TaxTMI Updates e-Newsletter
May 20,2021

Principles of natural justice - opportunity of personal hearing under Sections 75(4) and 126(3) of the TNGST Act - ex-parte assessment - non-application of mind - remand for fresh decision after affording personal hearing

Principles of natural justice - opportunity of personal hearing under Sections 75(4) and 126(3) of the TNGST Act - ex-parte assessment - non-application of mind - Validity of the assessment orders passed on 07.02.2020 in absence of personal hearing - HELD THAT: - The Court found that the impugned assessment orders were passed on 07.02.2020 while the notice for personal hearing was recorded only subsequently (03.12.2020), demonstrating that the assessing authority did not afford the petitioner a hearing before concluding assessment. This temporal discrepancy, together with the fact that the departmental appellate authority has itself filed appeals pointing out deficiencies in the assessment, led the Court to conclude there was total non-application of mind. The absence of a hearing where one was sought and where statutory provisions require opportunity of being heard meant the ex-parte assessments violated the principles of natural justice. The Court therefore could not sustain the assessments and directed that fresh orders be passed after affording the petitioner a personal hearing. [Paras 7, 8]

The assessment orders dated 07.02.2020 are set aside and the matters are remanded to the first respondent for fresh disposal after affording the petitioner a personal hearing within four weeks of receipt of this order.

Final Conclusion: Writ petitions allowed; impugned assessment orders of 07.02.2020 set aside and remitted to the assessing authority to pass fresh orders after providing the petitioner an opportunity of personal hearing within four weeks; no costs.

Court's power to grant interim protection from arrest - restraint on coercive action during investigation - protection from arrest subject to appearance before investigating officer - applicability of intermediary liability under the APGST Act - notice under Section 41-A Cr.P.C. - cooperation with investigation as bar to coercive action

Court's power to grant interim protection from arrest - restraint on coercive action during investigation - protection from arrest subject to appearance before investigating officer - notice under Section 41-A Cr.P.C. - cooperation with investigation as bar to coercive action - Interim restraint against coercive action including arrest of the petitioners until they appear before the investigating officer or until further orders of the Court. - HELD THAT: - The Court recorded the petitioners' submission that they are alleged to be intermediaries and denied intention to evade investigation, and the respondents' assurance that no coercive steps would be taken unless the petitioners refuse to cooperate. The respondents also placed on record issuance of a notice under Section 41-A Cr.P.C. as indicative of non-coercive intent. On these assurances and the petitioners' commitment to appear before the investigating officer on the specified dates, the Court exercised its power to grant limited interim protection and directed that no coercive action, including arrest, shall be taken against the petitioners as and when they appear on the dates indicated or such further dates, without obtaining further orders of the Court.

Investigation to continue but no coercive steps, including arrest, shall be taken against the petitioners until they appear before the investigating officer on the specified dates or until further orders of the Court.

Applicability of intermediary liability under the APGST Act - Submission regarding inapplicability of provisions of the APGST Act to the petitioners was recorded but not adjudicated on merits. - HELD THAT: - Counsel for the petitioners contended that, even accepting the allegations, the provisions of the APGST Act and Section 132 would not apply to the petitioners who are alleged to be intermediaries. The Court noted these contentions but did not pronounce any final finding on the legal applicability of the APGST Act or Section 132 to the petitioners; instead, the Court confined itself to granting interim protective relief as recorded.

Objections on the applicability of the APGST Act and Section 132 to the petitioners were recorded; no substantive adjudication was made and the matter remains open for investigation and future determination.

Final Conclusion: The petition for interim relief is allowed to the limited extent that no coercive action, including arrest, shall be taken against the petitioners as long as they appear before the investigating officer on the dates indicated or until further orders; the substantive question of applicability of the APGST Act to the petitioners was recorded but not decided.

Transitional credit under GST (TRAN-1) - technical glitches on common portal and system logs - judicial extension of time to file/revise statutory declarations - verification of genuineness of claims by revenue - Removal of difficulties under Section 172

Transitional credit under GST (TRAN-1) - technical glitches on common portal and system logs - Validity of the communication rejecting the assessee's claim to avail transitional credit on stock held on 30.06.2017 on the ground that system logs showed no technical glitch in filing TRAN-1. - HELD THAT: - The Court treated the impugned communication in the light of earlier Division Bench decisions which had confronted similar disputes and granted relief by permitting filing/revision of TRAN-1 despite expiry of the original time-limit. Having regard to that precedent and the objective of enabling transition of CENVAT/ITC from the pre-GST regime, the Court did not disturb the approach of giving assessees an opportunity to file or revise TRAN-1 even where initial rejection was recorded based on system logs. The Court therefore refused to sustain a categorical bar arising solely from portal logs where earlier judicial orders had afforded relief to similarly placed assessees. [Paras 4, 5]

The appeal against rejection was dismissed and assessees were permitted to file TRAN-1 within the time granted by the Court.

Judicial extension of time to file/revise statutory declarations - verification of genuineness of claims by revenue - Appropriateness and duration of the time extension to file/revise TRAN-1 and the scope of subsequent verification by revenue authorities. - HELD THAT: - Relying on the Division Bench's reasoning which had extended timeframes for filing TRAN-1 (after noting the sequence of statutory amendments and exercise of power under the 'removal of difficulties' provision), the Court found it appropriate to grant a limited additional period to the assessees for submission of TRAN-1. The Court left open the respondents' entitlement to have the merits and genuineness of the transitional credit claims verified by the revenue in accordance with law, thereby balancing relief to assessees with the revenue's investigatory rights. [Paras 4, 5]

Assessees granted 30 days from the date of the order to submit TRAN-1; revenue permitted to verify claims in accordance with law.

Final Conclusion: The writ appeal is dismissed. In line with earlier Division Bench orders affording similarly placed assessees an opportunity to file or revise TRAN-1 despite the expiry of prior time-limits, the Court grants the assessees 30 days from today to submit TRAN-1, while permitting the revenue to verify the genuineness of claims in accordance with law.

Detention of goods under proceedings under Section 129 of the CGST Act - error in one or two digits in the e-way bill document number - applicability of Ministry of Finance Circular dated 14.09.2018 - collection of tax and penalty contrary to administrative clarification - challenge to on-the-spot or coerced collection and right to subsequent judicial review - availability of writ remedy notwithstanding an alternative appellate remedy when no appealable order exists

Detention of goods under proceedings under Section 129 of the CGST Act - error in one or two digits in the e-way bill document number - applicability of Ministry of Finance Circular dated 14.09.2018 - collection of tax and penalty contrary to administrative clarification - Whether detention of the petitioner's consignment and the consequent collection of tax and penalty were justified despite a one digit error in the e Way Bill document number. - HELD THAT: - The notice of detention recorded that the invoice number in the Tax Invoice did not tally with the e Way Bill, the only discrepancy being that '1969' was mistyped as '1669'. The Ministry of Finance Circular dated 14.09.2018 expressly provides that proceedings under Section 129 need not be initiated where there is an 'Error in one or two digits of the document number mentioned in the e way bill.' In the present case all other particulars - including seller and destination - matched and the e Way Bill was generated on the GST Portal and IGST was accounted for. In these circumstances imposition and collection of tax and penalty for release of the goods was contrary to the administrative clarification and therefore unsustainable. The Court held that the respondents erred in collecting the tax and penalty and directed relief in accordance with the Circular, while requiring respondents to proceed as per the Circular. [Paras 10, 11, 12, 18, 19]

Detention and the collection of tax and penalty for the typographical one digit error were erroneous; respondents must act in terms of the Ministry of Finance Circular and release/refund accordingly.

Challenge to on-the-spot or coerced collection and right to subsequent judicial review - collection of tax and penalty contrary to administrative clarification - Whether the petitioner was estopped from challenging the legality of the tax and penalty after having paid them for release of urgently needed goods. - HELD THAT: - The petitioner paid the demanded tax and penalty under protest to secure release of essential raw materials and thereafter approached the Court. Precedents of this Court establish that payments made under compulsion or to secure release of goods do not preclude subsequent challenge to the legality or jurisdiction of the collection. The Court rejected the contention that the petitioner was barred from questioning the action after payment, observing that coercive or on the spot collections can be questioned later and citing earlier Division Bench decisions condemning such practices. [Paras 14, 15, 16, 17, 18]

Payment of the tax and penalty to obtain release of the goods does not estop the petitioner from challenging the legality of the collection; the challenge is maintainable.

Availability of writ remedy notwithstanding an alternative appellate remedy when no appealable order exists - Whether invocation of writ jurisdiction under Article 226 was impermissible because an appeal remedy existed. - HELD THAT: - The respondents argued that an appeal remedy precluded writ jurisdiction. The Court observed that an appeal lies only against an appealable order; in the absence of a proper order or where relief is sought against coercive executive action (detention and on the spot collection), writ jurisdiction is available. The Court proceeded to examine and decide the merits rather than reject the petition on maintainability grounds. [Paras 3, 4, 5, 14, 17]

Writ jurisdiction was appropriately invoked and the petition could be heard on merits despite the existence of statutory appellate remedies where the challenge concerned detention and coercive collection.

Final Conclusion: Writ petition allowed: respondents erred in detaining the goods and collecting tax and penalty for a typographical one digit error in the e Way Bill; petitioner may challenge payments made under compulsion; respondents to act in accordance with the Ministry of Finance Circular dated 14.09.2018 and release/refund as directed. No order as to costs.

Exemption from filing notarized affidavits - exemption from court-fee and welfare stamp - date of knowledge of the Assessing Officer - triggering point of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - duty of revenue to place on record documents and information in possession of FT and TR - interim prohibition on coercive measures by revenue

Exemption from filing notarized affidavits - Application for exemption from filing notarized affidavits was allowed subject to later compliance. - HELD THAT: - The Court granted the petitioner's request for exemption from filing notarized affidavits in the present proceedings on the condition that the petitioner shall place the notarized affidavits on record within three days of the resumption of the Court's normal functioning. The order is a conditional dispensation from the usual filing requirement rather than a waiver in perpetuity. [Paras 2, 3]

Exemption allowed subject to the petitioner filing the notarized affidavits within three days of resumption of normal court work.

Exemption from court-fee and welfare stamp - Application for exemption from payment of court-fee and welfare stamp was disposed of with a direction for subsequent compliance. - HELD THAT: - The Court did not grant a final exemption from court-fee and welfare stamp but directed that the petitioner must file the requisite court-fee and welfare stamp within three days of resumption of normal functioning of the Court. The direction postpones compliance until normal court functioning resumes and does not abrogate the obligation to pay and produce the stamps. [Paras 4]

Application disposed of with direction to file requisite court-fee and welfare stamp within three days of resumption of normal functioning.

Date of knowledge of the Assessing Officer - triggering point of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 - duty of revenue to place on record documents and information in possession of FT and TR - The court required the revenue to place on record documents and information in the possession of its FT and TR division to enable fixing the date of knowledge and to determine applicability of the Act; matter listed after issuance of notice and on filing of counter-affidavit. - HELD THAT: - The petition raises a factual and legal controversy whether the petitioner had ceased to hold the foreign asset before the Act came into force and whether the provisions of the Act are attracted; the revenue contends that the triggering point is the date the foreign asset came to the AO's notice, through information from FT and TR. The Court directed issuance of notice and ordered the revenue to file counter-affidavit(s) within six weeks, specifically to place on record the documents and information that FT and TR had, so that the date of knowledge can be fixed and the applicability of the Act examined. The Court observed that these aspects require examination on the basis of the materials to be tendered by the revenue and therefore deferred adjudication on merits pending production of those materials. [Paras 5, 6, 7, 8]

Notice issued; revenue directed to file counter-affidavit and place on record FT and TR documents within six weeks to enable determination of the date of knowledge and applicability of the Act.

Interim prohibition on coercive measures by revenue - Interim protection granted restraining respondent revenue from taking coercive measures against the petitioner until the next date of hearing. - HELD THAT: - Pending filing of counter-affidavit and further hearing, the Court directed that respondent nos. 2 to 5 (revenue) shall not take any coercive measures against the petitioner. This is an interim protective direction intended to preserve the status quo while factual materials are placed before the Court and the petition is adjudicated. [Paras 10]

Respondent nos. 2 to 5 directed not to take any coercive measures against the petitioner in the meanwhile.

Final Conclusion: Applications for temporary procedural relaxations (notarized affidavits; court-fee and welfare stamp) were allowed or disposed of subject to subsequent compliance upon resumption of court functioning. On the substantive writ, notice was issued to respondents and the revenue was directed to file counter-affidavit(s) and produce FT and TR materials within six weeks to enable fixing the date of knowledge and determine applicability of the Act; meanwhile the revenue is restrained from taking coercive measures against the petitioner and the matter is listed for further hearing.

