provisions at the time of filing fall within the ambit of rectifiable mistakes, subject to the established test that the mistake must be apparent on the face of the record. [Paras 12]

For rectification of e filed returns, the record includes both the e portal entries and the supporting facts and documents relied upon in making those entries.

Right to be heard / principles of natural justice (audi alteram partem) - requirement of a speaking order and opportunity of hearing on maintainability - Whether providing written submissions alone amounted to a conscious waiver of the assessee's right to be heard and whether the order complied with principles of natural justice - HELD THAT: - The Tribunal held that written submissions do not ipso facto constitute a conscious and intelligent waiver of the right to be heard. If the adjudicating authority finds written submissions insufficient, fairness requires that the party be informed and given an opportunity to be heard further; absent any record showing an informed waiver, the presumption that the party had nothing more to say is arbitrary. Applying these principles, the Tribunal found no evidence that the assessee consciously waived the right to be heard, and observed that the impugned order did not show that the assessee was confronted with deficiencies in its written submissions or given a further hearing. [Paras 13]

Written submissions alone did not operate as a waiver of the right to be heard; the impugned order violates principles of natural justice and cannot be sustained.

Final Conclusion: The impugned order passed under section 154 is set aside. The matter is remitted to the Commissioner (Appeals) to first decide, after giving the assessee a reasonable opportunity of hearing, the maintainability/timeliness of the rectification application; if the assessee does not succeed on maintainability the other issues (including merits) shall be addressed in a speaking order in accordance with law. The appeal is allowed for statistical purposes.

Proportionate disallowance of interest on interest-free advances - commercial expediency - allowability of business expenditure under commercial expediency - no loss to revenue where parties are subject to maximum marginal tax rate - application of section 40(a)(ia) for shortfall in TDS - tax deducted under wrong provision does not import section 40(a)(ia) - CBDT clarification on hotel accommodation and TDS under section 194-I (regular basis)

Proportionate disallowance of interest on interest-free advances - commercial expediency - no loss to revenue where parties are subject to maximum marginal tax rate - Deletion of proportionate disallowance of interest attributable to interest-free advances given to group concerns was upheld. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that advances to group concerns were given as a matter of commercial expediency and were connected with the assessee's business. The assessee was shown to have a commercial relationship with the group entities (evidenced by the MOU and sample invoices/debit notes) and to have availed services from those concerns, demonstrating nexus between the advances and business purposes. The Tribunal also accepted the factual finding that the assessee and its group concerns paid tax at the maximum marginal rate, and held that there was therefore no loss to the revenue by reason of interest-free advances. Reliance was placed on a co ordinate group case (ITA Nos. 1983 & 1984/AHD/2017) where identical facts led to deletion of such disallowance; the departmental representative did not point to perversity in the appellate findings. On these bases the Tribunal found no infirmity in deleting the AO's proportionate disallowance of interest. [Paras 9]

Ground of appeal on disallowance of interest on interest-free advances dismissed and deletion by CIT(A) upheld.

Application of section 40(a)(ia) for shortfall in TDS - tax deducted under wrong provision does not import section 40(a)(ia) - CBDT clarification on hotel accommodation and TDS under section 194-I (regular basis) - Deletion of disallowance under section 40(a)(ia) in respect of hotel payments (banquet charges and room rent) was upheld. - HELD THAT: - With regard to banquet charges, the Tribunal agreed with the CIT(A) that the assessee had deducted tax (albeit under section 194C at 2%) and that the situation was one of short/incorrect deduction rather than non-deduction; applying the equitable rule that, where non-jurisdictional High Courts conflict, the view favourable to the assessee should be followed, the Tribunal adopted the Calcutta High Court approach that shortfall due to deduction under a wrong provision does not automatically attract section 40(a)(ia). Concerning room rent, the Tribunal applied the CBDT circular clarifying that TDS under section 194-I applies only where hotel accommodation is taken on a "regular basis" (e.g., earmarked rooms or obligation to provide rooms for a specified period/rate), and found on the invoices and facts that rooms were taken for occasional events (conferences), not on a regular basis. The Tribunal relied on precedents of coordinate benches to hold that no TDS under section 194-I was required, and therefore no disallowance under section 40(a)(ia) was warranted. [Paras 15]

Ground of appeal on disallowance for non-deduction/short deduction of TDS in respect of hotel payments dismissed and deletion by CIT(A) upheld.

Final Conclusion: Both grounds of the Revenue's appeal - proportionate disallowance of interest on interest-free advances and disallowance under section 40(a)(ia) for hotel payments - were dismissed; the CIT(A)'s deletions were upheld and the Revenue's appeal is dismissed.

Refund of income-tax - Corporate Insolvency Resolution Process - jurisdiction of NCLT under the Insolvency and Bankruptcy Code - rights of the Resolution Professional - forum for determination of competing claims to corporate funds

Refund of income-tax - Corporate Insolvency Resolution Process - jurisdiction of NCLT under the Insolvency and Bankruptcy Code - rights of the Resolution Professional - forum for determination of competing claims to corporate funds - The dispute as to the rightful recipient of the tax refund is to be determined by the NCLT in the insolvency proceedings and not by the revenue in exercise of its refund remittance powers. - HELD THAT: - The refund in question relates to AY 2001-2002 and, pursuant to a sanctioned demerger, the textile business vested in the corporate debtor which is undergoing CIRP before the NCLT. The Resolution Professional acts under the control of the NCLT and the contention as to entitlement to funds said to belong to or have been paid to the corporate debtor involves rights and claims within the insolvency process. In view of the RP's involvement and the statutory scheme of the Code, the High Court held that the appropriate forum to adjudicate competing claims to the refund is the NCLT; the court recorded that this view was prima facie and did not accept the RP's position as correct on merits. The court therefore declined to decide entitlement itself, granted the petitioner liberty to approach the NCLT with an appropriate application, and noted the RP's and revenue's undertaking to assist in early disposal so as to address the petitioner's time-sensitive requirement under the Direct Tax Vivad se Vishwas Act, 2020.

The High Court declined to adjudicate entitlement and directed that the question be placed before the NCLT; the writ petition was dismissed as withdrawn and the petitioner given liberty to approach the NCLT.

Final Conclusion: The writ petition was dismissed as withdrawn; the petitioner is permitted to move the NCLT for determination of the competing claims to the refund (relating to AY 2001-2002), and the High Court requested that the NCLT take up and decide the matter at the earliest.

Co-operative society - co-operative bank - deduction under section 80P(2)(a)(i) - exclusion of co-operative banks under section 80P(4) - primary co-operative bank test under section 5(ccv) of the Banking Regulation Act, 1949 - authorities under the Income Tax Act cannot go behind registration certificate of a co operative society - beneficial construction of section 80P

Co-operative society - co-operative bank - deduction under section 80P(2)(a)(i) - exclusion of co-operative banks under section 80P(4) - primary co-operative bank test under section 5(ccv) of the Banking Regulation Act, 1949 - Whether the assessee, though carrying out some transactions with non members, is a co operative bank and therefore disentitled to deduction under section 80P(2)(a)(i) by virtue of section 80P(4) of the Income Tax Act. - HELD THAT: - The Court applied the statutory test for a primary co operative bank as reflected in section 5(ccv) of the Banking Regulation Act and the factual findings in earlier decisions concerning the assessee. While the assessee admitted limited dealings with non members, those transactions were held to be insignificant and did not transform the society's principal business into banking. The Court reiterated that income attributable to credit facilities given to non members is not deductible under section 80P(2)(a)(i), but that limited dealings with non members do not, by themselves, convert a registered co operative credit society into a co operative bank attracting the exclusion in section 80P(4). On these findings, the assessee remains a co operative credit society entitled to the deduction to the extent of income attributable to member business. [Paras 11, 21, 22, 40]

Assessee is not a co operative bank for AY 2012 13 and is entitled to deduction under section 80P(2)(a)(i) to the extent income is attributable to providing credit facilities to members.

Authorities under the Income Tax Act cannot go behind registration certificate of a co operative society - beneficial construction of section 80P - Whether the Income Tax authorities may go behind the registration certificate of a co operative society to re classify it as a co operative bank for purposes of denying section 80P benefits. - HELD THAT: - Relying on the Supreme Court's decision in Mavilayi Service Co operative Bank Ltd. and the reasoning therein, the Court held that section 80P is a benevolent provision to be construed in favour of the co operative movement. The authorities under the IT Act cannot go behind the fact of registration as a co operative society to reclassify its nature, except insofar as income must be attributed to activities specified in section 80P(2). The prior jurisprudence precludes undermining eligibility by re characterising a registered co operative society as a co operative bank on the basis of incidental or limited transactions with non members. [Paras 31, 36, 38, 41]

IT authorities cannot go behind the registration certificate to treat the registered co operative society as a co operative bank; section 80P must be construed beneficially and deductions allowed subject to attributability of income.

Final Conclusion: All substantial questions of law are answered against the Revenue: the assessee remains a co operative credit society for AY 2012 13 and is entitled to deduction under section 80P(2)(a)(i) to the extent income is attributable to credit facilities to members; the Income Tax authorities cannot re cast a registered co operative society as a co operative bank by going behind its registration.

