TaxTMI Updates e-Newsletter
May 18,2021

Provisional attachment under Section 83 - Taxable person - Protection of Government revenue - Jurisdictional limits on exercise of power - Availability of alternate remedy and writ jurisdiction - Material linking third party to taxable person s fraudulent transactions

Provisional attachment under Section 83 - Taxable person - Jurisdictional limits on exercise of power - Provisional attachment of bank accounts under Section 83 was without jurisdiction as the petitioner was not a "taxable person". - HELD THAT: - Section 83 authorises provisional attachment only of property "belonging to the taxable person." The Act's definition of "taxable person" is confined to a person who is registered or liable to be registered. The impugned orders themselves identify Milkfood Ltd. as the taxable person and do not aver that the petitioner was registered or liable to be registered. Consequently the condition precedent for assuming jurisdiction under Section 83 was absent and the exercise of provisional attachment power against the petitioner was without jurisdiction. The Court therefore entertained the writ despite availability of an alternate remedy because the action taken was jurisdictionally infirm. [Paras 5]

Impugned provisional attachment orders dated 07.12.2020 quashed for want of jurisdiction.

Protection of Government revenue - Material linking third party to taxable person s fraudulent transactions - Availability of alternate remedy and writ jurisdiction - Even if proceedings against the taxable person were pending, attachment of the petitioner s accounts was unsustainable in the absence of material linking her to the alleged fake invoices or an application of mind showing necessity to protect revenue. - HELD THAT: - Beyond the jurisdictional defect, the respondent failed to produce material demonstrating that the petitioner was connected to the alleged fraudulent invoices or that the officer had applied his mind to the requirement that attachment was necessary to protect revenue. The counter-affidavit relied only on the petitioner s "voluntary" statement that she received payment in FY 2019-2020 for advisory services and on her shareholding; nothing in that statement established involvement in the purported illegal transactions. The Court held that attachment is a draconian step and cannot be resorted to in the zeal to protect revenue without specific material linking the third party to the taxable person s wrongdoing. Consequently, the disposal of the petitioner s objections under Rule 159(5) also collapses as it proceeded from jurisdictionally invalid action. [Paras 5, 6]

Attachment set aside for lack of material and failure to satisfy the statutory requirement of necessity to protect revenue; order disposing objections also collapses.

Final Conclusion: Writ petition allowed; provisional attachment orders dated 07.12.2020 quashed and banks to be so informed; consequential order disposing the petitioner s objections also set aside as proceedings against the petitioner were without jurisdiction.

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - Requirement to furnish returns and pay amounts due as condition precedent to filing revocation application - Cancellation of registration for continuous non-filing of returns - Waiver of late fee under Notification No.52/2020-Central Tax dated 24.06.2020

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - Requirement to furnish returns and pay amounts due as condition precedent to filing revocation application - Whether the appellant complied with the conditions of Rule 23 for revocation of cancellation of registration and was entitled to revocation. - HELD THAT: - The adjudicating authority cancelled the appellant's GST registration for non-filing of returns for a continuous period of six months and rejected the revocation application on the ground that no reply to the show cause notice was furnished. Rule 23 mandates that where registration is cancelled for failure to furnish returns, an application for revocation cannot be filed unless such returns are furnished and any amount due in terms of such returns is paid. The appellant filed pending returns on 30.09.2020 but records show returns were not filed up to June-2020 and late fees for periods beyond January-2020 remained unpaid. The adjudicator's finding that the proviso to Rule 23 was not satisfied is affirmed on the basis that the statutory preconditions for filing and acceptance of a revocation application were not met. [Paras 6, 10]

Revocation application was not in compliance with Rule 23 and entitlement to revocation is rejected.

Waiver of late fee under Notification No.52/2020-Central Tax dated 24.06.2020 - Scope of waiver limited to returns for July, 2017 to January, 2020 - Whether the appellant could rely on the waiver of late fee under Notification No.52/2020 to cure non-compliance for the period up to June-2020 and thereby procure revocation. - HELD THAT: - The Board's circular and Notification No.52/2020 were considered. The notification provides waiver of late fee where the total central tax payable in the return is nil, and the waiver applies only for returns for the period July, 2017 to January, 2020 if furnished between 1 July 2020 and 30 September 2020. The appellant's non-filing extended to June-2020; the waiver under the notification does not cover the period February-2020 to June-2020. Thus the appellant could not claim waiver of late fee for the entire disputed period relied upon to show compliance with the proviso to Rule 23, and the contention that the amnesty covered all returns up to cancellation date is rejected. [Paras 9, 10]

Notification No.52/2020 does not extend waiver of late fee beyond January-2020 and cannot cure the appellant's non-compliance for the period up to June-2020.

Final Conclusion: The appeal is dismissed. The revocation application was held non-compliant with Rule 23 because returns and amounts due for the period up to 10.06.2020 were not furnished/paid, and the late-fee waiver under Notification No.52/2020 was held applicable only up to January-2020 and therefore did not entitle the appellant to revocation.

Compliance with CBDT Instruction No. 20/2015 (paragraph 4) - principles of natural justice - show-cause notice requirement before making additions/disallowances - additions under Section 68 and disallowance under Section 36(1)(va) read with Section 2(24)(x) - faceless assessment - interim stay on operation of assessment order

Compliance with CBDT Instruction No. 20/2015 (paragraph 4) - show-cause notice requirement before making additions/disallowances - principles of natural justice - Whether the Assessing Officer complied with paragraph 4 of CBDT Instruction No. 20/2015 by issuing a show-cause notice and affording a fair opportunity before making additions/disallowances - HELD THAT: - The Court noted that the impugned assessment order (under the Faceless Assessment Scheme) records issuance of notices under Section 143(2) and several questionnaires under Section 142(1), and that replies were filed by the petitioner (see paras. 8, 8.1 and 9). Paragraph 4 of CBDT Instruction No. 20/2015 requires that, where additions or disallowances are proposed in scrutiny cases, the Assessing Officer shall issue an appropriate show-cause notice indicating reasons and material and give due consideration to the submissions before passing the final order (para. 7 and quoted text). While the AO had issued prior notices and questionnaires, the Court observed that those steps serve broadly to gather information and, on the material before it at this stage, it did not appear that the specific show-cause step mandated by the Instruction was taken in respect of the additions/disallowances made (paras. 9 and 9.1). The Court therefore held that the matter warranted further examination to ascertain compliance with the Instruction and the requirements of natural justice (para. 9.2) and issued notice for that purpose (para. 10). [Paras 7, 8, 9, 10]

Matter remanded for further examination as to compliance with paragraph 4 of CBDT Instruction No. 20/2015 and the concomitant requirements of natural justice; notice issued to the respondent.

Interim stay on operation of assessment order - Whether the operation of the impugned assessment order dated 22.04.2021 should be stayed pending further proceedings - HELD THAT: - Having found that further examination was required regarding compliance with the CBDT Instruction and principles of natural justice, the Court directed interim relief. The Court stayed the operation of the assessment order dated 22.04.2021 while the respondent files its counter-affidavit and the matter is heard on the listed date (paras. 11, 11.1 and 12). [Paras 11, 12]

Interim stay granted on the operation of the impugned assessment order dated 22.04.2021.

Final Conclusion: The petition raises a prima facie question whether the Assessing Officer complied with paragraph 4 of CBDT Instruction No. 20/2015 and afforded the requisite show-cause opportunity before making additions/disallowances; the Court issued notice, remanded the matter for fresh consideration on that narrow point, and granted an interim stay on the operation of the assessment order dated 22.04.2021.

Mandatory notice under Section 143(2) for framing assessment under Section 143(3) after reopening - reassessment under Section 147 following notice under Section 148 - notice deemed valid provision under Section 292BB not curing complete absence of notice - revise or call into question assessment order under Section 263 over non-est order

Mandatory notice under Section 143(2) for framing assessment under Section 143(3) after reopening - reassessment under Section 147 following notice under Section 148 - Validity of the assessment order dated 25.07.2017 framed under Section 143(3)/147 where no notice under Section 143(2) was issued after the assessee filed return in response to notice under Section 148. - HELD THAT: - The Tribunal accepted the factual finding recorded by the Principal Commissioner that after the assessee filed return pursuant to notice under Section 148, the Assessing Officer did not issue the mandatory notice under Section 143(2) before completing assessment under Section 143(3) read with Section 147. Applying the settled law in Hotel Blue Moon and its progeny, the issuance of notice under Section 143(2) is a mandatory precondition for scrutiny assessment under Section 143(3) in such circumstances. In absence of that mandatory statutory notice the Assessing Officer lacked jurisdiction to frame the reassessment and the assessment order dated 25.07.2017 is null and non-est in law. [Paras 6]

Assessment order dated 25.07.2017 under Section 143(3)/147 is void for want of mandatory notice under Section 143(2).