Deduction under Section 36(1)(viia) of the Income Tax Act - deduction under Section 36(1)(vii) of the Income Tax Act - treatment of income on non-performing assets under mercantile versus cash system of accounting - application of UCO Bank Ltd. precedent - principle that a non-performing asset does not yield revenue (Section 145 context)

Deduction under Section 36(1)(viia) of the Income Tax Act - application of UCO Bank Ltd. precedent - Allowability of provision for non-performing assets debited to Profit & Loss account for AY 2010-11 - HELD THAT: - The Court accepted the coordinate bench's conclusion in ITA No.137/2015 that the provision described as 'provision for non-performing assets' was, in substance, a provision for bad and doubtful debts created in accordance with Reserve Bank of India norms and was allowable under Section 36(1)(viia) following the Supreme Court decision in UCO Bank Ltd. The concurrent findings of the Commissioner (Appeals) and the Tribunal that the provision was in pith and substance for bad and doubtful debts were held not to be perverse. The revenue's contention based on potential double deduction and interplay with actual write-offs under Section 36(1)(vii) was not entertained as falling outside the substantial question of law framed for the admitted appeal, and the coordinate bench's reasoning applying relevant precedents was treated as applicable mutatis mutandis to AY 2010-11. [Paras 4, 6, 7, 8]

Provision for non-performing assets debited to profit and loss account was held allowable in substance as a deduction under Section 36(1)(viia) for AY 2010-11; the Tribunal's and CIT(A)'s concurrent findings were upheld.

Treatment of income on non-performing assets under mercantile versus cash system of accounting - principle that a non-performing asset does not yield revenue (Section 145 context) - Permissibility of accounting interest on non-performing assets on cash basis despite following mercantile system - HELD THAT: - Relying on this Court's decision in Canfin Homes Ltd. and related authorities, the Court endorsed the view that once an asset is shown as a non-performing asset the assumption is that it is not yielding revenue; consequently accounting for interest on such assets on cash basis is permissible even where the assessee otherwise follows the mercantile system. The Tribunal and CIT(A) had recorded concurrent findings to this effect, which the Court found unassailable on the admitted substantial question of law. [Paras 5, 7, 8]

Accounting interest on non-performing assets on a cash basis was held to be proper; the Tribunal's and CIT(A)'s conclusions in favour of the assessee were affirmed.

Final Conclusion: The appeal is dismissed; the substantial question of law is answered against the revenue and in favour of the assessee for Assessment Year 2010-11, affirming the Tribunal and CIT(A) that the NPA provision was allowable under Section 36(1)(viia) and that treating income on NPAs on cash basis was permissible.

Registration under section 12A - exemption under section 11 - charitable purpose under section 2(15) - principle of consistency - finality of issues by prior judgments

Registration under section 12A - exemption under section 11 - principle of consistency - finality of issues by prior judgments - Entitlement of the assessee to registration under section 12A and consequent exemption under section 11 for the impugned assessment years. - HELD THAT: - The Tribunal declined to re-examine the substantive question of charitable status and entitlement to exemption where identical issues stood finally decided in the assessee's earlier proceedings. The assessee had been accepted as a charitable institution by the department for over two decades and the claim for registration/exemption, rejected for Asstt. Year 2011-12, was thereafter allowed by the Tribunal and that decision was sustained by the Hon'ble High Court and the Supreme Court dismissed the Department's SLP. No material was placed on record to show any change in facts or circumstances warranting departure from the earlier concluded view. Applying the principle of consistency and having regard to the finality of the prior judicial determinations in the assessee's own case, the Tribunal upheld the CIT(A)'s direction to treat the assessee as a registered charitable trust and to allow exemption under section 11. [Paras 6, 7]

Appeals of the Revenue dismissed; assessee to be treated as a registered charitable institution and allowed exemption under section 11.

Final Conclusion: The Tribunal dismissed the Revenue's appeals and affirmed the CIT(A)'s direction to recognize the assessee as a registered charitable trust under section 12A and permit exemption under section 11, relying on the prior final judicial decisions in the assessee's own case and the principle of consistency.

Deductibility of development/project cost - Commercial obligation to buyers arising from sanctioned plan - Legal obligation under sanctioned plan and HUDA norms to provide parking - Capital asset v. revenue expenditure - treatment of land used for business purpose - Taxability on subsequent sale where cost already claimed as deduction

Deductibility of development/project cost - Commercial obligation to buyers arising from sanctioned plan - Legal obligation under sanctioned plan and HUDA norms to provide parking - Capital asset v. revenue expenditure - treatment of land used for business purpose - Whether the cost of the adjacent plot of land used as parking and debited to profit and loss account by the assessee is allowable as a deduction (reduction from work-in-progress) or is a capital asset not deductible, thereby justifying the disallowance of Rs. 37,909,943. - HELD THAT: - The Tribunal found on the material on record that the assessee obtained sanction to construct the mall subject to provision of adequate parking in terms of the approved plan and HUDA norms, and sold shop/office units to buyers on that basis. The original parking area was acquired for a Metro project and the assessee received compensation; however the obligation to provide parking persisted. The assessee allotted an adjacent plot to be used for parking by the shop owners and demonstrated actual use by documentary evidence and photographs. Although title to the adjacent plot remained with the assessee and no formal transfer to a buyers' association was shown, the Tribunal held that a commercial obligation to provide parking - grounded in the sanctioned plan and the terms on which buyers purchased units - existed and had been discharged by making the plot available for parking. The cost of the plot, therefore, constituted part of the project/development cost incurred for the purpose of the assessee's business and was correctly debited to the profit and loss account rather than retained as work-in-progress. The Tribunal also observed that if the assessee were to sell the plot later, any profit would be taxable, since the cost has been allowed in the relevant year. For these reasons the AO's and CIT(A)'s disallowance was reversed and the deduction directed to be allowed. [Paras 9, 10]

Disallowance of Rs. 37,909,943 is deleted; the cost of the land used for parking is allowed as a deduction being part of project/development cost incurred to meet the assessee's legal/commercial obligation to provide parking.

Final Conclusion: The appeal is allowed: the Tribunal reversed the orders of the lower authorities and directed deletion of the addition of Rs. 37,909,943, holding that the cost of the plot used for parking is deductible as part of the project cost in assessment year 2014 - 15.

Annual value under Section 23(1)(b) - actual rent received or receivable - deduction of municipal taxes from rent - non-deductibility of society maintenance charges for computation of annual value - distinction between taxes levied by local authority and charges levied by a society

Annual value under Section 23(1)(b) - actual rent received or receivable - deduction of municipal taxes from rent - non-deductibility of society maintenance charges for computation of annual value - Whether society maintenance charges can be deducted from rental receipts in computing annual value of the property for AY 2012-13 - HELD THAT: - The Tribunal examined the lease/leave & license agreements which showed that the licensee paid fixed lump-sum license fees irrespective of outgoings and that the assessee (licensor) remained liable to pay municipal taxes and other outgoings. Section 23(1)(b) deems annual value to be the actual rent received or receivable but expressly permits deduction only of municipal taxes levied by a local authority and of rent which could not be realized. The statutory scheme does not allow other deductions from the expression "actual rent received or receivable." Allowing deduction of society maintenance charges would amount to introducing deductions not sanctioned by the statute and would permit assessees to claim any expenditure incurred against rent receipts, contrary to legislative intent. Society maintenance charges are not taxes levied by a local authority and therefore do not fall within the permissible deduction. The Tribunal also relied on its earlier decision and connected precedents that draw the same distinction and upheld the view that society maintenance charges are not allowable while municipal taxes are deductible as provided in the statute. Applying these principles to the facts, the Tribunal found no merit in the assessee's claim and affirmed the disallowance. [Paras 5, 6, 7, 8, 9]

Claim for deduction of society maintenance charges from rental income for computing annual value is disallowed; only municipal taxes (levied by a local authority) and unrealised rent are deductible under the statute.

Final Conclusion: The appeal is dismissed; society maintenance charges paid by the assessee are not deductible from rental receipts in computing annual value for AY 2012-13, while deductions expressly permitted by Section 23(1)(b) (municipal taxes and unrealised rent) remain available as provided by law.

Validity of penalty under section 271(1)(c) - Notice under section 274 read with section 271(1)(c) - Requirement to strike out inapplicable limb in penalty notice - Furnishing of inaccurate particulars of income versus concealment of income - Defect in penalty notice vitiates penalty order - Tribunal's jurisdiction to admit additional grounds of law

Validity of penalty under section 271(1)(c) - Notice under section 274 read with section 271(1)(c) - Requirement to strike out inapplicable limb in penalty notice - Furnishing of inaccurate particulars of income versus concealment of income - Defect in penalty notice vitiates penalty order - Whether penalty under section 271(1)(c) can be sustained where the notice under section 274 failed to strike out the inapplicable limb although the penalty was in fact levied for the other limb - HELD THAT: - The Tribunal examined the notices issued under section 274 which, in both assessment years, contained both limbs of section 271(1)(c) ('concealed particulars of income' and 'furnished inaccurate particulars of income') with no inapplicable limb struck off, while the additions and the penalty related only to the second limb (furnishing of inaccurate particulars). Relying on the principle that a notice must correctly charge the assessee and following the Full Bench decision of the Hon'ble Bombay High Court that a defect in the penalty notice by not striking out the inapplicable portion vitiates the penalty, the Tribunal held that such a procedural defect in the notice is fatal to the penalty order even if the Assessing Officer had recorded satisfaction for imposition of penalty. The Tribunal also admitted the additional grounds of law under the principle enunciated in National Thermal Power Co. Ltd. permitting the Tribunal to entertain a legal question not raised earlier if the relevant facts are on record. Applying these legal principles to the facts, the Tribunal concluded that the notices for both years did not correctly set out the charge and hence the penalty orders could not be sustained. [Paras 6, 7, 8]

Penalty orders under section 271(1)(c) for AY 2009-10 and AY 2011-12 are vitiated and are to be deleted because the section 274 notices did not strike out the inapplicable limb.

Final Conclusion: The appeals are allowed; the penalty confirmed by the authorities for assessment years 2009-10 and 2011-12 is deleted due to the defect in the section 274 notices which contained both limbs of section 271(1)(c) without striking out the inapplicable limb.

Recall and rectification under Section 254(2) - application of Section 50 to transfer of immovable property and block of assets - capital gains computation and deductibility of expenditure - cost of acquisition or improvement and capitalization of expenses

Recall and rectification under Section 254(2) - Application for recall/rectification of the Tribunal's earlier order dismissed. - HELD THAT: - The application under Section 254(2) sought recall/rectification of the appellate order dated 13/11/2019. The Tribunal reviewed the paper-book and the reasons recorded in the earlier order and found no mistake apparent on the face of the record warranting interference. The bench's findings on the merits of the contested contentions were supported by the record and the absence of requisite documents, and therefore did not satisfy the threshold for rectification under Section 254(2). [Paras 3, 5]

Application for recall/rectification dismissed; no error found in the earlier order.

Application of Section 50 to transfer of immovable property and block of assets - capital gains computation and deductibility of expenditure - Tribunal's finding that the assessee failed to establish that depreciation was never claimed on the immovable property and hence Section 50 treatment did not apply was upheld. - HELD THAT: - The Tribunal examined the documents on record and noted that the property was acquired on 31/12/2010, so entitlement to claim depreciation would arise for AYs 2011-12 onwards. Except for a computation for AY 2013-14, the assessee did not place computations of income for AYs 2011-12 and 2012-13 on record to demonstrate that depreciation was never claimed. The CIT(A) had made a similar observation in the impugned order. In view of the missing earlier-year computations, the Tribunal correctly concluded that the assessee had not discharged the burden of proving that the asset was outside a block of assets for the purpose of Section 50. [Paras 3]

Findings that Section 50 was not inapplicable were sustained because the assessee failed to prove absence of prior depreciation claims.

Cost of acquisition or improvement and capitalization of expenses - capital gains computation and deductibility of expenditure - Property tax and BEST (electricity) deposits were not regarded as part of the cost of acquisition or improvement for capital gains computation; deductibility governed by the statutory computational mechanism; other expenditure remained unallowable on facts for want of substantiation. - HELD THAT: - The Tribunal held that whether property tax and BEST deposits were capitalized did not determine their deductibility for computation of capital gains. Such items could not be treated as cost of acquisition or cost of improvement merely by capitalization; their treatment must follow the computational provisions of law. The Tribunal also noted that the question of allowability of other expenditures had been remitted/considered on facts and that the assessee had failed to substantiate those claims, which informed the earlier factual outcome. [Paras 4]

Property tax and BEST deposits are not part of cost of acquisition/improvement for capital gains; other expenditures disallowed for want of substantiation as recorded on the facts.

Final Conclusion: The application for recall/rectification under Section 254(2) is dismissed. The Tribunal's conclusion that the assessee failed to prove non-claim of depreciation (thereby negativing Section 50 relief) stands given the absence of earlier-year computations, and the treatment of property tax and BEST deposits as not forming part of cost of acquisition/improvement for capital gains computation is affirmed; other claimed expenditures remain unsupported on the facts.