Validity of reopening of assessment under section 147/148 - Sanction/approval for reassessment under section 151 given mechanically - Reopening vitiated where reasons to believe rest on wrong facts - Issuance of notice under section 143(2) on same day as return filed in response to section 148 - Limitation on AO's jurisdiction to make additions not connected with reasons for reopening

Validity of reopening of assessment under section 147/148 - Reopening vitiated where reasons to believe rest on wrong facts - Reopening of assessment was invalid because it was grounded on the recorded (and material) factual error that the assessee had not filed return for the relevant year. - HELD THAT: - The Tribunal found on the material on record that the assessee had in fact filed the return for A.Y. 2010-11 (receipt on 30.03.2011), whereas the reasons recorded by the Assessing Officer stated that no return was filed. Reopening founded upon such incorrect factual premise vitiates the initiation of reassessment; therefore the reassessment proceedings could not be sustained. The Tribunal relied upon the principle that reassessment is a nullity where the reasons to believe are based on wrong facts and that the correctness or sufficiency of material is not to be examined only where a genuine prima facie case exists; here no such prima facie case survived because of the recorded factual error. [Paras 7, 9, 14]

Reassessment quashed as initiation was based on a wrong recorded fact that the return was not filed.

Sanction/approval for reassessment under section 151 given mechanically - Reopening vitiated where reasons to believe rest on wrong facts - Approvals granted by superior authorities under the sanction proforma were mechanical and without application of independent mind, rendering the sanction invalid. - HELD THAT: - The Tribunal examined the sanction entries by the Jt. Commissioner and the Pr. CIT which merely recorded satisfaction without independent appreciation of the material facts (including the incorrect statement that return was not filed). Where the sanctioning authority supplies approval mechanically on incorrect facts, the sanction under the statutory form is defective and the consequent reassessment is liable to be quashed. The decision follows precedents recognizing that mechanical concurrence by higher authorities invalidates reassessment. [Paras 8, 9]

Sanctions were given in a mechanical manner and did not validate the reassessment; consequently reassessment cannot stand.

Issuance of notice under section 143(2) on same day as return filed in response to section 148 - Limitation on AO's jurisdiction to make additions not connected with reasons for reopening - Notice under section 143(2) issued on the same day the assessee furnished a return in response to the section 148 notice was improper and the AO's subsequent assessment action was vitiated. - HELD THAT: - The Tribunal observed that the AO issued notice under section 143(2) on the same day the assessee appeared and furnished the ITR in response to the section 148 notice. Jurisprudence establishes that issuing a notice under section 143(2) on that same day, without proper application of mind, is invalid and vitiates proceedings. Further, where the AO proceeds to make additions unrelated to the reason recorded for reopening, such roving inquiries are impermissible without fresh notice; having found fundamental defects in initiation and notice, the Tribunal held reassessment proceedings unsustainable. [Paras 12, 13, 14]

Notice under section 143(2) issued contemporaneously with the return in response to section 148 was invalid and, coupled with the AO making additions not rooted in the reasons for reopening, vitiated the reassessment.

Final Conclusion: The Tribunal allowed the appeal, quashed the reassessment proceedings for A.Y. 2010-11 on the grounds that reopening was founded on a wrong recorded fact and sanctioned mechanically, and that procedural defects (including an invalid contemporaneous section 143(2) notice) vitiated the proceedings; since the legal defects disposed of the matter, the merits of the additions were not adjudicated.

Relevant period for reopening under Section 153C to be reckoned from date of recording of satisfaction / deemed date of search under the proviso to Section 153C - limitation and abatement under Section 153A/153C - requirement of incriminating material seized relating document-wise to assessment year as jurisdictional fact under Section 153C - scope of assessment under Section 153A/153C in respect of unabated assessments - onus of proof under Section 68 regarding identity, genuineness and creditworthiness of share capital subscribers

Relevant period for reopening under Section 153C to be reckoned from date of recording of satisfaction / deemed date of search under the proviso to Section 153C - limitation and abatement under Section 153A/153C - Period of six years for assessments under Section 153C is to be reckoned with reference to the date of recording of satisfaction (deemed date of search under proviso to Section 153C / date of notice), and not from the original date of search in the searched person's case. - HELD THAT: - The Tribunal applied the binding precedents of the Delhi High Court in CIT v. RRJ Securities Ltd. and ARN Infrastructure India Ltd., holding that for a person other than the searched person the reference to the date of search in Section 153C must be construed as the date on which the AO of that person receives seized assets/documents or records satisfaction and issues notice. Consequently the six-year window for reopening is measured from that date. On the facts, the record showed the deemed date of search/satisfaction as 22.09.2013 (order-sheet notings of 20/09/2013/notice dated 22/09/2013), therefore AYs 2010-11 and 2011-12 were within the six-year window and were unabated only for the purpose of determining applicability of Section 153A/153C.

The six-year period for reopening under Section 153C is to be reckoned from the date of recording of satisfaction / deemed date of search; AY 2010-11 and 2011-12 were within that period.

Requirement of incriminating material seized relating document-wise to assessment year as jurisdictional fact under Section 153C - scope of assessment under Section 153A/153C in respect of unabated assessments - Where assessments are unabated, additions in proceedings under Section 153C/153A cannot be made unless there is incriminating material seized during the search that relates document-wise to the assessment years in question; absence of such incriminating material renders the additions unsustainable and outside the scope of Section 153C/153A. - HELD THAT: - Relying on the Supreme Court authority in Sinhgad Technical Education Society, the Tribunal emphasised the settled principle that invocation of Section 153C/153A to reopen completed/unabated assessments requires that seized or requisitioned incriminating material be relatable to the assessment years sought to be reopened; that requirement is a jurisdictional fact. The Tribunal found on the record that no incriminating documents relating to the impugned share-capital additions were unearthed during the search - only audited balance sheets and routine correspondence (which were already disclosed in returns and earlier assessments) were on record. The Tribunal rejected the CIT(A)'s reliance on Anil Bhatia to sustain jurisdiction where no incriminating material had been found, noting that the Delhi High Court in that decision expressly declined to decide cases with no incriminating material. Applying Kabul Chawla and subsequent high court and apex court precedents, the Tribunal held that completed/unabated assessments cannot be disturbed in the absence of incriminating seized material.

Additions made in unabated assessments under Section 153C/153A without any incriminating material seized relating to the assessment years are unsustainable; the impugned additions are deleted on this legal ground.

Onus of proof under Section 68 regarding identity, genuineness and creditworthiness of share capital subscribers - On the merits, the assessing officer failed to disprove the evidences produced by the assessee in respect of purchases/subscribers (identity, genuineness and creditworthiness), and therefore the additions under Section 68 in respect of share capital and premium were not maintainable except as to one subscriber which did not respond to statutory notice. - HELD THAT: - CIT(A) had examined documentary evidence filed by the assessee (confirmations, ITRs of purchasers, PANs, correspondence and company records) and noted that the AO did not carry out adequate enquiries to disprove those evidences; where replies to notices under Section 133(6) were on record, the AO did not confront the assessee with specific defects. The Tribunal accepted the appellate factual conclusion that the assessee discharged onus under Section 68 in respect of all subscribing purchasers except M/s S. S. Securities, which failed to reply and for which the assessee had not produced broker bills. While the Tribunal primarily deleted the additions on the legal ground of absence of incriminating seized material, it also recorded that on merits the evidence sufficed to negate the additions except the amount attributable to the non responding subscriber.

On merits the additions under Section 68 were not sustainable as the assessee proved identity, genuineness and creditworthiness of subscribers except in respect of M/s S. S. Securities; accordingly the additions are deleted except as to the non responding subscriber.

Final Conclusion: The revenue's appeals are dismissed. The Tribunal held that (i) the six year period under Section 153C is reckoned from the date of recording of satisfaction / deemed date of search; (ii) unabated assessments cannot be reopened under Sections 153C/153A in the absence of incriminating seized material document wise relating to the years in question; and (iii) on the facts the additions under Section 68 were unsustainable (except in respect of one non responding subscriber), leading to deletion of the impugned additions.

Revisional jurisdiction to declare an assessment erroneous and prejudicial to the interest of revenue - valuation of closing stock and the duty of the assessing officer to make adequate enquiry - recomputation of stock value without disturbing the method of valuation - consistency of accounting method does not estop revenue from reassessment or enquiry

Valuation of closing stock and the duty of the assessing officer to make adequate enquiry - revisional jurisdiction to declare an assessment erroneous and prejudicial to the interest of revenue - recomputation of stock value without disturbing the method of valuation - consistency of accounting method does not estop revenue from reassessment or enquiry - Whether the revisional order under section 263 directing modification of the assessment by enhancing the valuation of closing stock was justified. - HELD THAT: - The Tribunal upheld the Pr. CIT's conclusion that the assessment was erroneous and prejudicial to the revenue because the Assessing Officer had not made any enquiry into the apparent under-valuation of closing stock despite clear indications in the tax audit report (closing stock figures, shortage disclosed and auditor's annexure noting lack of physical verification). The revisional authority did not challenge the FIFO method adopted by the assessee but examined and recomputed the per ton cost after including an additional purchase bill which the AO had not considered; that recomputation raised the per ton valuation and resulted in the directed addition. The Tribunal relied on the principle that an AO is not bound to accept an accounting method without verification and there is no estoppel from examining valuation (referencing British Paints principle), and rejected the assessee's reliance on earlier tribunal decisions as distinguishable because those cases involved different factual errors (disturbance of method or failure to apply uniformly to opening stock). As the AO failed to investigate a glaring discrepancy in the assessment record, the Pr. CIT was correct in treating the assessment as erroneous and directing modification by recomputing the stock value, and the assessee could not point to any defect in the recomputation carried out by the revisional authority. [Paras 14, 15, 16, 18, 19]

Pr. CIT's order under section 263 directing modification of the assessment by enhancing the valuation of closing stock is sustained and the assessee's appeal is dismissed.