Notice deemed valid provision under Section 292BB not curing complete absence of notice - Whether Section 292BB cures the defect of non-issuance of notice under Section 143(2) where no notice at all issued by the Department. - HELD THAT: - The Tribunal followed the decision of the Hon'ble Supreme Court in Laxman Das Khandelwal to hold that Section 292BB, which deems a notice to be valid where the assessee has appeared or cooperated, cures infirmities in service or manner of service but does not validate a situation of complete absence of a notice emanating from the department. Since the record established that no notice under Section 143(2) was ever issued, Section 292BB could not be invoked to cure that absence. [Paras 7]

Section 292BB does not validate the reassessment where there was complete non-issuance of the mandatory notice under Section 143(2).

Revise or call into question assessment order under Section 263 over non-est order - Competence of the Principal Commissioner to exercise revisional power under Section 263 in respect of an assessment order which is non-est (void) for lack of mandatory notice. - HELD THAT: - Because the Tribunal held that the Assessing Officer's order of 25.07.2017 was void for want of the mandatory notice under Section 143(2), there was no subsisting assessment order for the Principal Commissioner to call into question under Section 263. Exercising revisional jurisdiction over an order that is non-est is impermissible. Accordingly, the impugned order passed under Section 263 was itself without jurisdiction and liable to be quashed. [Paras 8]

Order passed by the Principal Commissioner under Section 263 quashed as it sought to revise a non-est assessment order.

Final Conclusion: The appeal is allowed: the reassessment order dated 25.07.2017 under Section 143(3)/147 is void for want of mandatory notice under Section 143(2); Section 292BB does not cure complete absence of such notice; and the revisional order under Section 263 impugning that non-est order is consequently quashed.

Disallowance of reimbursement to related party under Section 40A(2)(b) for lack of identifiable business nexus - deductibility of promotional/gift expenditure under Section 37(1)

Disallowance of reimbursement to related party under Section 40A(2)(b) for lack of identifiable business nexus - Deletion of addition made by the assessing officer disallowing reimbursement payments to a related party under Section 40A(2)(b). - HELD THAT: - The Tribunal found that the assessee reimbursed marketing and advertising expenses to the related party pursuant to an existing arrangement (ratio 90:10) and that the arrangement had been continuing since AY 2011-12. Similar claims were accepted in assessments for AY 2011-12 and AY 2016-17. The assessee explained that marketing produced general sales leads not readily identifiable to specific clients, making production of a client-wise list difficult. The Tribunal also noted that both payer and payee are in the highest tax bracket, reducing concerns about tax-avoidance motive. In the absence of persuasive evidence of any disallowable personal or non-business expenditure, and having regard to the continuity and nature of the arrangement and earlier acceptance in other years, the invocation of Section 40A(2)(b) was not justified on the facts of the case. [Paras 4]

Addition under Section 40A(2)(b) deleted; ground of appeal allowed.

Deductibility of promotional/gift expenditure under Section 37(1) - Deletion of addition disallowing expenditure on gold coins treated as gifts for lack of business nexus under Section 37(1). - HELD THAT: - The assessee produced invoices for the purchase of gold coins and documentation before the appellate authority showing distribution of coins to sub-brokers as performance incentives to generate business. The Tribunal held that the disallowance was based on mere presumption that the expense was not for business purposes, whereas the assessee had placed requisite documentary evidence demonstrating the business character of the expenditure. Accordingly, the addition was found unsustainable. [Paras 5]

Addition under Section 37(1) in respect of gift articles deleted; ground of appeal allowed.

Final Conclusion: Both additions confirmed by the authorities - the reimbursement to the related party under Section 40A(2)(b) and the expenditure on gold coins under Section 37(1) - were deleted by the Tribunal and the appeal for AY 2014-15 was allowed.

Reopening of assessment under section 147 - reasons to believe - tangible material - application of mind - intimation under section 143(1)(a) - direction of appellate authority to initiate reassessment - no review in guise of reopening

Short payment of appeal fee - time bar of appeal - Whether the appeal to the Tribunal was time barred on account of short payment of appeal fees and delay in rectification of the defect. - HELD THAT: - The Tribunal found that the first appellate order was served on the assessee and the appeal was presented within the prescribed two month period but with a short payment of appeal fee. The Registry's defect notice and the assessee's subsequent belated payment of the deficit fees - explained as caused by acute financial stringency and liquidation of the company - cured the defect. The Tribunal held that mere short payment of fee, subsequently rectified, does not render the appeal time barred and cannot be a ground to treat the appeal as beyond time. [Paras 3, 4]

Application for condonation upheld; appeal treated as filed within time and not time barred.

Reopening of assessment under section 147 - reasons to believe - tangible material - intimation under section 143(1)(a) - application of mind - no review in guise of reopening - Whether reassessment proceedings initiated under section 147/148 were sustainable where the intimation under section 143(1)(a) had been issued and the Assessing Officer recorded satisfaction following the CIT(A)'s observation. - HELD THAT: - The Tribunal applied the settled principle that even where an intimation under section 143(1)(a) has been issued, the Assessing Officer can invoke section 147 only if he has 'reasons to believe' based on new or tangible material not previously available, and that reopening as a mere review is impermissible. The AO's satisfaction note merely reproduced facts of the processed return and the CIT(A)'s direction that the AO may invoke section 147 for non application of section 115JB; it lacked any independent recording of new facts or material gathered after the original processing and did not demonstrate application of mind by the AO. In these circumstances the reassessment was held to be founded on the appellate authority's direction and on a change of opinion basis without fresh tangible material, which, following the authorities cited in the reasons, rendered the reopening invalid. [Paras 10, 11, 14, 15, 16]

Grounds A and B allowed; reassessment proceedings under section 147/148 quashed for absence of tangible material and lack of application of mind.

Final Conclusion: The Tribunal held that the appeal was filed within time (defect in fee payment being cured) and, on merits of jurisdictional validity, quashed the reassessment proceedings under section 147/148 for want of fresh tangible material and for failure of the Assessing Officer to apply independent judicial mind; other grounds became infructuous and the assessee's appeal was allowed.

Right to be heard - principles of natural justice - audi alteram partem - ex parte order - rejection of application for registration - registration under section 12AA

Right to be heard - principles of natural justice - audi alteram partem - ex parte order - registration under section 12AA - Whether the impugned ex parte rejection of the assessee's application for registration under section 12AA was vitiated for want of opportunity of hearing and required fresh adjudication. - HELD THAT: - The Tribunal found that the order of the CIT(E) rejecting the application was passed ex parte and the record does not show that notice of the hearing date was served on the assessee or that the date was intimated to it. Given the absence of material establishing service or communication of the hearing, the Tribunal applied the settled principle that no one should be condemned unheard (audi alterm partem) and held that the principles of natural justice were not complied with. Consequently, the impugned order was set aside and the matter was restored to the file of the CIT(E) for fresh adjudication in accordance with law after affording the assessee a due and reasonable opportunity of hearing. [Paras 7, 8]

Impugned order set aside and matter remitted to the CIT(E) for fresh adjudication after giving the assessee a due and reasonable opportunity of hearing.

Final Conclusion: Appeal allowed in favour of the assessee; the CIT(E)'s ex parte rejection of the registration application is set aside and the matter is remitted for fresh adjudication after affording opportunity of hearing.