Reopening of assessment and validity of notice under section 148 read with section 147 - assessment based on documents found during search of third party premises and applicability of section 153C - borrowed satisfaction and requirement of independent reasons to believe - addition under section 69A - unexplained money - use of valuation report/DVO report received after completion of assessment for computing consideration - restriction of addition by application of section 50C principles for capital gains computation

Assessment based on documents found during search of third party premises and applicability of section 153C - reopening of assessment and validity of notice under section 148 read with section 147 - borrowed satisfaction and requirement of independent reasons to believe - Whether reopening of assessment under section 147 (notice under section 148) was valid where reassessment was initiated on information/documents found during search of third party premises - HELD THAT: - The Tribunal held that where incriminating documents pertaining to the assessee are found during search of third party premises, the statutory scheme mandates invocation of section 153C and not section 147. Allowing reassessment under section 147 on the basis of documents found in third party search would render section 153C redundant. The Assessing Officer's reasons to believe showed reliance on information passed by the CIT(A) and additions made in the hands of the buyers, without recording independent satisfaction or separate reasons; an instance of borrowed satisfaction. The Assessing Officer also failed to produce stamped/signed sanction and did not properly dispose of the objections raised by the assessee before completing reassessment. Coordinating Tribunal decisions cited by the parties support that notices issued under section 148 and assessments under section 147 based solely on documents found during third party search are void ab initio. On these grounds the reassessment was held null and void and cross objections allowing the challenge to reopening were accepted. [Paras 9]

Reopening under section 147 (notice under section 148) was invalid as assessment was founded on documents seized from third party premises and should have been proceeded under section 153C; the reassessment is quashed.

Addition under section 69A - unexplained money - use of valuation report/DVO report received after completion of assessment for computing consideration - restriction of addition by application of section 50C principles for capital gains computation - Whether addition under section 69A - based on a valuation report/DVO report received after completion of assessment and on additions made in buyers' assessments - could be sustained in assessee's hands - HELD THAT: - The Tribunal noted that the Assessing Officer made additions under section 69A without establishing ownership or actual receipt of the alleged money by the assessee and had relied on a valuation report found during search which was not in the assessee's possession. The first appellate authority had restricted declared consideration by reference to the DVO report received after completion of assessment and confirmed a limited addition by treating higher valuation as consideration for capital gains computations. However, because the reassessment itself was quashed as invalid (being founded on third party search material and improper reopening), the revenue's appeal against the CIT(A)'s restriction did not survive. Separately, the Tribunal accepted the contention that a valuation report obtained for bank loan purposes cannot ipso facto be the yardstick for unrecorded investments and observed absence of material establishing the alleged differential receipt by the assessee. On these bases the cross objections were allowed. [Paras 9, 10]

The addition based on the valuation report and on buyers' additions does not sustain; in view of the quashing of reassessment the limited addition (and the revenue's appeal) fails and the assessee's cross objections are allowed.

Final Conclusion: The Tribunal allowed the assessee's cross objections, quashed the reassessment framed under section 147/ notice under section 148 because the proceedings were founded on documents seized from third party premises and should have proceeded under section 153C; consequentially the revenue appeal against the restricted addition was dismissed.

Transfer within meaning of section 2(47)(v) of the Income-tax Act read with section 53A of the Transfer of Property Act - allowing possession in part performance of contract - capital gain arises only on actual transfer and not on hypothetical/unrealised transaction - developer allowed entry as licensee does not amount to transfer of ownership - protective assessment - pro tanto chargeability in year of actual registered sale

Transfer within meaning of section 2(47)(v) of the Income-tax Act read with section 53A of the Transfer of Property Act - developer allowed entry as licensee does not amount to transfer of ownership - capital gain arises only on actual transfer and not on hypothetical/unrealised transaction - Deletion of addition of short term and long term capital gains in assessment year 2008-09. - HELD THAT: - The Assessing Officer invoked the definition of "transfer" under section 2(47)(v) by relying on section 53A of the Transfer of Property Act, treating the development agreements of 2008 as transfers. The Tribunal found, on the material on record, that the developer was permitted to enter the property only as a licensee and not as an owner, and that a part of the land stood declared excess under the ULC Act and was recorded in the name of the Government at the material time. In those circumstances there was no transfer of possession or rights akin to ownership in 2008; consequently section 53A could not be invoked to treat the 2008 agreements as transfer giving rise to capital gains. The Tribunal also relied on the principle, as stated by the Apex Court in the cited authority, that income from a transaction which never materialised is not taxable as capital gain. Applying these determinations, the Tribunal upheld the CIT(A)'s deletion of the additions for A.Y. 2008-09. [Paras 9, 10, 11]

Additions for capital gains in A.Y. 2008-09 deleted; no transfer took place in the year under consideration.

Pro tanto chargeability in year of actual registered sale - protective assessment - Taxability of capital gains in subsequent years arising from actual registered transfers of parts of the property. - HELD THAT: - Having held that no transfer occurred in 2008, the Tribunal addressed taxability in later years. The assessee himself transferred 80R by registered sale in June 2010 (after repeal of the ULC Act and reversion of title), which the Tribunal held constituted a transfer chargeable pro tanto in the previous year relevant to A.Y. 2011-12; the assessee conceded no tax was offered for that year. The remaining portion was transferred by registered deed on 20.04.2013 and offered by the assessee in return for A.Y. 2014-15; the Tribunal held that resultant capital gain should be charged to tax in A.Y. 2014-15. The AO is directed to take into account all earlier receipts (from the developer and from the eventual buyers) in computing capital gains for the respective years and to afford the assessee adequate opportunity of hearing. The Tribunal treated protective assessments as appropriate to keep the issue alive for those years and directed substantive assessment accordingly, subject to applicable provisions. [Paras 13, 14]

Capital gain on transfer of 80R to Akash Erectors Pvt. Ltd. chargeable in A.Y. 2011-12; remaining capital gain chargeable in A.Y. 2014-15; AO to compute with regard to earlier receipts and give hearing.

Final Conclusion: The Revenue appeal is dismissed. The additions of short term and long term capital gains for A.Y. 2008 09 are deleted as no transfer took place in that year; capital gain arising on sale of 80R in 2010 is chargeable pro tanto in A.Y. 2011 12 and the balance on the registered sale of 20.04.2013 is chargeable in A.Y. 2014 15, to be computed by the AO after affording opportunity of hearing.

Penalty under section 272A(2)(k) for late filing of TDS statements - reasonable cause under section 273B - requirement of furnishing e TDS statements and transitional technical difficulties - no loss to Revenue as relevant to mitigation of penalty - overlapping defaults - restriction of penalty to first quarter

Penalty under section 272A(2)(k) for late filing of TDS statements - reasonable cause under section 273B - Application of section 273B (reasonable cause) to penalty imposed under section 272A(2)(k) for delayed filing of e TDS statements - HELD THAT: - The Tribunal held that penalties levied under section 272A(2)(k) are subject to the proviso in section 273B and therefore a deductor who establishes reasonable cause for delayed filing of e TDS statements is not liable to such penalty. The court noted that AY 2011-12 was the first year of mandatory e filing after the IT (Sixth) Amendment Rules, 2010, and that multiple amendments and software difficulties (including about 18 corrections/amendments to the system) created genuine compliance hardships. Where taxes were deducted and deposited in time and the delay arose from technical or transitional problems in e filing, the defaults were held to be attributable to system and procedural difficulties rather than wilful non compliance; consequently reasonable cause was satisfied and penalty could be avoided under section 273B. The Tribunal distinguished cases of prolonged unexplained delay or repeated defaults where no explanation was furnished and where tax itself was not deposited in time. [Paras 6]

Section 273B is applicable to defaults under section 272A(2)(k); reasonable cause arising from e filing technical difficulties and timely deposit of TDS negates liability to penalty.

Requirement of furnishing e TDS statements and transitional technical difficulties - no loss to Revenue as relevant to mitigation of penalty - Relevance of absence of loss to Revenue and transitional technical difficulties in deciding whether penalty should be levied - HELD THAT: - The Tribunal accepted that where tax deducted at source was deposited on time and no prejudice or loss to Revenue resulted from late filing of statements, the breach was technical/venial. Given the new mandatory e filing regime for FY 2010-11 and attendant system deficiencies, the Tribunal held that such practical difficulties are a relevant element of reasonable cause under section 273B. The decision relied on precedents where penalties were deleted or restricted when the delay did not occasion revenue loss, while distinguishing authorities where delay was excessive or unexplained. [Paras 6]

Where TDS was deposited timely and no loss to Revenue resulted, technical/transitional difficulties in e filing constitute reasonable cause and weigh against imposing the penalty.

Overlapping defaults - restriction of penalty to first quarter - penalty computation and verification by Assessing Officer - Treatment of overlapping defaults when multiple quarterly e TDS statements are filed belatedly on the same date - HELD THAT: - Following the reasoning in the cited bundle of Tribunal decisions, the Tribunal observed that where all quarterly returns for an assessment year are filed belatedly on a single date, the improper overlapping of defaults should not attract separate full penalties for each quarter. The Tribunal directed that penalty, if any, should be restricted to the first quarter in default and no separate penalty should be levied for subsequent overlapping quarters. The Assessing Officer was directed to verify the assessee's claims and compute any penalty accordingly, after affording opportunity of hearing. [Paras 6]

For overlapping defaults where all quarters are filed belatedly together, restrict penalty to the first quarter; AO to verify and compute accordingly.

Penalty under section 272A(2)(k) for late filing of TDS statements - Deletion of the penalty levied on the assessee in the present appeal - HELD THAT: - Applying the foregoing principles to the facts before it - namely, that TDS was deducted and deposited in time, no loss to Revenue occurred, and the delay was attributable to e filing teething problems - the Tribunal held that the penalty levied by the AO and confirmed by the CIT(A) was not sustainable. The Tribunal relied on earlier Tribunal precedents consonant with these facts and set aside the impugned order, directing deletion of the penalty in the assessee's case. [Paras 8, 9]

Penalty levied under section 272A(2)(k) is deleted in the assessee's case; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal: holding that reasonable cause under section 273B applies to penalties under section 272A(2)(k) where e filing transitional difficulties existed and TDS was deposited in time; overlapping quarterly defaults should be restricted to the first quarter; accordingly the penalty imposed on the assessee for AY 2011-12 is deleted and the Assessing Officer is directed to act in conformity with these directions.

Applicability of tax deduction at source on payments by a joint venture to its constituent members - Disallowance under section 40(a)(ia) for failure to deduct tax - Taxability of contract receipts in the hands of joint venture vis-a -vis its members - Revenue-sharing arrangement versus subcontracting - Binding effect of coordinate bench precedent and rule of consistency

Applicability of tax deduction at source on payments by a joint venture to its constituent members - Disallowance under section 40(a)(ia) for failure to deduct tax - Taxability of contract receipts in the hands of joint venture vis-a -vis its members - Revenue-sharing arrangement versus subcontracting - Binding effect of coordinate bench precedent and rule of consistency - Whether the Assessing Officer was justified in disallowing the amounts paid by the joint venture to its members under section 40(a)(ia) on the ground that the payments amounted to sub contracts attracting TDS, or whether the receipts are taxable in the hands of the members and no disallowance is warranted in the hands of the joint venture. - HELD THAT: - The Tribunal held that on the facts the joint venture merely acted as a conduit for obtaining the contract and receiving payments which were apportioned to constituent members in proportion to work executed; there was no relationship of contractor and subcontractor between the AOP and its members. The joint venture did not retain revenue or account for expenditure or profit/loss as an independent contracting entity; tax apportionment certificates had been issued and the members had disclosed and been assessed on the receipts in their own hands. Identical factual and legal situations had been decided in favour of the assessee by coordinate-bench precedents (including Swapnil RDS JV and Shraddha & Mahalaxmi JV) and aided by CBDT guidance and other authorities cited. In these circumstances the rigours of section 40(a)(ia) were inapplicable: treating the JV as assessee in default would lead to double taxation, and the JV could not be treated as having subcontracted work to its members. Absent any fresh material distinguishing the present year, the Tribunal followed the coordinate-bench reasoning and upheld the CIT(A)'s deletion of the disallowance. [Paras 8, 9, 10]

Disallowance under section 40(a)(ia) deleted; payments to members not treated as subcontract attracting TDS and income held taxable in the hands of the members.

Final Conclusion: Following coordinate bench precedents and on the facts that receipts and corresponding tax were apportioned to and taxed in the constituent members, the Tribunal dismissed the Revenue's appeal, upheld the CIT(A)'s order and sustained deletion of the disallowance for AY 2014-15.

International transaction - Explanation to section 92B retrospective application - Arm's Length Price - corporate guarantee commission - carry forward of capital losses - adjudication of claim on merits despite absence of revised return (Goetze principle) - credit for tax on distributed profits under section 115-O

International transaction - Explanation to section 92B retrospective application - Arm's Length Price - corporate guarantee commission - Whether a corporate guarantee constitutes an international transaction and the proper quantification of ALP for corporate guarantee commission in the impugned assessment years. - HELD THAT: - The Tribunal held that a corporate guarantee is an international transaction covered by the Explanation to section 92B with retrospective effect, rejecting the assessee's contention to the contrary in light of authoritative precedent. On quantification, in absence of acceptable comparables produced by the assessee and noting that the TPO relied on Government Guarantee Policy and banking rates, the Tribunal considered the rates adopted by the parties and directed a reasonable lump-sum corporate guarantee commission of 0.9% to be applied for both A.Y. 2012-13 and A.Y. 2013-14, with computation to follow and a non precedential caveat. [Paras 3, 4]

Corporate guarantee is an international transaction; ALP for corporate guarantee commission fixed at 0.9% for A.Y. 2012-13 and A.Y. 2013-14; computation to follow.