Final Conclusion: The Tribunal affirms the revisional finding that the assessment was erroneous and prejudicial to the revenue for AY 2014-15 due to lack of enquiry into closing stock valuation; the direction to the AO to modify the assessment raising the stock value (and consequent addition) is upheld and the appeal is dismissed.

Evidentiary value of an Agreement to Sell (Ikrarnama) - exclusion of oral evidence by documentary evidence / best evidence rule - requirement of speaking reasons before rejecting affidavit evidence - forensic examination of disputed signatures and verification of execution - verification of ownership and subsequent sale as prerequisite to taxability of sale proceeds

Evidentiary value of an Agreement to Sell (Ikrarnama) - forensic examination of disputed signatures and verification of execution - verification of ownership and subsequent sale as prerequisite to taxability of sale proceeds - Whether the deposits in the assessee's bank account could be treated as unexplained income notwithstanding the produced Ikrarnama/Agreement to Sell - HELD THAT: - The Tribunal held that the tax authorities erred in disregarding the Ikrarnama without addressing pivotal factual matters. The authorities did not determine whether the assessee or his mother ever owned the specified land, whether any sale deed was ultimately executed pursuant to the Ikrarnama, and if so at what price. Where a written document duly signed by parties is relied upon, its authenticity and the surrounding facts cannot be summarily discarded; if signatures are denied, forensic examination and examination of witnesses are necessary before rejecting the document. The best evidence rule and principles of documentary evidence require that the document be given appropriate consideration and that unimpeachable evidence be produced to contradict or vary its terms. In view of these lacunae and the need for further enquiries (including verification of ownership, sale, price and, if necessary, forensic examination of signatures), the Tribunal set aside the matter to the lower authority for fresh and speaking consideration. [Paras 9, 10, 12, 13, 14]

Finding that the authorities' conclusion could not be sustained, the issue is remanded to the CIT(A) for enquiries and a speaking order after verifying ownership, sale, authenticity of Ikrarnama and signatures.

Requirement of speaking reasons before rejecting affidavit evidence - exclusion of oral evidence by documentary evidence / best evidence rule - Whether the alternate explanation by way of affidavit that deposits arose from business sources could be rejected without discussion - HELD THAT: - The Tribunal held that the appellate authority wrongly rejected the affidavit without any discussion of its contents or legal infirmity. Even if the affidavit was filed at the appellate stage, it could not be arbitrarily discarded; the authority was obliged to examine the affidavit, point out any deficiencies and give the assessee a fair opportunity to rectify them. The absence of any reasoning or analysis in the order rendered the rejection unsustainable. Accordingly, the claim that deposits (fully or partly) originated from business sources requires consideration on merits with reasons recorded. [Paras 5, 11, 14]

The rejection of the affidavit is set aside; the matter is remanded to the CIT(A) to discuss the affidavit's contents, address any deficiencies and decide the claim with reasons after giving the assessee an opportunity to be heard.

Final Conclusion: The appeal is allowed for statistical purposes and the matter is remanded to the CIT(A) for fresh, reasoned adjudication after making necessary enquiries (including verification of ownership, sale transaction, authenticity of the Ikrarnama and consideration of the affidavit), giving the assessee a reasonable opportunity of being heard.

Interest on short-term deposits as income from other sources - interest on advances and fixed deposits not inextricably linked with project - independent source - receipts inextricably linked to construction/pre-operative activity to be capitalised - set-off/netting of interest income against pre operative/capital expenditure - res judicata and non-applicability in income tax reassessments

Interest on short-term deposits as income from other sources - interest on advances and fixed deposits not inextricably linked with project - independent source - Whether interest earned on fixed deposits and advances during the pre commencement/construction period is taxable as income from other sources. - HELD THAT: - The Tribunal examined the nature and use of the funds and the assessee's inability to demonstrate that the deposits or advances were inextricably linked to the project. The Bench held that once funds (including amounts received as share capital or loans) are in the hands of the assessee they may be invested by a conscious decision to earn interest; such investment contracts with banks create an independent source of income. The Tribunal placed reliance on precedents of High Courts and the Supreme Court distinguishing accountancy guidance from tax law, and concluded that interest on short term bank deposits and similar investments is revenue in nature and assessable under the head 'Income from other sources'. The Tribunal therefore supported the Assessing Officer's treatment and quashed the CIT(A)'s contrary view. [Paras 8, 32]

Interest earned on fixed deposits/advances (not shown to be inextricably linked to the project) is taxable as income from other sources; the Assessing Officer's treatment is restored.

Receipts inextricably linked to construction/pre-operative activity to be capitalised - inextricably linked receipts and capitalization against pre-operative expenditure - Whether interest earned from advances to contractors/employees and certain miscellaneous receipts are inextricably linked to the construction activity and therefore not taxable as revenue receipts. - HELD THAT: - On the material (including the assessee's contract booklet), the Tribunal found that advances to contractors and interest charged thereon, and various miscellaneous receipts (liquidated damages, recoveries from contractors, rent recovered, sale of scrap, overhead recoveries etc.) arose from acts closely connected and incidental to the construction activity. Applying the ratio that receipts which are inextricably linked with the process of setting up the business reduce the capital cost, the Tribunal held that these specific receipts are not to be treated as income from an independent source and therefore are not taxable under 'Income from other sources'. [Paras 39, 50]

Interest from advances to contractors/employees and the identified miscellaneous receipts are inextricably linked with construction and are not taxable as independent revenue receipts; they reduce capital cost.

Set-off/netting of interest income against pre operative/capital expenditure - res judicata and non-applicability in income tax reassessments - Whether pre commencement/pre operative expenses (or interest payable) can be set off/netted against interest income from deposits, and consequent treatment of the CIT(A) order. - HELD THAT: - The Tribunal noted that netting (capitalising interest income against capital expenditure) is not permissible where the interest income arises from an independent source; accountancy practice cannot override tax law. The Tribunal observed that res judicata does not operate to bind it in these tax proceedings. Having found that most of the impugned interest was revenue in nature, the Tribunal restored the Assessing Officer's order which had treated such interest as income from other sources and disallowed netting by the assessee. The CIT(A)'s order was quashed to that extent. However, the Tribunal accepted that specific linked receipts should reduce capital cost and adjusted the taxable quantum accordingly. [Paras 8, 9]

Netting/set-off of interest income against pre operative/capital expenditure is not allowable where the interest arises from an independent source; the Assessing Officer's order is restored and the CIT(A)'s contrary order is quashed, subject to the deletions for receipts found to be inextricably linked to construction.

Final Conclusion: The Revenue's appeal is allowed. The Tribunal restores the Assessing Officer's treatment that interest from short term deposits and similar investments (not shown to be inextricably linked to the project) is taxable as income from other sources, quashes the CIT(A)'s contrary order, but excludes from tax those amounts (interest on advances to contractors/employees and specified miscellaneous receipts) found to be inextricably linked with construction and to reduce capital cost.

Fair Market Value determination of capital asset as on 01.04.1981 - validity and admissibility of registered valuer's report vs departmental Valuation Officer (DVO) report - application of Section 55A for ascertaining FMV - relevance of stamp duty / SRO guideline value to FMV - enhancement of assessment without notice

Fair Market Value determination of capital asset as on 01.04.1981 - application of Section 55A for ascertaining FMV - relevance of stamp duty / SRO guideline value to FMV - Determination of the FMV of the land as on 01.04.1981 for computation of long term capital gains - HELD THAT: - The Tribunal examined rival valuations - the assessee's registered valuer's backward working/indexation method yielding a substantially higher figure and the departmental Valuation Officer's report producing a much lower figure. The Tribunal found the registered valuer's report deficient on facts: it did not demonstrate any comparable sales in the locality and produced a figure that was implausible given the short interval between the purchase date and 01.04.1981. While acknowledging that SRO guideline values serve revenue/stamp duty purposes and are not definitive for FMV, the Tribunal held that FMV must be supported by comparable data and reasonable methodology. Applying these principles to the facts, the Tribunal rejected the registered valuer's report, accepted that the DVO considered comparables, and, exercising its evaluative discretion, fixed FMV at Rs. 400 per sq. yard for the subject land for the limited purpose of this case, with a rider that the figure should not be treated as a precedent. [Paras 6, 9, 10]

Assessee's registered valuer's FMV rejected; FMV fixed at Rs. 400 per sq. yard as on 01.04.1981 for the present case (partly allowed).

Validity and admissibility of registered valuer's report vs departmental Valuation Officer (DVO) report - Whether the AO could avail the services of the DVO and act on the DVO's valuation report - HELD THAT: - The Tribunal held that the Assessing Officer may seek the assistance of departmental experts such as the DVO to arrive at FMV where requisite evidence (e.g., SRO guideline value for the relevant date) is not furnished. The Tribunal observed that the reference to the DVO in the assessment file did not expressly invoke section 50C and that the DVO's report showed consideration of objections and comparables, yielding a valuation close to the purchase consideration. Consequently, the DVO's report was found to be reasonable and admissible for the assessment proceedings in the present factual matrix, and the registered valuer's unexplained and unsupported enhancement was liable to be rejected. [Paras 6, 9]

Reference to and reliance on the DVO's report by the AO is valid in the circumstances; the DVO's valuation is accepted over the registered valuer's report for this case.

