TaxTMI Updates e-Newsletter
May 15,2021

Allowance of draft amendment - seizure and attachment under GST Act - release of seized vehicle - retention and release of other seized goods pending departmental requirement - grant of time for filing counter-affidavit

Allowance of draft amendment - Draft amendment filed by the petitioner was permitted to be incorporated. - HELD THAT: - The High Court heard counsel for both parties and allowed the petitioner to carry out the necessary incorporation of the draft amendment. No further substantive objection to permitting the amendment is recorded in the order and the court directed that the amendment be effected.

Draft amendment allowed and directed to be incorporated.

Seizure and attachment under GST Act - release of seized vehicle - retention and release of other seized goods pending departmental requirement - The vehicle seized under Section 67(2) and attached under Section 83 of the GST Act, 2017 is to be released by the department within a week; other seized goods may remain with the department or be released if not required further. - HELD THAT: - On instruction from the Government Pleader the court recorded that the vehicle earlier seized and attached under the specified provisions of the GST Act would be released within a week from the date of the order. The court left the departmental custody of the remaining seized and attached goods (including mobile phone and diary) to the department's discretion, directing that if those items are no longer required they may be considered for release.

Directed release of the seized vehicle within a week; other seized items to remain with or be released by the department depending on need.

Grant of time for filing counter-affidavit - Two weeks' time was granted to the respondent for filing a counter-affidavit in response to the draft amendment and any additional affidavit; matter listed to be heard after summer vacation. - HELD THAT: - The court recorded that concerned officers were indisposed and, on that basis, allowed two weeks' time for the respondent to file a counter-affidavit to the draft amendment and any additional affidavit. The case was ordered to be listed on 15.6.2021 after the summer vacation for further hearing.

Two weeks granted for filing counter-affidavit; matter posted for listing on 15.6.2021.

Final Conclusion: The petition's draft amendment was permitted to be incorporated; the vehicle seized and attached under the GST Act is to be released within a week, other seized items may be retained or released by the department as appropriate; two weeks were granted to file a counter-affidavit and the matter was listed for hearing on 15.6.2021.

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Acceptance of 3B/GST return subject to deposit of taxes and compliance with formalities - Limited time-bound opportunity to file return (5th July, 2021) - Direction to open GST portal to enable filing - Use of downloaded court order as equivalent to certified copy during COVID-19 restrictions

Condonation of delay - Proviso to Rule 23 of the Odisha Goods and Services Tax Rules - Delay in invoking the proviso to Rule 23 of the OGST Rules was condoned. - HELD THAT: - The Court, having regard to the submissions of the opposite parties' counsel, allowed the petitioner's belated invocation of the proviso to Rule 23 of the Odisha GST Rules and condoned the delay. The condonation is granted subject to the conditions imposed by the opposite parties, namely the deposit of all taxes due and satisfaction of other statutory/formal requirements before acceptance of the return. [Paras 2, 3]

Delay in invoking the proviso to Rule 23 OGST Rules is condoned subject to specified conditions.

Acceptance of 3B/GST return subject to deposit of taxes and compliance with formalities - Limited time-bound opportunity to file return (5th July, 2021) - Direction to open GST portal to enable filing - The petitioner's 3B GST return will be accepted if filed on or before 5th July, 2021, and upon deposit of taxes and compliance with other formalities; the proper officer shall open the portal to enable filing. - HELD THAT: - The Court directed that, conditioned on the petitioner depositing all taxes due and complying with other formalities, the opposite parties shall accept the petitioner's 3B return provided it is filed on or before 5th July, 2021. The petitioner is required to produce a downloaded copy of the order before the proper officer; upon compliance the proper officer is to open the portal to facilitate filing of the return. [Paras 2, 3, 4]

GST return to be accepted if filed by 5th July, 2021, subject to payment of taxes and fulfillment of formalities; portal to be opened on production of the order.

Use of downloaded court order as equivalent to certified copy during COVID-19 restrictions - A printout/downloaded copy of the Court's order may be used, at par with a certified copy, subject to attestation by the concerned advocate as per Court notices, during continuing COVID-19 restrictions. - HELD THAT: - Recognising ongoing COVID-19 related restrictions, the Court permitted parties to rely on a printout of the order available on the High Court website as equivalent to a certified copy, provided it is attested by the concerned advocate in the manner prescribed by earlier Court notices. This is allowed to facilitate compliance with the directions given in the order. [Paras 6]

Downloaded/printout of this order may be used as equivalent to certified copy subject to prescribed attestation.

Final Conclusion: The petition is disposed of by condoning the delay in invoking the proviso to Rule 23 OGST Rules and granting a time bound opportunity to file the 3B GST return on or before 5th July, 2021, provided all taxes are paid and formalities complied with; the proper officer shall open the portal on production of the order, and a downloaded copy of the order may be used as equivalent to a certified copy subject to attestation due to COVID 19 restrictions.

Best judgment assessment under Section 62 of the Telangana GST Act, 2017 - Arbitrariness in assessment - Requirement of a reasoned order - Right to personal hearing - Validity of penalty levy - Setting aside of attachment/garnishee orders

Best judgment assessment under Section 62 of the Telangana GST Act, 2017 - Arbitrariness in assessment - Requirement of a reasoned order - Impugned best-judgment assessment which multiplied the monthly average tax by three and adopted that as the tax liability was set aside and remitted for fresh consideration. - HELD THAT: - The Court found that although the assessing authority is empowered to make a best-judgment assessment in the absence of a return, the method adopted in the impugned order-multiplying the monthly average SGST figure by three to fix turnover and tax-was prima facie arbitrary and not shown to be based on any identifiable principle. The respondents were unable to justify the methodological basis for the multiplier. In consequence, the impugned order was set aside and the matter remitted to the assessing authority for fresh consideration. The assessing authority is directed to issue notice to the petitioner indicating the method it proposes to adopt under the best-judgment assessment provision, grant a personal hearing, and thereafter pass a reasoned order on tax, interest and penalty within eight weeks from receipt of the Court's order. [Paras 5, 6]

Impugned assessment set aside as prima facie arbitrary; matter remitted for fresh assessment after notice, hearing and reasoned order within eight weeks.

Validity of penalty levy - Requirement of a reasoned order - Right to personal hearing - Levy of 100% penalty, in the absence of any indication of the legal provision under which it was imposed, was not sustained and was remitted for fresh consideration along with tax and interest. - HELD THAT: - The Court observed that the impugned order levied 100% penalty without specifying the statutory provision under which the penalty was imposed. The respondent could not point to the provision supporting the penalty. As the penalty was imposed without the requisite statutory basis and without adequate reasoning recorded in the order, the Court set aside that portion of the order and remitted the question of levy of penalty to the assessing authority to consider afresh after giving notice and a personal hearing and recording a reasoned decision. [Paras 4, 5, 6]

Order imposing 100% penalty set aside and remitted for fresh consideration with notice, hearing and reasoned decision.

Setting aside of attachment/garnishee orders - Consequential attachment/garnishee orders issued pursuant to the impugned assessment order were set aside. - HELD THAT: - Because the assessment order dated 27-12-2019 was set aside, the Court also set aside consequential attachment and garnishee orders issued by the respondents. The recipients of those orders are thereby relieved from the consequences of enforcement steps taken pursuant to the impugned order. [Paras 6]

Consequential attachment/garnishee orders set aside.

Final Conclusion: Writ petition allowed: the best-judgment assessment order dated 27-12-2019 is set aside as prima facie arbitrary and remitted to the assessing authority for fresh consideration; the authority must issue notice specifying the proposed method of assessment, grant a personal hearing and pass a reasoned order on tax, interest and penalty within eight weeks; consequential attachment/garnishee orders are set aside; no costs.

Appealability of final order under Section 129 of the CGST Act, 2017 - Maintainability of writ petition against an appealable statutory order - Availability of alternate statutory remedy by way of appeal under Section 107 of the CGST Act, 2017 - Jurisdiction of appellate authority after passing of final order - Release of detained goods on furnishing a bank guarantee when appellate remedy exists

Maintainability of writ petition against an appealable statutory order - Availability of alternate statutory remedy by way of appeal under Section 107 of the CGST Act, 2017 - Writ petition challenging detention, seizure and show-cause notice culminating in a final order under Section 129 of the CGST Act is not maintainable where the final order is appealable under the statute. - HELD THAT: - The Court noted that a final order under Section 129 of the CGST Act has been passed by the Assistant State Tax Officer and that such order is amenable to appeal under the statutory scheme. Having regard to the existence of an alternate statutory remedy, the petition filed at the interim stage against the show-cause notice and related detention/seizure cannot be entertained. The writ petition was therefore disposed of with liberty to the petitioner to pursue the remedy of appeal as provided in law.

Writ petition dismissed insofar as it seeks to challenge the appealable final order; petitioner permitted to pursue statutory appeal.

Jurisdiction of appellate authority after passing of final order - Release of detained goods on furnishing a bank guarantee when appellate remedy exists - Petitioner's request for release of goods on furnishing a bank guarantee declined because jurisdiction to grant such relief now vests with the appellate authority in view of the final order. - HELD THAT: - The Court observed that once the final order under Section 129 has been passed and the matter is within the purview of the appellate mechanism under the Act, it is not appropriate for the High Court to direct release of goods on bank guarantee. The court declined to entertain the prayer for release and left the matter to be addressed before the competent appellate forum.

Prayer for release of goods on furnishing a bank guarantee refused; matter to be taken up before the appellate authority.

Final Conclusion: The writ petition is disposed of as not maintainable against a final, appealable order under Section 129 of the CGST Act; the petitioner is left to pursue the remedy of appeal under the statute and the request for release of goods on bank guarantee is declined since jurisdiction now lies with the appellate authority.

Principles of natural justice - show cause notice-cum-draft assessment - assessment under Section 143(3) read with Section 144B of the Income Tax Act, 1961 - breach of timeline by revenue - stay of operation of assessment order, notice of demand and penalty proceedings

Principles of natural justice - show cause notice-cum-draft assessment - breach of timeline by revenue - Prima facie finding that the petitioner was denied opportunity of hearing due to the revenue passing the assessment order before the expiry of the timeline for submitting response. - HELD THAT: - The petitioner contended that the show cause notice-cum-draft assessment called for a response by 23:59 hours on 22.04.2021 but the respondent on record shows the assessment order under the Act was passed on 22.04.2021 at 14:11 hours. The petitioner also placed on record an e-filing grievance dated 22.04.2021 stating attempts to upload a response at about 22:00 hours had failed. Having regard to these averments and materials, the court recorded a prima facie view that principles of natural justice appear to have been breached by the premature finalisation of the assessment before the expiry of the timeline fixed for submission of the petitioner's response. [Paras 2, 3, 4, 5]

Recorded a prima facie finding that there appears to have been a breach of principles of natural justice.