Carry forward of capital losses - Validation of the assessee's claim for carry forward and set off of short term capital losses pertaining to earlier assessment years. - HELD THAT: - The Tribunal noted that in a related appeal for A.Y. 2011-12 (ITA No. 401/Hyd/2016) it had restored the issue of carry forward of short term losses to the Assessing Officer and that this adjudication had not been considered by lower authorities in the impugned assessment year. Applying judicial consistency, the Tribunal directed the Assessing Officer to verify necessary facts in light of the consequential adjudication in earlier assessment year(s) and allowed the ground for statistical purposes. [Paras 5]

Directed remand to the Assessing Officer to verify and decide carry forward of short term capital losses in light of earlier tribunal order; ground allowed for statistical purposes.

Adjudication of claim on merits despite absence of revised return (Goetze principle) - Whether the Assessing Officer could decline the assessee's claimed capital gains relief on the ground that no revised return was filed and whether the claim should be adjudicated on merits. - HELD THAT: - The Tribunal rejected the Revenue's reliance on the Goetze principle as a bar to adjudication of the assessee's claim by the Assessing Officer when the matter concerns appellate or substantive consideration. The Tribunal directed the Assessing Officer to adjudicate the assessee's grievance on capital gains on merits, granting the assessee three effective opportunities of hearing to present the claim. [Paras 6]

Assessing Officer to adjudicate the assessee's capital gains claim on merits within three effective hearings; appeal partly allowed on this ground.

Credit for tax on distributed profits under section 115-O - Whether the assessee is entitled to credit for tax paid on distributed profits for A.Y. 2013-14. - HELD THAT: - Counsel for the assessee conceded that the assessee would not press this ground because the due credit had already been given in subsequent assessment years. The Tribunal accordingly accepted the appeal in part on this ground and directed consequential computation as per law. [Paras 7]

Ground not pressed by assessee (credit already given later); appeal accepted in part and consequential computation to follow.

Final Conclusion: Both appeals are partly allowed: corporate guarantee treated as an international transaction and ALP fixed at 0.9% for both years with computations to follow; carry forward of short term capital losses remanded to the Assessing Officer for verification in light of an earlier tribunal order; Assessing Officer directed to adjudicate the capital gains claim on merits within three hearings; the credit on distributed profits ground is not pressed and appeal accepted in part with consequential computation. A copy of the order to be placed in the respective files.

Unexplained cash credit under section 68 - burden of proof under section 68 - identity, creditworthiness and genuineness of creditors - onus shifting to Assessing Officer - requirement of enquiry before drawing adverse inference - proviso to section 68 regarding source of source (inapplicable to AY 2009-10) - jurisdictional challenge under section 127

Unexplained cash credit under section 68 - burden of proof under section 68 - identity, creditworthiness and genuineness of creditors - onus shifting to Assessing Officer - requirement of enquiry before drawing adverse inference - proviso to section 68 regarding source of source (inapplicable to AY 2009-10) - Validity of addition made under section 68 in respect of share capital and share premium. - HELD THAT: - The Tribunal examined whether the assessee had discharged the initial onus to explain the nature and source of credit appearing as share capital and share premium. It recorded that the assessee produced PANs, share application forms, allotment letters, bank statements, audited accounts and income-tax records of the 21 subscribing companies and that 14 subscribers had scrutiny assessments under section 143(3). On this material the Tribunal held that the assessee had prima facie established the identity, creditworthiness and genuineness of the transactions and that the burden therefore shifted to the AO/CIT(A) to disprove the documents. The Tribunal applied established precedents (including principles in Lovely Exports and subsequent High Court decisions) that mere non-appearance of creditors to summons or reliance on investigatory reports, without meaningful enquiry or pointing out infirmities in the documentary evidence, is insufficient to sustain an addition. The Tribunal noted that the proviso to section 68 (requiring proof of 'source of source') introduced by Finance Act 2012 is not applicable to AY 2009-10, but that the assessee in any event had produced source-of-source material. Finding no material on record to rebut the assessee's evidence and that the AO/Ld. CIT(A) had not conducted the requisite verification or pursued available avenues of enquiry, the Tribunal concluded that the addition was based on conjecture and surmise and could not be sustained. Accordingly the addition was deleted. [Paras 43]

Addition under section 68 in respect of share capital and share premium for AY 2009-10 deleted; appeal allowed on merits.

Jurisdictional challenge under section 127 - Challenge to the jurisdiction of ITO Ward-6(1) to pass the reassessment order. - HELD THAT: - The assessee raised additional grounds contesting the competence of the ITO Ward-6(1) to pass the reassessment, alleging that no order under section 127 was communicated when the file was transferred. The Tribunal acknowledged the contention but expressly refrained from adjudicating the jurisdictional point as it became academic after deciding the addition on merits. The Tribunal therefore left the legal issue open. [Paras 44]

Jurisdictional challenge not adjudicated and left open as academic.

Final Conclusion: For AY 2009-10 the Tribunal found that the assessee discharged the initial burden under section 68 by adducing documentary evidence establishing identity, creditworthiness and genuineness of the share subscriptions; absent meaningful enquiry or rebuttal by the AO/CIT(A), the addition was unsustainable and deleted. The separate challenge to the jurisdiction of the ITO Ward-6(1) was left undecided as academic.

Long-term capital gain - short-term capital gain - transfer within the meaning of section 2(47) - right to specific performance - possession/holding period qualifying period of thirty-six months - valuation by District Valuation Officer versus Stamp Valuation Authority

Long-term capital gain - short-term capital gain - transfer within the meaning of section 2(47) - possession/holding period qualifying period of thirty-six months - right to specific performance - Whether the gain on assignment/transfer of assessee's rights in the immovable property qualified as long term capital gain or short term capital gain. - HELD THAT: - The Tribunal examined the agreements for sale dated 06.04.1993 and the conveyance deed dated 08.05.2007 together and construed them as a whole. The documents acknowledge that the assessee was in exclusive use, occupation and possession of the properties from 1993 (the agreement and conveyance refer to possession and exclusive use), and there is no stipulation in the conveyance that possession was surrendered to the owners before the later formalities. The Tribunal found clause 22 of the conveyance to be ambiguously drafted and rejected the Revenue's construction that possession and the right to specific performance crystallised only upon the alleged balance payments in 2005/2006. Applying the principles in the judgments relied upon (including the analysis in H. Anil Kumar and Ved Prakash & Sons concerning rights under agreements to sell and relinquishment/extinguishment of such rights being capital assets/transfers under the Act), the Tribunal held that the assessee's right in the property amounted to a capital asset and that the assessee had held that right for more than the statutory qualifying period of thirty six months prior to transfer. On that basis the gain arising on assignment/transfer of the right was held to be long term capital gain and not short term capital gain. [Paras 20, 23, 24, 25]

The assessee's gain on transfer of its rights in the property qualifies as long term capital gain.

Final Conclusion: The assessee's appeal is allowed: the Tribunal holds that the assessee had possession/rights in the property for the requisite period and that the gain on transfer is long term capital gain for AY 2008 09.

Breach of principles of natural justice - keeping proceedings in call book / call book practice - inordinate delay in adjudication - reactivation of proceedings after long delay - prejudice from loss of evidence and documents due to delay - quashing of demand notice for unexplained delay - application of Section 28 of the Customs Act, 1962 by analogy to Section 11A of the Central Excise Act

Keeping proceedings in call book / call book practice - inordinate delay in adjudication - breach of principles of natural justice - prejudice from loss of evidence and documents due to delay - quashing of demand notice for unexplained delay - Whether the Demand Notice dated 2.8.2007 could be adjudicated after more than eleven years when no intimation was given about keeping the proceedings in abeyance and documents relating to the notice are not traceable. - HELD THAT: - The Court held that unexplained long delay in adjudication, occasioned by consigning matters to the call book without informing the noticee, constitutes a breach of the principles of natural justice and attracts quashing of the proceedings. The reasoning follows this Court's precedents which condemn revival of long-dormant proceedings where no communication was made to the noticee and revival would cause prejudice by reason of changed circumstances, closure of units, loss or displacement of documentary evidence and unavailability of personnel. The Court observed that Section 28 of the Customs Act, 1962 is materially similar to Section 11A of the Central Excise Act and the principles laid down in decisions under Section 11A apply equally. The respondent's limited explanation of departmental reorganisation and misplacement of files did not justify the inaction or the protracted delay; allowing adjudication now would be futile and unfair. Applying these principles the Court concluded that the Demand Notice could not be validly proceeded with and must be quashed. [Paras 16, 17, 18]

Demand Notice dated 2.8.2007 quashed and set aside on account of unexplained inordinate delay, failure to inform the petitioner of abeyance, loss of relevant documents and resultant prejudice.

Final Conclusion: Writ petition allowed to the extent of quashing and setting aside Demand Notice F.No.B/E No.F-1434./02.11.04 dated 2.8.2007; no order as to costs.

Export Promotion Capital Goods (EPCG) Scheme - Export Obligation - suspension of extension of Export Obligation Period pending show cause proceedings - interference with show cause notice at preliminary stage - DGFT licensing authority's finality in matters under the Foreign Trade Policy - misuse/fabrication of export documents

Suspension of extension of Export Obligation Period pending show cause proceedings - interference with show cause notice at preliminary stage - Whether the writ court should interfere with the suspension of the amendment sheet granting extension of the Export Obligation Period while show cause proceedings relating to alleged misuse of the EPCG authorisation are pending. - HELD THAT: - The Court held that interference at the stage of a show cause notice would be premature unless the notice is shown to be wholly without jurisdiction. The suspension of the amendment sheet dated 27.11.2018 (effectively suspending the extension) followed receipt of inputs from the DRI and non compliance with a direction to produce the original EPCG authorisation; the show cause notice was thereafter issued on 05.03.2019. Reliance was placed on Apex Court precedents which caution High Courts against entertaining writs that thwart or pre empt statutory adjudicatory or investigative processes at the notice stage. Accordingly, the Court declined to grant relief by restoring or prospectively extending the EOP while the show cause proceedings remain pending, observing that any indulgence at this stage would amount to deciding merits which the adjudicating authority must first examine. [Paras 19, 20, 21]

Petition seeking restoration/extension of the Export Obligation Period was refused; the court will not interfere with the suspension while show cause proceedings are pending.

DGFT licensing authority's finality in matters under the Foreign Trade Policy - misuse/fabrication of export documents - Whether suspension of the EOP extension was justified on the material produced by the DRI alleging misuse of the EPCG scheme and fabricated export documents, and the consequence if the petitioner is subsequently exonerated. - HELD THAT: - The Court recorded that the DRI's inputs alleged fabrication of export documents and misuse of the EPCG authorisation by showing shipping bills of another firm and using the petitioner's EPCG number. The respondent authority suspended the extension after the petitioner failed to comply with a direction to produce the original authorisation. The Court observed that suspension (as distinct from final cancellation) was a permissible precaution in light of the suspicion and pending inquiry; however, if the petitioner is exonerated in the adjudicatory proceedings, it may seek reconsideration of the suspended extension by the competent authority. The Court declined to adjudicate these factual/contentionary matters which properly belong to the statutory process. [Paras 16, 17, 18, 21]

Suspension of the extension was not interfered with; if the petitioner is cleared in the show cause proceedings, it may request the authority to consider restoration of the extension.

Final Conclusion: Writ petition dismissed; no interference with the suspension of the Export Obligation extension while show cause/adjudicatory proceedings on alleged misuse of the EPCG authorisation are pending; the petitioner remains free to seek relief from the authority if exonerated in those proceedings.

Interim bail - default bail - Section 167(2) Cr.P.C. - judicial custody and extended remand - transit remand not to be included in sixty days for default bail - regular bail - bar under Section 212(6) of the Companies Act - serious economic offences affecting public interest

Interim bail - Interim bail application for release during pendency of main bail application - HELD THAT: - The Court considered medical and compassionate grounds urged for interim release but observed that the main bail application was being decided on the same day. Since the substantive bail application was being disposed of, there was no basis to grant interim relief. The interim bail application was therefore rejected as unnecessary in view of contemporaneous determination of the main bail petition. [Paras 5, 6]

Interim bail application rejected.