Enhancement of assessment without notice - Whether the CIT(A) was justified in disallowing amounts spent by the assessee's husband on construction when the Assessing Officer had not made such disallowance and whether enhancement was effected without notice - HELD THAT: - The Tribunal noted that the Assessing Officer had allowed the claimed construction expenditure, and the CIT(A) subsequently disallowed the same, resulting in enhancement under section 251(1) without issuing any enhancement notice or affording the assessee an opportunity of hearing. Given the absence of any enhancement notice and the procedural requirement of issuing such notice before increasing the assessment, the Tribunal found the CIT(A)'s action to be procedurally untenable and reversed that part of the appellate order. The Tribunal directed that necessary recomputation be carried out in accordance with law. [Paras 11]

CIT(A)'s disallowance of the construction expenditure reversed for lack of enhancement notice; grounds 12 and 13 accepted and recomputation directed.

Final Conclusion: The appeal is partly allowed: the Tribunal rejected the registered valuer's FMV, accepted the DVO's approach and fixed FMV at Rs. 400 per sq. yard for the purpose of this case (without creating a precedent), and reversed the CIT(A)'s disallowance of the construction expenditure for having effected enhancement without notice; consequential computation to follow.

Revisional jurisdiction under section 263 - Erroneous and prejudicial to the interest of revenue - Lack of enquiry versus inadequate enquiry - Application of mind by the Assessing Officer - Two possible views rule under section 263

Revisional jurisdiction under section 263 - Application of mind by the Assessing Officer - Lack of enquiry versus inadequate enquiry - Two possible views rule under section 263 - Whether the Principal Commissioner was justified in invoking section 263 to set aside the assessment on the ground that the Assessing Officer had not made necessary enquiries regarding interest on loans and advances. - HELD THAT: - The Tribunal examined the documentary record, including the detailed questionnaire issued under section 142(1), party wise ledger accounts, confirmations, income tax returns and written submissions placed before the Assessing Officer. Those materials showed that the AO had raised specific queries on unsecured loans, loans and advances and interest thereon, and that the assessee had filed supporting documents and explanations which the AO considered. The Tribunal applied the settled legal test that revisional powers under section 263 require the assessing order to be both erroneous and prejudicial to revenue because the AO failed to make inquiries or verifications which should have been made; where the AO has made inquiries and taken one of two possible views after applying his mind, the Principal Commissioner cannot substitute his own view by directing further enquiry. The Principal Commissioner did not himself make fresh enquiries as contemplated by the provision and relied instead on a perceived disproportion in figures without pointing to any specific omission in the AO's verification. On the facts, the AO had conducted enquiries to his satisfaction and had taken a plausible view; therefore the assumption of jurisdiction under section 263 was impermissible and amounted to substituting the Principal Commissioner's view for that of the AO. [Paras 8, 12, 13]

Assumption of jurisdiction under section 263 was erroneous because the AO had made necessary enquiries and applied his mind; the revisional order is quashed and the assessment order is restored.

Final Conclusion: The appeal is allowed: the order passed by the Principal Commissioner under section 263 dated 24.03.2019 is quashed and the assessment order dated 26.10.2016 framed under section 143(3) is restored for A.Y. 2014-15.

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of revenue - guideline value / full value of consideration - proviso to section 50C - deduction under section 54F - investment in new house and capital gain deposit scheme - assessing officer taking a plausible view

Revisionary jurisdiction under section 263 - erroneous and prejudicial to the interests of revenue - assessing officer taking a plausible view - Validity of the Pr. CIT's exercise of jurisdiction under section 263 in setting aside the assessment framed u/s 143(3). - HELD THAT: - The Tribunal held that powers under section 263 can be exercised only when the impugned assessment order is both erroneous (i.e., not in accordance with law) and prejudicial to the revenue. Where the Assessing Officer after due enquiry has applied his mind and taken one of the plausible views based on the material on record, the Commissioner cannot substitute his view merely because he would have taken a different view. In the present case the AO examined the documents, called for explanations and reached a permissible conclusion; the Pr. CIT therefore was not justified in interfering under section 263 and the revisional order is without jurisdiction. [Paras 26, 28]

Order of Pr. CIT under section 263 dated 29.03.2019 quashed; assessment order dated 14.12.2016 restored.

Guideline value / full value of consideration - proviso to section 50C - assessing officer taking a plausible view - Whether the assessing officer ought to have adopted the guideline value as on date of sale deed (26.03.2014) instead of the sale agreement value (30.03.2012) for computing capital gains. - HELD THAT: - The assessee executed a registered agreement (without possession) on 30.03.2012 and received substantial consideration in FY 2011-12/2012-13; the final sale deed dated 26.03.2014 recorded a higher consideration received by the intermediary purchaser. The AO examined the agreement, payments received and relevant material and adopted the agreement value for computing the assessee's capital gain. The Tribunal found that the AO had thoroughly considered the issue and taken a plausible view supported by precedents; therefore the Pr. CIT had no basis to treat the AO's order as erroneous under section 263. [Paras 14, 17, 18]

Assessment officer's adoption of the agreement value for the assessee (as reflected in return) is a plausible view; Pr. CIT's interference on this ground is unwarranted.

Deduction under section 54F - investment in new house and capital gain deposit scheme - assessing officer taking a plausible view - Allowability of deduction under section 54F - (a) deposit in Capital Gain Account Scheme (FDRs) and (b) investment in construction of new house - and whether the AO failed to make necessary enquiries so as to render his order erroneous and prejudicial. - HELD THAT: - As to the deposit in the Capital Gain Account Scheme (FDRs) amounting to Rs. 46,13,000/-, the Pr. CIT accepted during section 263 proceedings that the assessee furnished the bank certificate and sample withdrawal application, so this issue was not pressed further. Regarding the construction investment claim (Rs. 43,31,991/-), the AO had issued detailed queries, received submissions, municipal sanction and bank withdrawal evidence, and examined the breakup of construction costs. The AO accepted the claim after scrutiny (subject only to disallowance of certain selling expenses). The Tribunal concluded that the AO had made a complete enquiry and taken a permissible view; the Pr. CIT therefore could not re-open the matter under section 263. [Paras 13, 19, 21, 22]

Claim for deposit under Capital Gain Account Scheme accepted as not live; claim for construction investment under section 54F was examined by AO and his view stands - Pr. CIT's direction to re-examine is unjustified.

Final Conclusion: The Tribunal allowed the appeal: the Pr. CIT's order under section 263 dated 29.03.2019 was quashed and the assessment order dated 14.12.2016 passed u/s 143(3) was restored, the Tribunal finding that the AO had conducted proper enquiries and taken plausible views on guideline value and section 54F claims, so the twin conditions for exercise of section 263 were not satisfied.

Effect of exoneration in adjudication proceedings on criminal prosecution - Abuse of process of court - Standard of proof in adjudication proceedings and criminal prosecution - Discharge under the Prevention of Corruption Act where adjudication on identical facts resulted in exoneration - Dereliction of duty vis-a -vis criminal misconduct

Effect of exoneration in adjudication proceedings on criminal prosecution - Standard of proof in adjudication proceedings and criminal prosecution - Discharge under the Prevention of Corruption Act where adjudication on identical facts resulted in exoneration - Abuse of process of court - Whether the Special Judge was justified in discharging Accused nos.1 and 2 under the Prevention of Corruption Act in view of their exoneration in related adjudication proceedings on the same material. - HELD THAT: - The Court examined the adjudication order of the Commissioner of Customs and the Appellate Tribunal's decision which, on the same set of facts and material as the criminal prosecution, recorded that the officers were not proved to have acted for extraneous considerations and were effectively exonerated on merit. Applying the principles in Radheshyam Kejriwal and Videocon Industries, the Court noted the distinct standards of proof: adjudication proceedings require a lower standard (preponderance/higher degree of probability) whereas criminal prosecution requires proof beyond reasonable doubt. Where the adjudication proceeding on identical allegations has resulted in a finding of no contravention on merits, continuing criminal prosecution would amount to an abuse of the process of the court. The Special Judge properly had regard to the identical factual matrix (inspection of the consignment, alleged failures in declarations and verification) and to the Appellate Tribunal's exoneration when ordering discharge. The Court found no demonstration of excess or failure to exercise jurisdiction by the Special Judge and held that the applicant, having not challenged the adjudication orders, was bound by them. [Paras 26, 27, 28, 29, 30]

The Special Judge's order discharging Accused nos.1 and 2 is justified; the revision is rejected and the application lacks merit.

Final Conclusion: The High Court refused the CBI's revision petition and upheld the Special Judge's discharge of the accused public servants, holding that exoneration on merit in the related adjudication proceedings based on identical material made continuation of the criminal prosecution an abuse of process.

