TaxTMI Updates e-Newsletter
May 27,2020

Direction to furnish information - inspection of premises - access with police permission - stay on coercive action for limited period - time-bound compliance and report preparation

Direction to furnish information - time-bound compliance and report preparation - Petitioner directed to furnish the information sought by the authority within a specified time and respondents directed to prepare a report within a further specified period. - HELD THAT: - The Court, after perusal of the record and hearing counsel, recorded that some information had already been furnished and that remaining information could be made available. The petitioner was therefore directed to furnish all outstanding information on or before 8th June 2020. The Court further recorded the authority's stance that after receipt of such information it would require time to prepare its report and accordingly directed that the respondents shall prepare their report by 30th June 2020. These directions impose a clear, time-bound schedule for compliance by the petitioner and subsequent action by the respondents. [Paras 6, 7]

Petitioner to furnish remaining information by 8th June 2020; respondents to prepare report by 30th June 2020.

Inspection of premises - access with police permission - Petitioner permitted to allow inspection of its office premises and to collect information with assistance of its staff; any required police permission to be granted. - HELD THAT: - The Court recognised that the outstanding information could be obtained by the authority visiting the petitioner's office premises. It directed that the authority would be at liberty to visit the premises and collect information with the assistance of necessary staff. The Court also recorded that if permission from the concerned police station is required for such a visit, that permission shall be granted to the petitioner and its staff subject to such conditions as the concerned police station deems fit. These directions facilitate on-site verification while accommodating public order requirements through police clearance if necessary. [Paras 6, 7]

Authority permitted to visit petitioner's premises to collect information with assistance of staff; police permission, if required, to be granted subject to conditions.

Stay on coercive action for limited period - No coercive steps to be taken against the petitioner by respondent no.1 for not furnishing information until a short specified date. - HELD THAT: - Balancing the parties' positions, the Court restrained the authority from taking coercive action against the petitioner for non-furnishing of information up to 10th June 2020. This limited protection provides the petitioner a brief, court-directed window to comply with the obligation while preserving the authority's power thereafter if compliance is not achieved. [Paras 7]

Respondent no.1 restrained from taking coercive steps against the petitioner until 10th June 2020.

Final Conclusion: Writ petition disposed of by consent with directions that the petitioner furnish outstanding information by 8th June 2020, permit inspection and collection of information (with police permission if required), no coercive action shall be taken until 10th June 2020, and respondents shall prepare their report by 30th June 2020; no order as to costs.

Stay of recovery - deposit as condition for stay - extension of interim stay - expeditious disposal of appeal - prevention of rendering appeal academic

Stay of recovery - deposit as condition for stay - extension of interim stay - prevention of rendering appeal academic - Whether respondent could call for payment of the balance demand after the petitioner had complied with the condition of depositing 20% and whether the interim stay should be extended pending disposal of the appeal. - HELD THAT: - The Court noted that assessment for assessment year 2016-17 was completed and a stay of recovery was granted subject to deposit of 20% of the demand until 30.09.2019. The respondent issued a notice calling for payment of the balance 80% despite the petitioner having complied with the deposit condition. The Court held that issuance of such a notice ought not to have been made once the condition for stay was fulfilled, since executing the demand would render the pending appeal an academic exercise. To meet the ends of justice, the Court extended the interim stay until the appeal is finally disposed of and directed that the appeal be decided expeditiously, preferably within three months from receipt of the judgment copy. [Paras 4, 5]

Ext.P12 calling for payment of the balance demand ought not to have been issued; the stay granted in Ext.P10 is extended until the appeal is disposed of and the appeal is to be disposed of expeditiously, preferably within three months.

Final Conclusion: Writ petition disposed of by directing expeditious disposal of the appeal (preferably within three months), extending the interim stay granted in Ext.P10 until the appeal is disposed of, and making no order as to costs.

Disallowance under section 14A read with Rule 8D - computation of interest disallowance on net basis (interest received netted against interest paid) - apportionment of expenditure where shares are held as stock in trade - only investments yielding exempt dividend to be included for average investment under Rule 8D(2) - binding precedents of the Supreme Court (Maxopp Investment) governing applicability of section 14A to stock in trade

Computation of interest disallowance on net basis (interest received netted against interest paid) - disallowance under section 14A read with Rule 8D - Whether disallowance of interest under Rule 8D(2)(ii) is to be computed after netting interest received against interest paid - HELD THAT: - Tribunal held that the disallowance under Rule 8D(2)(ii) must be computed after taking net interest (interest paid net of interest received). The view follows a consistent line of Tribunal precedents cited by the Bench which recognize the intrinsic linkage between interest income and interest expense in the assessee's accounts and require netting off for correct tax effect; where interest received exceeds interest paid, no further disallowance would be warranted. The assessee was directed to furnish particulars of interest received/paid for verification and computation by the Assessing Officer. [Paras 9]

Disallowance under Rule 8D(2)(ii) to be computed on net interest basis; Assessing Officer to recompute after verification.

Apportionment of expenditure where shares are held as stock in trade - only investments yielding exempt dividend to be included for average investment under Rule 8D(2) - binding precedents of the Supreme Court (Maxopp Investment) governing applicability of section 14A to stock in trade - Whether shares shown as stock in trade are to be excluded from 'investment' for the purposes of disallowance under section 14A read with Rule 8D - HELD THAT: - The Tribunal rejected the assessee's contention that shares shown as stock in trade are wholly immune from section 14A/Rule 8D. Relying on the Supreme Court's ratio in Maxopp Investment, the Bench held that even where shares are held as stock in trade certain exempt dividends may be earned incidentally and section 14A operates on the theory of apportionment of expenditure between taxable and exempt income. Applying this principle and following the Tribunal's precedent in REI Agro Ltd. (affirmed by the Calcutta High Court), the Tribunal directed that while apportionment is required for stock in trade, only those shares which actually yielded exempt dividend during the year are to be taken into account for computing the average value of investments under Rule 8D(2). The Coordinate Bench decision relied upon by the assessee was held to be not binding as it did not properly apply the Supreme Court precedent. [Paras 11, 13]

Section 14A read with Rule 8D applies to shares held as stock in trade by apportionment; for computation under Rule 8D(2) only shares which yielded dividend in the year are to be included.

Final Conclusion: Appeal allowed for statistical purposes: Assessing Officer directed to recompute disallowance under section 14A read with Rule 8D by (i) taking interest on a net basis (interest received offset against interest paid) and (ii) applying apportionment to stock in trade but including only those shares which yielded exempt dividend for the average investment computation.