Stay of operation of assessment order, notice of demand and penalty proceedings - assessment under Section 143(3) read with Section 144B of the Income Tax Act, 1961 - Interim relief by staying operation of the impugned assessment order and consequential notices pending further orders. - HELD THAT: - In view of the prima facie conclusion on breach of natural justice and while respondent was permitted time to obtain instructions, the court directed an interim stay on the operation of the impugned assessment order dated 22.04.2021 and on the notice of demand issued under Section 156 as well as the notice initiating penalty proceedings under Section 270A. The court listed the matter for further hearing and permitted the respondent to file a counter-affidavit if instructed to resist the petition. [Paras 5, 6, 7, 8, 9]

Granted interim stay on the impugned assessment order, the notice of demand and the penalty notice; listed the matter for further hearing on 19.05.2021.

Final Conclusion: On a prima facie finding of breach of natural justice arising from the premature passing of the assessment, the court granted an interim stay on the assessment order dated 22.04.2021, the notice of demand and the penalty proceedings, and listed the matter for further hearing on 19.05.2021, permitting the revenue to file a counter-affidavit if it chooses to resist.

Treatment of processing and beneficiation as manufacture/production - interpretation of manufacture under clause (r) of SEZ Act and section 2(29BA) - application of market value/arm's length price for inter-unit transfers under section 10B(7) read with section 80-IA(8) - remand to Assessing Officer for determination of market value of transferred crude ore - application of section 14A and Rule 8D for disallowance of expenditure relating to exempt income - comparative scope of the expressions manufacture and production

Treatment of processing and beneficiation as manufacture/production - interpretation of manufacture under clause (r) of SEZ Act and section 2(29BA) - comparative scope of the expressions manufacture and production - Whether the Tribunal correctly held that the assessee's beneficiation, processing (including conversion of ROM and tailings into marketable lumps/fines) amounts to manufacture/production for the purposes of section 10B. - HELD THAT: - The Court examined the statutory scheme of sections 10A, 10AA and 10B and recent statutory definition in section 2(29BA) which defines 'manufacture' as change resulting in a new and distinct object or a different chemical composition or integral structure. It analysed precedents (Chowgule, Pio Food Packers, Saraswati Sugar Mills, Aman Marble, Arihant Tiles and this Court's earlier decisions in Sesa Goa and Fateh Granite) and noted that 'process' and 'manufacture' are treated synonymously in this context and that 'production' has a wider ambit than 'manufacture'. On the facts, the beneficiation and processing carried out in the three units alter chemical/physical composition and convert non-marketable ROM/tailings into marketable lumps/fines; the units had requisite approvals as EOUs and the Tribunal's factual findings (including site inspection and description of processes) supported its conclusion. Applying the statutory definition and precedents, the Tribunal's conclusion that the activities amount to manufacture/production was upheld. [Paras 48]

Tribunal's finding that the units undertake manufacture/production was upheld; substantial question answered against Revenue.

Application of market value/arm's length price for inter-unit transfers under section 10B(7) read with section 80-IA(8) - remand to Assessing Officer for determination of market value of transferred crude ore - Whether the Tribunal correctly directed recomputation of exemption under section 10B by restricting open market value of iron ore transfers to the assessee's average purchase value and whether pro rata overheads must be considered. - HELD THAT: - The Court reviewed section 10B(7)'s stipulation that provisions of section 80-IA(8) apply mutatis mutandis, and the meaning of 'market value' (including arm's length price) under section 80-IA(8). The Tribunal remanded the issue to the AO to ascertain the market value of crude ore transferred to EOUs by reference to the average price the assessee paid to third-party suppliers, giving the assessee opportunity to produce evidence. The Court clarified that the remand is complete and the AO must determine price in accordance with law and may take account of differences in grade/quality and other relevant factors; the AO's determination must be made untrammelled by the Tribunal's observations but in conformity with statutory principles (including market value/arm's length concepts). The question of pro rata overheads was subsumed within the AO's recomputation on remand. [Paras 57]

Tribunal's direction for recomputation on remand was sustained; AO to determine market value (and account for quality/grade and appropriate costs) in accordance with law.

Application of section 14A and Rule 8D for disallowance of expenditure relating to exempt income - distinction between case law applying Rule 8D and factual acceptance of no borrowed funds - Whether the Tribunal was correct in deleting the disallowance under section 14A (as computed under Rule 8D) in respect of income not includible in total income. - HELD THAT: - The Court observed that section 14A and Rule 8D apply where expenditure is incurred in relation to exempt income and where the AO is not satisfied with the assessee's claim. On the facts the AO had accepted that the assessee had not borrowed funds for investments and the assessee had claimed and shown certain indirect expenditures in relation to exempt income; the Tribunal found that the AO/CIT(A) had not pointed to specific expenses actually incurred for earning exempt income nor recorded satisfaction to reject the assessee's claim and that application of Rule 8D on surmises was impermissible. The Court relied on its recent decision in Sociedade De Fomento (on materially similar facts) and held that the Tribunal's deletion of the disallowance was justified. [Paras 68]

Tribunal's deletion of the section 14A disallowance was upheld and the substantial question answered against Revenue.

Final Conclusion: All framed substantial questions of law were answered against the Revenue and in favour of the assessee: the Tribunal's conclusions on manufacture/production, the remand for market-value determination under section 10B(7)/80-IA(8), and deletion of the section 14A disallowance under Rule 8D were sustained; the AO is directed to determine market value on remand in accordance with law taking account of quality/grade and relevant factors.

Principles of natural justice - pre-assessment show-cause notice - faceless assessment scheme - waiting till the end of the working day - setting aside assessment order and de novo assessment

Principles of natural justice - pre-assessment show-cause notice - faceless assessment scheme - Whether the assessment order dated 23.03.2021 was vitiated by gross violation of principles of natural justice because it was passed before the expiry of time granted in the pre-assessment show-cause notice under the faceless assessment scheme. - HELD THAT: - The Court found that the pre-assessment notice dated 19.03.2021 expressly afforded the petitioner time to respond until 23:59 hours on 23.03.2021. The assessing authority, however, finalized and passed the assessment order on 23.03.2021 before the expiry of the time so granted, thereby depriving the petitioner of the opportunity to file the response promised by the notice. The Court treated this as a gross breach of principles of natural justice and relied on the settled expectation-recognised in the cited authority-that an officer should await the end of the working day when time has been posted for response. The circumstance that the order was passed under the faceless assessment scheme did not cure the breach where the time limit in the notice itself was ignored. [Paras 3, 4]

The assessment order was held to be vitiated by violation of natural justice and set aside.

Setting aside assessment order and de novo assessment - waiting till the end of the working day - Remedial directions following setting aside of the assessment order. - HELD THAT: - Having set aside the impugned order for breach of natural justice, the Court directed a limited remedial course: the petitioner was to be given an opportunity to file his response to the show-cause notice within two weeks from the date of the order, and the assessing authority was directed to complete the assessment afresh after hearing the petitioner within six weeks. The order thus mandates a de novo assessment process that cures the procedural infirmity by ensuring the opportunity to be heard. The Court declined to award costs. [Paras 5]

Petition allowed; assessment order set aside and assessment remitted for de novo completion after the petitioner files his response within the specified timeframe.

Final Conclusion: Writ petition allowed; impugned assessment order dated 23.03.2021 set aside for breach of principles of natural justice, petitioner permitted to file response within two weeks, and the assessment to be completed de novo by the assessing authority within six weeks; no costs.

Notice under Section 148 - Reopening of assessment - Limitation for reopening under Section 147 - Procedure under GKN Driveshafts for filing return and objections - Maintainability of writ against notice - Jurisdictional competence of tax authority to adjudicate limitation

Notice under Section 148 - Maintainability of writ against notice - Procedure under GKN Driveshafts for filing return and objections - Whether the writ petition challenging issuance of notice under Section 148 is maintainable at this stage. - HELD THAT: - The Court held that the petition is premature because the statutory procedure contemplated in GKN Driveshafts - requiring the assessee to file returns and objections and permitting the revenue to follow the prescribed procedure for reopening - has not been exhausted. The court observed that a writ against a notice is not to be entertained routinely and is permissible only where the issuing authority lacks jurisdiction or the notice is beyond the period of limitation. Since the respondent asserted compliance with procedural requirements and relied on the GKN principle, the correct course is for the assessee to raise objections before the competent tax authority rather than seek pre-emptive relief from the High Court. The Court therefore dismissed the writ as premature and directed that the statutory process be followed for further adjudication. [Paras 8, 9, 11]

Writ petition dismissed as premature; petitioner to follow the procedure under GKN Driveshafts and raise objections before the tax authority.

Limitation for reopening under Section 147 - Jurisdictional competence of tax authority to adjudicate limitation - Whether the point of limitation in respect of the notice can be raised before the tax authority and whether the authority can adjudicate it. - HELD THAT: - The Court noted that the respondent filed documents asserting that the notice was issued within the period of limitation and produced postal dispatch evidence. The Court held that if the contention of limitation exists, the petitioner is at liberty to raise it and place relevant documents before the competent authority, which is empowered to adjudicate the question of limitation on merits and in accordance with law. The High Court declined to decide the limitation point in these writ proceedings and left the matter for the authority's consideration. [Paras 6, 10]

Petitioner may raise the limitation objection and produce evidence before the tax authority; the authority is competent to adjudicate the limitation issue.

Final Conclusion: The writ petition challenging the notice under Section 148 for assessment year 2011-2012 is dismissed as premature; the petitioner may raise limitation and related objections before the competent income-tax authority for adjudication, and there shall be no order as to costs.

Notice under Section 148 - reopening of assessment - validity of notice addressed to a deceased person - remand for fresh adjudication - opportunity of hearing

Notice under Section 148 - validity of notice addressed to a deceased person - reopening of assessment - Validity of the notice dated 28.02.2018 issued under Section 148 addressed to the assessee's mother who is alleged to be deceased - HELD THAT: - The High Court declined to determine the factual question whether the addressee of the notice was deceased, holding that such material facts must be established by evidence and enquiries by the competent tax authorities rather than by the Court under Article 226. The Court observed that an adjudicatory/enquiry process is required to verify the factual position and enable formation of opinion before proceeding under Section 148. Consequently, the Court quashed the impugned notice dated 28.02.2018 but remitted the matter to the respondents for fresh adjudication, directing them to afford the writ petitioner an opportunity to produce proof and be heard, and to pass orders on merits in accordance with law and procedure within a stipulated period. [Paras 5, 6]

Impugned notice quashed and matter remanded to the respondents for fresh adjudication with opportunity to the petitioner and directions to decide the matter on merits and in accordance with law within three months.