Default bail - Section 167(2) Cr.P.C. - judicial custody and extended remand - transit remand not to be included in sixty days for default bail - Claim for default (statutory) bail under Section 167 Cr.P.C. on the ground that complaint/charge-sheet was not processed within sixty days - HELD THAT: - The court examined the dates of custody, filing of the complaint and the legal position on computation of the sixty days period. It accepted that transit remand is excluded when calculating judicial custody but found that the complaint/police report was filed on 15.05.2020 and the sixty-day period expired on 17.05.2020. The applicant had moved for default bail on 18.05.2020, after the complaint had already been filed. The Court held that where the prosecution has filed the complaint/charge-sheet within the statutory period, a right to default bail does not accrue; remand could continue under Section 167(2) Cr.P.C. even though cognizance had not yet been taken. Consequently, the applicant's claim to default bail was rejected. [Paras 23, 24, 26]

Default bail claim rejected; judicial custody and extended remand under Section 167(2) Cr.P.C. held valid as complaint was filed within sixty days.

Regular bail - bar under Section 212(6) of the Companies Act - serious economic offences affecting public interest - Application for regular bail in proceedings under the Companies Act and related offences - HELD THAT: - On the regular bail plea the Court compared the parties' contentions and the material on record. Although the applicant had earlier been granted bail in proceedings arising from a separate CBI FIR, the Court noted that the present prosecution under the Companies Act involves serious economic offences with substantial alleged public-sector bank loss. The Court observed that the effect of the provision contained in Section 212(6) of the Companies Act (as applied by the investigating agency) and the gravity of the allegations weighed against grant of regular bail. Having regard to the nature of offences, the amount involved and the statutory bar and safeguards envisaged, the Court concluded that the applicant had not made out a case for regular bail. [Paras 27, 28, 29]

Regular bail application rejected.

Final Conclusion: Interim bail dismissed as unnecessary in view of contemporaneous disposal of the main bail petition; statutory/default bail denied because the complaint was filed within the sixty-day period and extended remand under Section 167(2) Cr.P.C. was lawful; regular bail refused on merits given the seriousness of the economic offences and the bar and safeguards under the Companies Act.

Affairs of the company conducted in a fraudulent manner - default in filing financial statements or annual returns for immediately preceding five consecutive financial years - sanction of the Central Government to institute winding up proceedings - winding up under Section 271(c) and (d) of the Companies Act, 2013 - appointment of Official Liquidator as Liquidator - restraint on disposal of assets pending winding up - costs and incidental expenses to be paid out of company assets

Affairs of the company conducted in a fraudulent manner - default in filing financial statements or annual returns for immediately preceding five consecutive financial years - sanction of the Central Government to institute winding up proceedings - winding up under Section 271(c) and (d) of the Companies Act, 2013 - Whether the company should be wound up on the grounds of fraudulent conduct and default in filing statutory returns for five consecutive financial years - HELD THAT: - The Tribunal found on the record that the company failed to file its balance sheet and annual return for the immediately preceding five or more consecutive financial years as from 31st March, 2013, had not filed Income Tax returns after 31st March, 2012 and had not been functioning for more than five subsequent financial years. The petitioner had obtained prior sanction of the Central Government to proceed. Notices and opportunities were given but the company did not respond and service attempts returned as 'addressee not found'; notices in newspapers also produced no appearance. The Tribunal accepted the petitioner's submission and the surrounding facts, including related findings of fraudulent conduct in the group pursuant to the SFIO report and prior winding up orders in related companies, and concluded that the affairs were conducted fraudulently and the management were guilty of fraud, misfeasance or misconduct. On these determinative findings the Tribunal held it proper in the interest of justice to wind up the company and accordingly ordered winding up under Section 271(c) and (d). [Paras 17, 18, 19]

Winding up of the company under Section 271(c) and (d) of the Companies Act, 2013 was ordered.

Appointment of Official Liquidator as Liquidator - possession of assets, books of accounts and records - restraint on disposal of assets pending winding up - costs and incidental expenses to be paid out of company assets - time-bound completion of winding up - Reliefs and incidental directions to be granted consequential to the winding up order - HELD THAT: - Consequent to the winding up, the Tribunal appointed the Official Liquidator attached to the High Court, Guwahati as Liquidator with directions to take immediate possession of the assets, properties and books of account of the company and to submit quarterly progress reports beginning with the quarter ending June 2021. The Tribunal further restrained the company from disposing of its assets and ordered that costs and incidental expenses of the petition be paid out of the company's assets; the Liquidator was directed to complete the winding up process within one year from the date of the order. The Registry was directed to send a copy of the order to the Liquidator by speed post and e-mail, if available. [Paras 19]

Official Liquidator appointed; assets and books to be taken into possession; restraint on disposal; costs payable from company assets; winding up to be completed within the directed time-frame.

Final Conclusion: The Tribunal allowed the petition and ordered winding up of Saradha Realtors Pvt. Ltd. under Section 271(c) and (d) of the Companies Act, 2013, appointed the Official Liquidator to take possession and oversee a time-bound winding up, restrained disposal of assets and directed costs to be met from the company's assets.

Recall of ex parte order - abeyance of main proceedings - substitution of legal representative - locus standi of legal representative - condonation of delay - qualification to file petition under sections 397/398 read with section 399 - harmonious construction of statute and rules

Recall of ex parte order - abeyance of main proceedings - substitution of legal representative - locus standi of legal representative - condonation of delay - IA No. 28 of 2020 seeking recall of the CLB order dated 08.02.2016 and interim abeyance of the main proceedings was examined and disposed of. - HELD THAT: - The Tribunal reviewed the CLB order dated 08.02.2016 which had considered and allowed the application for substitution of the legal representative (Mr. Abhay Kumar Singh) despite objections regarding delay and non-transmission of shares. The CLB had found that the applicant filed the substitution application shortly after receiving the death certificate, that the delay was minimal and adequately explained, and that there is no statutory requirement that a legal representative be a member of the company before being placed on record. Having perused the records, written submissions and the CLB's reasons, the Tribunal found no merit in the present application to recall the CLB order or to put the main petition in abeyance. The Tribunal noted that the NCLAT had directed that the parties be heard on the basis of copies of certain annexures, and that the matter has been pending for long with repeated interlocutory applications. The Tribunal therefore dismissed IA No. 28/2020 and declined to recall the CLB order or keep the main proceedings in abeyance, while warning against further frivolous delays and reserving power to take suo motu steps to protect corporate governance and justice to stakeholders. [Paras 14, 15, 18, 19]

IA No. 28/2020 is rejected and disposed of; the prayer to recall the CLB order dated 08.02.2016 and to keep the main proceedings in abeyance is refused.

Final Conclusion: The application for recall of the CLB's ex parte substitution order and for interim abeyance of the main Company Petition was dismissed; the Tribunal upheld the CLB's approach to substitution of legal representatives, declined to disturb that order, disposed IA No. 28/2020 with no costs and warned against further frivolous delay in the long-pending petition.

Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - Appointed Date - vesting of undertakings by operation of law - transfer of liabilities including taxes and pending proceedings - no immunity from stamp duty, taxes or other statutory charges - compliance with FEMA/RBI and Foreign Direct Investment requirements - compounding application under Section 441 for default in appointment of Company Secretary - statutory returns, filings and post-sanction compliance reports

Scheme of Amalgamation - sanction under Sections 230 to 232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between the transferor companies and the transferee company. - HELD THAT: - The Tribunal examined the petition, the reports of the Regional Director and ROC, objections/inputs from statutory authorities including Income Tax and CCI, the Official Liquidator's report and the material filed by the petitioners. Noting that schemes proposed for commercial expediency are ordinarily not interfered with, the Tribunal found the Scheme to be fair and reasonable and not detrimental to members, creditors or public policy. The Tribunal was satisfied that the procedural requirements under sub sections (1) and (2) of section 232 have been complied with and, accordingly, sanctioned the Scheme as prayed. [Paras 12, 13]

The Scheme of Amalgamation is sanctioned.

Appointed Date - Fixation of the Appointed Date for the Scheme of Amalgamation. - HELD THAT: - Although the petition and certain filings referred to other dates, the Tribunal expressly fixed the Appointed Date for the Scheme when sanctioning it. The appointed date as declared in the order governs the operative effect of the Scheme. [Paras 13]

The Appointed Date for the Scheme shall be 01st April, 2020.

Vesting of undertakings by operation of law - transfer of liabilities including taxes and pending proceedings - Effect of sanction on transfer and vesting of assets, liabilities and pending proceedings. - HELD THAT: - Pursuant to section 232, the Tribunal ordered that the undertakings, assets and liabilities of the transferor companies shall, without further act or deed, vest in the transferee company and that all liabilities including taxes, levies, duties and any pending proceedings by or against the transferor companies shall continue by or against the transferee company. The order emphasises that such vesting is subject to existing charges and does not preclude enforcement of liabilities by competent authorities. [Paras 13]

All assets, liabilities and pending proceedings of the transferor companies shall stand transferred to and vest in the transferee company.

No immunity from stamp duty, taxes or other statutory charges - Whether the sanction operates as exemption from payment of stamp duty, taxes or other statutory charges. - HELD THAT: - The Tribunal clarified that sanction of the Scheme is not an order granting exemption from payment of stamp duty, taxes or other charges and that such matters shall be dealt with by the respective authorities under the applicable laws and rules. This preserves the power of statutory authorities to claim dues notwithstanding the sanction. [Paras 13]

Sanctioning the Scheme does not exempt the companies from payment of stamp duty, taxes or other statutory charges.

Compliance with FEMA/RBI and Foreign Direct Investment requirements - Obligations regarding foreign investment and foreign exchange regulatory compliance arising from the issue of CCDs pursuant to the Scheme. - HELD THAT: - Given that substantial Compulsorily Convertible Debentures are to be issued and that foreign entities are involved, the Tribunal directed strict compliance with FEMA and RBI regulations and required the transferee/transferor companies to make all relevant filings under Foreign Direct Investment policy and other regulations upon completion of the merger. The Tribunal recorded the undertaking of the transferee company to comply with applicable provisions. [Paras 13]

The companies shall comply with FEMA/RBI and file all requisite FDI/foreign exchange filings as applicable.

Compounding application under Section 441 for default in appointment of Company Secretary - Remedial direction for defaults in statutory compliance relating to appointment of Company Secretary. - HELD THAT: - The ROC/RD had observed defaults in appointment of company secretaries by certain parties. The Tribunal directed Transferor Company No. 2 and the Transferee Company to file compounding applications under Section 441 of the Companies Act, 2013 to compound the offence in relation to the default in appointment of Company Secretary within thirty days of receipt of the order. [Paras 13]

Transferor Company No. 2 and the Transferee Company to file compounding applications under Section 441 within 30 days.

Statutory returns, filings and post-sanction compliance reports - Post sanction compliance obligations including filings and periodic compliance reports. - HELD THAT: - The Tribunal required the petitioner companies to lodge a certified copy of the order and Scheme with the Registrar of Companies for registration within thirty days, to file all due statutory returns immediately if any are outstanding, and to submit quarterly/annual status affidavits by the Managing Director/Director with CA/ICWA/CS certificates until compliance is ensured. The Court also directed handing over books and records of transferor companies to the transferee company after amalgamation. [Paras 13]

Petitioner companies to register the order with ROC, file outstanding statutory returns and submit periodic compliance affidavits until compliance is achieved; books to be handed over to transferee.

Preservation of action by statutory authorities - Whether sanction bars initiation or continuation of action by statutory authorities for prior violations. - HELD THAT: - The Tribunal explicitly recorded that sanction of the Scheme does not preclude the Registrar of Companies or any other authority from taking appropriate action in accordance with law for violations or offences committed prior to or during the approval process. It reiterated that sanction does not imply waiver of liabilities or bar statutory action. [Paras 12, 13]

Sanction does not prevent statutory authorities from initiating or continuing proceedings for past or ongoing violations.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation as fair and in compliance with the procedural requirements, fixed the Appointed Date as 01.04.2020, ordered vesting of assets and transfer of liabilities to the transferee company, preserved the rights of statutory authorities to claim taxes or take action for violations, directed compliance with FEMA/RBI and FDI filings, mandated filing of compounding applications for defaults in appointment of company secretary, and required registration, statutory filings and ongoing compliance reporting by the petitioner companies.

Threshold for homebuyers to initiate CIRP under the Insolvency and Bankruptcy Code after the 2019 Amendment Ordinance - decree-holder / RERA order cannot be executed by invoking corporate insolvency process under Section 7 - IBC not intended as a substitute for recovery proceedings - forum shopping - improper invocation of CIRP to enforce adjudicated relief

Threshold for homebuyers to initiate CIRP under the Insolvency and Bankruptcy Code after the 2019 Amendment Ordinance - The petitioners, being two homebuyers, did not satisfy the mandatory threshold required to file a Section 7 petition after the 2019 Amendment Ordinance and therefore the petition cannot be entertained. - HELD THAT: - The Tribunal noted that the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 permits homebuyers as financial creditors to file a petition under Section 7 jointly only if they constitute 100 homebuyers or 10% of the total homebuyers, whichever is less. In the present petition only two homebuyers approached the Tribunal, which neither amounts to 10% of the class nor to 100 homebuyers; consequently the petition is disqualified on this threshold ground and cannot be admitted under the Code. [Paras 5, 7]

Petition dismissed for failure to meet the statutory threshold for homebuyers under the 2019 Amendment Ordinance.