Addition under section 69 of the Income Tax Act (unexplained cash) - peak credit theory for ascertaining unexplained investment - use of bank account as evidence of trading transactions - requirement of specific verification of recipients of cross bearer cheques before rejecting assessee's explanation

Addition under section 69 of the Income Tax Act (unexplained cash) - peak credit theory for ascertaining unexplained investment - use of bank account as evidence of trading transactions - requirement of specific verification of recipients of cross bearer cheques before rejecting assessee's explanation - Validity of the addition of Rs. 23,87,399 made by the AO under section 69 and whether the assessee's explanation of circulation/discounting of cheques could be accepted leading to application of peak credit theory. - HELD THAT: - The Tribunal examined the bank statements, the assessee's cash flow summary and the pattern of systematic withdrawals and deposits. It observed that the accounts were used for commodity trading and that the assessee consistently asserted that cheques had been discounted and the amounts re circulated for trading. The AO had relied on bank information showing cross bearer cheque clearances to conclude that cash withdrawals were not returned to the assessee and made a gross addition. The Tribunal held that before rejecting the assessee's alternative explanation the AO ought to have carried out specific verification, for example by calling persons to whom cheques were issued, to falsify the assessee's claim. In the absence of such verification and having regard to the account usage and the cash flow summary, the Tribunal found it appropriate to apply the peak credit/peak negative balance approach to determine unexplained income. On that basis the Tribunal reduced the addition to the peak negative balance of Rs. 3,51,801 (as on 5.9.2009), deleting the remainder of the AO's addition and directing the AO to compute income accordingly. [Paras 6, 7]

Addition of Rs. 23,87,399 is reduced and confirmed only to the extent of Rs. 3,51,801 (peak/negative balance); the rest is deleted and the AO is directed to compute the income accordingly.

Final Conclusion: Appeal partly allowed; concurrent addition under section 69 confirmed only to the extent of the peak/negative balance of Rs. 3,51,801 for the Assessment Year in question, with the Assessing Officer directed to compute income accordingly.

Long term capital gains exemption under Section 10(38) - Unexplained cash credit under Section 68 - Unexplained expenditure under Section 69C - Sham or arranged transactions and circumstantial evidence - Burden of proof on assessee to establish claim of exemption - Reliance on investigation and SEBI findings as corroborative material

Long term capital gains exemption under Section 10(38) - Unexplained cash credit under Section 68 - Sham or arranged transactions and circumstantial evidence - Burden of proof on assessee to establish claim of exemption - Reliance on investigation and SEBI findings as corroborative material - Genuineness of the claimed LTCG from sale of shares of Kailash Auto Finance Ltd. and whether the sale consideration should be treated as unexplained credit under Section 68, thereby rejecting exemption under Section 10(38). - HELD THAT: - The Tribunal upheld the findings of the Assessing Officer and the CIT(A) that the transactions were part of an arranged scheme to generate non-genuine long term capital gains. The authorities relied on an investigation report identifying syndicate behaviour in respect of the scrip, SEBI's findings of price manipulation and connected entities, statements recorded under the Act implicating brokers/promoters and the pattern of off market/promoters' quota acquisitions followed by sales through a single broker. Viewed cumulatively these materials constituted a chain of circumstantial evidence from which the Assessing Officer could infer that the gains were engineered and the cheque receipts were not genuine third party sale proceeds. The Tribunal applied the established principle that the onus to establish entitlement to an exemption lies on the assessee and noted that the assessee had not placed independent material to rebut the incriminating evidence. In these circumstances the Tribunal sustained the treatment of the sale consideration as unexplained credit chargeable under Section 68 and refused the claim of exemption under Section 10(38).

Claimed LTCG held non-genuine; sale consideration treated as unexplained credit under Section 68 and exemption under Section 10(38) rejected.

Unexplained expenditure under Section 69C - Sham or arranged transactions and circumstantial evidence - Whether the commission charged for arranging the alleged LTCG was an unexplained expenditure liable to be added under Section 69C. - HELD THAT: - The Tribunal accepted the view of the lower authorities that commission charged in the course of the arranged scheme was part of the contrived transaction and therefore not an ordinary business outlay supported by independent evidence. Given the finding that the entire sequence of purchases and sales was engineered to convert unaccounted money into apparent exempt gains, the Tribunal sustained the addition of the claimed commission as unexplained expenditure under Section 69C, as the assessee failed to furnish satisfactory explanation or material to displace the inference drawn from the surrounding circumstances and admissions recorded by other participants.

Commission treated as unexplained expenditure and confirmed as addition under Section 69C.

Final Conclusion: The Tribunal dismissed the appeal, confirming that the Long Term Capital Gains claimed on sale of Kailash Auto Finance Ltd. shares were non-genuine and chargeable as unexplained credit under Section 68, and that the commission for arranging such gains was an unexplained expenditure under Section 69C; the assessee failed to discharge the burden of proof to establish entitlement to exemption under Section 10(38).

Validity of assessment completed under section 153C vis-a -vis section 143(3) - protective addition in absence of substantive addition in other hands - computation of commission/profit rate on accommodation entries - treatment of unexplained bank deposits as unexplained income on protective basis - addition for unaccounted purchases - application of profit element

Validity of assessment completed under section 153C vis-a -vis section 143(3) - Whether the assessment for A.Y. 2011-12 was validly completed under section 153C despite initial objections and references to section 143(3). - HELD THAT: - The Tribunal examined order-sheet entries and records placed on file which showed that notice under section 153C had been issued and that the assessment was recorded as completed under section 153C. The assessee's additional grounds contending that assessment should have been framed under section 153C (and thus that the assessment under section 143(3) was invalid) were considered. The Tribunal found the AO had in fact taken action under section 153C (satisfaction recorded and assessment completed under section 153C), and therefore the contention was without substance. The additional grounds were therefore dismissed. [Paras 10, 11]

Additional grounds asserting invalidity of assessment for want of section 153C procedure are dismissed; assessment stands as completed under section 153C.