Restoration of name of struck off company - Validity of striking off - service and publication of notices under removal rules - Opportunity of hearing and fairness in striking off proceedings - Conditions for restoration - compliance with pending statutory filings and costs - Registrar's residual power to take action for prior violations

Validity of striking off - service and publication of notices under removal rules - Opportunity of hearing and fairness in striking off proceedings - Whether the striking off and dissolution of the company's name was effected in accordance with the statutory notice and publication requirements and whether the company was denied opportunity of being heard. - HELD THAT: - The Tribunal examined the sequence of statutory notices and publications relied upon by the Registrar and the Appellant's assertion that notices were not served and no opportunity to be heard was afforded. The Registrar produced records that Notice in Form STK 1 and STK 5 were issued and that the company's name was published on the Ministry website (STK 5 dated 19.07.2018), in leading newspapers on 21.07.2018 and in the Official Gazette on 04.08.2018; the dissolution order was published on the Ministry website (STK 7) on 12.09.2018. On that factual basis the Tribunal found the Appellant's contentions that no notice was given or that no opportunity to be heard was afforded to be frivolous and unacceptable. The Tribunal therefore concluded that the Registrar complied with the statutory publication and notice mechanism prescribed under the Rules, and that there was no denial of a fair hearing sufficient to sustain the striking off. [Paras 10, 12]

The Tribunal held that the statutory notices and publications were issued as required and that the contention of denial of opportunity to be heard was not accepted; nevertheless, on broader considerations the Tribunal proceeded to allow restoration.

Restoration of name of struck off company - Conditions for restoration - compliance with pending statutory filings and costs - Registrar's residual power to take action for prior violations - Whether the company's name should be restored and on what conditions restoration should be permitted. - HELD THAT: - Balancing the Registrar's compliance with removal procedure against the Appellant's request for relief and its stated readiness to regularise defaults, the Tribunal exercised its power to set aside the striking off order and to restore the company's name. Restoration was made conditional to secure compliance and protect public interest: the company must within specified short timelines file all pending financial statements and annual/statutory returns, deliver a certified copy of the order and pay costs to the Registrar, after which the Registrar will publish the order in the Official Gazette and restore the name. The Tribunal also expressly preserved the Registrar's authority to take appropriate action for any other violations prior to the cut off date or in the interregnum and warned that failure to comply with the conditions would nullify the restoration.

The Tribunal allowed the appeal, set aside the striking off order and restored the company's name subject to conditions of filing pending returns, payment of costs and publication; the Registrar's residual powers were left unimpaired.

Final Conclusion: Appeal allowed; impugned order striking off the company's name set aside and the name restored in the Registrar's register subject to the appellant filing all pending statutory returns within the prescribed timelines, delivering a certified copy of the order and payment of costs, with the Registrar to publish the order and retaining authority to take action for prior or other violations.

Oppression and mismanagement - quasi-partnership - application of equitable principles in family companies - interim relief by stay of resolutions passed at a general meeting - acquiescence and cause of action in company petitions

Oppression and mismanagement - standing under section 244 - Petitioners' right to maintain the company petition alleging oppression and mismanagement - HELD THAT: - The petition was presented under sections 241/242 and the petitioners were found to hold in aggregate 18.15% of the paid-up share capital, satisfying the threshold for maintenance under the statutory scheme. The Tribunal recorded that the company is a family-owned concern and accepted that the petitioners are eligible to invoke the remedy for alleged acts of oppression and mismanagement. [Paras 1]

The petitioners are entitled to maintain the petition.

Quasi-partnership - application of equitable principles in family companies - acquiescence and cause of action in company petitions - interim relief by stay of resolutions passed at a general meeting - Whether interim relief by way of stay of the EGM resolutions removing the petitioners should be granted - HELD THAT: - The Tribunal applied the equitable principles applicable to family companies and entities in the nature of quasi-partnerships, observing that such companies are to be judged by standards of equity (relying on Ebrahimi and subsequent authorities) rather than by the same yardstick as normal companies. The Tribunal found that the respondents' removal of all three petitioner-directors and assumption of full board control disturbed longstanding arrangements that had operated satisfactorily for about twenty-one years. The single omission alleged (non-invitation of the respondent representative to one board meeting) was held to be an insufficient ground to justify total exclusion of the petitioner group. The Tribunal rejected the contention that convening the meeting by the petitioner-directors amounted to acquiescence that would preclude relief, noting that the requisition could lawfully have been pursued by the requisitionists and that mere convening did not bar scrutiny of the substance. On the prima facie material, the Tribunal concluded that the petitioners had made out a case for interim protection and accordingly stayed the resolutions passed at the EGM dated 14.04.2021 and directed the Registrar of Companies not to take cognisance of filings made pursuant to those resolutions. [Paras 28, 29, 30, 31]

Interim stay granted on the EGM resolutions dated 14.04.2021; RoC directed not to take cognisance of filings made pursuant to those resolutions until further orders.

Final Conclusion: The Tribunal held that the petitioners have standing to maintain the company petition; applying equitable principles applicable to quasi partnership/family companies it found a prima facie case and granted interim relief by staying the EGM resolutions of 14.04.2021 and directing the RoC not to act on filings consequent thereto, while directing the respondents to file their replies and listing the matter for further hearing.

Application of the law of limitation to claims preferred before the IRP/RP during CIRP - time barred claims cannot be revived by filing claim in CIRP - inadmissibility of claims founded on unregistered instruments affecting immovable property - challenge to rejection of claim by IRP under Section 60(5) of the IBC - role of IRP in admitting or rejecting claims under the CIRP process and Regulation 9A

Application of the law of limitation to claims preferred before the IRP/RP during CIRP - time barred claims cannot be revived by filing claim in CIRP - Whether the claim for arrears of rent (relating to period from November 2013) was barred by limitation and therefore inadmissible in the CIRP. - HELD THAT: - The Tribunal examined the claim documents and noted that no acknowledgement or document was placed on record after 21.09.2016 to bring the claim within the period of limitation. Having regard to the Supreme Court's view in B.K. Educational Services and the Insolvency Law Committee's report, the Limitation Act, 1963 applies to proceedings under the Code and to claims preferred before the IRP/RP. A claim which is time barred on the date of initiation of CIRP cannot be revived by filing a claim in the CIRP. Applying these principles to the materials, the Tribunal found the asserted arrears (from 2013) to be hopelessly barred by limitation and that the applicant had not shown any entitlement to extend or revive the limitation period by means of acknowledgment or other admissible material. [Paras 11, 13, 14, 15, 16]

The claim was time barred and therefore inadmissible in the CIRP.

Inadmissibility of claims founded on unregistered instruments affecting immovable property - role of IRP in admitting or rejecting claims under the CIRP process and Regulation 9A - challenge to rejection of claim by IRP under Section 60(5) of the IBC - Whether the IRP's rejection of the applicant's claim (on grounds including unregistered lease, delay in submission, lack of supporting documents and demand evidence) warranted interference under Section 60(5). - HELD THAT: - The IRP had rejected the claim citing multiple deficiencies: delay in submission of Form F, the lease deed of 03.01.2011 being unstamped and unregistered, absence of documentary evidence of demand or satisfaction of claim, and lack of bank statements or adjudicatory orders as required by Regulation 9A(2)(iii). The Tribunal, after considering the materials and the absence of any post 2016 acknowledgment or supporting adjudicatory material, concluded that the IRP's rejection did not call for interference. While the unregistered lease was noted as a deficiency, the determinative ground was the bar of limitation and the insufficiency of supporting evidence to establish a subsisting, enforceable claim within the CIRP timeframe. [Paras 9, 10, 11, 16, 17]

The IRP's rejection of the claim was upheld and the challenge under Section 60(5) is dismissed.

Final Conclusion: The Tribunal held that the applicant's claim for rent arrears (relating to 2013-2019) was time barred and inadequately supported; the IRP rightly rejected the claim under the CIRP process and the application under Section 60(5) is dismissed without cost.

Joint Lenders' Meeting conclusions not creating contractual obligation - Judicial review of commercial and contractual decisions involving public money - Mandamus to compel funding or implementation of a resolution plan - Maintainability of writ petitions where insolvency proceedings are pending before NCLT - Scope of interference in bank decisions relating to revival of corporate debtor

Joint Lenders' Meeting conclusions not creating contractual obligation - Mandamus to compel funding or implementation of a resolution plan - The conclusions recorded in the Joint Lenders Meetings of 19th and 27th March 2020 did not crystallise into a legally enforceable agreement obliging the respondent banks to implement the proposed resolution plan or to provide funding, and the High Court will not issue a mandamus to compel banks to inject funds. - HELD THAT: - The Court held that the minutes and in-principle conclusions of the Joint Lenders Meetings were deliberative and were not taken to their logical end in the form of an agreement or contract. In the absence of a concluded agreement, no contractual obligation arose which the Court could enforce by directing the respondent banks to pump in additional money. The exercise of directing banks to implement the proposed restructuring would amount to compelling a commercial decision involving public funds; such compulsion is beyond the province of a writ court when no enforceable contractual duty exists. Consequently, the relief sought in the nature of mandamus to implement the Resolution Plan could not be granted. [Paras 18]

The petition seeking a mandamus to direct implementation of the Joint Lenders' conclusions is rejected because those conclusions did not create a binding contractual obligation.