Application of Section 50C for adoption of stamp duty valuation as full value of consideration - Long Term Capital Gains - Validity and weight of Departmental Valuation Officer (DVO) report - Effect of relevant statutory/administrative land-use restrictions on market valuation - Admission and consideration of additional evidence on valuation

Application of Section 50C for adoption of stamp duty valuation as full value of consideration - Validity and weight of Departmental Valuation Officer (DVO) report - Effect of relevant statutory/administrative land-use restrictions on market valuation - Admission and consideration of additional evidence on valuation - Whether the addition to Long Term Capital Gains by adopting the stamp valuation (and/or DVO valuation) was justified, having regard to the DVO report, additional evidence regarding APIIC rates and restrictive land-use, and the CIT(A)'s adjustment to market value - HELD THAT: - The Tribunal examined the Assessing Officer's adoption of stamp valuation under Section 50C in the light of the DVO's valuation and the additional evidence relating to APIIC fixed land rates and the restrictive industrial use of the plot. The Assessing Officer had relied on the Stamp Valuation Authority value (which was less than the initial DVO figure) for computing capital gains; earlier the DVO had applied locational and other enhancement factors which the CIT(A) found to be unsupported. The CIT(A) reviewed the materials, took into account the APIIC-prescribed rate and the effect of the plot being in an industrial estate with specified restrictive use, and concluded that a valuation at twice the APIIC rate (yielding a market value lower than the sale consideration declared by the assessee) was appropriate; on that basis the addition was deleted. The Tribunal found that the DVO had not applied the restrictive use fixed by APIIC and had increased value on locational factors without comparable support, whereas the CIT(A)'s approach of moderating the enhancement (to two times the APIIC rate) was reasonable; the Tribunal accepted that the additional evidence concerning APIIC rates and restrictive use had been properly considered and that, after adjustment, no addition was warranted since the adjusted market value did not exceed the declared sale consideration. [Paras 3, 5, 10]

CIT(A)'s conclusion adjusting valuation (to twice the APIIC rate) and deleting the addition was justified and is upheld; the DVO's higher enhancement was not sustained.

Final Conclusion: Revenue's appeal is dismissed; the CIT(A)'s order deleting the addition to Long Term Capital Gains (after adjusting valuation in light of APIIC rates and restrictive land-use) is affirmed.

Disallowance under section 14A - Rule 8D of the Income Tax Rules - Proportionate computation of disallowance - Objective satisfaction of the Assessing Officer before invoking Rule 8D - Disallowance of interest where own/interest free funds are sufficient - Remand to Assessing Officer for verification and determination

Disallowance under section 14A - Rule 8D of the Income Tax Rules - Proportionate computation of disallowance - Objective satisfaction of the Assessing Officer before invoking Rule 8D - Remand to Assessing Officer for verification and determination - Validity and quantum of disallowance under section 14A read with Rule 8D and the manner of its computation - HELD THAT: - The Tribunal noted that a coordinate Bench in Oswal Woolen Mills Ltd. had considered identical facts and directed that where the assessee furnishes a proportionate computation (including necessary adjustments such as personnel expenses), the Assessing Officer must not mechanically apply Rule 8D without recording objective satisfaction on the accounts. The Tribunal found no change in facts and accepted the assessee's reliance on that coordinate Bench decision. The matter was therefore not finally quantified by the Tribunal: it held that the Assessing Officer should determine the disallowance on a proportionate basis in accordance with the directions of the coordinate Bench or, if the assessee's suo motu working is found to be in conformity with that direction, restrict the addition to the amount computed by the assessee. Consequently, the Tribunal remitted the issue to the Assessing Officer for determination/verification in line with the coordinate Bench precedent and after affording the assessee an opportunity of being heard. [Paras 9]

Issue remitted to the Assessing Officer to determine the disallowance under section 14A read with Rule 8D on a proportionate basis in accordance with the coordinate Bench direction, or to restrict the addition to the assessee's working if found to conform to that direction.

Disallowance of interest where own/interest free funds are sufficient - Remand to Assessing Officer for verification and determination - Sustainability of addition by disallowing interest charged to capital/current accounts where assessee contends sufficient own funds were available - HELD THAT: - The Tribunal observed that a coordinate Bench (in Monte Carlo Fashions and other cited precedents) has held that where sufficient own or interest free funds (capital, reserves, internal accruals) are available to meet investments or asset acquisition, no disallowance of interest is warranted. Noting that the lower authorities had not rebutted the assessee's contention about availability of own funds and that the facts are similar to the coordinate Bench matter, the Tribunal found merit in the assessee's plea. The Tribunal did not decide the quantum on merits but set aside the findings of the CIT(A) and remitted the issue to the Assessing Officer to examine the fund position (capital, reserves, interest free funds, accruals), determine whether borrowed funds were utilized in excess of available own funds, and decide afresh after giving the assessee a reasonable opportunity of being heard. [Paras 14]

Findings of the CIT(A) set aside and the issue remitted to the Assessing Officer for fresh adjudication on availability and application of own/interest free funds before making any disallowance of interest.

Final Conclusion: Appeal allowed for statistical purposes; issue of disallowance under section 14A read with Rule 8D remitted to the Assessing Officer to determine the disallowance on proportionate basis in accordance with the coordinate Bench direction (or to accept the assessee's working if conforming thereto), and the question of disallowance of interest from current/capital account set aside and remitted to the Assessing Officer for fresh decision after examining the assessee's fund position and affording opportunity to be heard.

Duty of first appellate authority to dispose appeals on merits - Prohibition on dismissal for non-prosecution without merits - Requirement to state points for determination, decision and reasons - Admissibility and maintainability of appeal before adjudication on merits - Treatment of e-filed documents and attachments as part of appellate record - Obligation to adhere to principles of natural justice in appellate proceedings

Prohibition on dismissal for non-prosecution without merits - Duty of first appellate authority to dispose appeals on merits - Validity of the Commissioner (Appeals) order dismissing the appeal for non-prosecution without adjudication on merits. - HELD THAT: - The Tribunal held that a Commissioner (Appeals) is obliged to dispose of an appeal on merits and cannot in limine dismiss an appeal for non-prosecution without considering and deciding the matters arising from the impugned assessment. The statutory scheme requires the first appellate authority to apply its mind to issues arising from the assessment order and to exercise powers co-terminus with the Assessing Officer; accordingly dismissal for non-prosecution that results in failure to decide points of controversy is impermissible. Having recorded that the impugned order confirmed the assessment without dealing with merits, the Tribunal set aside that order and remanded the matter for fresh disposal on merits. [Paras 4, 6]

Impugned order of the Commissioner (Appeals) dismissing the appeal for non-prosecution without deciding the appeal on merits is set aside and the matter is remanded for fresh adjudication.

Treatment of e-filed documents and attachments as part of appellate record - Admissibility and maintainability of appeal before adjudication on merits - Requirement to state points for determination, decision and reasons - Obligation to adhere to principles of natural justice in appellate proceedings - Directions to the Commissioner (Appeals) on treatment of e-filed material and the manner of fresh disposal on remand. - HELD THAT: - The Tribunal directed that e-filed documents and attachments submitted at the time of e-filing must be treated as part of the record and receive proper consideration. The Commissioner (Appeals) is to first decide admissibility and maintainability of the appeal after due consideration of those materials; if admissible and maintainable, the Commissioner (Appeals) must decide the appeal on merits by stating the points for determination, the decision on each point and the reasons therefor, while adhering to principles of natural justice and the statutory provisions governing disposal of appeals. [Paras 5]

Matter remitted to the Commissioner (Appeals) with directions to treat e-filed documents as part of the record, determine admissibility and maintainability, and if appropriate decide the appeal on merits stating points for determination, decisions and reasons, observing natural justice.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the Commissioner (Appeals) order dated 12/03/2019 for non-prosecution, and remitted the matter to the Commissioner (Appeals) for fresh disposal in accordance with the directions above.

Dismissal for non-prosecution - obligation to dispose of appeal on merits - points for determination, decision thereon and reasons - admissibility and maintainability of appeal - e-filed documents as part of record - remand for fresh decision - adherence to principles of natural justice

Dismissal for non-prosecution - obligation to dispose of appeal on merits - The ex parte order of the Commissioner (Appeals) dismissing the assessee's appeal for non-prosecution without deciding the appeal on merits was not sustainable. - HELD THAT: - The Tribunal held that although the Commissioner (Appeals) may pass an ex parte order, he is obliged under the scheme of sections 249-251 and 250(6) of the Income-tax Act to apply his mind and dispose of the appeal on merits by stating the points for determination and reasons for decision. An order of dismissal in limine for non-prosecution, rendered without consideration of the merits, is therefore inappropriate. The Tribunal relied on established authorities and applied the principle that the first appellate authority's powers are co-terminus with those of the Assessing Officer, and that the appellate machinery, once set in motion by a valid appeal, must be allowed to run its course on the merits. [Paras 4]

Impugned ex parte order confirming the assessment was set aside as the Commissioner (Appeals) did not decide the appeal on merits.