Final Conclusion: Writ petition allowed: the notice dated 28.02.2018 under Section 148 is quashed and the matter is remanded to the tax authorities for fresh enquiry and adjudication, affording the petitioner an opportunity to produce evidence and be heard, with a direction to conclude the proceedings within three months.

Unexplained cash credits under Section 68 of the Income-tax Act, 1961 - assessee's onus to prove identity, genuineness and creditworthiness - admission of additional evidence at appellate stage - remand to Assessing Officer for verification of documents

Unexplained cash credits under Section 68 of the Income-tax Act, 1961 - assessee's onus to prove identity, genuineness and creditworthiness - Deletion of a portion of addition made under Section 68 by the Assessing Officer and sustained by the CIT(A) was rightly upheld by the Tribunal. - HELD THAT: - The Tribunal examined additional material filed by the assessee during appellate proceedings, including PAN particulars and subsequently executed registered sale deeds, and found that for a substantial part of the credits the assessee discharged the primary onus by proving identity, genuineness and creditworthiness. The Tribunal recorded that the Assessing Officer's remand report itself noted execution of sale deeds and acceptance of PAN particulars (with some discrepancies subsequently corrected), and concluded that the assessee had satisfactorily explained the source of the credits for the portion deleted. The High Court found no infirmity in this conclusion, noting that the Tribunal applied the correct legal test under Section 68 and that the deletion was based on materials on record and proper appraisal of the assessee's submissions.

Tribunal's deletion of part of the addition under Section 68 was upheld.

Admission of additional evidence at appellate stage - remand to Assessing Officer for verification of documents - Validity of the Tribunal's admission of post-filing additional evidence and its remand of the remaining credits to the Assessing Officer for verification. - HELD THAT: - The Tribunal admitted documents placed on record after institution of the appeal, comprising details of 483 customers with PAN particulars and other documents, and, in respect of a remaining portion of advances, remitted the matter to the Assessing Officer for necessary verification. The Tribunal also separately confirmed that a portion of the addition (where the assessee had not rebutted findings) would stand. The High Court held that the Tribunal, after considering the materials and the Assessing Officer's remand report, properly exercised its discretion to admit additional evidence and to remit the remaining unverified credits for verification so that correct taxable amount could be worked out.

Admission of additional evidence and remand to the Assessing Officer for verification were proper; the remand was confirmed as a lawful exercise to enable verification and computation.

Substantial question of law - Whether any substantial question of law arises from the Tribunal's order warranting interference by the High Court. - HELD THAT: - Having reviewed the Tribunal's reasoning and the materials on record, the High Court found that the Tribunal applied the settled legal tests under Section 68, dealt with the assessee's post-filing evidentiary material, and lawfully remitted the unverified portion to the Assessing Officer. No error of law was shown which would justify interference under Section 260A. The Court therefore concluded that no substantial question of law arises from the impugned order.

No substantial question of law arises; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal's order upholding deletion of part of the addition under Section 68, admitting additional evidence at the appellate stage and remitting the remaining unverified credits to the Assessing Officer for verification is unexceptionable; no substantial question of law arises and the Revenue's appeal is dismissed.

Treatment as not being in default pending appeal under section 220(6) - CBDT Instruction No.1914 - guidelines for stay of demand - binding effect of appellate tribunal's decision on Assessing Officer - adjustment/withholding of refunds against outstanding demands under section 245 - release of refunds under section 244A(1)

Treatment as not being in default pending appeal under section 220(6) - CBDT Instruction No.1914 - guidelines for stay of demand - binding effect of appellate tribunal's decision on Assessing Officer - Whether the Principal Commissioner of Income Tax ought to have granted stay of recovery of the demands raised for A.Y. 2017-18 to 2019-20 pending disposal of appeals before the CIT(Appeals). - HELD THAT: - The Court found that the outstanding demands for A.Y. 2017-18 to 2019-20 arose from denial of exemption under the concept of mutuality, an issue already concluded in favour of the assessee by the Tribunal in earlier years. Section 220(6) permits the Assessing Officer to treat the assessee as not being in default in respect of the amount in dispute while the appeal remains undisposed of, and the CBDT's Instruction No.1914 sets out illustrative situations where stay may be granted, including where the issue has been decided in the assessee's favour earlier. Applying these provisions and instructions, and relying on the principle that subordinate authorities must follow a concluded appellate decision within their territorial field, the Court held that the conditions for exercising discretion in favour of the assessee existed and that rejection of the stay amounted to harassment. The Court therefore directed that the Principal CIT grant stay of the demands for the specified assessment years until the CIT(Appeals) disposes of the appeals. [Paras 19, 21, 22, 23, 25]

Stay of recovery for A.Y. 2017-18 to 2019-20 to be granted during pendency of appeals before CIT(Appeals).

Adjustment/withholding of refunds against outstanding demands under section 245 - release of refunds under section 244A(1) - Whether refunds payable to the petitioner for earlier assessment years (from 2002-2003 onwards) must be released notwithstanding prior adjustments/withholdings by the revenue. - HELD THAT: - The Court noted that refunds had become payable pursuant to orders giving effect to appellate decisions in favour of the petitioner and that the question of entitlement to those refunds was no longer res integra. Having directed stay of the outstanding demands for the later years, the Court held that the respondents must process and release the refunds due for earlier years in accordance with section 244A(1) of the Act. The Court directed release of such refunds within a stipulated period, observing that continued adjustment of refunds against demands which are ordered stayed cannot be sustained. [Paras 24, 25]

Respondents directed to release refunds due from assessment year 2002-2003 onwards in accordance with section 244A(1) within six weeks.

Final Conclusion: Writ petition disposed by directing the Principal CIT to grant stay of demands for A.Y. 2017-18 to 2019-20 pending CIT(Appeals) and to release the refunds due to the petitioner for earlier years (from A.Y. 2002-2003 onwards) in accordance with section 244A(1) within six weeks; rule made absolute to that extent.

Alternative efficacious remedy - writ jurisdiction under Article 226 - statutory appeal under Section 264A - principles of natural justice

Alternative efficacious remedy - writ jurisdiction under Article 226 - statutory appeal under Section 264A - Maintainability of the writ petition where a statutory alternative remedy under the Income Tax Act is available. - HELD THAT: - The Court confined itself to the question of maintainability and held that the writ jurisdiction under Article 226 is a discretionary remedy which ordinarily will not be exercised where an adequate and efficacious alternative remedy is provided by statute. Relying on settled Supreme Court precedent, the Court observed that the Income Tax Act provides a complete machinery for redressal of grievances arising from assessment orders and that the petitioner could not bypass the statutory forum. The Court found no exceptional circumstances on the facts warranting invocation of extraordinary writ jurisdiction and therefore declined to entertain the petition on grounds of availability of the statutory remedy under Section 264A. [Paras 7, 8, 12]

Writ petition not entertained on maintainability grounds; petitioner relegated to statutory appeal under Section 264A.

Principles of natural justice - alternative efficacious remedy - Whether an alleged breach of principles of natural justice on the facts justified bypassing the statutory remedy. - HELD THAT: - The Court noted the petitioner's contention that the assessment was passed ex parte and in violation of natural justice. However, after examining the factual matrix and conduct of the petitioner, the Court held that it could not be said that the petitioner was denied a fair opportunity. The Court further observed that even where breach of natural justice is alleged, interference by writ is exceptional and must be established; on the present facts the petitioner failed to demonstrate such an exception. Consequently the Court declined to decide the merits and directed the petitioner to raise the natural justice plea before the appellate forum. [Paras 10, 11, 12]

Allegation of breach of natural justice not adjudicated on merits; petitioner to raise the grievance in the statutory appeal.

Statutory appeal under Section 264A - alternative efficacious remedy - Directions as to conduct of the statutory appeal and scope of the appellate authority's consideration. - HELD THAT: - Having declined to exercise writ jurisdiction, the Court relegated the petitioner to the statutory appellate remedy. The Court directed that if an appeal is filed, the appellate authority should decide the matter on merits and not raise technical objections as to limitation; the Court expressly refrained from expressing any opinion on the merits, including the natural justice issue, leaving those questions to be considered by the appellate forum in accordance with law. [Paras 12]

Petitioner permitted to file statutory appeal; appellate authority directed to decide merits (including natural justice) without raising technical limitation objections.

Final Conclusion: Writ petition dismissed on the ground of available statutory remedy; petitioner relegated to file appeal under Section 264A which shall be decided on merits (including any natural justice challenge) without technical limitation objections; no expression of opinion on merits; interim relief vacated and no costs.

Reopening of assessment - reasons recorded - statements recorded under section 131 of the I.T. Act - right to confront and cross-examine statements - material collected at the back of the assessee - relevance of statements for making additions - deletion of addition on merits

Reopening of assessment - reasons recorded - Validity of reopening the assessment for A.Y. 2009-2010 - HELD THAT: - The Tribunal examined the plea that reopening was covered by an earlier ITAT order in respect of the husband and whether an earlier assessment under section 143(3) existed for the assessee. The assessee failed to produce any assessment order under section 143(3) for herself and the Tribunal noted that the reasons recorded by the AO expressly stated that no order under section 143(3) had been passed for the assessee. Consequently, the Tribunal found that the earlier order in the husband's case did not assist the assessee and there was no accepted material before the Tribunal to conclude that reopening was unjustified. [Paras 5]

Ground challenging reopening dismissed; reopening held not covered by the cited ITAT order and not invalidated on the material before the Tribunal.

Statements recorded under section 131 of the I.T. Act - right to confront and cross-examine statements - material collected at the back of the assessee - deletion of addition on merits - Admissibility of the seller's statement and justification for the addition of Rs. 1.05 crores - HELD THAT: - The Tribunal found that the addition rested solely on the statement of the seller, Smt. Jaya Sharma, recorded under section 131 and on other material collected without confronting the assessee. The seller had subsequently retracted the statement and denied signing it. The assessee repeatedly requested supply of the adverse material and an opportunity to cross-examine the persons whose statements were relied upon, but the AO did not produce the seller for cross-examination nor address these requests in the assessment order. Applying settled principles that material collected at the back of the assessee and statements used against an assessee must be confronted and the assessee afforded an opportunity to cross-examine, the Tribunal held that the seller's statement could not be read in evidence against the assessee. On this basis the Tribunal concluded there was no sustaining foundation for the addition and set aside the orders below, deleting the addition. [Paras 8]

Statement of the seller and other material not admitted against the assessee; the addition of Rs. 1.05 crores deleted.

Relevance of statements for making additions - Relevance of the husband's statement and the statement of the Manager (Shri Rakesh Sejwal) to the addition in the assessee's hands - HELD THAT: - The Tribunal observed that the husband's statement and the Manager's statement related to different transactions (sale to M/s. Mapple Destination Dreambuilt P. Ltd. and collection on sale of other properties) and therefore were not relevant to the question of the assessee's purchase from the seller in issue. Consequently, those statements could not constitute a basis for making the addition against the assessee for the purchase transaction under consideration. [Paras 8]

Statements of the husband and Shri Rakesh Sejwal held not relevant and cannot sustain the addition.