Computation of commission/profit rate on accommodation entries - Whether the rate of commission of 3% adopted by the AO and sustained by the CIT(A) on alleged accommodation entries is justified and what rate should be adopted. - HELD THAT: - The Tribunal noted that the AO's order did not explain the basis for adopting a 3% commission rate and observed that coordinate benches of the Tribunal have adopted commission rates in the range 0.15% to 0.5% in comparable entry-provider cases. Considering the totality of facts and the precedents cited, the Tribunal exercised its discretion to moderate the rate and directed the AO to adopt a profit/commission rate of 0.5% on the identified bank credits. The Tribunal accordingly modified the order of the CIT(A) to restrict the addition to the amount representing commission @0.5%. [Paras 17, 18]

Addition on account of commission is restricted to commission at 0.5% of the identified bank credits; the higher rate of 3% is disallowed.

Protective addition in absence of substantive addition in other hands - treatment of unexplained bank deposits as unexplained income on protective basis - Whether the protective addition of the total unexplained bank deposits in the assessee's hands is sustainable when no substantive addition has been made in any other person's hands. - HELD THAT: - The Tribunal reviewed the AO's and CIT(A)'s reasoning and applicable precedents, noting that protective additions are intended to protect the revenue where a substantive assessment/addition has been made in another hand; several decisions of coordinate benches were cited to the effect that a protective addition cannot stand in the absence of any substantive addition elsewhere. Finding that the AO had made the protective addition without any corresponding substantive assessment in any other person's hands, the Tribunal held the protective addition to be not in accordance with law and directed deletion of the protective addition of the unexplained bank deposits. [Paras 18]

Protective addition of the unexplained bank deposits is deleted because no substantive addition has been made in any other hand.

Addition for unaccounted purchases - application of profit element - Whether the addition made by the AO (and sustained by the CIT(A)) in respect of unaccounted purchases should be sustained in full or restricted to the profit element. - HELD THAT: - On review of the seized documents and the CIT(A)'s findings, the Tribunal noted that the CIT(A) had accepted that certain seized sales pages did not represent the assessee's turnover but sustained an addition of purchases shown in the seized documents. The Tribunal held that, in the absence of unaccounted stock and given the nature of the addition, only the profit element should be brought to tax. Applying a reasonable profit rate of 10% to the unaccounted purchases, the Tribunal reduced the addition accordingly and directed the AO to restrict the addition to the profit portion. [Paras 20, 22]

Addition for unaccounted purchases is restricted to the profit element at 10%; AO to assess only that reduced amount.

Final Conclusion: The appeal is partly allowed. The Tribunal upheld that the assessment proceeded under section 153C. The addition claimed as commission is restricted to commission at 0.5% of the identified bank credits; the protective addition of unexplained bank deposits is deleted for want of any substantive addition in other hands; and the addition for unaccounted purchases is limited to the profit element at 10%.

Admission of appeal despite non-payment of tax liability - deductibility of bank charges against interest income under section 57(1) of the Income tax Act - nexus/dominant purpose test for expenditure incurred to earn income

Admission of appeal despite non-payment of tax liability - Whether the Tribunal should admit and decide appeals which were not admitted by the Commissioner (Appeals) on the ground that tax due on returned income had not been paid. - HELD THAT: - The Tribunal noted the peculiar factual matrix: the assessee had died and the legal heir represented the estate; during search proceedings valuables were seized and requests to realise seized jewellery to meet tax liabilities were not acted upon by the Department; the taxes were subsequently paid from sale proceeds of house property between 18.03.2015 and 12.08.2015. In these circumstances the Tribunal exercised its jurisdiction to admit and decide the appeals on merits rather than remit them to the CIT(A). The Tribunal found no reason to set aside the matter to the CIT(A) and proceeded to decide the issues substantively. [Paras 10]

Appeals admitted and decided on merits despite earlier non-admittance by the CIT(A).

Deductibility of bank charges against interest income under section 57(1) of the Income tax Act - nexus/dominant purpose test for expenditure incurred to earn income - Whether bank charges debited by a foreign bank in relation to interest earned from foreign accounts are allowable deductions against 'income from other sources'. - HELD THAT: - The Tribunal applied the established principle that for an expenditure to be deductible under the head 'income from other sources' the dominant purpose must be to earn income and there must be a nexus between the expenditure and the income. The assessee had her foreign accounts managed by the bank which charged maintenance fees and bank charges for investing funds and generating interest; the assessee declared interest net of such charges. The Tribunal observed that similar claims for later years had been allowed by the Commissioner (Appeals) and were not contested by the Revenue. Concluding that the bank charges were incurred solely and exclusively for earning the interest income and were not capital or personal in nature, the Tribunal held the bank charges to be allowable deductions and directed the Assessing Officer to allow them. [Paras 13]

Bank charges are allowable as deduction against interest income; Assessing Officer directed to allow the deduction.

Final Conclusion: In view of the admitted payments and the peculiar facts including the assessee's death and subsequent payment of tax, the Tribunal admitted the appeals and on merits held that the bank charges paid to the foreign bank are deductible against the interest income; all appeals are allowed.

Arm's length price - transfer pricing adjustment - deduction under section 10A/10AA of the Act - working capital adjustment - operating income - treatment of foreign exchange gains - comparability of comparable companies - application of export filter to comparables - proviso to section 92C(4) - non attraction where arm's length price is declared by the assessee

Deduction under section 10A/10AA of the Act - transfer pricing adjustment - proviso to section 92C(4) - non attraction where arm's length price is declared by the assessee - Entitlement to deduction under section 10AA in respect of voluntary transfer pricing adjustment made by the assessee. - HELD THAT: - The Tribunal accepted that the assessee voluntarily offered a transfer pricing adjustment and added it to its returned income. The DRP disallowed the 10AA deduction on the grounds that (a) details of the voluntary adjustment were not furnished, (b) export proceeds in foreign exchange would not be brought to India within the period prescribed by section 10AA, and (c) the eligible unit had incurred losses. The Tribunal examined precedent, including the Tribunal decisions in iGate Global Solutions Ltd and Apoorva Systems (P) Ltd and the Karnataka High Court's decision upholding iGate, and concluded that the proviso to section 92C(4) (which bars deductions where income is enhanced by a determination of arm's length price by the assessing authority) does not apply where the assessee itself has computed and offered the arm's length adjustment. The Tribunal found that the voluntary adjustment formed part of the assessee's business profits and, on that basis, the deduction under section 10AA was allowable. The DRP's findings about alleged non furnishing of details and foreign exchange repatriation were rejected in light of the assessee's computation and offered income and the binding precedents relied upon. [Paras 17, 18, 19]

Assessee entitled to deduction under section 10AA in respect of voluntary transfer pricing adjustment; direction to allow deduction.