Admissibility and maintainability of appeal - e-filed documents as part of record - points for determination, decision thereon and reasons - adherence to principles of natural justice - remand for fresh decision - Direction to remand the matter to the Commissioner (Appeals) to decide admissibility/maintainability and, if admissible, to decide the appeal on merits after considering e-filed material and following principles of natural justice. - HELD THAT: - The Tribunal directed that the Commissioner (Appeals) must treat the documents and attachments filed at the time of e-filing as part of the record and must give them due consideration. If satisfied as to admissibility and maintainability, the Commissioner (Appeals) is required to pass a fresh reasoned order on the merits, stating the points for determination, the decision on each point and reasons therefor, and to observe principles of natural justice and the statutory provisions governing appeals. The remand was ordered as the Tribunal found it appropriate in the interest of justice where the Commissioner (Appeals) had not examined the merits. [Paras 5]

Matter restored to the file of the Commissioner (Appeals) with directions to consider admissibility/maintainability, treat e-filed documents as part of record, and, if appropriate, decide the appeal on merits with stated points and reasons, observing natural justice.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the Commissioner (Appeals)'s ex parte dismissal for non-prosecution, and remitted the matter to the Commissioner (Appeals) to determine admissibility/maintainability and, if admissible, decide the appeal on merits after considering e-filed material and stating points for determination, decisions and reasons in accordance with law and principles of natural justice.

Business expenditure - expenditure on training and higher education as business expenditure - nexus between expenditure and business - genuineness of service agreement - service agreement with obligation to serve and liquidated damages - booking under wrong head of expenditure not a ground for disallowance - deduction under Section 37(1) as business expenditure

Expenditure on training and higher education as business expenditure - nexus between expenditure and business - genuineness of service agreement - service agreement with obligation to serve and liquidated damages - booking under wrong head of expenditure not a ground for disallowance - deduction under Section 37(1) as business expenditure - Claim for expenditure incurred towards sponsoring higher education of a management trainee allowed as business expenditure. - HELD THAT: - The Tribunal examined the written service agreement, which obliged the company to bear the trainee's educational and travel expenses and required the trainee to serve the company for a minimum period after completion of studies, with stipulated remuneration, restrictions and liquidated damages for premature termination. In the absence of any adverse material, the genuineness of the agreement was accepted and the fact that the trainee served the company for more than five years after completion of education was noted. Reliance was placed on the jurisdictional High Court decision which recognises that expenditure on training or higher education, whether abroad or domestic, is deductible as business expenditure where the trainee, after completion, contributes to the business; that principle was applied to the facts. The Tribunal further held that mere booking of the payment under an incorrect head of account cannot, by itself, justify disallowance. On these grounds the disallowance made by the Assessing Officer and confirmed by the CIT(A) was set aside and the expenditure allowed as deductible business expenditure under the recognised principle embodied in Section 37(1) of the Act as interpreted by the cited authority. [Paras 8, 9, 10, 11]

Disallowance of the sponsorship expenditure set aside and expenditure allowed as business expenditure.

Final Conclusion: Appeal allowed; the disallowance of the expenditure incurred for sponsoring the trainee's higher education is deleted and the expense is allowed as business expenditure.

Assessments under section 153A cannot disturb concluded assessments in absence of incriminating material - Requirement of recording AO's satisfaction before applying section 14A and Rule 8D(2) - Limit to disallowance under section 14A - cannot exceed exempt income - Application of section 14A disallowance while computing book profits under section 115JB - Rule 8D(2) computation not automatically applicable; actual expenses to be identified - Addition under section 69A explained by books of account - cash found during search to be accepted if accounted in books - Business loss on bona fide conversion of investment into stock-in-trade to be treated as business loss (distinct from capital loss) - Protective vs substantive disallowance - AO must conduct independent enquiry and afford opportunity to rebut; reliance on investigation-wing material without disclosure violates natural justice - Amortisation of preliminary expenses governed by amended proviso to section 35D - deduction at 1/5th

Assessments under section 153A cannot disturb concluded assessments in absence of incriminating material - No additions/disallowances can be validly made in assessments framed under section 153A in respect of assessment years which were concluded on the date of search, unless incriminating material relatable to those years is found during the search. - HELD THAT: - The Tribunal, following the reasoning of the Bombay High Court in CIT v. Continental Warehousing (Nhava Sheva) Ltd (374 ITR 645 (Bom)) and the Supreme Court's approach in cases dealing with incriminating seized material, held that section 153A must be read with the concept of search/requisition under section 132. Where an assessment stood concluded on the date of search and no incriminating material relatable to that assessment year was found during the search, the Assessing Officer lacked jurisdiction to reopen or make additions for those concluded years under section 153A. The revenue did not furnish contrary evidence to show existence of incriminating material; accordingly the Tribunal upheld the CIT(A)'s deletion of additions for the specified concluded years and dismissed the corresponding revenue grounds.

Decided for the assessee; specified additions in concluded assessment years deleted and revenue appeals dismissed on this ground.

Requirement of recording AO's satisfaction before applying section 14A and Rule 8D(2) - Limit to disallowance under section 14A - cannot exceed exempt income - Assessing Officer cannot apply the Rule 8D(2) computation under section 14A without first recording an objective satisfaction with reasons that the assessee's suo-moto disallowance is unacceptable; any disallowance under section 14A cannot exceed the exempt income. - HELD THAT: - Relying on Maxopp Investment Ltd (402 ITR 640 (SC)) and relevant coordinate bench decisions, the Tribunal held that AO must record satisfaction under section 14A(2) read with Rule 8D(1) before proceeding to apply the mechanical computation under Rule 8D(2). Where the assessee had made suo-moto disallowances and supported them with books/notes, the AO's mere statement of dissatisfaction without cogent reasons was inadequate. Further, disallowance computed under section 14A cannot exceed the amount of exempt income for the year. The Tribunal also took into account that the assessees had sufficient own (interest free) funds for investments, negating disallowance of interest under Rule 8D(2)(ii). Consequently, the suo moto disallowances made by the assessee survived and AO's disallowances without required satisfaction were disallowed.

Decided for the assessee; AO's disallowances under section 14A/Rule 8D(2) set aside where satisfaction not recorded; disallowance capped by exempt income and interest disallowance not warranted where own funds suffice.

Application of section 14A disallowance while computing book profits under section 115JB - Rule 8D(2) computation not automatically applicable; actual expenses to be identified - While computing book profits under section 115JB, the AO cannot mechanically apply the Rule 8D(2) computation; actual expenditure attributable to exempt income should be identified and disallowance cannot exceed exempt income. - HELD THAT: - Following the Special Bench view in Vireet Investments (165 ITD 27) and consistent authorities, the Tribunal held that Rule 8D(2) methodology is not mandatorily applicable for clause (f) of Explanation (1) to section 115JB(2). Where the assessee had itself identified and excluded actual expenses in normal computations, those voluntary disallowances should be considered for section 115JB purposes. In cases (e.g. IIC) where no voluntary disallowance was made, the AO was directed to identify actual expenditure attributable to exempt income; in all events any disallowance must not exceed exempt income for the year.

Decided for the assessee with direction: use actual attributable expenses for book profit computation; AO to identify such expenses where assessee made none, subject to the cap of exempt income.

Addition under section 69A explained by books of account - cash found during search to be accepted if accounted in books - Addition under section 69A in respect of cash found during search was not sustainable where the cash was explained by contemporaneous books of account of group companies sharing the premises and the AO accepted the books' cash position. - HELD THAT: - The Tribunal noted that the Aerocity premises were common to many group companies and that the combined cash in hand as per books exceeded the cash found at the premises. The AO's factual inference of a negative difference and reliance on packaging/stapling of bundles were held irrelevant to taxability. Since the cash was recorded in books of the various group companies and documentary evidence was furnished and acknowledged, the CIT(A)'s acceptance that the cash was explained was upheld and the section 69A addition was deleted.

Decided for the assessee; addition under section 69A deleted.