IBC not intended as a substitute for recovery proceedings - decree-holder / RERA order cannot be executed by invoking corporate insolvency process under Section 7 - A decree-holder seeking execution of an adjudicated amount (here, a RERA order) cannot invoke Section 7 of the IBC to initiate CIRP; IBC is not a substitute for ordinary recovery or execution proceedings. - HELD THAT: - Relying on settled law, including the principle that the IBC is not intended to replace recovery forums, the Tribunal observed that petitioners were essentially seeking execution of the RERA order. The Tribunal referred to NCLAT precedents holding that a decree-holder does not fall within the class of financial creditors for the purpose of initiating CIRP under Section 7 where the claim is an adjudicated amount, and therefore such claims cannot be converted into a financial debt triggering CIRP. Accordingly, invocation of Section 7 to execute a RERA decree is impermissible. [Paras 6, 8]

Petition not maintainable as a means to execute the RERA order; IBC cannot be used as an alternative recovery mechanism.

Forum shopping - improper invocation of CIRP to enforce adjudicated relief - The petition constitutes an attempt at forum shopping because the petitioners have an available remedy to execute the RERA order and cannot substitute that remedy by invoking CIRP. - HELD THAT: - The Tribunal recorded that the petitioners had obtained relief under the RERA and that the present proceeding under the Code was essentially an effort to execute that order via CIRP. Allowing such recourse would defeat the purpose of the statutory threshold introduced for homebuyers and permit circumvention of specialized fora and recovery mechanisms. Therefore, the petition was rejected on the ground that it is an attempt to substitute proper recovery/ execution remedies. [Paras 7, 8]

Proceedings dismissed as forum shopping; petitioners must pursue execution or other remedies available under relevant laws.

Final Conclusion: C.P. (IB) No. 49/BB/2020 stands dismissed for want of maintainability: the petitioners do not meet the post 2019 Amendment Ordinance threshold for homebuyers to invoke Section 7, and a decree holder cannot seek CIRP to execute a RERA order; petitioners remain free to pursue other remedies under law.

Pre-existing dispute - admission of debt and acknowledgement - insolvency requirement under Section 9 IBC - maintainability of petition under Section 9 IBC - limitation and fresh acknowledgement - direction to repay / settlement in lieu of CIRP

Pre-existing dispute - admission of debt and acknowledgement - Whether the reply and earlier communications of the Corporate Debtor constituted a pre-existing dispute barring initiation of proceedings under Section 9. - HELD THAT: - The Tribunal examined the correspondence relied upon by the Corporate Debtor (emails of 13.10.2015 and the Reply to the Demand Notice). While the emails record complaints about non-supply of certain supporting structures and delays, the Corporate Debtor also repeatedly acknowledged the outstanding liability by letters/emails dated 10.05.2016, 18.10.2016 and 02.02.2017. The Tribunal found that the Respondent's communications contained admissions of debt and sought time to liquidate the dues, and that the limited grievances shown in earlier emails did not, on the material before the Tribunal, constitute a pre-existing dispute which would ipso facto bar the petition under the Code. The Tribunal therefore treated the asserted dispute about completion and quality as not being a bar to the claim of debt in the summary Section 9 proceedings, given the contemporaneous and subsequent admissions of liability by the Respondent. [Paras 7, 8, 11]

The communications relied on by the Corporate Debtor did not constitute a pre-existing dispute sufficient to bar the Section 9 petition in light of the admitted acknowledgements of liability.

Insolvency requirement under Section 9 IBC - maintainability of petition under Section 9 IBC - Whether the Petitioner had established insolvency of the Corporate Debtor so as to justify invocation of CIRP under Section 9. - HELD THAT: - The Tribunal observed that the Petitioner had not placed material to establish that the Corporate Debtor was insolvent. Public records (master data on MCA) showed the Corporate Debtor as active and compliant with no charges on assets; there was no specific evidence demonstrating insolvency. The Tribunal emphasised that an undisputed debt is a sine qua non for initiating proceedings under Section 9 and that, if non-payment arises from commercial disputes or business difficulties rather than insolvency, the Adjudicating Authority should not convert Section 9 into a debt recovery forum. Given the absence of evidence of insolvency on the record, the Tribunal concluded that the petition was not a fit case for initiation of CIRP. [Paras 9]

Petitioner failed to establish insolvency of the Corporate Debtor; thus initiation of CIRP was not warranted on the material before the Tribunal.

Limitation and fresh acknowledgement - direction to repay / settlement in lieu of CIRP - Relief to be granted where debt is admitted but insolvency is not established, and effect of acknowledgements in the limitation context. - HELD THAT: - The Tribunal noted the sequence of acknowledgements of debt by the Corporate Debtor within the relevant limitation period and the Petitioner's reliance on those acknowledgements to avoid a limitation defence. Considering the admitted liability, the absence of proof of insolvency, and the broader economic context (including measures to protect businesses during the pandemic and legislative changes raising the minimum threshold for default), the Tribunal exercised its discretion to afford the Corporate Debtor an opportunity to settle the admitted debt rather than commence CIRP. The Tribunal directed that the Corporate Debtor negotiate and repay the debt or the mutually settled amount within a specified period, failing which the Petitioner would be at liberty to file a fresh petition. [Paras 8, 10, 12, 13]

Proceedings under Section 9 were disposed of with a direction that the Corporate Debtor repay the debt or the mutually agreed amount within six months, failing which the Petitioner may file a fresh petition.

Final Conclusion: The Tribunal held that the Corporate Debtor's limited complaints did not amount to a pre-existing dispute sufficient to defeat the claimed debt in the summary Section 9 proceedings, but the Petitioner failed to prove insolvency; balancing the admitted liability, lack of insolvency evidence and the prevailing economic circumstances, the Tribunal declined to initiate CIRP and directed repayment or settlement within six months, leaving the Petitioner free to refile if repayment is not made.

Pre-existing and bona fide dispute - maintainability of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - use of the IBC for recovery of disputed or time-barred debts - effect of reply to demand notice on existence of dispute

Pre-existing and bona fide dispute - maintainability of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - effect of reply to demand notice on existence of dispute - use of the IBC for recovery of disputed or time-barred debts - Whether the petition under Section 9 was maintainable in view of the existence of a pre-existing and bona fide dispute regarding the debt and default. - HELD THAT: - The Corporate Debtor filed a detailed reply to the statutory demand and produced emails and correspondence alleging that the supplied material was of poor quality, caused loss, and that credit/adjustment was sought from the Operational Creditor. The Operational Creditor admitted receipt of that reply in its affidavit under Section 9(3)(b). On these facts the Tribunal found that there existed a pre-existing and bona fide dispute about the claim and that the petition was instituted to recover a disputed amount rather than to initiate CIRP on justified grounds. In view of settled law that the IBC cannot be used to recover disputed or time-barred debts and that a genuine dispute disclosed by the Corporate Debtor defeats maintainability under Section 9, the Tribunal concluded that the petitioner failed to make out a case for initiation of CIRP. [Paras 5, 6, 7]

Petition under Section 9 dismissed for want of maintainability on account of a pre-existing and bona fide dispute; petitioner free to pursue other remedies for recovery.

Final Conclusion: The Company Petition under Section 9 of the IBC is dismissed as the claim was found to be pre existingly and bona fide disputed; the order does not preclude the petitioner from invoking other legal remedies for recovery.

Date of default/NPA as trigger for limitation - acknowledgement of debt not prerequisite for admission of claim in CIRP - admission of claims under CIRP requires documents establishing existence of debt - IRP/Resolution Professional's administrative role and lack of adjudicatory power

Date of default/NPA as trigger for limitation - admission of claims under CIRP requires documents establishing existence of debt - Limitation for admission of the applicant's claim was to be reckoned from the date of default/NPA (06.11.2019) and the claim was within limitation. - HELD THAT: - The Tribunal held that the date of default or classification as NPA is the appropriate date for computing limitation under Article 137 of the Limitation Act. The applicant had filed its claim in Form C within the period counted from the date of NPA (06.11.2019). The claim was supported by loan agreements, hypothecation agreements, deeds of guarantee and account statements which established the existence of debt and default. On that basis the claim could not be rejected as time-barred. [Paras 6]

The claim is within the period of limitation and cannot be rejected on the ground of being time-barred.

Acknowledgement of debt not prerequisite for admission of claim in CIRP - admission of claims under CIRP requires documents establishing existence of debt - Acknowledgement of debt is not a precondition for admission of the claim where the claim is supported by documents showing debt and default. - HELD THAT: - The Tribunal observed that absence of a written acknowledgement of debt does not, by itself, justify rejection of a claim if other documents (loan agreements, hypothecation agreements, deeds of guarantee, statements of account) demonstrate the debt and its default. The determinative inquiry is whether the requisite documents establishing the debt have been furnished, not solely whether an acknowledgement exists. [Paras 7]

Acknowledgement of debt is not a prerequisite to admit the claim where supporting documents establish existence of debt and default.

IRP/Resolution Professional's administrative role and lack of adjudicatory power - admission of claims under CIRP requires documents establishing existence of debt - The Resolution Professional exceeded his jurisdiction in rejecting the applicant's claim for being time-barred and for lack of acknowledgement/charge documents; those communications are set aside. - HELD THAT: - Relying on the principle that the IRP/RP's role is administrative and not adjudicatory, the Tribunal found that the RP erred in rejecting the claim on the cited grounds when the applicant had submitted the necessary documents to show debt and default and had filed the claim within the prescribed period. The communications dated 24.04.2020 and 14.06.2020 declining admission of the claim were therefore held to be erroneous and were set aside. [Paras 8, 9]

The RP's communications rejecting the claim are set aside and the IA is allowed.

Final Conclusion: The Tribunal allowed I.A. No. 90 of 2021, set aside the communications of the Resolution Professional dated 24.04.2020 and 14.06.2020, and held that the applicant's claim is within limitation and was wrongly rejected in the absence of an acknowledgement of debt where supporting documents established the debt and default.

Undisputed operational debt - default under the Insolvency and Bankruptcy Code - bonafide dispute - misuse of the IBC as a debt recovery forum - admission of petition under Section 9 - insolvency proceedings against a solvent, viable company

Undisputed operational debt - default under the Insolvency and Bankruptcy Code - Whether the petitioner established a clear and undisputed operational debt and default such as would warrant initiation of CIRP under Section 9 of the IBC. - HELD THAT: - The Tribunal applied the settled principle that an application under Section 9 requires existence of an undisputed debt and a default. Relying on the correspondence between the parties, payments made by the corporate debtor and the specific email raising quality complaints and seeking a credit note, the Tribunal found that the corporate debtor had genuinely withheld part payments and had raised a bonafide dispute regarding quality and reconciliation. The audited financial statements showed the corporate debtor to be a profitable and solvent enterprise. In these circumstances the Tribunal held that the petitioner failed to establish the necessary clear and undisputed debt and default that Section 9 contemplates; the presence of a bonafide dispute on the invoices and the corporate debtor's solvency precluded admission of the petition. [Paras 8, 9, 10, 11, 12]

The petition under Section 9 was not maintainable because there was no clear and undisputed operational debt or default.

Bonafide dispute - misuse of the IBC as a debt recovery forum - insolvency proceedings against a solvent, viable company - Whether the petition constituted an attempt to use the IBC as a mechanism for recovery of disputed dues and thereby constituted misuse of the Code against a viable company. - HELD THAT: - The Tribunal referred to controlling precedents that the IBC is not a substitute for recovery proceedings and must not be used to push otherwise solvent and viable companies into insolvency. Examining the material, including the corporate debtor's email asserting quality issues, its prior part payments and amounts withheld pending resolution, and the audited financials showing profitability and positive net worth, the Tribunal concluded that the petition sought recovery of disputed dues rather than redress for an undisputed default. Initiation of CIRP in such circumstances would amount to misuse of the Code and would defeat the legislative purpose of insolvency resolution. [Paras 7, 8, 9, 11, 12]

The petition was an impermissible attempt to use the IBC as a debt recovery forum and therefore liable to be dismissed.

Final Conclusion: The petition under Section 9 was dismissed: the claimant failed to prove an undisputed operational debt and default, and the material established a bonafide dispute and the corporate debtor's solvency such that admitting CIRP would amount to misuse of the Code.

Leave to withdraw application - withdrawal subject to payment of costs - dismissed as withdrawn - ends of justice - forum shopping (allegation)

Leave to withdraw application - ends of justice - forum shopping (allegation) - withdrawal subject to payment of costs - dismissed as withdrawn - Leave to withdraw IA No.1165/KB/2020 filed by the liquidator was permitted subject to payment of costs and consequent dismissal of the application as withdrawn. - HELD THAT: - The Bench noted that the liquidator had filed IA No.1165/KB/2020 seeking clarification notwithstanding that an appeal against the impugned order was pending before the NCLAT. The Bench observed that a seasoned professional should have refrained from pursuing both forums, and the respondent accused the liquidator of forum shopping. However, the Court declined to refuse permission to withdraw because doing so would effectively hold the appeal before the NCLAT 'hostage'. In the interests of justice the Bench allowed withdrawal of the application but imposed a conditional cost to mark the impropriety and to meet the ends of justice. The application for leave to withdraw was therefore allowed on payment of Rs. 50,000 to the PM-CARES Fund within two weeks, and IA No.1165/KB/2020 was ordered to stand dismissed as withdrawn. [Paras 8, 9]

IA No.1165/KB/2020 permitted to be withdrawn; applicant to pay costs to PM-CARES Fund within two weeks; IA No.1165/KB/2020 dismissed as withdrawn.