Comparability of comparable companies - transfer pricing adjustment - Exclusion of specific comparable companies (M/s E Clerx Services Ltd and M/s Acropetal Technologies Ltd) from the comparable set. - HELD THAT: - The Tribunal upheld the DRP's exclusion of M/s E Clerx Services Ltd because judicial precedents (a Special Bench and co ordinate benches) have treated that company as providing high end/KPO services and therefore functionally dissimilar to the assessee's low end ITES/BPO activities. Similarly, the Tribunal upheld exclusion of M/s Acropetal Technologies Ltd on the basis of consistent co ordinate bench holdings and examination of the company's annual report showing significant software/engineering design activity, making it functionally different from the assessee's low end ITES functions. [Paras 8, 9]

DRP's exclusion of E Clerx Services Ltd and Acropetal Technologies Ltd from the comparable set upheld.

Working capital adjustment - Correction of working capital adjustment computation directed by the DRP. - HELD THAT: - The TPO had computed a working capital adjustment (noted at 0.23% in the order) and the assessee contended a different computation (0.64). The DRP directed the TPO to correct any mistake in the working capital adjustment. The Tribunal held that the DRP's direction related to correction of a computational mistake and found no infirmity in directing the TPO to correct the working capital adjustment. [Paras 10]

DRP's direction to correct the working capital adjustment upheld.

Operating income - treatment of foreign exchange gains - Whether foreign exchange gains should be included as part of operating income for transfer pricing/PLI computation. - HELD THAT: - The TPO excluded foreign exchange gains from operating income; the DRP directed that such gains be included, following co ordinate bench precedent (SAP Labs India Pvt. Ltd and CISCO Systems (India) Pvt. Ltd). The Tribunal, applying those consistent precedents, found no infirmity in the DRP's direction to include foreign exchange gains as part of operating income when computing the profit level indicator. [Paras 11, 12]

DRP's direction to treat foreign exchange gains as part of operating income upheld.

Application of export filter to comparables - Application of export filter to the comparable set and consequential exclusion of comparables failing that filter (e.g., Sundaram Business Services Ltd). - HELD THAT: - The DRP applied an export filter across comparables in the ITES segment; as a result a comparable that failed the export filter was excluded. The revenue contended that applying such a filter amounted to setting aside the draft order, beyond DRP's scope. The Tribunal held that the DRP validly applied the export filter on comparables and that doing so did not amount to impermissibly setting aside the draft order. [Paras 13, 14]

DRP's application of the export filter and exclusion of comparables failing that filter upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal: it upheld the DRP's adjustments on comparables selection (exclusions and export filter), working capital correction and inclusion of foreign exchange gains as operating income, and held that the assessee is entitled to claim deduction under section 10AA in respect of the voluntary transfer pricing adjustment.

Registration under section 12AA - genuineness of activities - verification of suspected undisclosed receipts - reconsideration and remand for verification - grant of registration on enquiry into objects and activities - recognition under Rule 34(6) of Haryana Education Rules, 2003

Registration under section 12AA - genuineness of activities - grant of registration on enquiry into objects and activities - Whether the refusal of registration under section 12AA on the basis of unverified suspicions about undisclosed receipts and the genuineness of activities was sustainable - HELD THAT: - The Tribunal noted it was undisputed that the assessee society runs a school and holds recognition from the Department of Education, Government of Haryana. The Commissioner (Exemptions) refused registration because of suspicion that cash from undisclosed sources was being introduced as school fees and because the premises appeared small relative to the receipts. The Tribunal held that such doubts, if entertained, ought to have been verified instead of resulting in immediate refusal of registration. The appropriate course is to verify the facts, afford the assessee opportunity, and then decide on merits. Consequently, the Tribunal did not decide the merits of the genuineness allegation but found the refusal on mere conjecture to be improper and that the matter requires fresh consideration by the Commissioner (Exemptions). [Paras 4, 5]

The matter is restored to the file of the Commissioner (Exemptions) for verification of the doubts, reconsideration of the application for registration under section 12AA after giving adequate opportunity to the assessee; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the refusal of registration and remanded the matter to the Commissioner (Exemptions) to verify the suspected undisclosed receipts, reconsider the application for registration under section 12AA on the basis of verified facts and after affording opportunity to the assessee; the appeal is allowed for statistical purposes.

Condonation of delay - dismissal for non-prosecution - ex parte order - correction of party title - remand for fresh adjudication with opportunity of hearing

Condonation of delay - dismissal for non-prosecution - Delay in filing the appeal was condoned despite a 125-day delay. - HELD THAT: - The Tribunal examined the explanation that the assessee had handed the CIT(A)'s order to its authorised representative who failed to file the appeal and subsequently parted ways with the assessee. The Tribunal found that the assessee did not derive any benefit from the belated filing and that the default lay with the tax consultant rather than the assessee; these circumstances, together with supporting affidavit material and the fact that the appeal had been dismissed below for non-prosecution, furnished a sufficient basis to condone the delay. The objection of the Revenue that no sufficient reason was shown was considered and rejected on these facts. The Tribunal therefore exercised its discretion to condone the delay and admit the appeal despite its being filed after the statutory period. [Paras 6]

Delay in preferring the appeal was condoned.

Correction of party title - ex parte order - remand for fresh adjudication with opportunity of hearing - The CIT(A)'s ex parte dismissal was set aside and the matter remitted for fresh consideration after correction of the party title. - HELD THAT: - The Tribunal found material defects in the proceedings below: the assessment and appellate records had been framed and referred to in the name of M/s. Chunnu Fashions whereas the correct assessee was B.M. Sarin, HUF. Notices were served via e-mail which the senior, non computer literate Karta did not receive; the assessee's business had been closed and the Karta was elderly, circumstances which explained non-attendance before the CIT(A). In view of these defects and because the issues were not adjudicated on merits by the CIT(A) due to dismissal for non-prosecution, the Tribunal corrected the title to B.M. Sarin, HUF, set aside the CIT(A)'s order and remitted the matter to the CIT(A) for fresh examination of all issues with an opportunity of hearing to the assessee. The assessee was permitted to raise all grounds on merit before the CIT(A). [Paras 8]

Order of the CIT(A) set aside; appeal remitted for fresh hearing after correction of the party title.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, corrected the party title to B.M. Sarin, HUF, set aside the ex parte order of the CIT(A) and remitted the matter for fresh adjudication with opportunity of hearing; the appeal is allowed for statistical purposes.