Write off of business advances to subsidiary allowable as business loss if advanced in ordinary course of business and irrecoverable - Write off of advances to a subsidiary was allowable as business loss where advances were made in the ordinary course of business (within memorandum objects), became irrecoverable on factual/legal basis (including environmental clearance denial) and the AO's grounds were not pursued on appeal. - HELD THAT: - Rattanindia Power Ltd. had advanced amounts to its subsidiary for a project within its corporate objects; the subsidiary's project could not proceed due to environmental clearance refusal. The assessee obtained legal advice and wrote off amounts as irrecoverable business advances. The CIT(A) accepted these factual and documentary submissions and allowed the write offs as business loss. Revenue did not contest the merits on appeal; accordingly, the Tribunal dismissed revenue grounds as infructuous.

Decided for the assessee; write offs allowed as business loss and revenue grounds dismissed.

Protective vs substantive disallowance - AO must verify vendors and afford opportunity; reliance on investigation wing without disclosure violates natural justice - Disallowance of alleged bogus purchases (protective in vendor's hands and substantive by capitalisation/depreciation in project company's hands) was unsustainable where AO failed to make independent enquiries, did not test documentary evidence, and relied on investigation wing material not furnished to assesssee, thereby violating natural justice; corresponding depreciation disallowance also deleted. - HELD THAT: - The Tribunal examined the facts where IIC (EPC contractor) had payments to five vendors; invoices, bank evidences, PAN/VAT and other documents were produced. AO drew adverse inferences from investigation wing reports without providing those replies to the assessee or conducting vendor enquiries/site inspection. The Tribunal observed that AO's failure to verify or give opportunity to rebut third party material, and to distinguish between protective and substantive disallowance principles, rendered the additions unsustainable; Supreme Court precedents (e.g., Odeon Builders) were applied to uphold deletion by CIT(A).

Decided for the assessee; both protective additions in IIC and substantive depreciation disallowance in project company deleted.

Business loss on conversion of investment into stock in trade treated as business loss (distinct events: deemed capital loss on conversion and business loss on subsequent sale) - Loss arising from bona fide reclassification of investments (OCDs) into stock in trade and subsequent sale resulting in trading loss is a business loss; AO cannot treat the trading loss component as capital loss where the conversion and sale were distinct, documented and disclosed. - HELD THAT: - IIC converted OCD investments into stock in trade by board resolution dated 1.4.2016 thereby attracting deemed transfer (section 2(47)(iv)) and a long term capital loss; subsequently sale of the stock produced a business loss. The AO accepted the deemed capital loss but treated the subsequent trading loss as capital loss, alleging afterthought. The Tribunal upheld CIT(A)'s finding that the two events were separate and bona fide, supported by books, board resolution and audited financials, and that revision under section 139(5) was legitimately filed. Given absence of material to displace the assessee's factual case, the business loss was allowed.

Decided for the assessee; business loss on sale after conversion allowed.

Amortisation of preliminary expenses governed by amended proviso to section 35D - deduction at 1/5th - Preliminary expenses are to be amortised at 1/5th (as per proviso to section 35D(1) as amended) and AO's application of 1/10th was erroneous. - HELD THAT: - The assessee followed the amended statutory position and claimed amortisation at 1/5th. The AO applied an incorrect rate of 1/10th. The CIT(A) rectified the error by granting deduction in accordance with the amended provision. The Tribunal found no infirmity in CIT(A)'s order.

Decided for the assessee; amortisation allowed at 1/5th as per amended law.

Final Conclusion: The Tribunal allowed the assessees' appeals on multiple grounds: (i) assessments under section 153A cannot disturb concluded assessment years unless incriminating material relatable to those years is found during search; (ii) AO cannot apply Rule 8D(2)/section 14A computations without recording requisite satisfaction and any disallowance cannot exceed exempt income (and interest disallowance excluded where own funds suffice); (iii) for computation of book profits under section 115JB, actual attributable expenses must be identified (Rule 8D(2) not mechanically applied); (iv) section 69A addition for cash found was deleted as cash was accounted in group books; (v) write offs to subsidiary, protective/substantive bogus purchase additions, conversion related trading losses and preliminary expense amortisation were allowed in the factual and legal circumstances shown, with directions to the AO to identify actual attributable expenses where the assessee did not do so. The revenue grounds on these issues were dismissed to the extent recorded in the order.

Assessment of undisclosed business income as business income - deemed income under section 69A - survey under section 133A - statement on oath - claiming proportionate expenses against undisclosed receipts - set-off of unabsorbed business loss and depreciation - remand for exclusion of proportionate expenses

Assessment of undisclosed business income as business income - deemed income under section 69A - statement on oath - Characterisation of the undisclosed receipts of Rs. 7,25,03,689/- as business income rather than income from other sources or only as deemed income under section 69A. - HELD THAT: - The statement on oath recorded during the survey (answers to questions 8 and 9) recorded admission by the partner that Rs. 7,20,00,000/- arose as net unaccounted income from sale of shops in FY 2009-10 and that Rs. 5,03,689/- was excess cash found, together constituting undisclosed net business receipts of Rs. 7,25,03,689/-. The Tribunal accepted the assessee's submission (also affirmed in the survey statement) that the receipts relate to the firm's business of developing and selling shops and therefore are properly treated as business income. While the Assessing Officer and the CIT(A) had applied section 69A additions, the Tribunal treated the amount as undisclosed business income in character, noting the assessee's own admission in the survey statement and the nature of the receipts as revenue from the business activity. [Paras 11]

The undisclosed receipts of Rs. 7,25,03,689/- are to be treated as undisclosed business income for AY 2010-11.

Claiming proportionate expenses against undisclosed receipts - set-off of unabsorbed business loss and depreciation - remand for exclusion of proportionate expenses - Whether the assessee is entitled to set-off of unabsorbed business loss and depreciation against the admitted undisclosed business receipts, in view of the claim of proportionate expenses in the audited profit and loss account. - HELD THAT: - The Tribunal found a material inconsistency between the survey statement (where the assessee admitted the Rs. 7,25,03,689/- as net income with no expenses to be claimed) and the audited profit and loss account, in which the assessee included that amount in income and claimed proportionate construction and other expenses against the combined receipts. Because the audited accounts reflect claiming of proportionate expenses contrary to the survey admission, the Tribunal concluded that the correctness of expense allocation must be examined. The Tribunal therefore did not decide the quantum of set-off on the merits but remitted the matter to the Assessing Officer with a specific direction: the AO is to exclude the proportionate expenses claimed against the undisclosed income of Rs. 7,25,03,689/- and thereafter allow the assessee the benefit of set-off of unabsorbed business loss and depreciation in accordance with law; the assessee was directed to file details of the proportionate expenses claimed. [Paras 12]

Remanded to the Assessing Officer to exclude proportionate expenses claimed against the undisclosed receipts and thereafter determine and allow set-off of unabsorbed business loss/depreciation in accordance with law.

Final Conclusion: The Tribunal held that the admitted receipts of Rs. 7,25,03,689/- constitute undisclosed business income for AY 2010-11; however, because the assessee's audited accounts claimed proportionate expenses contrary to the survey admission, the matter is remitted to the Assessing Officer to exclude such proportionate expenses and thereafter determine entitlement to set-off of unabsorbed business loss and depreciation. The appeal is allowed for statistical purposes.

Deduction under section 80P(2)(a)(i) - Deduction under section 80P(2)(d) - Interest from deposits treated as "income from other sources" - Effect of insertion of sub section (4) to section 80P on co operative banks - Definition of "co operative society" for section 80P(2)(d) purposes - Conflict of non jurisdictional High Court decisions to be resolved in favour of the assessee

Deduction under section 80P(2)(a)(i) - Interest from deposits treated as "income from other sources" - Claim for deduction under section 80P(2)(a)(i) in respect of interest on fixed deposits and savings bank accounts rejected. - HELD THAT: - The Tribunal applied the Supreme Court decision in Totgars Co operative Sale Society Ltd. and the Gujarat High Court view that interest earned on deposits constitutes 'income from other sources' taxable under section 56 and does not qualify as business income for the purpose of section 80P(2)(a)(i). On that basis the assessee's primary contention for deduction under section 80P(2)(a)(i) was negatived. [Paras 7]

Deduction under section 80P(2)(a)(i) disallowed.