Final Conclusion: The liquidator was granted leave to withdraw the clarification application, on payment of a conditional cost to the PM-CARES Fund, and the application was ordered dismissed as withdrawn to avoid prejudicing the pending appeal before the NCLAT.

Approved Resolution Plan binding - Unilateral modification of Resolution Plan impermissible - Forfeiture of performance security for non-implementation - Liquidation upon failure to implement approved plan - Appointment of Liquidator and commencement of liquidation

Approved Resolution Plan binding - Unilateral modification of Resolution Plan impermissible - Whether the Resolution Applicant could unilaterally modify or delay implementation of the Resolution Plan approved by the Adjudicating Authority. - HELD THAT: - The Tribunal held that once a Resolution Plan is approved by the Committee of Creditors and the Adjudicating Authority, its terms are binding and not open to unilateral alteration by the successful Resolution Applicant. The Resolution Applicant's repeated requests for amendments and its proposed unilateral changes to major commercial terms (upfront consideration, deferred consideration, treatment of cash balances, management and control) were held impermissible. The Tribunal relied on the orders of the NCLT and NCLAT upholding the requirement that the approved plan be implemented without procrastination and noted that internal approval processes or the Resolution Applicant's foreign-fund status did not justify non-implementation. The Tribunal therefore rejected the contention that the Resolution Applicant could vary the approved plan or delay its implementation indefinitely. [Paras 10, 13, 16, 26, 33]

The Resolution Applicant cannot unilaterally modify the approved Resolution Plan and its attempts to delay or alter implementation were rejected.

Forfeiture of performance security for non-implementation - Whether the performance security deposited by the Resolution Applicant should be forfeited for failure to implement the approved Resolution Plan. - HELD THAT: - The Tribunal found that the Resolution Applicant wilfully failed to implement the approved plan despite directions by the NCLT and NCLAT and after repeated opportunities. Considering the conduct of the Resolution Applicant and the consequent prejudice to stakeholders, the Tribunal directed forfeiture of the portion of the performance security deposited (the amount recorded in the order) as a consequence of non-implementation. The forfeiture was framed as a necessary consequence of the Resolution Applicant's non-compliance with binding orders and the approved plan's timelines. [Paras 26, 27, 28]

Part of the performance security deposited by the Resolution Applicant is forfeited on account of its failure to implement the approved Resolution Plan.

Liquidation upon failure to implement approved plan - Appointment of Liquidator and commencement of liquidation - Whether the Corporate Debtor should be sent into liquidation and a liquidator appointed in view of the Resolution Applicant's failure to implement the approved plan, and whether the application to reinstate the COC and RP for inviting fresh bids should be granted. - HELD THAT: - The Tribunal examined the record of the CIRP, the limited number of genuine prospective applicants, the prolonged delay and the Resolution Applicant's refusal to implement the approved plan despite adjudicatory directions. It held that restarting the resolution process at this stage would be unconvincing and likely to frustrate Code timelines and stakeholders' certainty. Relying on the statutory scheme and judicial precedents cited in the order, the Tribunal concluded that the natural corollary of failure to secure implementation within prescribed/extended timelines is liquidation. Consequently, the IA seeking reinstatement of the COC and RP and a fresh 96-day window to invite bids was rejected. The Tribunal directed initiation of the liquidation process, cessation of moratorium, vesting of management powers in the Liquidator, issuance of public notices, and consequential administrative steps, and appointed the named liquidator from the IBBI panel to conduct the liquidation in accordance with law. [Paras 31, 32, 34, 35, 36]

The prayer to reinstate the COC/RP and invite fresh bids was rejected; the Corporate Debtor is ordered into liquidation and the nominated Liquidator is appointed to carry out the liquidation process.

Final Conclusion: The Tribunal rejected the request to reinstate the Committee of Creditors and Resolution Professional for a fresh resolution process, held that an approved Resolution Plan cannot be unilaterally modified or indefinitely delayed by the Resolution Applicant, ordered forfeiture of part of the performance security for non-implementation, and directed initiation of liquidation proceedings with appointment of the named Liquidator and consequential steps under the Code.

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and default - compliance with Form 5 and procedural completeness under the Adjudicating Authority Rules - declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and commencement of CIRP

Operational debt and default - admission of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - The petition under Section 9 was admitted on the ground that an operational debt and default were established. - HELD THAT: - The Bench evaluated the contractual relationship, purchase orders, delivery of goods, invoices and the ledger account and found that supplies were made as per purchase orders and invoices were admitted by the corporate debtor. The minutes of meeting dated 12.03.2018 recorded the corporate debtor's agreement to pay the outstanding amount with compound interest and to clear the dues by 31.05.2018. The corporate debtor failed to make payment as agreed. On these facts the Bench found that an existing operational debt exceeding the statutory threshold and a default in payment were proved and therefore the Section 9 application warranted admission. [Paras 29, 30, 31, 32, 33]

Petition under Section 9 admitted as operational debt and default are established.

Compliance with Form 5 and procedural completeness under the Adjudicating Authority Rules - The application was held to be complete and in the prescribed Form 5 under the Adjudicating Authority Rules. - HELD THAT: - The Bench examined the filing and records and found that the petition was presented in Form 5 as required by the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and that the application was complete for the purposes of consideration under Section 9(2). Consequently, there was no procedural impediment to admission. [Paras 34, 36]

Application is in proper Form 5 and is complete.

Declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - appointment of Interim Resolution Professional and commencement of CIRP - Upon admission, moratorium was declared, public announcement directed, and an Interim Resolution Professional was appointed to commence the CIRP. - HELD THAT: - Having admitted the Section 9 petition, the Bench declared moratorium as prescribed by Section 14, prohibiting institution or continuation of suits or proceedings against the corporate debtor and restraining transfer or encumbrance of assets, subject to specified exceptions. The Bench directed immediate public announcement of the initiation of CIRP and appointed the proposed Insolvency Resolution Professional as Interim Resolution Professional to carry out statutory functions and to submit compliance within 30 days. [Paras 37, 38]

Moratorium declared, public announcement directed, and IRP appointed; CIRP commenced from date of order.

Final Conclusion: The Section 9 petition filed by the operational creditor is admitted: the Tribunal found that an operational debt and default were established, the application was complete in Form 5, moratorium under Section 14 is declared, a public announcement is to be made and the named Insolvency Resolution Professional is appointed as Interim Resolution Professional to commence the CIRP.

Locus of debenture holders to file petition under Section 7 - existence of financial debt and default for initiation of CIRP - unconditional and irrevocable corporate guarantee as primary obligation - effect of event of default and premature redemption under Debenture Trust Deed - force majeure plea and its inapplicability where no contractual clause permits it - contingent payment of project management fees under escrow and non-waiver

Locus of debenture holders to file petition under Section 7 - Petition by debenture holders under Section 7 is maintainable notwithstanding that a Debenture Trustee was appointed under the Debenture Trust Deed. - HELD THAT: - The Bench held that the presence of a Debenture Trustee, appointed for the convenience and benefit of debenture holders, does not extinguish or limit the rights of the debenture holders to initiate enforcement. The Debenture Trustee acts as an agent and the Debenture Trust Deed itself contemplates that upon occurrence of an Event of Default the Debenture Holder(s), through the Trustee if so directed, are entitled to exercise rights including acceleration and enforcement. Precedent and the terms of the Trust Deed support the proposition that debenture holders have locus to pursue remedies under the Deed and under applicable law; hence the objection that only the Trustee could file the petition was rejected. [Paras 25]

Objection that only the Debenture Trustee could file the petition is rejected; debenture holders have locus to file under Section 7.

Existence of financial debt and default for initiation of CIRP - effect of event of default and premature redemption under Debenture Trust Deed - Debt and default stood established for admitting the Section 7 petition owing to non payment of interest and principal ensuing an Event of Default under the Debenture Trust Deed. - HELD THAT: - The Bench found that the petitioners had disbursed the amounts by subscription to NCDs and that LDR had repaid only a portion; interest and principal payments became due and were not paid, constituting an Event of Default under the Debenture Trust Deed. The Trust Deed (Clause 18 and related clauses) provides that upon an Event of Default outstanding amounts, including accrued interest, principal, redemption premium and default interest, become immediately due and payable and the Debenture Holders are entitled to recover monies paid towards the NCDs. On the material before the Tribunal (disbursal evidence, demand certificate and admitted defaults) the essential elements of debt and default were established and the petition was complete for admission under Section 7. [Paras 22, 26, 27]

Existence of financial debt and default established; Section 7 petition admitted.

Unconditional and irrevocable corporate guarantee as primary obligation - The Corporate Debtor is liable under the Deed of Guarantee as an unconditional, irrevocable and primary obligor/surety and therefore jointly and severally liable for the NCD outstanding amounts. - HELD THAT: - The Bench examined the terms of the Corporate Guarantee and noted Clauses (including Clause 2, 16 and 20) which render the Corporate Debtor liable not merely as a contingent surety but as if it were the principal debtor. The Corporate Debtor did not deny execution of the Guarantee or the computations of debt. Given the contractual language making the obligation unconditional and irrevocable and treating the guarantor as a primary obligor, the Corporate Debtor's contention that it is not liable was rejected. [Paras 23, 24]

Corporate Debtor held bound by the unconditional and irrevocable Deed of Guarantee and liable for the outstanding dues.

Force majeure plea and its inapplicability where no contractual clause permits it - Force majeure plea raised by the Corporate Debtor was rejected as untenable in the facts and law and could not absolve the obligation under the unconditional guarantee. - HELD THAT: - The Bench noted that the events relied upon (NGT order and subsequent notifications) pre dated execution of the Debenture Trust Deed and thus could not constitute a new, unilateral force majeure excusing performance. Moreover, force majeure relief depends on an agreed contractual clause; absent such an operative unilateral right, the Corporate Debtor could not invoke force majeure to avoid liability. The Deed of Guarantee also explicitly contemplated inability to proceed as an Event of Default, and the Corporate Debtor's obligations were unconditional irrespective of disputes. [Paras 25]

Force majeure defence rejected; it does not relieve the Corporate Debtor of liability under the Guarantee.

Contingent payment of project management fees under escrow and non-waiver - Allegation that Petitioners breached the Trust Deed by withholding Project Management fees did not absolve the Corporate Debtor; payments were contingent on actual costs and no written waiver operated to estop enforcement. - HELD THAT: - The Tribunal inspected Clause 8.8 (and related sub clauses) of the Debenture Trust Deed and concluded that payment/reimbursement of Project Management fees was subject to actual costs/expenses incurred and was to be released from the Project Escrow Account on trustee instructions. Where no actual work was carried out during certain periods, non payment of PM fees was consistent with the Deed. Further, any waiver required written authorization as per the Deed (Clause 34), and no such written waiver was shown. Thus the contention that Petitioners' alleged breach precluded enforcement of the Guarantee was rejected. [Paras 25]

Complaint of non payment of PM fees does not defeat the petition; no waiver or contractual breach by Petitioners excusing liability was established.

Final Conclusion: The Tribunal admitted the Company Petition under Section 7, recording that debt and default were established and that the Corporate Debtor was liable under an unconditional corporate guarantee; moratorium was ordered and an Interim Resolution Professional appointed to commence the CIRP from the date of the order.

Corporate Insolvency Resolution Process set aside / dismissal of CIRP - relief of Interim Resolution Professional from assignment / cessation of IRP's role - ascertainment of existence of default under Section 7(4) - time bound completion of CIRP and the 330 days principle - remand by appellate forum and annulment of admission order - allocation/settlement of CIRP costs and IRP fees

Corporate Insolvency Resolution Process set aside / dismissal of CIRP - remand by appellate forum and annulment of admission order - CIRP of Shree Sai Rolling Mills (India) Pvt. Ltd. stands set aside with effect from 20.06.2020 while the original Section 7 application by the financial creditor remains alive. - HELD THAT: - The Tribunal recorded that the Hon'ble NCLAT set aside the admission order dated 23.08.2019 and remanded the matter for fresh consideration. Consequent to the NCLAT order the CIRP that had been initiated stood set aside and the Tribunal took the position that the CIRP is treated as annulled with effect from 20.06.2020, while explicitly clarifying that the underlying Section 7 applications are not dismissed and remain pending for fresh decision in accordance with the appellate directions. The Tribunal further observed that extensive delay had already occurred and reiterated the time bound objectives of the Code, including the principle that CIRP should ordinarily be completed within the prescribed period (the 330 day principle), and directed the financial creditor to take a clear stand on prosecution of the applications. [Paras 12]

CIRP is set aside with effect from 20.06.2020; the Section 7 petition remains alive and may be pursued after outcome of appeals.