Allowance of depreciation where asset is owned and put to use for purpose of business - characterisation of rental receipts as income from business or income from house property and its effect on depreciation - application of section 14A read with Rule 8D for disallowance of expenditure in relation to exempt income - remand for verification of availability of interest free funds (cash flow evidence) before computing Rule 8D disallowance

Allowance of depreciation where asset is owned and put to use for purpose of business - characterisation of rental receipts as income from business or income from house property and its effect on depreciation - Whether depreciation on the building used/let out by the assessee is allowable for the assessment years under consideration and how the assessee's own classification of income affects entitlement to depreciation. - HELD THAT: - For AY 2010-11 and AY 2011-12 the Tribunal found that the assessee had ownership of the building and the building (or substantial parts thereof) was put to use for the purpose of business - including occupation by staff, training centre use and letting out of some floors - and prior inspection reports did not rebut those explanations sufficiently. Applying the Tribunal's earlier decision in the assessee's own case (ITA No.99/Coch/2016 dated 17/11/2016), once a building is ready and used for business even if parts remain vacant for letting, depreciation cannot be denied. Consequently the Assessing Officer was directed to treat income from letting of the building for AY 2010-11 and AY 2011-12 as business income and allow depreciation as claimed. For AY 2012-13, the assessee itself declared the rental receipts as income from house property; having taken that characterisation, the assessee was not entitled to claim depreciation and was limited to deductions permissible under the provisions applicable to income from house property (section 24), hence no relief was available for that year. [Paras 3]

Depreciation allowed for AY 2010-11 and 2011-12 by treating rental income as business income; appeal dismissed for AY 2012-13 as assessee declared income as house property and is entitled only to deductions under that head.

Application of section 14A read with Rule 8D for disallowance of expenditure in relation to exempt income - remand for verification of availability of interest free funds (cash flow evidence) before computing Rule 8D disallowance - Whether disallowance under section 14A read with Rule 8D should be sustained in respect of investments yielding exempt income, or whether the assessee had sufficient interest free own funds so as to negate or limit such disallowance. - HELD THAT: - The Assessing Officer applied Rule 8D to compute disallowance, concluding that interest bearing funds had been used for investments yielding exempt income. The assessee produced various cash flow statements asserting availability of interest free funds but failed before the lower authorities to establish, with supporting bank evidence, that interest bearing funds were not utilized at the time of making the investments. The Tribunal found that the factual question whether sufficient own (interest free) funds were available at the dates of investment had not been satisfactorily established on the record and required verification. Accordingly, the matter was not finally decided on merits; the Tribunal directed remand to the Assessing Officer to examine the relevant cash flow statements and supporting documents produced by the assessee and to determine the applicability and quantum of any disallowance under section 14A read with Rule 8D after such verification. [Paras 4]

Issue remitted to the Assessing Officer for fresh consideration and verification of cash flow evidence to determine whether disallowance under section 14A read with Rule 8D is warranted; ground partly allowed for statistical purposes pending such verification.

Final Conclusion: The appeals are partly allowed for statistical purposes: depreciation on the building is permitted for AY 2010-11 and 2011-12 (rental income to be treated as business income) but the appeal for AY 2012-13 is dismissed as the assessee declared the receipts as income from house property; the question of disallowance under section 14A read with Rule 8D is remitted to the Assessing Officer for verification of the assessee's cash flow evidence and fresh determination.

Deduction under section 80P(2)(d) - Alternative claim under section 80P(2) and 80P(2)(a)(i) - Order giving effect to appellate directions - Remand for fresh consideration and speaking order - Stay petition dismissed as infructuous

Deduction under section 80P(2)(d) - Alternative claim under section 80P(2) and 80P(2)(a)(i) - Remand for fresh consideration and speaking order - Order giving effect to appellate directions - Whether the CIT(A) properly adjudicated the assessee's alternative claim for deduction under section 80P(2) / 80P(2)(a)(i) where deduction under section 80P(2)(d) was denied, for AY 2014-15 and AY 2015-16. - HELD THAT: - The Tribunal found that the CIT(A)'s orders on both assessment years were cryptic and did not address the assessee's alternative plea that, if deduction under section 80P(2)(d) is not allowable, deduction under section 80P(2) or specifically section 80P(2)(a)(i) ought to be examined and decided. The assessment effect orders followed the directions of earlier appellate decisions in relation to allowance under section 80P(2)(d), but the CIT(A) failed to give a speaking answer to the grounds and arguments seeking the alternative relief and treated those arguments as based on facts outside the appellate directions. Because the appellate orders were found to be non speaking on these alternative grounds, the Tribunal remitted the matters to the file of the CIT(A) for fresh consideration and disposal by a reasoned/speaking order so that the alternative claim may be examined on merits in accordance with law. [Paras 7, 13]

The appeals are partly allowed for statistical purposes and the issues relating to the assessee's alternative claim under section 80P(2)/80P(2)(a)(i) are remitted to the CIT(A) for fresh consideration by passing speaking orders for AY 2014-15 and AY 2015-16.

Stay petition dismissed as infructuous - Whether the stay petitions filed by the assessee in respect of AY 2014-15 and AY 2015-16 should be maintained following remand. - HELD THAT: - Because the Tribunal remitted the appeals to the CIT(A) for fresh consideration, the purpose of the pending stay petitions (seeking suspension of assessment effect orders) was rendered moot. The Tribunal therefore held that the stay petitions had become infructuous. [Paras 14]

The stay petitions are dismissed as infructuous.

Final Conclusion: The Tribunal partly allowed the appeals for statistical purposes by remitting the questions whether alternative deductions under section 80P(2)/80P(2)(a)(i) should be allowed (where section 80P(2)(d) was denied) to the CIT(A) for fresh, speaking consideration for AY 2014-15 and AY 2015-16; the stay petitions were dismissed as infructuous.

Reopening of assessment based on AIR information and reason to believe - Burden of proof for unexplained cash deposits - Deletion of additions where source is admitted in return and supported by bank records - Remand for verification of undocumented partnership receipts - Verification of gifts - requirement to establish nature and source

Reopening of assessment based on AIR information and reason to believe - Validity of reopening assessment under section 147 in view of AIR information and non-response to AO's queries - HELD THAT: - The Tribunal upheld the reopening as valid since the Assessing Officer received information from AIR regarding substantial cash deposits not reflected in the return and the assessee failed to respond to repeated query letters. In these circumstances the AO had a reason to believe escapement of income, and the reopening was not set aside. [Paras 9, 16]

Reopening of assessment sustained; ground challenging reopening dismissed.