Maintainability of writ petitions where insolvency proceedings are pending before NCLT - Scope of interference in bank decisions relating to revival of corporate debtor - The writ petition is not maintainable to the extent it seeks to substitute the banks' commercial judgment on revival; matters relating to revival or insolvency are to be considered by the NCLT where the banks have already initiated proceedings. - HELD THAT: - The Court noted that the respondent banks have filed a petition before the National Company Law Tribunal and that the NCLT is the appropriate forum to examine whether the corporate debtor can be revived and to refer the matter to a committee of creditors or professionals under the Insolvency and Bankruptcy Code. Given the pending adjudication before NCLT and the commercial character of the banks' decision (involving public money), the High Court declined to interfere. The Court observed that the petitioner may press its contentions before the NCLT, which is equipped to assess revival prospects and take appropriate steps under the IBC framework. [Paras 13, 18]

The writ petition is not maintainable insofar as it challenges the banks' commercial decision and seeks directions substituting the NCLT's role; the petitioner may pursue remedies before the NCLT.

Final Conclusion: The writ petition challenging the letter dated 04.06.2020 is dismissed: the Joint Lenders' Meeting conclusions did not become a binding contract enforceable by mandamus, and the appropriate forum for contesting revival/insolvency issues is the NCLT; no costs.

Operational Debt - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Negotiable Instruments Act, 1881 - dishonour of cheque - Proof of supply - invoices and delivery proof - Unilateral journal entries / running account adjustments

Operational Debt - Proof of supply - invoices and delivery proof - Whether the petitioner proved existence of an operational debt arising from supply of goods or services. - HELD THAT: - The Bench examined the documents filed by the petitioner and observed that no invoice, delivery challan, purchase order or other documentary proof supporting the claimed debt was initially produced (paras 19, 22). On being granted an opportunity the petitioner filed 37 invoices dated between 11.11.2013 and 23.01.2018 (para 23). The respondent, however, demonstrated invoice wise that payments had been made in respect of those 37 invoices and provided running account particulars showing payments exceeding the invoiced sums up to 23.01.2018; the petitioner did not deny those payments (paras 24-27). The ledger and subsequent entries relied upon by the petitioner after 23.01.2018 were unilateral journal adjustments lacking supporting invoices or proof of delivery and an unexplained opening debit balance as of 01.04.2018 (paras 28-29). Charges claimed separately (delay charges, khalapur, travel) had no supporting invoices or agreement and the asserted rate of delayed payment was not part of the invoices (paras 29-30). The Bench concluded there was nothing on record to show an outstanding operational debt based on supply of goods or services and that the 37 invoices were not outstanding (para 31). [Paras 27, 28, 29, 30, 31]

Claim of operational debt for supply of goods or services was not proved; the 37 invoices were shown to have been paid and additional claimed charges were unsubstantiated.

Negotiable Instruments Act, 1881 - dishonour of cheque - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether dishonour of the two cheques issued by respondent establishes an operational debt for purposes of Section 9 proceedings. - HELD THAT: - The petitioner relied on two confirmation letters and two cheques issued by the respondent (paras 6-9, 17-18). The respondent denied signing the letters and contended the cheques were given as security or advances and not as acknowledgment of past operational debt (paras 20, 32). The Bench observed that allegations of forgery and the respondent's contention that the cheques were security/advance were tenable and that cheque dishonour in itself relates to proceedings under the Negotiable Instruments Act and only indicates refusal to pay the purported security; it does not, without supporting documentary proof of an underlying unpaid operational debt, establish a debt for initiation of CIRP under the Code (paras 20, 32). [Paras 9, 17, 18, 20, 32]

Dishonour of the cheques did not, by itself and in the absence of substantiating documents showing an outstanding operational debt, suffice to invoke Section 9 proceedings.

Unilateral journal entries / running account adjustments - Proof of supply - invoices and delivery proof - Whether unilateral journal entries and later ledger adjustments can form the basis of an operational debt claim. - HELD THAT: - The Bench scrutinised the petitioner's ledger and noted that entries after 23.01.2018 consisted largely of journal/unilateral adjustments and an unexplained opening debit balance on 01.04.2018; such entries were neither sale nor bank receipt entries and lacked supporting invoices or proof of delivery (para 28). The additional claimed amounts for various expenses were unsupported by invoices or any agreement between the parties (paras 25, 29-30). The Bench held that journal entries unilaterally passed by the petitioner do not constitute a claim arising from supply of goods or services and cannot substantiate an operational debt under the Code (para 31). [Paras 25, 28, 29, 30, 31]

Unilateral journal entries and unsupported ledger adjustments do not constitute a provable operational debt.

Section 9 of the Insolvency and Bankruptcy Code, 2016 - Operational Debt - Final adjudicatory outcome on the petition under Section 9. - HELD THAT: - Applying the foregoing findings - that the invoices relied upon were paid, additional claimed charges were unsubstantiated, and the cheques' dishonour did not demonstrate an outstanding operational debt - the Bench found no material on record to admit the Section 9 petition and initiate CIRP (paras 31-33). [Paras 31, 32, 33]

Petition under Section 9 is dismissed.

Final Conclusion: The petition under Section 9 of the IBC was dismissed: the petitioner failed to prove an outstanding operational debt by supply of goods or services, the invoices relied upon were shown to have been paid, additional claims were unsubstantiated, unilateral journal entries were inadmissible as proof of operational debt, and dishonour of the cheques did not, without supporting documentary proof of an underlying unpaid debt, warrant initiation of CIRP.

Maintainability of Section 9 application combining multiple contracts - operational debt includes retention money - default of one lakh rupees or more triggers corporate insolvency resolution process - admission of Section 9 application and appointment of Interim Resolution Professional - moratorium under Section 14 on admission of insolvency application

Maintainability of Section 9 application combining multiple contracts - Single Section 9 petition comprising claims arising out of multiple work orders was maintainable. - HELD THAT: - The Tribunal examined whether separate claims arising from different work orders and dates of default could be clubbed in one petition under Section 9. Relying on precedent cited by the applicant and observing subsequent clarifications of higher fora, the Tribunal held that claims arising out of multiple agreements may be included in a single Section 9 application and such consolidation is not a ground for rejection. The Tribunal therefore rejected the objection that the application was not maintainable on account of being a composite petition covering different work orders. [Paras 18]

Objection to maintainability on account of multiple work orders dismissed and single petition held maintainable.

Operational debt includes retention money - Retention money retained after completion of work is an operational debt and forms part of the claim under the Code. - HELD THAT: - The Tribunal considered whether amounts retained as retention/security after completion of work fell within the definition of operational debt. Noting contemporaneous admissions by the corporate debtor and reliance on NCLAT and other decisions, the Tribunal concluded that once work is complete and final bill is raised, the retention money becomes due and payable and falls within the definition of debt under the Code. The corporate debtor's communications admitting outstanding retention sums reinforced that no further adjudication was required on that admitted portion. [Paras 18]

Retention money held to be part of operational debt and recoverable under Section 9.

Default of one lakh rupees or more triggers corporate insolvency resolution process - Existence of a default of at least the threshold amount was established and sufficient to admit the Section 9 application. - HELD THAT: - Applying the statutory scheme and authoritative pronouncement on default, the Tribunal observed that the Code is triggered when a debt of rupees one lakh or more becomes due and remains unpaid. The corporate debtor had admitted a sum exceeding the threshold (including retention money) and the Tribunal found that default existed within the relevant timeframe. Accordingly, the criteria for admission under the Code were satisfied and the application warranted admission. [Paras 18]

Default of requisite threshold established; Section 9 application admitted.

Admission of Section 9 application and appointment of Interim Resolution Professional - moratorium under Section 14 on admission of insolvency application - On admission, an Interim Resolution Professional was appointed, moratorium was declared and directions for deposit to meet IRP expenses were issued. - HELD THAT: - Upon admitting the application, the Tribunal appointed an Interim Resolution Professional named in the order after noting requisite disclosures and consent requirements. Consequent to admission, the moratorium under Section 14 was held to apply, and the Tribunal directed the operational creditor to deposit a specified amount with the IRP to meet initial expenses, subject to adjustment by the Committee of Creditors. Directions were also given for communication of the order to the IRP, parties, IBBI and ROC and for the operational creditor to provide the paper book to the IRP. [Paras 19, 20, 21, 22]

IRP appointed, moratorium declared and directions issued for deposit and communications.

Final Conclusion: The Section 9 application was admitted: the Tribunal held that a single petition may aggregate claims from multiple work orders, retention money is an operational debt, default above the statutory threshold was established, an Interim Resolution Professional was appointed and statutory moratorium and ancillary directions followed.

Pre-existing dispute - Section 8 notice under the Insolvency and Bankruptcy Code, 2016 - maintainability of CIRP application

Pre-existing dispute - Section 8 notice under the Insolvency and Bankruptcy Code, 2016 - maintainability of CIRP application - Whether the petition to initiate CIRP was maintainable in view of a pre-existing dispute between the operational creditor and the corporate debtor prior to the service of the Section 8 notice. - HELD THAT: - The Tribunal examined the communications exchanged between the parties, including Whatsapp chats and emails from 23.02.2019 to 19.09.2019, and the corporate debtor's correspondence dated 16.09.2019, 18.09.2019 and its reply dated 26.09.2019. These records indicated disagreements on the CFT rates charged by the operational creditor and allegations of excess billing, and the corporate debtor had intimated its intention to issue debit notes before the Section 8 notice was served. The Tribunal found that these contemporaneous communications disclosed a real and pre-existing dispute on the very subject-matter of the claim which arose prior to service of the demand notice dated 28.09.2019. On that basis the Tribunal concluded that the statutory threshold for admitting a CIRP petition under the Code was not satisfied because the claim was disputed bona fide and genuinely prior to the notice, rendering the petition untenable. [Paras 4]

Petition dismissed for want of maintainability as a pre-existing dispute existed prior to issuance of the Section 8 notice.