Relief of Interim Resolution Professional from assignment / cessation of IRP's role - remand by appellate forum and annulment of admission order - Anil Agarwal is relieved of his appointment as Interim Resolution Professional with effect from 20.06.2020. - HELD THAT: - The Tribunal accepted the IRP's submission that, following receipt of the NCLAT order setting aside the admission, he ceased to control the affairs of the corporate debtor and handed back management on 20.06.2020. Given the annulment of the initiation order by the appellate tribunal, the IRP's duties were held to have ended from that date and he was formally relieved of the assignment by the Tribunal. [Paras 13]

IRP is relieved from his assignment with effect from 20.06.2020.

Allocation/settlement of CIRP costs and IRP fees - time bound completion of CIRP and the 330 days principle - The claim for reimbursement of CIRP costs and IRP fees was recorded as amicably settled between the IRP and the financial creditor and is not adjudicated by this Bench; the Tribunal declined to adjudicate IRP fees when the underlying matter arises from a Section 7 application. - HELD THAT: - While earlier in proceedings the Tribunal observed that the financial creditor was to bear actual CIRP costs (excluding IRP fees) incurred between initiation and handing over, the final position recorded by the Tribunal is that the IRP and the financial creditor have settled the matter amicably. The Tribunal noted that disputes over IRP fees raised in a proceeding under Section 7 are not appropriate for adjudication in that forum and observed that such issues have been subject to higher court decisions. Accordingly, the IA seeking reimbursement was disposed of on the record of settlement and without independent adjudication of the IRP's fee claim. [Paras 14]

The claim for CIRP cost/IRP fees stands disposed of on record of amicable settlement between IRP and financial creditor; Tribunal did not adjudicate the fee claim.

Final Conclusion: The Tribunal held that the CIRP in respect of Shree Sai Rolling Mills (India) Pvt. Ltd. was set aside with effect from 20.06.2020, relieved the Interim Resolution Professional from his assignment from that date, recorded that the IRP's claims for fees/CIRP costs have been amicably settled with the financial creditor and disposed of the IA accordingly, and clarified that the underlying Section 7 petition remains pending for fresh consideration.

Abatement of duty under Rule 10 - uninstallation and sealing under Rule 6(5) proviso - presumption from official sealing order - onus on revenue to prove operation despite sealing

Uninstallation and sealing under Rule 6(5) proviso - abatement of duty under Rule 10 - presumption from official sealing order - onus on revenue to prove operation despite sealing - Whether absence of an explicit recital in the earlier sealing order that the machine was 'sealed in such a manner that it cannot be operated' disentitles the assessee to abatement under Rule 10 for the claimed periods. - HELD THAT: - The proviso to sub-rule (5) of Rule 6 contemplates that where removal of a heavy packing machine from factory premises is not feasible, the Superintendent shall uninstall and seal it in such a manner that it cannot be operated. Where the Superintendent has sealed the same machine and recorded circumstances (such as inability to remove the heavy machine) in a later sealing order, the factual situation does not alter for an earlier contiguous period when the same machine remained sealed. It was the duty of the Superintendent to record the manner of sealing, but the form of the sealing order is not within the control of the assessee. In absence of any material or allegation by the department that the sealed machine was nevertheless operated, a sealing order by the Superintendent gives rise to a presumption that the machine was rendered inoperative. The Tribunal and revenue could not deny abatement solely on the ground that the earlier order did not recite the precise words that the machine 'cannot be operated', particularly where the Commissioner(Appeals) had accepted the later explanatory sealing record and there is no evidence of continued manufacture despite sealing. Applying these principles, the Court held that the assessee was entitled to the benefit of abatement for the periods in question. [Paras 13, 14, 15, 16]

Assessee entitled to abatement for the claimed periods; denial based solely on absence of express recital that the machine 'cannot be operated' in the earlier sealing order is not permissible.

Final Conclusion: Appeals allowed; Tribunal's judgment reversed and department directed to grant abatement for the specified periods.

Pre-deposit under Section 35F of the Central Excise Act, 1944 - statutory minimum pre-deposit - registry's power to waive pre-deposit - use of Personal Ledger Account balance towards pre-deposit - jurisdiction under Article 226 of the Constitution of India

Pre-deposit under Section 35F of the Central Excise Act, 1944 - statutory minimum pre-deposit - registry's power to waive pre-deposit - jurisdiction under Article 226 of the Constitution of India - Whether the Registry of the first respondent Tribunal can waive or dispense with the statutory minimum pre-deposit required under the amended Section 35F at the stage of listing and admission of appeals. - HELD THAT: - The Court held that the amendment to the Act prescribes a statutory minimum pre-deposit (7.5% at first appeal stage and an additional 2.5% at Tribunal stage totalling 10%) which cannot be waived by the Registry. The legislative purpose of fixing a minimum is to ensure expeditious hearing and not to delegate discretion to the Registry to dispense with the statutory requirement. The Registry is not entitled to adjudicate merits and therefore cannot remit or waive the statutory minimum pre-deposit. While other High Courts have in some cases granted relief from pre-deposit, this Court declined to abrogate the statutory prescription under Article 226 and confined its intervention, observing that a challenge to the impugned communication cannot succeed insofar as it asks the Registry to waive the mandatory minimum deposit. [Paras 2, 9, 10, 11, 13]

The challenge to the Registry's communication seeking 10% pre-deposit is dismissed insofar as it seeks waiver of the statutory minimum; the Registry cannot waive the mandatory pre-deposit under Section 35F.

Use of Personal Ledger Account balance towards pre-deposit - pre-deposit under Section 35F of the Central Excise Act, 1944 - Whether amounts debited by the petitioner in its Personal Ledger Account during investigation can be treated towards the mandatory pre-deposit demanded for filing the appeal before the Tribunal. - HELD THAT: - The Court accepted the petitioner's contention that an amount had been debited in its Personal Ledger Account during investigation and directed a practical mode of compliance. The petitioner was directed to obtain from the jurisdictional Superintendent of Central Excise a certificate stating that the debited amount has not been adjusted against any duty liability nor refunded. Upon production of such certificate before the Registry of the Tribunal, the Registry shall treat that amount towards the 10% mandatory deposit under Section 35F and proceed to number and list the appeals for final hearing. The direction implements the statutory requirement by permitting available ledger balance to be utilized for the deposit subject to official certification, without purporting to waive the statutory minimum. [Paras 14, 15, 16, 17, 18]

Petitioner may obtain a certificate from the jurisdictional officer confirming the PL Account debit; on production of that certificate the Registry shall treat the certified amount towards the 10% mandatory deposit and number and list the appeals.

Final Conclusion: Writ petition disposed: statutory minimum pre-deposit under amended Section 35F cannot be waived by the Tribunal's Registry; however, upon production of a certificate from the jurisdictional officer confirming that the petitioner's Personal Ledger Account debit has not been adjusted or refunded, the Registry shall treat that amount towards the mandatory 10% deposit and proceed to number and list the appeals for final hearing.

Relegation to alternative remedy of appeal - appeal under Section 31 of the AP VAT Act, 2005 - exclusion of limitation period due to COVID-19 (Apex Court directions) - stay of coercive action

Relegation to alternative remedy of appeal - appeal under Section 31 of the AP VAT Act, 2005 - Whether the writ petition should be entertained or the petitioner should be relegated to the statutory remedy of appeal under Section 31 of the AP VAT Act, 2005. - HELD THAT: - The Court found that the petitioner has an effective alternative remedy by way of appeal to the Appellate Deputy Commissioner under Section 31 of the AP VAT Act, 2005 and, in the circumstances, declined to adjudicate the matter in writ jurisdiction. The Court observed the statutory scheme permits filing an appeal within thirty days and that the proviso empowers the appellate authority to grant an additional period of thirty days on sufficient cause. Having regard to these provisions and the availability of the statutory remedy, the writ petition was disposed of by relegating the petitioner to that remedy and directing the petitioner to file the appeal within two weeks from receipt of the order.

Writ petition disposed of and petitioner relegated to file appeal under Section 31 of the AP VAT Act, 2005 within two weeks from receipt of this order.

Exclusion of limitation period due to COVID-19 (Apex Court directions) - stay of coercive action - Whether the period of limitation is to be computed taking into account the Apex Court's order excluding the period from 15.03.2020 to 14.03.2021, and whether any immediate coercive action should be restrained. - HELD THAT: - The Court applied the directions of the Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 which excluded the period from 15.03.2020 to 14.03.2021 from computation of limitation and provided the scheme for restoration of the balance period or grant of 90 days from 15.03.2021. In view of that, and having relegated the petitioner to the appellate remedy, the Court granted limited protective relief by directing that no coercive action shall be taken against the petitioner for a period of four weeks from the date of the order to enable the petitioner to avail the appellate remedy.

Period from 15.03.2020 to 14.03.2021 excluded for computing limitation; no coercive action against the petitioner for four weeks from the date of this order.

Final Conclusion: The writ petition is disposed of by relegating the petitioner to file the statutory appeal under Section 31 of the AP VAT Act, 2005 within two weeks from receipt of this order; the Supreme Court's exclusion of limitation for 15.03.2020-14.03.2021 is applied and no coercive measures shall be taken for four weeks.

Principles of natural justice - right to inspection report - right to personal hearing - reassessment/remand for fresh consideration - prohibition on decision based solely on Enforcement Wing report

Principles of natural justice - right to inspection report - right to personal hearing - prohibition on decision based solely on Enforcement Wing report - Validity of the assessment order dated 28.03.2018 in TIN No.33633441305/2015-16 in view of non-supply of the Inspection Report and non-consideration of bank statements, and whether the order violates principles of natural justice requiring remand. - HELD THAT: - The Court found that the Assessing Authority issued a revision notice but, despite the petitioner specifically requesting the Enforcement Wing's Inspection Report to prepare further objections, passed the final order without furnishing that report. The impugned order does not record any consideration of the petitioner's request for the Inspection Report, nor does it reflect consideration of bank statements filed by the petitioner for assessment year 2015-2016. The failure to provide the Inspection Report and to consider the bank statements meant the petitioner was deprived of an opportunity to meet the case against him and of effective personal hearing. The Assessing Authority proceeded with the assessment based on the report of Enforcement Wing officials; the Court directed that such a report must not be allowed to be the controlling basis of the order without giving the assessee an opportunity to respond. For these reasons the order was held to be vitiated by breach of natural justice and set aside, with the matter remitted for fresh consideration after affording full opportunity to the petitioner to inspect the Enforcement Wing Report, file objections, and be heard.

The assessment order dated 28.03.2018 is set aside and the matter is remitted to the Assessing Authority to issue fresh notice, furnish the Enforcement Wing's Inspection Report to the petitioner, permit filing of objections and personal hearing, and decide afresh without being influenced solely by the Enforcement Wing report within four weeks.

Final Conclusion: Writ petition allowed; impugned assessment order quashed and remitted for fresh decision after furnishing the Inspection Report, considering the bank statements and affording personal hearing; matter to be decided within four weeks.

Violation of principles of natural justice - service of notice and opportunity to file objections - right to hearing - fresh assessment after granting opportunity of hearing

Violation of principles of natural justice - service of notice and opportunity to file objections - right to hearing - Assessment order passed without affording the period of 15 days stipulated in the notice amounted to violation of natural justice. - HELD THAT: - The notice (Ext.P6) expressly granted the assessee 15 days to file objections but was served only on 24.03.2021. The assessment order (Ext.P7) was passed within five days of that service. The Court found that where a notice itself prescribes a period for filing objections, that period must be afforded even if earlier attempts at service had failed or the assessee had evaded service. Passing the assessment without complying with the time stipulated in the notice offended the principles of natural justice and vitiated the assessment order. The defect was not treated as incurable; the Court observed that the revenue would not be prejudiced by setting aside the order and allowing a fresh assessment after hearing the assessee.

Ext.P7 set aside for breach of natural justice; fresh assessment directed after granting the opportunity of hearing.

Fresh assessment after granting opportunity of hearing - Direction to the assessing authority to hear the assessee afresh and to consider the request to correct the TIN in the returns. - HELD THAT: - The Court directed that the petitioner be heard by the assessing authority and that the authority pass fresh assessment orders in accordance with law after such hearing. To avoid further dispute over service, the Court treated the judgment as sufficient notice and directed the petitioner to appear on the specified date for hearing. The Assessing Officer was also required to consider the petitioner's request to correct the TIN in the returns and pass appropriate orders in law on that request, during the fresh proceedings.

Assessing authority to conduct a fresh hearing, consider TIN correction request, and pass reassessment orders in accordance with law.

Final Conclusion: The assessment order for 2017-18 (Ext.P7) was set aside for breach of natural justice; the matter is remitted to the assessing authority to afford the petitioner the stipulated opportunity to be heard, to consider correction of the TIN in returns, and to pass fresh assessment orders in accordance with law.