Burden of proof for unexplained cash deposits - Deletion of additions where source is admitted in return and supported by bank records - Whether cash deposits constituting opening cash in hand and professional receipts were unexplained and liable to be treated as income - HELD THAT: - The Tribunal found that substantial portions of the cash deposits were reflected in the assessee's return and contemporaneous accounts: professional receipts shown in the profit and loss account and opening cash balance were deposited into the bank account and had been included in the respective returns as income or balances. Treating those amounts again as unexplained cash would result in double addition. In absence of any contrary finding by the Revenue, the Tribunal deleted the addition to the extent of the opening cash balances and the professional receipts for both appellants. [Paras 10, 17]

Addition deleted insofar as it related to the admitted professional receipts and opening cash balances.

Remand for verification of undocumented partnership receipts - Verification of gifts - requirement to establish nature and source - Treatment of cash receipts from the partnership (Priyadarshi Hospital) and cash gifts where supporting records were unauthenticated or not produced - HELD THAT: - The Tribunal observed that the ledger/accounts produced to explain the cash receipts from the partnership were unauthenticated and did not record the partnership's PAN; the firm's return/records were not placed on file. Accordingly, the Tribunal did not adjudicate those receipts on merits but directed remand to the AO for verification. The assessee was directed to produce authenticated ledger/account showing PAN of the partnership firm; the AO is to examine and decide afresh. As to gifts from relatives, the Tribunal directed the assessee to explain and show the nature and source to the AO; if satisfactorily explained no addition is required (noting statutory exemption for smaller gifts), otherwise the AO may make an appropriate addition. [Paras 10, 17]

Receipt of Rs. 3,00,000 from the partnership and the reported gifts remanded to the AO for verification; assessee directed to produce authenticated accounts/PAN and evidence of source.

Final Conclusion: Both appeals partly allowed: additions attributable to admitted professional receipts and opening cash balances deleted; receipts from the partnership and certain gifts remanded to the Assessing Officer for verification upon production of authenticated accounts and evidence of source; reopening of assessments upheld.

Deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 - business transaction characterisation - simultaneous repayment / same-day reconciliation - application of precedent: Praveen Bhimsi Chheda - deletion of addition on merits

Deemed dividend under section 2(22)(e) of the Income-tax Act, 1961 - business transaction characterisation - simultaneous repayment / same-day reconciliation - application of precedent: Praveen Bhimsi Chheda - Addition of deemed dividend made in the hands of the assessee under section 2(22)(e) was deleted. - HELD THAT: - The Tribunal examined whether advances made by M/s. Vardhman Automobiles Pvt. Ltd. to an associated concern of which the assessee was proprietor attracted the deeming fiction of deemed dividend under section 2(22)(e) of the Income-tax Act, 1961. The Assessing Officer treated the advances as distributions and computed an addition. The assessee produced bank statements showing that amounts were advanced and returned on the same dates and contended that the transactions were business in nature between parties engaged in similar trade. Applying the ratio of the decision in Praveen Bhimsi Chheda , and the subsequent view of the Hon'ble Bombay High Court that funds returned to the company on the same day cannot be treated as deemed dividend, the Tribunal held that where transactions are genuine business dealings and monies are reconciled on the same day, they do not fall within the scope of the deeming provision. On this basis, and having regard to the contemporaneous bank evidence, the Tribunal found no merit in the addition and set it aside. [Paras 9, 10]

Addition under section 2(22)(e) deleted and the assessee's appeal allowed.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition of deemed dividend for Assessment Year 2011-12, holding that same-day business transactions supported by bank records do not attract the deeming provision; the order under appeal is set aside.

Interim injunction under Section 151 CPC - advisories and guidelines - binding effect of executive circulars on private contracts - Major Ports versus non-Major Ports distinction - customs areas and Container Freight Stations - balance of convenience and irreparable injury - remand for filing detailed affidavits

Advisories and guidelines - binding effect of executive circulars on private contracts - Major Ports versus non-Major Ports distinction - customs areas and Container Freight Stations - Whether the circulars/orders/advisories issued by Respondent Nos.1 and 2 bind Respondent Nos.3 to 6 and entitle the petitioner to relief from ground rent, demurrage and related penal charges. - HELD THAT: - The court examined the orders and advisories issued by the Ministry of Shipping, Director General of Shipping and the Department of Revenue and concluded that those communications were addressed to and directly apply to Major Ports and to CFSs/ICDs operating within or as concessionaires of Major Ports. The Ministry of Shipping's directions issued under the Major Port Trusts Act are applicable to Major Ports and their concessionaires; they do not extend statutory regulatory control to privately operated CFSs situated outside port land which are not concessionaires of Major Ports. The Director General of Shipping's advisories were directed primarily at shipping lines/carriers. The CBIC letter and local customs advisories were of advisory character urging a sympathetic approach. Where a CFS is a private arrangement with its customers and located outside port limits, the executive advisories do not alter or supplant the private contractual terms between the CFS and the importer. The court noted that respondents Nos.3-6 themselves had, on a voluntary basis, granted limited waivers/discounts, but that this does not convert advisory communications into binding directions against private CFS operators. For these reasons the petitioner could not derive a prima facie entitlement to relief based on those advisories. [Paras 34, 37, 39, 44, 49]

The advisories and circulars relied upon do not bind Respondent Nos.3 to 6 and do not establish a prima facie legal right for the petitioner to be relieved of ground rent, demurrage or related penal charges.

Interim injunction under Section 151 CPC - balance of convenience and irreparable injury - Whether an injunction restraining Respondent Nos.3 to 6 from charging ground rent, demurrage and related charges should be granted as an interim measure. - HELD THAT: - The petitioner sought urgent interim relief under Section 151 CPC relying on the advisories and guidelines. Having found that those advisories do not impose binding obligations on the private CFS operators concerned, the court assessed the conventional interim relief tests. There was no material to show violation of a clear legal right by the respondents; respondents Nos.3-6 had already granted limited, voluntary concessions and were considering further reliefs. The balance of convenience did not favour the petitioner and no irreparable injury was shown that would justify interim interference with private contractual arrangements. The court also observed that, if ultimately the advisories were held to be binding, the petitioner would have an alternate remedy to recover any charges paid. [Paras 4, 49, 50, 51]

The application for interim injunction under Section 151 CPC is dismissed.