Final Conclusion: Reopening was upheld on the material before the Tribunal (assessee's challenge dismissed), but the addition of Rs. 1.05 crores was deleted because the decisive seller's statement and other material collected at the back of the assessee were inadmissible for want of confrontation and opportunity for cross-examination; statements relied upon relating to other transactions were held not relevant.

Treatment of receipts credited as sales vis-a -vis unexplained cash credits under section 68 - consequence of books of account and stock records being accepted by authorities - double taxation/double addition by treating admitted sales as unexplained income - burden of disproving recorded sales by tangible evidence

Treatment of receipts credited as sales vis-a -vis unexplained cash credits under section 68 - consequence of books of account and stock records being accepted by authorities - burden of disproving recorded sales by tangible evidence - Whether cash receipts recorded and offered as sales in the books of the assessee could be treated as unexplained cash credits and taxed again under section 68 read with section 115BBE where purchases, sales and stock records are intact and accepted by the revenue. - HELD THAT: - The Tribunal examined section 68 and observed that sums credited in the books are chargeable as income only when the assessee offers no explanation or the explanation is unsatisfactory. In the present case the assessee consistently recorded the transactions as sales, produced sale bills, trading accounts, P&L and audit reports, and offered the receipts for taxation. Both the investigating authority and the Assessing Officer conducted surveys yet did not find defects in the books, stock or closing stock; the movement of stock corresponded with the recorded sales. The Tribunal held that purchases, sales and stock are interlinked and that suspicion, however strong, is insufficient to discard recorded sales unless the revenue can disprove them with tangible evidence (for example non existence of stock or discrepancies in trading accounts). The Tribunal further distinguished the case law relied upon by the revenue as relating to scenarios where credits were not offered as income or books were not accepted. Having found that the books and stock records supported the sales and that profits were not abnormal, the Tribunal concluded there was no justification to recharacterise the admitted sales as unexplained cash credits and tax them again under section 115BBE. [Paras 7, 9]

The deletion of the addition made under section 68 read with section 115BBE is upheld; the cash receipts recorded and offered as sales are not liable to be taxed again as unexplained cash credits.

Final Conclusion: Revenue appeal dismissed; order of the CIT(A) deleting the addition under section 68 read with section 115BBE is upheld and the assessee's cross objection is rendered infructuous.

Revision under section 263 - Deduction under section 80P(2)(d) - Interest from co-operative bank vis-a -vis other banks - Assessing Officer's reasoned view - Erroneous and prejudicial test (twin conditions) - Binding precedent of jurisdictional High Court

Revision under section 263 - Erroneous and prejudicial test (twin conditions) - Assessing Officer's reasoned view - Validity of the revisionary order under section 263 in respect of allowance of deduction under section 80P(2)(d). - HELD THAT: - The Tribunal held that the Assessing Officer had made specific enquiries under notices and examined the claim for deduction under section 80P(2)(d) during the assessment proceedings and thereafter allowed the deduction in the assessment order. Where the AO has made full enquiry and taken a reasonable and possible view, a different belief of the Commissioner is insufficient to sustain revision under section 263. The twin conditions for invoking section 263 - that the assessment order is erroneous and is insofar prejudicial to the revenue - must be satisfied simultaneously; when the AO's conclusion is a permissible view, it cannot be characterized as erroneous so as to justify revision. Applying these principles to the facts, the Tribunal found that the AO had taken a tenable view and therefore the revisionary jurisdiction of the PCIT was not properly attracted. [Paras 14, 16]

Revision under section 263 was not validly exerciseable because the Assessing Officer had taken a reasonable and permissible view; the twin conditions for revision were not satisfied.

Deduction under section 80P(2)(d) - Interest from co-operative bank vis-a -vis other banks - Binding precedent of jurisdictional High Court - Whether interest earned by the co-operative society from deposits with a co-operative bank qualifies for deduction under section 80P(2)(d) and whether the AO's allowance was contrary to law. - HELD THAT: - The Tribunal examined legal precedents and noted that decisions of the jurisdictional High Court and co-ordinate authorities treat a co-operative bank as within the ambit of section 80P(2)(d) for interest earned by a co-operative society on deposits with such banks. While other decisions may hold otherwise, the Tribunal gave weight to the binding decision of the jurisdictional High Court which supports allowability of the deduction on gross interest received from a co-operative bank. In the circumstances, the AO's allowance of the deduction was a tenable view and not contrary to law. [Paras 15, 18]

Interest earned from deposits with a co-operative bank was a legitimate basis for deduction under section 80P(2)(d); the AO's allowance was a permissible view in law.

Final Conclusion: The appeal is allowed: the revision under section 263 was held invalid as the Assessing Officer had formed a reasonable and permissible view in allowing deduction under section 80P(2)(d) for interest from deposits with a co-operative bank, and the twin conditions for revision were not satisfied.

Revisional jurisdiction under section 263 - limitation under section 263(2) - erroneous and prejudicial to the interest of revenue - application of mind in original assessment - doctrine of merger and consistency in assessment orders

Limitation under section 263(2) - revisional jurisdiction under section 263 - Validity of the Principal Commissioner of Income Tax's order under section 263 in view of the two year limitation prescribed by section 263(2). - HELD THAT: - The Tribunal found that the original assessment under section 143(3) for AY 2010-11 was framed on 26.03.2013. Section 263(2) permits revision only within two years from the end of the financial year in which the order sought to be revised was passed, i.e. up to 31.03.2015 in the present case. The ld. PCIT issued the revisional order on 03.03.2020, well beyond that period. Relying on authorities and the principle that revisional jurisdiction cannot be exercised beyond the statutory period, the Tribunal held that the PCIT lacked jurisdiction to revise matters concluded in the original assessment and that the exercise of jurisdiction after the expiry of limitation was a nullity. [Paras 12, 16]

Order under section 263 dated 16.03.2020 quashed as barred by section 263(2).

Erroneous and prejudicial to the interest of revenue - application of mind in original assessment - doctrine of merger and consistency in assessment orders - Whether the assessing officer's order was 'erroneous and prejudicial to the interest of revenue' so as to warrant revision under section 263. - HELD THAT: - The Tribunal examined the original assessment dated 26.03.2013 and the assessment for AY 2009-10 and observed that the AO had considered the claim under section 80IB(10), called for documents, examined plans, approvals and building user certificates and recorded reasons for treating a disclosed sum as income from other sources. The Tribunal held that the AO had applied his mind and taken a possible view in the original assessment. Further, the department had earlier accepted the deduction for the same project in AY 2009-10, engaging the principle of consistency. Given that the AO adopted a permissible course of action, even if adverse to revenue, the order could not be treated as erroneous and prejudicial in the sense required for exercise of revisional power. Consequently, PCIT's invocation of section 263 was impermissible on merits as well as on limitation grounds. [Paras 11, 13, 14, 17]

The AO's assessment was not shown to be erroneous and prejudicial; therefore the revisional exercise under section 263 was unjustified and is quashed.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashing the Principal Commissioner of Income Tax's order under section 263 dated 16.03.2020 as being beyond the two year limitation and because the original assessment for AY 2010-11 involved a permissible application of mind; the revisional exercise was therefore void.

Additions under section 69A for unexplained cash deposits - Burden of proof to establish identity, creditworthiness and genuineness - Role of corroborative documentary evidence in discharging onus - Facilitator transactions versus beneficial ownership of funds

Additions under section 69A for unexplained cash deposits - Burden of proof to establish identity, creditworthiness and genuineness - Role of corroborative documentary evidence in discharging onus - Facilitator transactions versus beneficial ownership of funds - Whether cash deposits in the assessee's bank accounts could be treated as unexplained income under section 69A when the assessee produced confirmations, premium receipts, proposal forms, banker's cheques and other documents showing the deposits were collections from clients subsequently paid as insurance premiums. - HELD THAT: - The Tribunal found that the Assessing Officer invoked section 69A after concluding that the three ingredients-identity, creditworthiness and genuineness-were not proved. On appeal the assessee produced detailed, person-wise corroborative material including confirmation letters, premium collection receipts, proposal forms, banker's cheques, identification documents and surrender statements linking specific deposits to specific premium payments. The Tribunal noted that the Assessing Officer did not discredit or demonstrate falsity of these documents in his order. The material showed that the assessee, a salaried insurance agent, had collected clients' monies and remitted them as premiums on their behalf and that the relevant entries were traceable and identifiable in the bank account and by reference to premium receipts (which recorded demand draft numbers and bank details). Given this nexus and the absence of any positive finding by the Assessing Officer challenging the evidence, the Tribunal held that the assessee discharged the onus of explaining the source and nature of the deposits and that the amounts were not the assessee's income but funds he merely facilitated to transfer to insurers. On these facts the addition under section 69A was therefore not sustainable. The Tribunal applied the same reasoning mutatis mutandis to the other two assessment years before it. [Paras 10, 11, 12]

The addition made under section 69A was deleted and the appeals for AY 2009-10, 2010-11 and 2011-12 were allowed.

Final Conclusion: The Tribunal deleted the addition under section 69A in respect of the impugned cash deposits, holding that the assessee furnished adequate corroborative evidence showing the deposits were client monies remitted as insurance premiums and not the assessee's income; appeals for AY 2009-10, 2010-11 and 2011-12 were allowed.

Unexplained cash credit under section 68 - Rectification under section 154 and its appealability - Condonation of delay in filing appeal against a section 154 order - Estimation by ad hoc disallowance without rejecting books of account - Set-off and carry forward of business losses and unabsorbed depreciation

Unexplained cash credit under section 68 - Rectification under section 154 and its appealability - Condonation of delay in filing appeal against a section 154 order - Addition of Rs. 12,10,00,000 as unexplained share application money was rectified by AO under section 154 and the matter was remitted to the CIT(A) for de novo adjudication with direction to condone delay in filing appeal against the section 154 order. - HELD THAT: - The Tribunal found that the AO had made an addition under section 68 in the body of the assessment order but omitted to carry that addition into the computation of total income and to create demand. The AO thereafter rectified this omission by an order under section 154. The assessee did not file an appeal against the rectification order, and the CIT(A) declined to adjudicate the ground in the appeal against the original section 143(3) order on the ground that the section 154 order is a separate appealable order. Observing that the omission arose from a clerical mistake by the AO and that the assessee should not suffer for that mistake, the Tribunal remitted the issue to the file of the CIT(A) for fresh adjudication on merits, directed the assessee to file an appeal against the section 154 order within one month from receipt of the Tribunal order, and directed the CIT(A) to condone the entire delay and decide the appeal on merits. [Paras 8]

Remitted to the CIT(A) for de novo adjudication of the addition made under section 68 in the section 154 order; directed the assessee to file appeal against the section 154 order within one month and directed the CIT(A) to condone the delay and adjudicate on merits.