Deduction under section 80P(2)(d) - Effect of insertion of sub section (4) to section 80P on co operative banks - Definition of "co operative society" for section 80P(2)(d) purposes - Conflict of non jurisdictional High Court decisions to be resolved in favour of the assessee - Interest income derived by the co operative society from investments with co operative banks is eligible for deduction under section 80P(2)(d). - HELD THAT: - The Tribunal examined the language of section 80P(2)(d) which provides that interest or dividends derived by a co operative society from investments with any other co operative society shall be deducted. It held that a co operative bank remains a 'co operative society' for the purposes of clause (d) and that insertion of sub section (4) (which restricts applicability of section 80P to certain co operative banks) does not extinguish a co operative society's right to claim deduction under sub section (2)(d) in respect of interest earned from investments with a co operative bank. The Tribunal noted divergent High Court decisions on this point, observed that no contrary decision of the jurisdictional High Court was cited, and applied the principle (as stated by the Bombay High Court) of preferring non jurisdictional High Court authority favourable to the assessee. On this basis, and having regard to coordinate Tribunal and High Court decisions supporting allowance, the alternate plea under section 80P(2)(d) was accepted. [Paras 8, 9, 10, 11, 12]

Deduction under section 80P(2)(d) allowed in respect of interest earned from investments with co operative banks.

Final Conclusion: Both appeals partly allowed: claim under section 80P(2)(a)(i) rejected; deduction under section 80P(2)(d) allowed in respect of interest earned from investments with co operative banks for assessment years 2014 15 and 2015 16.

Deduction under section 80P(2)(d) - co-operative society as including co-operative bank - effect of insertion of sub section (4) of section 80P - revised computation of income regularises omitted claim - no separate form required for claim under section 80P

Deduction under section 80P(2)(d) - co-operative society as including co-operative bank - effect of insertion of sub section (4) of section 80P - Interest income earned by the assessee from deposits with cooperative banks is eligible for deduction under section 80P(2)(d). - HELD THAT: - The Tribunal examined earlier decisions of coordinate benches and High Courts and observed a divergence of authority on whether interest on deposits with cooperative banks falls within clause (d) of section 80P(2). Relying on decisions that treat a cooperative bank as a 'cooperative society' for the purposes of section 80P(2)(d) and following the principle of preferring a view favourable to the assessee when confronted with conflicting non jurisdictional High Court decisions, the Tribunal held that where it is established that the income is interest derived by a co operative society from its investments with another co operative society (including a cooperative bank registered under the Cooperative Societies Act), the deduction under section 80P(2)(d) is available. The Tribunal accordingly rejected the Revenue's reliance on subsection (4) of section 80P as not defeating the claim of the co operative society depositing funds with a cooperative bank in the facts of this case. [Paras 10]

Assessee entitled to deduction under section 80P(2)(d) in respect of interest income from cooperative banks.

Revised computation of income regularises omitted claim - no separate form required for claim under section 80P - The claim for deduction under section 80P(2)(d) made by way of a revised computation of income was admissible and not a fresh claim. - HELD THAT: - Applying the reasoning in authorities where claims omitted from the return but supported by documents on record were allowed after being regularised, the Tribunal noted that the assessee had disclosed the interest in its accounts and furnished necessary details during assessment proceedings. Since no separate statutory form or certificate is mandated for claiming deduction under section 80P, the filing of a revised computation merely regularised an existing claim evidenced in the record rather than constituting a new claim. On that basis the Tribunal allowed the claim made by the revised computation, while restricting the deduction to interest income derived from cooperative banks as determined by the Tribunal. [Paras 11]

Deduction claimed by revised computation is allowable; claim regularised and permitted to the extent indicated by the Tribunal.

Final Conclusion: Delay in filing the appeal was condoned and, on merits, the appeal was partly allowed: the assessee was held eligible for deduction under section 80P(2)(d) in respect of interest from cooperative banks and the claim made by revised computation was regularised for AY 2013-14.

Revisional jurisdiction under section 263 - limited scrutiny under CASS - binding effect of CBDT Instruction No.2/2014 - erroneous and prejudicial to Revenue

Revisional jurisdiction under section 263 - limited scrutiny under CASS - binding effect of CBDT Instruction No.2/2014 - Whether initiation of section 263 proceedings by the PCIT was valid where the Assessing Officer had conducted only limited scrutiny under CASS and the issue impugned was not part of the CASS reasons. - HELD THAT: - The Tribunal held that the assessee's case for AY 2015-16 was selected for limited scrutiny under CASS for three specified items and the issue of the alleged insurance premium (Keyman Policy) did not form part of those reasons. As CBDT Instruction No.2/2014 confines field officers to enquiries strictly within the CASS-selected reasons, the AO could not be faulted for not enquiring into the Keyman Policy amount. Because the AO acted within the scope mandated by the CBDT circular, his omission could not be characterised as an order which is "erroneous and prejudicial to the interests of the Revenue" so as to justify exercise of revisional jurisdiction under section 263. The Tribunal also relied on its earlier coordinate-bench decisions in Sanjib Kumar Khemka , M/s Chengmari Tea Co. Ltd. and Sri Hartaj Sewa Singh to record that section 263 proceedings ought not to be initiated to expand scrutiny beyond CASS-selected issues. Applying these principles, the Tribunal concluded that the very initiation of revision by issuance of the show cause notice dated 13.01.2020 was without satisfying the essential condition precedent and was therefore bad in law. [Paras 6, 8]

The show cause notice and all consequent proceedings and order of the PCIT under section 263 are quashed; the assessee's appeal is allowed.

Final Conclusion: The Tribunal quashed the initiation and consequent order under section 263 as unlawful because the AO had conducted only CASS-limited scrutiny and the impugned issue did not form part of that limited scrutiny; appeal allowed.

Quashing of FIR and criminal proceedings - Right to speedy trial under Article 21 - Maintainability of successive quashing petition after withdrawal - Prohibition on second prosecution for same allegations / second complaint - Liability of a professional / non executive director - Inherent jurisdiction of High Court under Section 482 CrPC and availability of alternative statutory remedies

Quashing of FIR and criminal proceedings - Liability of a professional / non executive director - Impugned FIR and the consequent criminal case are quashed and dismissed qua the petitioner - HELD THAT: - The Court found on the admitted and undisputed material that the petitioner was appointed as a professional director, resigned in 1995, was not involved in day to day management nor a beneficiary of company transactions, and that the FIR did not contain specific averments establishing the ingredients of the offences charged against him. On a bare perusal the complaint failed to disclose any prima facie case against the petitioner for the enumerated IPC offences; consequently continuation of proceedings against him would be an abuse of process. Applying precedents which require specific pleading of involvement of an officer and considering that the averments in the prospectus were not particularised as to any false statement attributed to the petitioner, the Court quashed the FIR and dismissed the criminal case insofar as the petitioner is concerned. [Paras 9, 21, 22]

Impugned F.I.R. I C.R. No. 192 of 2004 and Criminal Case No. 15072 of 2010 are quashed and dismissed qua the petitioner.

Right to speedy trial under Article 21 - Quashing of FIR and criminal proceedings - Delay and dormancy of the prosecution proceedings constituted a factor supporting quashment - HELD THAT: - The Court recorded that the criminal proceedings against the petitioner had been pending for over two decades and remained at the stage of prosecution evidence with virtually no progress and repeated non attendance by the complainant. Applying the settled balancing principles governing the right to a speedy trial, the Court held that the inordinate delay, absence of prosecution progress and prejudice to the petitioner (including personal hardship and impact on travel) justified quashing of proceedings in the facts of this case, consistent with authorities permitting quashment where delay amounts to abuse of process. [Paras 9, 13, 22]

The petitioner's right to a speedy trial having been infringed in the circumstances, quashment of proceedings qua the petitioner is warranted.

Maintainability of successive quashing petition after withdrawal - Inherent jurisdiction of High Court under Section 482 CrPC and availability of alternative statutory remedies - Second quashing petition filed after earlier withdrawal of a petition was held maintainable on the facts - HELD THAT: - The Court accepted that the petitioner had earlier withdrawn a petition under Section 482 but found that withdrawal is not the same as dismissal and that changed circumstances - notably the prolonged dormancy and denial of speedy trial - made a subsequent petition maintainable. The Court rejected the submission that availability of statutory remedies (such as discharge or other trial court remedies) rendered the writ/482 petition impermissible in these particular facts, relying on precedents which permit exercise of inherent jurisdiction where extraordinary circumstances or abuse of process are shown. [Paras 11, 12, 22]

The second petition under Article 226/Section 482 was maintainable and entertained in view of the changed circumstances and abuse of process demonstrated.