Remand for filing detailed affidavits - Procedure to be followed for adjudication of the writ petition on merits. - HELD THAT: - The court recorded that the hearing on the urgent interlocutory application proceeded on limited pleadings and that various substantive questions of fact and law remain to be ventilated. The court directed Respondent Nos.1 and 2 to file detailed counter affidavits within four weeks and permitted the petitioner to file rejoinder within four weeks thereafter, thereby remitting the substantive issues for fresh consideration on fuller affidavits and arguments. [Paras 1, 2]

Respondent Nos.1 and 2 directed to file detailed counter affidavits within four weeks; rejoinder within four weeks thereafter; matter listed for further hearing.

Final Conclusion: The petitioner's application for interim relief is dismissed: the circulars and advisories relied upon do not, prima facie, bind private CFS operators outside Major Ports and do not furnish a basis for injunctive relief; the writ petition will proceed on merits after filing of detailed affidavits as directed.

Interim relief during pendency of substantive proceedings - abuse of process / re litigation - laches and delay in prosecuting claim - withdrawing earlier suit and estoppel under Order XXIII Rule 1 CPC - duty of disclosure of earlier proceedings - leave of court for disposition of assets in liquidation - court appointed sale of entitlement of rights issue

Interim relief during pendency of substantive proceedings - court appointed sale of entitlement of rights issue - Whether the Company Judge erred in refusing the appellant's prayer for interim relief in CA No.242/2020 by reference to the order dated 13th May, 2020 appointing a Court Commissioner to deal with the rights issue entitlement of the company in liquidation. - HELD THAT: - The Court recorded that the Company Judge, by the impugned order dated 14th May, 2020, declined the principal relief sought in CA No.242/2020 because an earlier order dated 13th May, 2020 had appointed Karvy as Court Commissioner to sell the entitlement of the rights issue available to the company in liquidation so as to secure maximum value. That appointment and the process ordained by the Company Judge necessarily affected the availability of the specific interim relief claimed and left the appellant to its remedy in the pending substantive proceeding (CA No.491/2019). The High Court found no error in relying on the 13th May order to dispose of the interim application, particularly in the context of a liquidation where court control over assets and a commissioner's appointment are permissible to protect collective interest. [Paras 7]

The impugned disposal of CA No.242/2020 by reference to the 13th May, 2020 order was not erroneous and the appellant was correctly left to pursue the pending substantive proceeding.

Laches and delay in prosecuting claim - duty of disclosure of earlier proceedings - abuse of process / re litigation - withdrawing earlier suit and estoppel under Order XXIII Rule 1 CPC - Whether the appellant's long delay, concealment of earlier proceedings and prior withdrawal of its 2011 claim barred relief and disentitled it to indulgence. - HELD THAT: - The Court examined material showing the appellant had earlier, in 2011, sought identical relief in CA No.2436/2011, which was opposed by the Official Liquidator inter alia on grounds of delay, limitation and on the basis that the transaction may be void as a fraudulent preference. The earlier application was withdrawn in November 2012 with liberty to file claim before the Official Liquidator. The appellant did not disclose that history in its subsequent filings and remained inactive for nearly 14 years after the alleged 1997 purchase. The Court treated the concealment and the prior withdrawal as constituting re litigation and abuse of process; it held that the appellant's conduct, coupled with the delay and absence of satisfactory explanation, disentitled it to relief and justified refusal of interim protection. The Court also observed that the merits of the substantive claim had to be considered before granting interim relief and that merely changing counsel or allowing time to pass could not revive or alter earlier orders. [Paras 11, 12, 14]

The appellant's delay, failure to disclose earlier proceedings and the withdrawn 2011 claim amounted to laches and abuse of process, barring equitable indulgence and justifying dismissal of the appeal.

Interim relief during pendency of substantive proceedings - abuse of process / re litigation - Whether the appellant was entitled to interim relief during the pendency of CA No.491/2019 absent a showing of merit and without addressing the consequences of its prior conduct. - HELD THAT: - The Court emphasized that grant of interim relief requires consideration of the merits of the substantive claim. Given the appellant's prior withdrawal of an identical suit, the opposition on grounds of limitation and possible invalidity of the transaction, and the concealed litigation history, the Court concluded that no satisfactory case for interim relief had been made out. The appellant's failure to seek preponement of the substantive hearing and its choice to pursue the present appeal rather than the procedural remedy further undermined its entitlement to interim measures. [Paras 13, 14]

No interim relief could be granted to the appellant during the pendency of the substantive proceeding in the circumstances.

Final Conclusion: The appeal is devoid of merit and is dismissed. The High Court upheld the Company Judge's disposal of the interim application by reference to the earlier court order appointing a commissioner, and found that the appellant's prolonged delay, prior withdrawal of identical proceedings and concealment of that history amounted to laches and abuse of process, disentitling it to interim relief; the appellant remains left to pursue its substantive remedy, but no indulgence was granted.

Interim bail in light of COVID-19 - risk to life of undertrial prisoners with comorbidities - High Powered Committee/Suo Motu release criteria - gravity of economic offences and bail - likelihood of tampering with evidence - obligations to ensure prison health precautions - expedited investigation by investigating agency

Interim bail in light of COVID-19 - risk to life of undertrial prisoners with comorbidities - Prayer for interim bail on the ground that applicants, being diabetic and one asthmatic and elderly, face serious risk from COVID-19 and cannot maintain social distancing in overcrowded jail. - HELD THAT: - The applicants sought interim bail under section 439 Cr.P.C. solely on the ground that their comorbidities expose them to heightened risk from COVID-19 while confined in District Jail, Kanpur Nagar. The Court examined the applicants' medical condition, the custodial environment and the relief route adopted (an application for interim bail rather than a regular bail petition). The Supreme Court's suo motu orders and the State High Powered Committee's resolutions for decongesting prisons were considered. The Court noted that the applicants had been provided certain facilities in jail (home-cooked food, bedding, medicines) on an earlier application before the Special Judge and that the respondents assert regular medical care is being provided. Weighed against these facts, the Court held that the mere risk from COVID-19, in the context of the other considerations in this case, did not justify grant of interim bail. [Paras 15, 16, 17, 18]

Interim bail sought on COVID-19/health grounds refused.