Final Conclusion: The Tribunal dismissed the application to initiate CIRP against the corporate debtor on the ground that a pre-existing dispute between the parties concerning rates and alleged excess billing existed before the demand notice was served; the dismissal is without prejudice to the parties' rights in other fora.

Financial creditor under Section 5(8)(f) - financial debt and default - admissibility of application under Section 7 - appointment of Interim Resolution Professional - moratorium under Section 14 - public announcement under Section 13(2)

Financial creditor under Section 5(8)(f) - admissibility of application under Section 7 - Applicants are financial creditors and the Section 7 application is maintainable. - HELD THAT: - The Tribunal examined whether the applicants qualify as "financial creditors" within the meaning of the Code by virtue of amounts paid to the corporate debtor as buyers of residential flats. Applying the statutory definition relied upon in the petition and the limited scope of inquiry mandated in Innovative Industries Ltd. v. ICICI Bank, the Tribunal found that the amounts paid in consideration of allotment constitute financial debt and therefore the applicants fall within the category of financial creditors. The application filed in the prescribed form under Rule 4(2) read with Section 7 was held to satisfy the formal requirements for admissibility.

The Section 7 application by the applicants is maintainable as they are financial creditors.

Financial debt and default - admissibility of application under Section 7 - There was default by the corporate debtor in respect of the claimed financial debt. - HELD THAT: - On the material before it, including allotment letters, payment history and the agreed timeline for possession, the Tribunal concluded that the corporate debtor failed to deliver possession within the contractual period and thereby defaulted in repaying the financial liability to the homebuyers. Relying on the limited inquiry standard, the Tribunal was satisfied that a default had occurred within the meaning of the Code.

A default in respect of the claimed financial debt has occurred and is established for purposes of Section 7.

Admissibility of application under Section 7 - appointment of Interim Resolution Professional - The application under Section 7 was complete and the Tribunal admitted the petition and appointed the proposed Interim Resolution Professional. - HELD THAT: - The Tribunal found that the application complied with the prescribed form and manner under the Code and Rules, and that no disciplinary proceedings were pending against the proposed professional. Having been satisfied on completeness and compliance, and in exercise of power under Section 7(5), the Tribunal admitted the application and appointed the proposed registrant as Interim Resolution Professional to manage the corporate insolvency resolution process.

The petition is admitted and the proposed person is appointed as Interim Resolution Professional.

Moratorium under Section 14 - Moratorium under Section 14 is declared upon admission of the Section 7 petition. - HELD THAT: - Consequent to admission, the Tribunal imposed the statutory moratorium and set out the prohibitions flowing from Section 14(1)(a)-(d), including restraint on institution or continuation of suits, transfer or encumbrance of assets, enforcement of security and recovery of property occupied by the corporate debtor. The Tribunal also clarified exceptions recognized by the Code and relevant regulations regarding specified transactions, surety obligations and uninterrupted supply of essential goods or services.

Moratorium under Section 14 is declared with the statutory prohibitions and recognized exceptions.

Public announcement under Section 13(2) - appointment of Interim Resolution Professional - The Interim Resolution Professional must make the public announcement and the financial creditor was directed to provide funds for initial IRP expenses. - HELD THAT: - The Tribunal directed the Interim Resolution Professional, pursuant to Section 13(2) and the Explanation to Regulation 6(1), to make the public announcement within the specified short period. The Tribunal further directed the financial creditor to deposit funds to meet initial expenses of the IRP, subject to accounting and adjustment by the Committee of Creditors, and required the office and Registrar of Companies to communicate and update statutory records reflecting admission of the petition.

IRP to make public announcement promptly; financial creditor directed to deposit funds for IRP's initial expenses and statutory notifications to be effected.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the homebuyers as financial creditors, held that a default existed, appointed the proposed Interim Resolution Professional, directed immediate public announcement and initial funding for the IRP, and declared the moratorium under the Code.

Corporate insolvency resolution process - Operational debt - Default - Service of demand notice - Section 9 admission - Interim Resolution Professional appointment - Moratorium under Section 14 - Limitation

Service of demand notice - Section 9 admission - Service of the Section 8 demand notice and the Section 9 application on the Corporate Debtor was valid and complete. - HELD THAT: - The Tribunal found that the Section 8 notice in Form 3 was sent by speed post to the registered address as per MCA master data and the tracking report records 'Item Delivered'. Service of the Section 9 application was effected by email to the registered email and by speed post which returned with the endorsement 'Addressee left without instructions'; relying on the reasoning in Madan & Co. v. Wazir Jaivir Chand, the Tribunal held that return endorsements of that nature do not defeat service where the notice was correctly addressed and dispatched. The Corporate Debtor neither filed any reply nor appeared and was proceeded ex parte. [Paras 6, 7, 8]

Service of the demand notice and application was complete and effective; the Corporate Debtor was proceeded against ex parte.

Operational debt - Default - Limitation - The existence of an operational debt and default was established and the application was within limitation. - HELD THAT: - The Applicant's invoices (raised between 20.07.2016 and 20.02.2017) and cheques issued and dishonoured were accepted as evidencing an operational debt. Form V, Part IV records the outstanding sum and the date of default as 10.08.2016. The affidavit under section 9(3)(b) affirmed absence of any notice of dispute from the Corporate Debtor. The Tribunal concluded that the application filed on 01.02.2019 was within the period of limitation measured from the date of default. [Paras 5, 9, 10, 12, 13]

Operational debt and default were proved and the petition was not time-barred.

Section 9 admission - Corporate insolvency resolution process - The Section 9 application was admitted under the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - Having found the operational debt, the default and valid service, and in the absence of any disputed claim raised by the Corporate Debtor, the Tribunal held that the application met the requirements of Section 9(5) and admitted the application to initiate the corporate insolvency resolution process. [Paras 11, 13]

Application under Section 9 admitted and CIRP initiated.

Interim Resolution Professional appointment - An Interim Resolution Professional (IRP) was appointed and conditions for consent and disclosures were imposed; the Operational Creditor was directed to deposit funds to meet IRP expenses. - HELD THAT: - The Tribunal noted the proposed IRP had withdrawn consent and accordingly appointed Mr. Sunder Khatri as IRP, subject to filing of specific consent in Form 2 and requisite disclosures under the IBBI regulations within one week. The Operational Creditor was directed to deposit an initial sum with the IRP to meet expenses, subject to adjustment by the Committee of Creditors. [Paras 14, 15]

Mr. Sunder Khatri appointed as IRP conditional on statutory disclosures and consent; Operational Creditor to deposit the directed sum for IRP expenses.

Moratorium under Section 14 - Upon admission, the moratorium under Section 14 of the Code operates in respect of the Corporate Debtor. - HELD THAT: - The Tribunal directed that, as a consequence of admission under Section 9(5), the moratorium envisaged under Section 14(1) will follow and the prohibitions in provisos (a)-(d) of the Code shall apply, with the other provisions of Section 14 (2) to (4) coming into force during the moratorium period. [Paras 16]

Moratorium under Section 14 declared to be in effect upon admission of the application.

Final Conclusion: The Tribunal admitted the Section 9 petition, having held that the operational debt and default were established, service of notices was valid, the petition was within limitation, an IRP was appointed subject to statutory formalities and an initial deposit for IRP expenses ordered, and the moratorium under Section 14 of the Code was declared operative.

Maintainability of writ petitions during extension of an amnesty scheme on account of the COVID-19 pandemic - requirement of prior notice before enhancement of declared tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme - scope of correction for arithmetic or clerical error by the Designated Committee - computation of tax dues for slab applicability under the Scheme based on the return filed - judicial discretion against remand in expedited amnesty proceedings

Maintainability of writ petitions during extension of an amnesty scheme on account of the COVID-19 pandemic - Maintainability of the writ petitions filed after the original scheme deadline but during period affected by COVID-19 extensions. - HELD THAT: - The petitions, filed while the nation-wide COVID-19 lockdown and subsequent extensions were in force and after the Government had announced extensions of dates relevant to the Scheme, were held to be maintainable. The Court accepted that the exceptional circumstances arising from the pandemic and the sequence of extensions affecting last dates for submission and payment provided sufficient justification for entertaining the writ petitions filed on 30.07.2020.

Writ petitions held maintainable.