Estimation by ad hoc disallowance without rejecting books of account - Estimation and burden of proof for business expenditures - Ad-hoc disallowance of 10% of various expenses was deleted. - HELD THAT: - The Tribunal held that the AO resorted to an arbitrary percentage disallowance of 10% of aggregate expenses without rejecting the assessee's books of account under section 145(3) or making a best judgment assessment under section 144. There was no material on record to show that any part of the expenditures was for non-business purposes; the accounts were audited and vouchers/ledgers were produced. The Tribunal observed that where specific expenditure items lack nexus to business or supporting vouchers, item-wise disallowance may be appropriate, but wholesale percentage disallowance on suspicion is impermissible. Applying these principles and relying on precedent, the Tribunal deleted the ad hoc addition of Rs. 80,97,725/-. [Paras 14]

Ad-hoc 10% disallowance of expenses deleted and the addition of Rs. 80,97,725/- set aside.

Set-off and carry forward of business losses and unabsorbed depreciation - Claim for set-off of unabsorbed depreciation and carry forward of business losses was directed to be examined and allowed after verification. - HELD THAT: - The Tribunal treated the claim as consequential and noted that the assessee had filed returns and schedules showing carried forward and current year unabsorbed losses. In view of the material placed on record, the Tribunal directed the AO to examine the return and the charts submitted by the assessee, verify the claims and, if found in order, allow the set-off and carry forward in accordance with law. The grounds relating to set-off and carry forward were treated as allowed for statistical purposes subject to verification. [Paras 18]

Directed the AO to verify and allow the claim of set-off and carry forward of unabsorbed depreciation and business losses in accordance with law; grounds treated as allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the addition under section 68 (rectified by the AO under section 154) is remitted to the CIT(A) for de novo adjudication with directions to condone delay in filing appeal and decide on merits; the ad hoc 10% disallowance of expenses is deleted; and the claims for set-off and carry forward of unabsorbed depreciation and business losses are directed to be examined and allowed by the AO after verification.

Penalty under section 271(1)(c) - penalty not leviable for estimated additions - bona fide / inadvertent disclosure made during search - Explanation 5(2) to section 271(1)(c) - condonation of delay - validity of revised return filed under section 139(5)

Condonation of delay - Whether the delay of 353 days in filing the appeal should be condoned. - HELD THAT: - The Tribunal examined the assessee's petition explaining ill health as the cause for delay and applied settled principles permitting condonation of delay where cogent reasons are shown so that substantial justice is served. Finding the delay to be neither intentional nor deliberate but due to circumstances beyond the assessee's control, the Tribunal exercised its discretion to condone the 353 days' delay and admitted the appeal for adjudication on merits. [Paras 2]

Delay of 353 days condoned and appeal admitted for hearing.

Penalty under section 271(1)(c) - penalty not leviable for estimated additions - bona fide / inadvertent disclosure made during search - Explanation 5(2) to section 271(1)(c) - validity of revised return filed under section 139(5) - Whether the penalty imposed under section 271(1)(c) for non-disclosure / furnishing of inaccurate particulars of income is sustainable. - HELD THAT: - The Tribunal considered the material on record and the orders of the authorities below and declined to adjudicate a procedural notice-related ground which was not on record. On the merits, the Tribunal concluded that the penalty was imposed primarily on additions made on an estimated basis and on alleged non-disclosure of contract receipts. Following precedents and the factual record, it found that (a) the surrendered income had been disclosed during search and was within the knowledge of the Revenue prior to the assessment action, (b) the non-inclusion in the original computation was an inadvertent omission corrected by a revised return and supported by disclosures (cash flow and balance sheet) placed on record before the AO, and (c) where additions are merely estimate-based and no concrete evidence of concealment is shown, penalty under section 271(1)(c) is not leviable. The Tribunal held that Explanation 5(2) to section 271(1)(c) and the line of authority on bona fide/surrender disclosures applied, and therefore the levy of penalty was unjustified. [Paras 7]

Penalty levied under section 271(1)(c) set aside and AO directed to cancel the penalty.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and allowed the appeal on merits by setting aside the penalty imposed under section 271(1)(c), directing the Assessing Officer to cancel the penalty.

Admission of statutory appeal after earlier dismissal for non-compliance of pre-deposit - pre deposit requirement under Section 129 E of the Customs Act, 1962 - appeal rejected in limine is not an order on merits - reinstatement of appeal for consideration on merits - alternative remedy by appeal to the CESTAT

Admission of statutory appeal after earlier dismissal for non-compliance of pre-deposit - pre deposit requirement under Section 129 E of the Customs Act, 1962 - Validity of the office order dated 31.12.2020 declining to admit the appeal filed on 03.12.2020 after an earlier dismissal of the appeal for non compliance with the pre deposit requirement. - HELD THAT: - The Court found that the Commissioner (Appeals) correctly rejected the earlier memorandum of appeal dated 17.08.2020 by an order dated 03.11.2020 because the appellant had only undertaken to pay the mandatory pre deposit but had not in fact made the required deposit as mandated by Section 129 E. That earlier order was a refusal to entertain the appeal in limine for non compliance and was not a decision on the merits of the substantive appeal. Consequently, when the petitioner subsequently complied with the pre deposit requirement and filed the appeal on 03.12.2020, the office letter dated 31.12.2020 declining to admit the second appeal on the ground that Government extensions did not permit repeated filing before the same forum was unsustainable. The Court emphasised that an appeal dismissed for non compliance cannot be treated as a determination on merits so as to bar a properly filed and compliant appeal within the extended period; the appellate authority must consider the fresh, compliant appeal on merits after hearing the appellant. [Paras 11, 12, 13]

The impugned letter dated 31.12.2020 declining to admit the appeal filed on 03.12.2020 was set aside and the appeal restored to the file for consideration on merits after giving the petitioner an opportunity of being heard.

Appeal rejected in limine is not an order on merits - alternative remedy by appeal to the CESTAT - Whether the petitioner was required to prefer an appeal to the CESTAT against the order of the Commissioner (Appeals) dated 03.11.2020 instead of seeking relief in the High Court. - HELD THAT: - The Court rejected the respondents' contention that the petitioner should be relegated to the CESTAT to challenge the Commissioner (Appeals)'s order of 03.11.2020. The Court held that the order of 03.11.2020 was not an adjudication on the merits but a procedural refusal to entertain the appeal for failure to comply with the mandatory pre deposit. As such, treating that order as a final order on merits and forcing the petitioner to invoke the appellate remedy before the CESTAT would be inappropriate. The proper course was to permit the properly constituted appeal (filed after compliance with the pre deposit requirement) to be considered on its merits by the Commissioner (Appeals). [Paras 12, 13]

The contention that the petitioner must be relegated to the CESTAT was rejected; the restored appeal was to be considered by the Commissioner (Appeals) on merits.

Final Conclusion: Writ petition allowed; the order refusing admission of the appeal dated 31.12.2020 is set aside and the appeal filed on 03.12.2020 is restored for consideration on merits by the Commissioner (Appeals) after giving the petitioner an opportunity of being heard; no order as to costs.

Oppression and Mismanagement under Sections 241 & 242 - Maintainability of a directors-cum-shareholders petition and estoppel of director-claimants - Duties and disqualifications of directors - Validity of board resolutions and majority decision-making - Appointment and qualification of independent directors

Oppression and Mismanagement under Sections 241 & 242 - Validity of board resolutions and majority decision-making - The petition under Sections 241 and 242 alleging oppression and mismanagement is not made out and the reliefs claimed are not justified. - HELD THAT: - The Tribunal found that the petitioners failed to establish the ingredients of oppression or mismanagement. The contested corporate actions taken during the lifetime of the founder or while the first petitioner was a functioning Managing Director could not be impugned by him in a manner that requires the Tribunal to undertake a roving inquiry. Several factual contentions (including disposition of shares under wills and transmission) remain sub judice before the High Court and, until resolved, the parties cannot claim entitlement based on those disputed transmissions. The Tribunal observed that decisions of the Board, if taken in accordance with law and Articles, bind the company and its stakeholders, and mere allegations of mismanagement without prima facie proof of serious illegality do not warrant interference. Having regard to the pleadings and the record, the Tribunal concluded that the petitioners did not establish a case for exercise of powers under Sections 241/242. [Paras 9, 10, 15, 17, 18]

The petition is dismissed on merits for failure to make out oppression or mismanagement.

Maintainability of a directors-cum-shareholders petition and estoppel of director-claimants - Duties and disqualifications of directors - The petition filed by the petitioners in their capacity as directors-cum-shareholders is not maintainable in the normal course and the petitioners are estopped from challenging acts to which they were party. - HELD THAT: - The Tribunal noted that directorial petitions are ordinarily not maintainable and that petitioners who were part of the management and signatories to company transactions cannot complain of actions in respect of which they were participants. The court emphasised statutory duties and qualifications of directors and observed that the petitioners, having been at the helm of affairs and having authenticated accounts and transactions, could not adopt a contrary stance now. The Tribunal also recorded that where petitioners had opportunities under company processes (for example reappointment at AGM), those remedies remained available rather than collateral attack by way of the present petition. [Paras 11, 13, 15, 17]

Petition is not maintainable as filed by directors-cum-shareholders and petitioners are estopped from impugning acts in respect of which they were party.

Appointment and qualification of independent directors - Duties and disqualifications of directors - Allegations challenging the appointment and qualification of the independent directors were held to be vague and untenable; the appointments were not invalidated on the record before the Tribunal. - HELD THAT: - The Tribunal considered the statutory tests for independence and qualifications under the Companies Act and the Rules, and found that the petitioners' allegations regarding the independence and antecedents of the appointed independent directors were general and without sufficient particularity. The respondents satisfied the Tribunal that the appointees possessed requisite qualifications and were not relatives disqualifying them under the statutory scheme. The Tribunal therefore declined to set aside or treat those appointments as invalid on the present record. [Paras 14]

Challenges to the appointment and qualification of the independent directors are rejected as vague and not tenable.

Final Conclusion: C.P. No. 82/BB/2019 is dismissed as devoid of merit; all pending interlocutory applications are disposed of as infructuous and no costs awarded.