Prohibition on second prosecution for same allegations / second complaint - Quashing of FIR and criminal proceedings - The impugned FIR was a second complaint based on the same facts and its filing was impermissible and weighty in the decision to quash - HELD THAT: - The Court noted that a prior complaint/complaint proceedings arising from the same facts were on record and that the Registrar of Companies had earlier proceeded under the Companies Act. Relying on precedents, the Court observed that filing a second, separate FIR raising identical allegations without seeking appropriate steps in the earlier complaint amounts to an improper multiplicity of prosecutions and harassment. That consideration, together with lack of particularised averments against the petitioner, supported quashment. [Paras 15, 16, 22]

Impugned FIR, being a second complaint based on the same set of allegations and not appropriately particularised, is quashed qua the petitioner.

Release of passport and consequential reliefs - Quashing of FIR and criminal proceedings - Criminal Miscellaneous Application for retention of passport became infructuous and passport directed to be released - HELD THAT: - As a direct consequence of quashing the FIR and dismissing the criminal case against the petitioner, the Court held the Criminal Misc. Application for extension of passport retention to be rendered infructuous and directed the trial court to release the petitioner's passport forthwith. [Paras 23]

Criminal Misc. Application disposed of as infructuous and trial court directed to release the passport of the petitioner immediately.

Final Conclusion: The High Court allowed the Special Criminal Application, quashed F.I.R. I C.R. No. 192 of 2004 and dismissed Criminal Case No. 15072 of 2010 insofar as the petitioner is concerned, holding that the complaint did not disclose prima facie offences against a professional/non executive director and that prolonged delay and the complainant's conduct rendered continuation an abuse of process; consequentially the ancillary application regarding the passport was disposed of as infructuous and the passport ordered released.

Operational debt and default - pre-existing dispute - admissibility under Section 9 of the Insolvency and Bankruptcy Code, 2016 - limitation for initiation of corporate insolvency resolution process - declaration of moratorium - appointment of Interim Resolution Professional

Operational debt and default - admissibility under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The application under Section 9 is admissible because the applicant has established existence of operational debt and occurrence of default by the corporate debtor. - HELD THAT: - The Adjudicating Authority examined the documents filed by the operational creditor, including tax invoices, e-way bills, ledgers and email communications, and found that they sufficiently evidence a debt and its non-payment by the corporate debtor. Applying the tests set out in Mobilox Innovative Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the Authority was satisfied that (i) an operational debt existed, (ii) documentary evidence showed the debt to be due and payable, and (iii) no pre-existing dispute barred the claim. Consequently, the application met the statutory requirements for admission under Section 9. [Paras 13, 15, 16, 17, 18]

Application under Section 9 is admitted as the operational debt and default are established.

Pre-existing dispute - The averments relied upon by the corporate debtor do not constitute a pre-existing dispute preventing initiation of CIRP. - HELD THAT: - The respondent relied on a suit between the applicant and a third party and on ledger non-confirmation and other objections. The Authority held that the dispute with a third party (Amivarsha Industries) is not a dispute between the applicant and the corporate debtor and therefore cannot defeat the Section 9 petition. Other objections regarding ledger confirmation, alleged connectedness and mistakes in the petition were treated as fanciful and insufficient to establish a pre-existing dispute within the meaning of the Code. [Paras 12, 14, 18]

No pre-existing dispute exists that would bar admission of the Section 9 application.

Limitation for initiation of corporate insolvency resolution process - The petition is within limitation and not time-barred. - HELD THAT: - On perusal of the record, the Adjudicating Authority found that the petition was filed within the period allowed and that the claimed operational debt was not barred by limitation or any other law for the time being in force. This finding formed part of the basis for admitting the Section 9 application. [Paras 14, 18]

The application is within limitation and maintainable.

Declaration of moratorium - appointment of Interim Resolution Professional - Upon admission, moratorium is declared and an Interim Resolution Professional is appointed to conduct the CIRP. - HELD THAT: - Having admitted the petition under Section 9(5)(i), the Adjudicating Authority exercised its powers to declare the moratorium under Section 14(1) and directed public announcement and calling for claims under Section 15. The Authority appointed the named interim resolution professional to manage the corporate debtor as a going concern and directed the operational creditor to provide initial interim funds to the IRP. Directions were also issued to communicate the order to relevant authorities including the Registrar of Companies. [Paras 21, 23, 24, 25, 26]

Moratorium imposed and the named Interim Resolution Professional appointed to oversee the CIRP; directions issued for public announcement, claim submission and interim funding.

Final Conclusion: The Section 9 petition is admitted: the operational creditor established debt and default, no pre-existing dispute or limitation bar was found, moratorium is declared and the named Interim Resolution Professional is appointed to conduct the corporate insolvency resolution process.

Exclusive jurisdiction of Special Judges under the Prevention of Corruption Act - jurisdiction of Special Courts designated under the PMLA to try scheduled offences - non-obstante clause and repugnancy between special statutes - harmonious construction and later enactment principle - power of transfer under Section 44(1)(c) of the PMLA - Explanation to Section 44(1) of the PMLA (Finance (No.2) Act, 2019) - trial of both sets of offences not to be construed as joint trial

Jurisdiction of Special Courts designated under the PMLA to try scheduled offences - exclusive jurisdiction of Special Judges under the Prevention of Corruption Act - non-obstante clause and repugnancy between special statutes - harmonious construction and later enactment principle - Special Courts constituted under the PMLA have jurisdiction to try scheduled offences under the PC Act where the provisions of the PMLA (notably Section 44(1)(a) read with Section 43 and Section 71) apply. - HELD THAT: - The Court examined the language and purpose of Section 44(1) and Section 43 of the PMLA and the non-obstante clause in Section 4(1) of the PC Act. Paragraph 28 records that offences under Section 8 of the PC Act are included as "scheduled offences" under the PMLA; clause (a) of Section 44(1) therefore makes such offences triable by the Special Court constituted under the PMLA. The 2019 explanation to Section 44(1) makes clear that trial of the PMLA offence and the scheduled offence need not be a joint trial (para 30), and clause (c) permits committal of a scheduled offence to the Special Court which has taken cognizance of the PMLA offence (paras 32-33). The deletion of the word "only" by the 2013 amendment indicates that jurisdiction of other courts was not intended to be excluded but that the Special Court under the PMLA would also have jurisdiction (para 31). Applying established principles for resolving conflicts between statutes with non-obstante clauses, including the need for harmonious construction and regard to the later enactment and object of the statutes (paras 35-46), the Court concluded that insofar as the PMLA enables the Special Court to try scheduled offences and serves the purpose of a coherent adjudication of money-laundering and predicate offences, Sections 44(1)(a) and 44(1)(c) of the PMLA operate as an exception to Section 4(1) of the PC Act (paras 50-52). The Court also noted that Special Judges under the PMLA meet the judicial qualifications prescribed by Section 3(2) of the PC Act, and that procedural safeguards and other provisions of the PC Act continue to apply where relevant (para 51). [Paras 32, 33, 50, 51, 52]

The Special Court (PMLA) designated under the PMLA has jurisdiction to try the scheduled offence under the PC Act in the circumstances indicated by Sections 43 and 44 of the PMLA and the 2019 explanation; the impugned transfer was not contrary to law.

Power of transfer under Section 44(1)(c) of the PMLA - discretion of the authority authorised under the PMLA to seek committal - The authority empowered to file a complaint under the PMLA is not required to apply for committal of every predicate scheduled offence to the Special Court; the application is discretionary and should be made only where expedient in the interest of a speedy or consistent trial. - HELD THAT: - The Court endorsed the view that the authorised officer need not move an application under Section 44(1)(c) in every case (para 57). While Clause (c) plainly empowers the authorised authority to seek committal of a scheduled offence to the Special Court that has taken cognizance of the PMLA offence (paras 33, 61), the Court accepted that such an application should be made after careful consideration and only where it is necessary in the interest of a speedy trial or otherwise expedient (paras 57-59). The Court agreed with the Kerala High Court's caution that the authority must apply its mind, but rejected any broader limitation that would deny the PMLA Special Court jurisdiction as a class in cases involving the PC Act (paras 53-59). [Paras 33, 57, 58, 59, 61]

The authorised officer has discretion whether to seek committal under Section 44(1)(c); such applications should be made only in appropriate cases, but that discretion does not preclude the transfer of PC Act predicate offences to a PMLA Special Court where expedient.