Requirement of prior notice before enhancement of declared tax dues under the Sabka Vishwas (Legacy Dispute Resolution) Scheme - scope of correction for arithmetic or clerical error by the Designated Committee - computation of tax dues for slab applicability under the Scheme based on the return filed - judicial discretion against remand in expedited amnesty proceedings - Whether the impugned rectifications by the Designated Committee constituted mere arithmetic/clerical corrections not requiring notice, and whether the petitioner's month-wise quantification argument altered slab applicability under Section 124(1)(c). - HELD THAT: - The Court held that powers under the Scheme to correct arithmetical or clerical errors do not extend to adjustments that enhance the quantification of tax dues arrived at under Section 127; where rectification effects an enhancement of declared dues it falls outside the limited scope of arithmetic or clerical error and requires issuance of notice to the declarant. Separately, the petitioner's contention that tax dues must be quantified month-wise was rejected: under the Scheme the computation of 'tax due' for slab purposes is to be based on the return filed under the relevant indirect tax enactment (here, half-yearly returns under the Finance Act, 1994), and therefore the appropriate slab applies as per the return-based computation. Although the Court found that notice should have been issued before enhancement, it exercised judicial discretion not to remand the matters on that technical ground given the need for expedition in amnesty proceedings; instead the court dismissed the petitions but granted limited liberty to seek time from the authority to remit dues under the revised SVLDRS determinations.

Rectifications amounted to more than clerical/arithmetic corrections and, in principle, required notice; petitioner's month-wise computation rejected; notwithstanding the lack of notice, petitions dismissed with liberty to approach authorities for additional time as specified by the Court.

Final Conclusion: The High Court entertained the writ petitions despite the original scheme deadline in view of COVID-19 related extensions; it held that the Designated Committee's rectifications went beyond mere clerical/arithmetic corrections and therefore required prior notice, and rejected the petitioner's month-wise quantification contention, but declined to remand the matters. The petitions were dismissed, with liberty granted to the petitioner to seek limited additional time from the authorities to remit the revised dues, subject to the timeline and conditions directed by the Court.

Clandestine removal of excisable goods - corroborative evidence requirement for clandestine clearance - presumption versus positive evidence - penalty under Section 11AC of the Central Excise Act, 1944 - appropriation of payment towards duty and interest - set aside of duty demand for lack of positive and tangible evidence

Penalty under Section 11AC of the Central Excise Act, 1944 - corroborative evidence requirement for clandestine clearance - presumption versus positive evidence - Penalty imposed under Section 11AC was not sustainable and was set aside. - HELD THAT: - The Commissioner (Appeals) held that the departmental case for clandestine manufacture and removal lacked independent and corroborative material and rested on assumptions and uncorroborated statements; applying the principle in Amrit Foods, the notice did not sustain the specific charge for penalty under Section 11AC read with the Rules. The Tribunal records that the Commissioner (Appeals) properly set aside the penalty as not sustainable in the absence of concrete positive and tangible evidence and affirms that conclusion. [Paras 22, 25]

Penalty under Section 11AC set aside.

Clandestine removal of excisable goods - corroborative evidence requirement for clandestine clearance - set aside of duty demand for lack of positive and tangible evidence - Demand of duty and interest based on alleged clandestine removal was not sustainable and was set aside. - HELD THAT: - The Commissioner (Appeals) found that no positive independent evidence was produced to support the charge of clandestine manufacture and removal, noting that inferences were drawn from recovered documents and stock shortages without corroboration from buyers, transporters or suppliers. The Tribunal, on review of the impugned order, found no independent observation to justify upholding the duty demand where the charge itself was held to be unsupported by positive evidence, and therefore set aside the demand of duty and interest. [Paras 8, 10, 13, 25]

Demand of duty and interest for the period October 2013 to March 2014 set aside.

Final Conclusion: The appeal is allowed: the penalty under Section 11AC previously set aside by the Commissioner (Appeals) is affirmed, and the demand of duty and interest for October 2013 to March 2014 is set aside with consequential relief as per law.

Appealability of administrative intimation - limitation for filing appeal - time-barred appeal - interest on delayed refund - remand for fresh adjudication

Limitation for filing appeal - appealability of administrative intimation - time-barred appeal - The appeal filed before the Commissioner (Appeals) on 31.10.2019 against the adjudicating authority's communication dated 29.08.2019 was within the prescribed time and the finding that the appeal was time barred was incorrect. - HELD THAT: - The adjudicating authority's order dated 11.04.2018 made no mention of any claim for interest. The appellant thereafter filed an application for interest on 07.05.2019, which was responded to by the authority on 29.08.2019 stating that the matter had been settled by the earlier order. The letter dated 29.08.2019 constituted an appealable communication. The appeal lodged on 31.10.2019 was therefore within the statutory time limit measured from that appealable intimation, and the Commissioner (Appeals)'s dismissal on the ground of delay was unsustainable. [Paras 4]

Impugned conclusion that the appeal was time barred is set aside; the appeal before the Commissioner (Appeals) is held to be in time.

Interest on delayed refund - remand for fresh adjudication - The substantive question of entitlement to interest on the delayed refund was not decided on merits and is remanded to the Commissioner (Appeals) for fresh consideration. - HELD THAT: - The Commissioner (Appeals) did not adjudicate the claim for interest on its merits after the appeal was held to be time barred. Given that the time-bar finding has been set aside, the matter must be considered on merits in accordance with relevant judicial pronouncements. The Commissioner (Appeals) is directed to decide the issue afresh and in accordance with law within 90 days of receipt of this order. [Paras 5]

Matter remanded to the Commissioner (Appeals) to decide the claim for interest on delayed refund on merits within 90 days.

Final Conclusion: Appeal allowed insofar as the finding of delay is concerned and the impugned order is set aside; the question of interest on delayed refund is remitted to the Commissioner (Appeals) for fresh adjudication in accordance with law within 90 days.

Compounding of offences under the Negotiable Instruments Act by mutual settlement - Inherent powers of High Court under Section 482 Cr.P.C. to secure the ends of justice - Non-obstante clause in Section 147 of the Negotiable Instruments Act and its interaction with general compounding law - Embargo on altering a criminal judgment after pronouncement under Section 362 Cr.P.C. - Section 320 Cr.P.C. as the statutory code governing compounding and its mandatory pre requisites - Prevention of abuse of process of court

Compounding of offences under the Negotiable Instruments Act by mutual settlement - Non-obstante clause in Section 147 of the Negotiable Instruments Act and its interaction with general compounding law - Section 320 Cr.P.C. as the statutory code governing compounding and its mandatory pre requisites - Whether a petition under Section 482 Cr.P.C. can be entertained to give effect to a compromise under Section 147 of the Negotiable Instruments Act so as to compound an offence under Section 138 after conviction has been delivered and confirmed. - HELD THAT: - The court held that although Section 147 NI Act makes offences under the Act compoundable and begins with a non obstante clause, that provision does not obliterate the substantive and procedural framework of Section 320 Cr.P.C. Section 147 overrides only the bar contained in Section 320(9) insofar as making NI Act offences compoundable, but it does not remove the mandatory pre requisites and limitations embodied in Section 320 (including sub sections (5), (6), (7) and (9)) nor does it furnish a free power to alter a criminal judgment once finally pronounced. The Criminal Procedure Code (Sections 4 and 5) requires that procedure under the Cr.P.C. be followed for offences unless a special Act prescribes otherwise; accordingly, compounding under the NI Act must be consistent with the principles and restrictions in Section 320 Cr.P.C. The court emphasised that compounding which would have the effect of setting aside a conviction after final judgment cannot be achieved by an application under Section 482 Cr.P.C., since Section 362 Cr.P.C. bars altering a judgment after pronouncement except for clerical or arithmetical errors. Allowing compounding after final conviction would amount to re writing and nullifying a judgment on merits, enable opportunistic post verdict settlements and constitute an abuse of process. While the inherent power under Section 482 is wide, it must be exercised with caution and cannot be used to defeat the specific procedural bar in Section 362 Cr.P.C.; therefore a Section 482 petition for compounding after conviction is not maintainable. [Paras 16, 19, 21, 23, 27]

A petition under Section 482 Cr.P.C. cannot be entertained to compound an offence under Section 138 NI Act by invoking Section 147 after the conviction has been pronounced and confirmed, because Section 362 Cr.P.C. bars alteration of a final criminal judgment and Section 147 must be read consistently with the procedural prerequisites of Section 320 Cr.P.C.

Inherent powers of High Court under Section 482 Cr.P.C. to secure the ends of justice - Prevention of abuse of process of court - Limits on exercise of extraordinary powers after final adjudication - Scope and limits of the High Court's inherent jurisdiction under Section 482 Cr.P.C. in cases where parties seek compounding after final judgment. - HELD THAT: - The court recognised the plenary and inherent nature of Section 482 powers to prevent abuse of process and to secure the ends of justice, but held that such powers are circumscribed where their exercise would alter a final criminal judgment in contravention of Section 362 Cr.P.C. The inherent jurisdiction may be exercised to quash proceedings or prevent abuse in appropriate cases, but it is an extraordinary remedy to be used with caution; it cannot be deployed to nullify a judgment on merits by compounding offences after conviction. Permitting post judgment compounding under the guise of Section 482 would undermine the finality of criminal adjudication, encourage opportunistic settlements after adverse verdicts and erode public confidence in judicial decisions. [Paras 22, 23, 24, 25, 27]

While Section 482 confers wide inherent powers, those powers cannot be exercised to defeat the statutory embargo in Section 362 Cr.P.C. by permitting compounding that would effectively set aside a final criminal conviction; such exercise would be impermissible and amount to abuse of process.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking compounding of the offence under Section 138 NI Act by invoking Section 147 after the conviction was affirmed is rejected as not maintainable: Section 147 must be applied consistently with Section 320 Cr.P.C., and Section 362 Cr.P.C. bars alteration of a final criminal judgment, so the High Court cannot use its inherent powers under Section 482 to compound the offence post conviction.