Binding effect of an approved resolution plan and freezing/extinguishment of claims - treatment of statutory dues in a resolution plan - priority and charge of provident fund dues vis-a -vis other creditors - exclusion of provident fund, pension and gratuity from the liquidation estate - applicability of liquidation-stage provisions at the resolution stage - finality of claims submitted during CIRP and prohibition on enhancement after crystallisation

Binding effect of an approved resolution plan and freezing/extinguishment of claims - treatment of statutory dues in a resolution plan - Whether the Adjudicating Authority rightly approved the Resolution Plan which provided treatment for the admitted provident fund claim and thereby bound the appellant such that claims not part of the approved plan stood frozen and extinguished. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's approval of the Resolution Plan and applied the settled principle that once a resolution plan is approved under Section 31, the claims as provided therein stand frozen and are binding on the corporate debtor and all stakeholders. Reliance was placed on Supreme Court authority that a successful resolution applicant must not face undecided claims after approval and that the 2019 amendment to the Code clarifies that statutory authorities are covered within the binding effect. The Appellant had filed and had an admitted claim in Form B which was considered in the Resolution Plan; the enhanced claim raised later was held unsustainable. The Tribunal therefore found the approval was in conformity with Section 30(2) and that claims not part of the approved plan stand extinguished and cannot be pursued thereafter. [Paras 21, 23, 26, 33, 34]

The Resolution Plan's treatment of the admitted provident fund claim is binding and the appellant's attempt to advance an enhanced claim after crystallisation of claims in CIRP is not permissible; the approved plan freezes and extinguishes claims not included in it.

Priority and charge of provident fund dues vis-a -vis other creditors - exclusion of provident fund, pension and gratuity from the liquidation estate - Whether the Resolution Plan's compromise or waiver of a portion of provident fund dues offended the priority/charge under the EPF Act or the exclusion under Section 36 of the IBC so as to invalidate the plan. - HELD THAT: - The Tribunal examined the contention that Section 11 of the EPF Act creates a first charge and that Section 36 of the IBC excludes provident fund dues from the liquidation estate. It held that Section 36's exclusion operates in the context of liquidation and formation of the liquidation estate; the corporate debtor in the present matter is under resolution, not liquidation, so the liquidation-stage exclusion was not directly applicable. The Tribunal also noted precedents that provident/pension/gratuity funds do not form part of the liquidation estate but observed that, absent a separate corpus/fund maintained by the corporate debtor, there was no fund available to be excluded or set aside. Further, statutory priority or charge does not override the statutory scheme under the IBC that makes an approved resolution plan binding on stakeholders; where the admitted claim was dealt with in the plan and approved by the Adjudicating Authority, the plan could not be struck down merely because a portion of the claimed dues was not fully paid. [Paras 22, 25, 27, 28, 31]

The objections based on the EPF Act priority and on Section 36 exclusion at liquidation stage do not invalidate the approved Resolution Plan: Section 36's exclusion is a liquidation-stage concept and, in the absence of a separate provident corpus, there was no fund to exclude, while the approved plan's binding effect governs treatment of the admitted claim.

Finality of claims submitted during CIRP and prohibition on enhancement after crystallisation - Whether the appellant could enhance its claim after submission during CIRP and after the Resolution Plan had been formulated and approved. - HELD THAT: - The Tribunal found that debts and claims stand crystallised as on the CIRP initiation date and that established authority prevents resurrecting or enhancing claims that were not submitted or dealt with by the resolution process. The appellant had filed and obtained admission of a specific claim amount in Form B which was incorporated into the Resolution Plan; its later insistence on a higher figure lacked justification and was contrary to the principle that claims not part of an approved plan are extinguished. Consequently the appellant was not permitted to press the enhanced demand. [Paras 12, 23, 24, 32, 34]

The appellant cannot enhance its claim after crystallisation in CIRP; the admitted claim as treated in the Resolution Plan is final and any attempt to raise a larger claim post-CRP is impermissible.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly approved the Resolution Plan which incorporated the appellant's admitted claim; the plan is binding on all stakeholders, claims not included in the approved plan stand extinguished, and enhancement of the claim after crystallisation during CIRP is impermissible. No order as to costs.

Effect of acknowledgment under Section 18 of the Limitation Act - limitation for application under Section 7 of the Insolvency and Bankruptcy Code commences from the date of default and is extendable by acknowledgment - - maintainability of a CIRP application where debt and default are established

Effect of acknowledgment under Section 18 of the Limitation Act - limitation for application under Section 7 of the Insolvency and Bankruptcy Code commences from the date of default and is extendable by acknowledgment - - Whether the Section 7 application filed by the financial creditor was barred by limitation or was revived/extended by acknowledgements so as to be within time. - HELD THAT: - The Tribunal examined the chronology and documentary material and held that the guarantors/corporate debtor had executed Balance and Security Confirmation Letters dated 20.02.2018 and there was a payment credited to the loan account on 15.10.2018. Applying the principles of Section 18 of the Limitation Act, 1963, the Tribunal concluded that such written confirmations and the payment constituted an acknowledgement of debt sufficient to create a fresh period of limitation to be computed from the date of the acknowledgements. On that basis the application filed in July 2019 fell within the extended limitation period. The Tribunal relied on the settled principle that an acknowledgement need not be in any particular form but must show awareness of liability; having found such acknowledgements on the record, the limitation objection was rejected. [Paras 26, 28, 34]

The Section 7 application was not barred by limitation because the Balance and Security Confirmation Letters and subsequent payment amounted to an acknowledgement of debt under Section 18, and the application was filed within the extended period.

Maintainability of a CIRP application where debt and default are established - admissibility of documents proving debt and default - Whether the Adjudicating Authority erred in admitting the Section 7 petition and initiating CIRP in respect of the corporate debtor. - HELD THAT: - Having considered the material filed with the Section 7 application, the Tribunal found that the financial creditor had proved existence of debt and default by documentary evidence, including sanction letters, particulars of default and the acknowledged balance confirmations. The Tribunal held that the Adjudicating Authority's admission of the application and declaration of moratorium did not suffer from legal infirmity. The complaint that the Authority failed to decide limitation was addressed by the Tribunal's own finding that the application was within time on account of the acknowledgements. [Paras 2, 19, 34, 35]

The Adjudicating Authority rightly admitted the Section 7 petition; its order declaring moratorium and admitting CIRP was free from legal infirmity and the appeal is dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal held that the Balance and Security Confirmation Letters and payment constituted an acknowledgement of debt under Section 18 of the Limitation Act, thereby extending the limitation so that the Section 7 application was maintainable; the Adjudicating Authority's admission of the petition and declaration of moratorium were upheld.

Voluntary liquidation - Declaration of solvency - Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - Voluntary Liquidation Process Regulations, 2017 - Final report of the liquidator - Verification of claims and public announcement - Dissolution under Section 59(8) of the Insolvency and Bankruptcy Code, 2016

Voluntary liquidation - Declaration of solvency - Compliance with Section 59 of the Insolvency and Bankruptcy Code, 2016 - Final report of the liquidator - Verification of claims and public announcement - Sufficiency of compliance with statutory and regulatory requirements for voluntary liquidation and whether the company should be dissolved. - HELD THAT: - The Tribunal examined the declarations of solvency by the directors, audited financial statements for the requisite periods, the statement of assets and liabilities, the board and members' resolutions approving voluntary liquidation and appointment of the liquidator, the preliminary and final reports of the liquidator, evidence of public announcement and claims verification, and service upon ROC and Income-tax authorities. The auditors' report and the directors' affidavits indicated no debts and no fraud; the liquidator's accounts and final report show assets realised or written off and that affairs were wound up; no objections were filed by ROC or Income-tax Authorities in response to notice. On the basis of these materials the Tribunal found that the procedural and substantive conditions under Section 59, read with the Voluntary Liquidation Process Regulations, 2017, were satisfied and that no liability or fraud prevented dissolution. [Paras 32]

The company is to be dissolved and the liquidator's application for dissolution is allowed; the company stands dissolved under Section 59(8) of the IBC, 2016.

Final Conclusion: The Tribunal, being satisfied that the statutory and regulatory conditions for voluntary liquidation were complied with and that there are no outstanding liabilities or objections, allowed the liquidator's application and ordered dissolution of Bakreswar Ispat Private Limited under the Insolvency and Bankruptcy Code, 2016, directing communication of the order to the Registrar of Companies and the IBBI.

Operational debt - default - no pre-existing dispute - limitation - admission of petition under Section 9 - moratorium - corporate insolvency resolution process - appointment of Interim Resolution Professional - public announcement of CIRP and call for claims

Operational debt - default - no pre-existing dispute - limitation - Existence of an operational debt, occurrence of default, absence of a pre-existing dispute and applicability of limitation for admission under Section 9. - HELD THAT: - The Tribunal found that the applicant furnished documentary evidence of supplies and part payments and that the corporate debtor, by affidavit, admitted the debt. Applying the test in Mobilox (as cited), the Authority held that the debt qualified as an operational debt, the documentary evidence showed the debt to be due and unpaid, there was no record of any pre-existing dispute nor pendency of proceedings in relation to the claimed debt, and the petition was within limitation. On these findings the application satisfied the statutory requirements for admission under Section 9. [Paras 10, 11, 13, 15, 20]

Application under Section 9 admitted as the operational debt and default were established, no dispute existed, and the claim was not barred by limitation.

Moratorium - corporate insolvency resolution process - public announcement of CIRP and call for claims - Imposition of moratorium and directions relating to public announcement and claims following admission of the Section 9 petition. - HELD THAT: - Having admitted the petition, the Tribunal exercised its discretion to declare the moratorium under Section 14(1) for the purposes envisaged in Sections 13 and 14, prohibiting institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property occupied by the corporate debtor. The Authority also directed the Interim Resolution Professional to make the public announcement of initiation of the corporate insolvency resolution process and to call for submission of claims as required by Section 13(1)(b) read with Section 15. It clarified the moratorium's temporal effect and preserved supply of goods and essential services during the moratorium subject to statutory exceptions. [Paras 16, 17, 18, 21, 22]

Moratorium declared and the Interim Resolution Professional directed to make the public announcement and call for claims; ancillary directions issued regarding effect and communications.

Appointment of Interim Resolution Professional - Proposed appointment of an Interim Resolution Professional and consequent institutional steps. - HELD THAT: - The applicant proposed a named insolvency professional to act as Interim Resolution Professional. The Tribunal recorded the proposal and, in admitting the petition, directed the appointment-related steps including communication of the order to relevant parties and the Registrar of Companies so as to protect the corporate insolvency process and prevent actions (such as striking off) that would be detrimental to realisation of assets. [Paras 19, 20, 21, 22]

Proposed Interim Resolution Professional noted and administrative directions given to effect appointment and notify relevant authorities.

Final Conclusion: The Tribunal admitted the Section 9 petition: it found an operational debt and default with no pre-existing dispute and within limitation, declared the moratorium, directed the Interim Resolution Professional to make the public announcement and call for claims, recorded the proposed Interim Resolution Professional, and issued consequential administrative directions including communication to the Registrar of Companies.