Final Conclusion: The petition challenging the transfer order was dismissed. The Court upheld the transfer of the trial to the Special Court (PMLA) on the basis that Sections 43 and 44 of the PMLA (including the 2019 explanation) enable the PMLA Special Court to try specified scheduled offences under the PC Act and that the authorised officer's application for committal under Section 44(1)(c) is discretionary and to be made in appropriate cases.

Principles of Natural Justice - waiver of sales tax - requisite factual verification of tax collection - consideration of government orders in exercise of administrative discretion - remand for fresh consideration

Principles of Natural Justice - remand for fresh consideration - Impugned communication rejecting waiver was set aside for violation of Principles of Natural Justice and the matter remitted for fresh consideration. - HELD THAT: - The Court found that the Special Commissioner/Commissioner failed to carry out the factual inquiry mandated by Government orders and did not afford the petitioner an opportunity to be heard before rejecting the waiver request. The impugned order relied upon conclusions - including an inference drawn from a provision in the petitioner's balance sheet - without examining relevant documents or hearing the petitioner. In consequence, the order is vulnerable to interference on grounds of non-compliance with natural justice. The Court therefore remitted the matter to the competent officer to consider the petitioner's request afresh, with liberty to file additional representations, and directed that the respondents identify the officer to whom such representations should be sent and decide the matter within three months after allowing the petitioner one month to file further material. The Court expressly declined to express any opinion on the merits. [Paras 8, 9, 10]

Impugned communication set aside for want of hearing; matter remitted to the Special Commissioner/Commissioner (or competent officer) for fresh consideration in accordance with the specified Government Orders, subject to timelines and opportunity to the petitioner to file additional representation.

Waiver of sales tax - requisite factual verification of tax collection - consideration of government orders in exercise of administrative discretion - Determination whether the petitioner had collected tax from guests and was therefore ineligible for waiver was not decided on merits and was remanded for factual verification. - HELD THAT: - The Court identified that crucial factual questions - whether tax was billed separately or as an all-inclusive price, whether any commensurate adjustment was made during the interregnum between High Court and Supreme Court orders, whether tax was disclosed in balance sheets and income-tax returns, and whether any direct collection was effected - remained unanswered by the tax authorities. The Joint Commissioner had been directed by Government Orders to examine such records and submit findings, but that exercise was not reflected in the impugned communication. Consequently, the Court required production and examination of relevant documents and directed the tax authorities to decide entitlement to waiver (and any waiver of penalty) after applying the applicable Government Orders and verifying the facts. [Paras 5, 6, 7, 8, 10]

Issue of whether tax was collected and the petitioner's entitlement to waiver (and waiver of penalty) remitted to the tax authorities for factual verification and decision in accordance with the applicable Government Orders.

Final Conclusion: Writ petition disposed by setting aside the impugned communication for breach of natural justice and remitting the petitioner's application for waiver of sales tax (and request for waiver of penalty) for fresh consideration by the competent tax authority within three months, with liberty to the petitioner to file additional representation within one month and to be informed of the officer to whom it should be submitted.

Branch transfer vs inter-state sale - veracity of statutory delivery note (Form XX) - burden of proof on assessee to prove particulars in statutory forms - appellate authority's appreciation of documentary evidence - revisional power exercised suo motu

Branch transfer vs inter-state sale - veracity of statutory delivery note (Form XX) - appellate authority's appreciation of documentary evidence - Validity of the Joint Commissioner's revisional interference with the First Appellate Authority's acceptance of branch transfers/consignment sales over the Assessing Officer's finding of inter state sales. - HELD THAT: - The First Appellate Authority accepted documentary material, notably delivery notes in Form XX duly endorsed by the Check Post Officer and branch order records, and concluded that the transactions were branch transfers/consignment sales. Neither the Assessing Officer nor the revisional authority disputed the authenticity of those statutory delivery notes. The Court applied the principle that mere contemporaneous resale by agents or sale on the same date arriving in the other State does not convert a branch transfer/consignment into an inter state sale where documentary evidence establishes the nature of the transaction. Reliance was placed on earlier Division Bench decisions holding that the burden lies on the assessee to prove the truth of particulars in statutory forms and that, where such proof is furnished and there is no contrary material, authorities err in treating the transaction as an inter state sale. In the present case the appellate findings on the documentary evidence were rightly made and the revisional interference lacked sufficient contrary evidence to displace those findings; accordingly the revisional order was unsustainable and was set aside. [Paras 7, 8, 10, 11]

The revisional order quashing the First Appellate Authority's order is unsustainable; the appellate order holding the transactions to be branch transfers/consignment sales is restored.

Final Conclusion: Writ petition allowed; impugned revisional order set aside and the order of the First Appellate Authority dated 25.7.1997 is restored; no costs.

Disciplinary jurisdiction of a professional body - forum competence of court-appointed auditor's report - lack of locus standi - abuse of process - bar on parallel proceedings - costs and conditional bar on filing

Disciplinary jurisdiction of a professional body - forum competence of court-appointed auditor's report - Whether the Disciplinary Committee of the Institute of Chartered Accountants of India had jurisdiction to adjudicate the complaint against respondent No.3 regarding reports prepared pursuant to a High Court appointment. - HELD THAT: - The Disciplinary Committee dismissed the complaint on the ground that respondent No.3 was appointed by the High Court of Karnataka to verify books and to submit reports, and those reports were placed before and considered by the High Court. The Committee viewed that the reports were effectively the property of the High Court and that the matter was sub judice, concluding that only the High Court could pass any order on those reports and that the Committee lacked jurisdiction to continue the inquiry unless the High Court passed an order to that effect. The Court agreed with the Committee's view, noting that respondent No.3's appointment and the submission of reports to the Karnataka High Court, followed by sanction of the merger by that Court, meant the Disciplinary Committee could not appropriately continue parallel disciplinary proceedings in respect of the same reports. [Paras 9, 26, 29]

Disciplinary Committee was correct to dismiss the complaint for lack of jurisdiction to inquire into reports submitted to the Karnataka High Court.

Lack of locus standi - abuse of process - bar on parallel proceedings - Whether the petitioner had locus to challenge the reports or to initiate proceedings challenging the merger sanctioned by the Karnataka High Court. - HELD THAT: - The record shows the petitioner was neither a shareholder, director, nor otherwise connected to the companies whose accounts were scrutinised, and the Karnataka High Court held that an intervenor who raised similar objections lacked locus and had abused the process. The petitioner and his counsel were shown to have sought parallel proceedings to challenge the sanction of merger despite not being aggrieved parties. The High Court found no ground to permit the petitioner to pursue parallel proceedings in this Court or to indirectly challenge the Karnataka High Court's sanction by seeking disciplinary action against the auditor whose report had been considered by that Court. [Paras 7, 21, 23, 27, 28]

Petitioner lacks locus to challenge the reports or the merger and cannot initiate parallel proceedings; such attempts amount to abuse of process.

Costs and conditional bar on filing - Whether the petition should be dismissed with costs and whether the petitioner should be restrained from filing further petitions until earlier costs are paid. - HELD THAT: - The petition was dismissed as devoid of merit and the Court quantified costs against the petitioner. The Court further recorded that the petitioner had not paid costs previously imposed by the Division Bench and other orders; accordingly the Registry was directed not to register or list any petition or proceedings filed by the petitioner until receipts evidencing deposit of the earlier costs were enclosed. This order operates as a conditional bar on filing until compliance with the costs directions. [Paras 30, 31]

Petition dismissed with costs; petitioner restrained from filing further petitions until proof of payment of previously imposed costs is produced.

Final Conclusion: Writ petition dismissed: the Disciplinary Committee correctly refused to entertain the complaint because respondent No.3's reports were made to the Karnataka High Court pursuant to its appointment and only that Court could adjudicate upon them; the petitioner lacked locus and was attempting parallel proceedings; petition dismissed with costs and a conditional bar on filing further proceedings until earlier costs are paid.