Separate filing of proof of claim for CIRP and for liquidation - requirement to submit claims to the liquidator in prescribed form and time - admission of workmen claims on the basis of books of account under liquidation regulations - liquidator's duty to verify claims and communicate reasons for rejection - time bound nature of the liquidation process and requirement to seek extension - no equity about limitation - claims filed during CIRP cannot be equitably treated as claims in liquidation

Claims filed during CIRP cannot be equitably treated as claims in liquidation - separate filing of proof of claim for CIRP and for liquidation - Claims submitted during the CIRP cannot be treated as claims submitted during the liquidation process on equitable grounds. - HELD THAT: - The Tribunal held that CIRP and liquidation are distinct stages under the IBC framework and claimants are required to file proof of claim afresh with the liquidator after commencement of liquidation. Allowing CIRP claims to be treated as liquidation claims would render the separate statutory processes nugatory. Reliance was placed on the need to preserve the statutory scheme and the caution against judicial innovation in IBC matters, as explained by the Supreme Court in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd., to reject an equitable expansion of claim recognition from CIRP into liquidation. [Paras 15, 16]

The plea that claims filed during CIRP be treated as claims in liquidation on equity is rejected.

Requirement to submit claims to the liquidator in prescribed form and time - liquidator's duty to verify claims and communicate reasons for rejection - Operational creditors who failed to submit claims during the liquidation process cannot insist that their CIRP claims be carried forward; claim submission to the liquidator within prescribed time is mandatory. - HELD THAT: - The Tribunal summarised statutory and regulatory requirements: claimants must submit claims to the liquidator in the form, manner and within time prescribed by the Board; the liquidator must verify claims within specified time limits and communicate admission or rejection with reasons, and creditors have a statutory right of appeal within the prescribed period against rejection. The applicants, despite knowledge (or having had opportunity) of liquidation, did not file claims in the liquidation stage and therefore cannot be permitted to circumvent the statutory process. [Paras 13, 14, 16]

Applicants' failure to file claims with the liquidator in the liquidation process disentitles them from the relief sought.

Admission of workmen claims on the basis of books of account under liquidation regulations - The limited exception permitting admission of workmen and employees' claims on the basis of books of account does not extend to operational creditors. - HELD THAT: - Under Regulation 19(4) of the IBBI (Liquidation Process) Regulations a liquidator may admit workmen and employees' claims based on the corporate debtor's books even if they have not made a claim; no similar relaxation exists for operational creditors. Consequently, mere entry of debt in books of account is not sufficient to admit claims of operational creditors in liquidation without the prescribed claim submission. [Paras 14]

Operational creditors are not entitled to the concession available to workmen and employees; their claims must be filed as required.

Time bound nature of the liquidation process and requirement to seek extension - no equity about limitation - Delay in seeking admission of claims after lapse of statutory liquidation period and the general principle that 'there is no equity about limitation' bar relief; the liquidation being time bound militates against entertaining the application. - HELD THAT: - The Tribunal emphasised that liquidation is a time bound process under Regulation 44 and that the liquidator must seek extension with reasons if liquidation is not completed within one year. Citing authority on limitation and the need to uphold statutory timelines, the Tribunal noted the applicants' claim was filed after a substantial delay and therefore the Court could not grant equitable relief to override limitation and the statutory scheme. [Paras 17, 18, 19]

The application is barred by the time bound nature of liquidation and limitation principles; relief is refused.

Final Conclusion: The application IA/265/2020 is dismissed (without costs) for failure to file claims in the liquidation process and because the statutory, time bound liquidation framework and limitation principles preclude treating CIRP claims as liquidation claims.

Binding nature of approved resolution plan under Section 31 of the IBC, 2016 - exclusion of related party creditors from Committee of Creditors under Section 21 of the IBC, 2016 - requirement that liabilities and allocations must be included in the resolution plan as approved - impermissibility of post approval deduction of amounts not provided in the resolution plan - finality of adjudicating authority's approval of a resolution plan

Impermissibility of post approval deduction of amounts not provided in the resolution plan - requirement that liabilities and allocations must be included in the resolution plan as approved - Whether the CoC/Resolution Professional could meet additional litigation costs from amounts allocated to related party financial creditors though such costs were not provided for in the resolution plan approved by the Adjudicating Authority. - HELD THAT: - The Tribunal held that the CoC/RP could not, by a subsequent internal resolution, defray additional litigation costs out of sums earmarked to related party financial creditors where such contingency was not disclosed or provided for in the resolution plan placed before and approved by the Adjudicating Authority. The approved plan is not an open ended document permitting post approval depletion of stakeholder allocations; any expense to be charged against the amounts payable to creditors ought to have been factored into the plan and submitted for approval. The related contention that the CoC in its commercial wisdom could re allocate amounts after approval was rejected because such reallocation effectively altered the terms of the approved plan without judicial sanction. [Paras 10, 11]

The attempt to meet additional litigation costs from the amounts allocated to related party financial creditors, not provided for in the approved resolution plan, is not permissible and cannot be mulcted upon those creditors.

Binding nature of approved resolution plan under Section 31 of the IBC, 2016 - finality of adjudicating authority's approval of a resolution plan - exclusion of related party creditors from Committee of Creditors under Section 21 of the IBC, 2016 - Whether the Applicant (a related party financial creditor) was entitled to payment as per the approved resolution plan and the consequent obligation on the Resolution Professional to disburse the payable amount. - HELD THAT: - Relying on the Tribunal's approval order and the statutory effect of Section 31, the Tribunal observed that the approved resolution plan binds all stakeholders and its terms must be implemented. Related party financial creditors, being excluded from the CoC under Section 21, could not be expected to have participated in or objected to any internal reallocation; therefore their entitlement under the approved plan stands. In consequence, the Resolution Professional was directed to pay the amount due to the Applicant from the total resolution plan amount without demur and within a time fixed by the Tribunal. [Paras 9, 12]

The Applicant is entitled to the amount provided for in the approved resolution plan and the Resolution Professional is directed to disburse the payable sum within 90 days from the date of the order.

Final Conclusion: The application is allowed: the Tribunal held that additional litigation costs could not be imposed on related party financial creditors where such costs were not provided for in the approved resolution plan; the Resolution Professional is directed to pay the amount due to the Applicant under the approved plan from the total resolution amount within 90 days.

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator and duties under Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Ceasing of moratorium under Section 14 and commencement of moratorium under Section 33(5) - Investigation of financial affairs and filing of avoidance/fraudulent transaction applications under Sections 35(1), 45, 49, 66 and 69 - Public announcement and invitation of claims/expressions of interest (Form A / Form G) - Rejection/closure of applications filed to delay liquidation as devoid of merit

Liquidation under Section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Liquidator and duties under Insolvency and Bankruptcy (Liquidation Process) Regulations, 2017 - Ceasing of moratorium under Section 14 and commencement of moratorium under Section 33(5) - Public announcement and invitation of claims/expressions of interest (Form A / Form G) - Investigation of financial affairs and filing of avoidance/fraudulent transaction applications under Sections 35(1), 45, 49, 66 and 69 - Corporate Debtor to be liquidated and a Liquidator appointed with specified directions for carrying out the liquidation process. - HELD THAT: - The Tribunal recorded that despite initiation of CIRP, publication of Form A and Form G, extension of the CIRP period and exclusion of days under Section 12(2), no expression of interest or resolution plan was received and the CoC unanimously resolved to seek liquidation. The Tribunal accordingly allowed the liquidation application under Section 33(2) and appointed the named insolvency professional as Liquidator. The order directs the Liquidator to act in accordance with the Code and Liquidation Regulations, to issue the public announcement (with the discharge notice for officers/employees under Section 33(7)), to proceed with liquidation under Chapter III of Part II, to investigate the corporate debtor's affairs and file applications in respect of preferential/undervalued/fraudulent transactions, to intimate statutory authorities (including Registrar of Companies and tax authorities) and to file the preliminary report within the prescribed period under the Regulations. The moratorium under Section 14 was declared to cease and a fresh moratorium under Section 33(5) was held to commence, aligning the process with the statutory liquidation framework. [Paras 13, 14]

IA/213/IB/2020 allowed; Corporate Debtor ordered to be liquidated and Liquidator appointed with specified directions.

Rejection/closure of applications filed to delay liquidation as devoid of merit - Applications filed by the erstwhile director seeking urgent hearing, change of resolution professional and adjournment were closed as without merit and intended to delay the liquidation process. - HELD THAT: - The Tribunal examined the applications filed by the erstwhile director and the accompanying pleadings and concluded that they were aimed at effecting a settlement or delaying the liquidation rather than presenting matters warranting interference. Having regard to the factual position that no resolution plan had materialised and the CoC's resolution for liquidation, the Tribunal found no merit in the applications and directed that they be closed. [Paras 17, 18]

IA/35/2021, E-Filing Diary No. 3305118/00134/2021 and IA/805/IB/2020 are closed.

Final Conclusion: The Tribunal allowed the liquidation application, appointed the Liquidator with specified statutory directions (including investigation obligations and notices to authorities), declared the Section 14 moratorium to cease and Section 33(5) moratorium to commence, and closed ancillary applications by the erstwhile director as devoid of merit.

Initiation of corporate insolvency resolution process (CIRP) - existence of operational debt and default - pre-existing real dispute / bona fides of dispute - fraud / abuse of process in invocation of insolvency remedy - moratorium under Section 14 of the Code - appointment of interim resolution professional (IRP)

Existence of operational debt and default - pre-existing real dispute / bona fides of dispute - Whether the Operational Creditor has established existence of an operational debt and default such as to warrant initiation of CIRP, and whether the Corporate Debtor's plea of pre-existing dispute defeats the claim. - HELD THAT: - The Tribunal found that the Corporate Debtor did not dispute that materials were supplied and had confirmed the statement of account by an e-mail dated 13.03.2018, and had not raised any quality-related objections. The Corporate Debtor relied on a counter-claim and subsequent invoices allegedly showing a net balance in its favour, but did not produce documentary evidence showing that a dispute had been raised prior to receipt of the Section 8 demand notice. The Operational Creditor, in its rejoinder, produced documentary material challenging the genuineness of the invoices said to have been raised by the Corporate Debtor (including irregularities in invoice series, incorrect addressee, absence of proof of delivery and anomalies in transportation documents) and asserted that the later invoices were a contrivance to create a dispute. On the record, and on a prima facie appraisal required at this stage, the Tribunal rejected the Corporate Debtor's contentions and concluded that the Operational Creditor had adequately proved existence of debt and default and that the alleged dispute was not a bona fide pre-existing dispute capable of defeating the Section 9/10/11/12 threshold for initiation of CIRP. [Paras 5, 6]

The Tribunal rejected the Corporate Debtor's plea of a pre-existing dispute and held that the Operational Creditor has established existence of operational debt and default, warranting initiation of CIRP against the Corporate Debtor.

Moratorium under Section 14 of the Code - appointment of interim resolution professional (IRP) - Whether moratorium should be imposed and an IRP appointed pending the corporate insolvency resolution process and related procedural directions. - HELD THAT: - Having initiated CIRP, the Tribunal recorded and applied the statutory consequences of initiation. A moratorium in the terms set out in Section 14 was imposed with the usual prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property from the corporate debtor; preservation of supply of essential goods or services subject to exceptions notified by the Central Government was noted. The Tribunal nominated an interim resolution professional from the IBBI list and directed him to act under the Code and file his report within 30 days. The Applicant was directed to deposit an amount to enable the IRP to meet immediate expenses, to be accounted for and reimbursed as CIRP costs. [Paras 7, 8, 9]

Moratorium imposed forthwith in terms of Section 14; Mr. Devendra Umrao appointed as IRP; Applicant directed to deposit Rs. 2 lakhs for immediate IRP expenses to be accounted for and recoverable as CIRP costs.

Final Conclusion: The Tribunal initiated the corporate insolvency resolution process against the Corporate Debtor, rejecting the plea of a pre-existing bona fide dispute and finding existence of operational debt and default; a moratorium under Section 14 was imposed, an IRP was appointed, and interim funding of the IRP was directed.

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - no resolution plan received after invitation in Form G - expiry of extended CIRP period - appointment of liquidator under section 34(1) subject to valid Authorisation for Assignment (AFA) - vested powers of board to the liquidator - bar on institution of suits and proceedings on initiation of liquidation subject to section 52 and section 33(5) - duty to publish public notice and file order with Registrar of Companies

No resolution plan received after invitation in Form G - expiry of extended CIRP period - liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Liquidation of the Corporate Debtor was ordered because no resolution plan was received and the CIRP period had expired. - HELD THAT: - The Resolution Professional published the invitation for Expression of Interest in Form G twice but no EoI or resolution plan was received. The CoC, after convening requisite meetings, unanimously resolved for liquidation. The Adjudicating Authority noted that the extended CIRP period expired on 25/02/2021 and, in view of absence of any resolution plan for consideration, found that liquidation was the only available course and ordered liquidation of the Corporate Debtor under section 33(2) of the Code. [Paras 8, 10, 13, 15, 16]

IA No. 307/KB/2021 allowed and the Corporate Debtor ordered to be liquidated in terms of section 33(2) of the Code.

Appointment of liquidator under section 34(1) subject to valid Authorisation for Assignment (AFA) - The Resolution Professional, Mr. Sachin Gopal Jathar, was appointed as Liquidator subject to possession of a valid AFA. - HELD THAT: - The CoC requested the RP to continue as Liquidator and the RP consented. The Adjudicating Authority appointed Mr. Sachin Gopal Jathar as Liquidator as provided under section 34(1) of the Code, subject to his possessing a valid Authorisation for Assignment issued by his Insolvency Professional Agency in terms of regulation 7A of the IBBI (Insolvency Professionals) Regulations, 2019. [Paras 10, 11, 16]

Mr. Sachin Gopal Jathar appointed as Liquidator, subject to possession of a valid AFA.

Vested powers of board to the liquidator - bar on institution of suits and proceedings on initiation of liquidation subject to section 52 and section 33(5) - On initiation of liquidation, powers of directors and key managerial personnel cease and vest in the Liquidator; suits/ proceedings against or by the Corporate Debtor are barred except as permitted. - HELD THAT: - The Adjudicating Authority directed that all powers of the Board of Directors and key managerial persons shall cease and vest in the Liquidator. It further ordered that, subject to section 52 of the Code, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor, except that the Liquidator may institute proceedings on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority as provided in section 33(5) read with its proviso. [Paras 16]

Powers of management cease and vest in the Liquidator; institution of suits/ proceedings is barred save as provided.

Duty to publish public notice and file order with Registrar of Companies - Orders concerning publication of liquidation notice and filing of the liquidation order with the Registrar of Companies were directed. - HELD THAT: - The Adjudicating Authority directed that a public notice be issued in the same newspapers in which previous advertisements were made to state that the Corporate Debtor is in liquidation. It further directed the Liquidator to file a copy of the liquidation order with the Registrar of Companies, West Bengal, Kolkata, and the Registry to forward a copy to the Registrar as required under section 33(1)(b)(iii). [Paras 16]

Public notice to be issued in specified newspapers and the Liquidator to file a copy of the order with the Registrar of Companies, West Bengal, Kolkata.

Liquidator's obligation to initiate liquidation process under Chapter III and Liquidation Process Regulations - The Liquidator was directed to initiate the liquidation process in accordance with Chapter III of the Code and the IBBI (Liquidation Process) Regulations, 2016. - HELD THAT: - Following appointment, the Liquidator was directed to commence the statutory liquidation process and comply with the procedures and obligations set out under Chapter III of the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. [Paras 16]

Liquidator to initiate liquidation process as envisaged under the Code and applicable IBBI Regulations.

Final Conclusion: The Tribunal allowed IA No. 307/KB/2021, ordered liquidation of GM Agro Allied Private Limited under section 33(2) of the Code due to absence of any resolution plan and expiry of the CIRP period, appointed the RP as Liquidator subject to valid AFA, and issued consequential directions for initiation of the liquidation process, publication of notice and filing with the Registrar of Companies.

Financial creditor - financial debt - corporate guarantee - default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - record of default in an Information Utility - appointment of Interim Resolution Professional - moratorium - threshold limit for initiation of CIRP

Financial creditor - financial debt - corporate guarantee - default - record of default in an Information Utility - FC is a financial creditor and the corporate debtor is liable for financial debt as guarantor in respect of the principal borrowers, and a default has been established. - HELD THAT: - The petitioning bank produced tripartite guarantee agreements, deposit of title deed documents and summons from the DRT together with reports of default filed in the Information Utility. The reports record the debt start date and dates/amounts of default for the two principal borrowers. In terms of the definition of "financial debt", liability in respect of a guarantee is included; therefore the bank qualifies as a financial creditor vis-a -vis the corporate guarantor and has placed sufficient material to demonstrate the existence of legally recoverable financial debt and default within the prescribed limitation period. [Paras 8, 10, 13, 14]

The Adjudicating Authority found that the applicant is a financial creditor, the corporate debtor is liable as guarantor for financial debt and that a default has occurred.

Admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - threshold limit for initiation of CIRP - appointment of Interim Resolution Professional - The Section 7 application was complete, the default exceeded the minimum threshold and the proposed IRP had no disciplinary impediment, thus the petition was to be admitted and an IRP appointed. - HELD THAT: - Section 7(5) requires that where the Adjudicating Authority is satisfied that a default has occurred, the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, the application must be admitted. The petition contained the requisite particulars of financial debt and default, the default exceeded the minimum threshold fixed by the Code, the proposed resolution professional had consented in Form 2 and no disqualifying disciplinary proceedings were shown. Accordingly, the Authority exercised its mandatory duty to admit the petition and appointed the named IRP. [Paras 6, 11, 14, 15]

The petition under Section 7 was admitted and Mr. Ashok Kumar Dewan was appointed as Interim Resolution Professional.

Moratorium - prohibitions during moratorium - public announcement - Upon admission, moratorium was declared and directions were given for public announcement and conduct of the IRP in accordance with the Code. - HELD THAT: - Following admission, the Authority directed immediate public announcement and declared the moratorium under the Code, enumerating the prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property. The order clarified applicability exceptions as provided by the statute and outlined duties of the IRP to manage the corporate debtor, preserve assets and seek cooperation of personnel and promoters. [Paras 16, 17, 18, 19]

A moratorium was declared, the IRP was directed to make the public announcement and to perform statutory functions; prohibitions during the moratorium were imposed as stated.

Final Conclusion: The Section 7 petition filed by the financial creditor was admitted against the corporate debtor (a corporate guarantor), an Interim Resolution Professional was appointed, public announcement was directed and a moratorium was declared; the IRP is to conduct the CIRP in accordance with the Code and the applicant was directed to deposit the initial fee for CIRP expenses.

Maintainability of Section 9 application by former directors of a dissolved company - operational creditor standing - effect of company dissolution under section 248/section 250 of the Companies Act, 2013 on insolvency proceedings - burden of proof on the applicant to establish standing - dispute in existence of debt and notice of dispute under Section 8(2) of the Code - allegation of fabrication of invoices

Maintainability of Section 9 application by former directors of a dissolved company - operational creditor standing - burden of proof on the applicant to establish standing - The applicants, being erstwhile directors/shareholders of a company dissolved w.e.f. 08.08.2018, are not operational creditors entitled to file the present application under Section 9 of the IBC in their personal capacity. - HELD THAT: - The Tribunal found that the company in which the applicants were directors/shareholders had been struck off and ceased to exist from 08.08.2018. The applicants failed to produce documentary evidence to establish that they, in their personal capacity, supplied goods or rendered services to the corporate debtor or otherwise acquired the status of operational creditors entitled to initiate proceedings under Section 9. The burden to prove maintainability rested on the applicants, which they did not discharge. In these circumstances the application under Section 9 is not maintainable by the applicants. [Paras 7]

Application rejected for want of maintainability as the applicants are not operational creditors entitled to file under Section 9.

Effect of company dissolution under section 248/section 250 of the Companies Act, 2013 on insolvency proceedings - Section 250 of the Companies Act, 2013 does not render an application under Section 9 of the IBC maintainable where the applicant is not an operational creditor. - HELD THAT: - The Tribunal observed that although Section 250 allows limited continuance of a dissolved company for realization of its assets, the present proceeding under Section 9 is not a recovery proceeding governed by Section 250. Therefore, the mere invocation of Section 250 by the applicants did not confer standing on them to file an application under Section 9 when they had not established operational creditor status. [Paras 9]

Section 250 is not applicable to confer maintainability of the present Section 9 application.

Dispute in existence of debt and notice of dispute under Section 8(2) of the Code - allegation of fabrication of invoices - The claim was disputed by the respondent, including by service of notices of dispute and by alleging that the invoices were fabricated; the dispute militates against admission of the Section 9 application. - HELD THAT: - The record shows that the respondent had replied to earlier demand notices and served a notice of dispute under Section 8(2). The respondent specifically alleged that invoices (bearing certain invoice numbers) were fraudulently generated after the date of dissolution of the applicant company and therefore false. The existence of a bona fide dispute and allegations of fabrication, together with the applicants' failure to prove their standing, led the Tribunal to conclude that the claim was not admitted and could not form the basis for initiating CIRP under Section 9. [Paras 4, 8, 9]

Claim is disputed and invoices are alleged to be fabricated; consequently the Section 9 petition cannot be sustained.

Final Conclusion: The petition under Section 9 of the IBC is dismissed for want of maintainability as the applicants have not established operational creditor status and the claim is disputed; observations are without prejudice to rights of the parties before other forums.