High Powered Committee/Suo Motu release criteria - interim bail in light of COVID-19 - Whether applicants fall within the class of prisoners eligible for release under the Supreme Court's suo motu direction and the High Powered Committee resolution (prisoners facing offences with maximum sentence up to seven years). - HELD THAT: - The Court analysed the Supreme Court's order of 23.3.2020 and the subsequent High Powered Committee resolution which contemplate interim release primarily for prisoners facing offences punishable with maximum sentence up to seven years. The applicants are charged under sections 447 and 448 of the Companies Act, 2013, offences attracting punishment of up to ten years. Consequently their case is distinguishable from the category envisaged by the High Powered Committee, and that distinction carries weight in the exercise of discretion in the present interim bail application. [Paras 15, 16]

Applicants do not fall within the class for interim release under the suo motu/High Powered Committee criteria.

Gravity of economic offences and bail - likelihood of tampering with evidence - Whether the nature and gravity of the alleged economic offences and the possibility of tampering with evidence weigh against granting interim bail. - HELD THAT: - The record shows the applicants are alleged to be key decision-makers who, as directors of the company, are accused of manipulating books and financial statements and inducing banks/PFIs to extend large credit facilities, resulting in massive outstanding liabilities. The Court noted established jurisprudence that economic offences involving large public funds and complex conspiracies require careful scrutiny in bail matters. The ongoing investigation, the gravity of allegations and the Court's apprehension about potential tampering with evidence were held to be determinative factors militating against interim release at this stage. [Paras 10, 16, 17]

Gravity of the offences and the risk of tampering with evidence preclude grant of interim bail.

Obligations to ensure prison health precautions - interim bail in light of COVID-19 - Directions regarding custodial safety and health precautions in view of COVID-19. - HELD THAT: - Although interim bail was refused, the Court directed the I.G. (Prison) State of U.P. to ensure that the applicants are kept safely in District Jail, Kanpur Nagar and that all necessary precautions as issued by the State in the context of COVID-19 are observed. The Court instructed that these precautions be applied particularly with respect to prisoners detained in jails throughout the State to address the health concerns raised. [Paras 19]

Prison authorities directed to ensure COVID-19 precautions for the applicants and similarly situated prisoners.

Expedited investigation by investigating agency - Direction to the investigating agency to expedite the ongoing investigation. - HELD THAT: - Given that investigation by respondent no. 2 (SFIO) into the affairs of the companies is pending and the applicants' detention relates to that probe, the Court directed respondent no. 2 to expedite and conclude the investigation at the earliest. This direction is ancillary to refusal of interim bail and aims to facilitate early adjudication on merits, including any regular bail applications. [Paras 20]

Respondent no. 2 directed to expedite the investigation and conclude it at the earliest.

Interim bail in light of COVID-19 - Effect of the order on future proceedings including regular bail applications. - HELD THAT: - The Court clarified that observations made in disposing of the interim bail application would not prejudice the applicants' right to seek consideration of a regular bail application under section 439 Cr.P.C. before this Court or the trial Court. The present order was confined to the disposal of the interim application. [Paras 21]

Observations without prejudice to the applicants' right to move/seek consideration of regular bail applications.

Final Conclusion: Interim bail application founded on COVID-19 risk and applicants' comorbidities refused: applicants do not fall within the class of prisoners contemplated for interim release under the Supreme Court's suo motu direction and High Powered Committee resolution; the gravity of the alleged economic offences and risk of tampering with evidence militated against release. The prison authorities are directed to ensure COVID-19 precautions for the applicants and respondent no. 2 is directed to expedite the investigation; the order is without prejudice to any regular bail application.

Limitation for Section 7 applications under the Insolvency and Bankruptcy Code - Article 137 of the Limitation Act and date of default as NPA - Effect of acknowledgment in writing under Section 18 of the Limitation Act - Exclusion of time under Section 14 of the Limitation Act for proceedings prosecuted in good faith - Inapplicability of SARFAESI/DRT actions to extend limitation for Section 7 applications - Consequences of time-barred Section 7 admission - setting aside admission and attendant CIRP orders

Limitation for Section 7 applications under the Insolvency and Bankruptcy Code - Article 137 of the Limitation Act and date of default as NPA - The Section 7 application was barred by limitation because the relevant date of default (date of NPA) was 30.06.2014 and the petition filed on 08.11.2017 was beyond the three-year period under Article 137. - HELD THAT: - The Tribunal applied the Supreme Court decisions holding that for applications under Section 7 the residuary Article 137 of the Limitation Act governs and the trigger for limitation is the date of default, which is the date of NPA. The Adjudicating Authority's acceptance of a later trigger was rejected on the facts: the letter dated 02.07.2014 records the date of default as 30.06.2014; the right to sue therefore accrued on 30.06.2014 and the three year limitation expired on 29.06.2017 while the Section 7 petition was filed on 08.11.2017. Applying the ratio of Gaurav Hargovindbhai Dave, Jignesh Shah and B.K. Education Services, the appeal court held the Section 7 application to be time barred and not saved by the date of commencement of the IBC. [Paras 10, 11, 12, 14, 15]

Application under Section 7 is barred by limitation and cannot be maintained.

Exclusion of time under Section 14 of the Limitation Act for proceedings prosecuted in good faith - Inapplicability of SARFAESI/DRT actions to extend limitation for Section 7 applications - Time spent in SARFAESI/DRT proceedings was not excluded under Section 14 for computing limitation for the Section 7 application. - HELD THAT: - The Tribunal followed the Larger Bench reasoning that Section 14(2) excludes time only where the applicant prosecuted, with due diligence, another civil proceeding in a court of first instance or on appeal/revision which, due to want of jurisdiction or similar defect, could not entertain it. Actions under the SARFAESI Act and proceedings before DRT are not civil proceedings in a court of first instance or appeal/revision for the purposes of Section 14(2). Consequently, pursuit of remedies under SARFAESI/DRT does not suspend or exclude the limitation period for a Section 7 application, and the Financial Creditor could not claim exclusion of time on that basis. [Paras 16, 18, 21]

No exclusion of time under Section 14; SARFAESI/DRT steps do not extend the limitation for filing Section 7.

Effect of acknowledgment in writing under Section 18 of the Limitation Act - The outstanding/default statement relied upon by the Financial Creditor did not constitute an acknowledgment in writing under Section 18 and, in any event, the alleged acknowledgment post-dated the expiration of limitation. - HELD THAT: - Section 18 requires a written acknowledgment of liability signed by the party against whom the right is claimed (or an authorised agent) prior to the expiry of the prescribed period. The Annexure relied upon is unsigned by the Corporate Debtor or its authorised representative and therefore fails to satisfy Section 18. Further, the purported acknowledgment dated 30.09.2017 (or 20.03.2018 as referred) is after the three year limitation had already expired; Sampuran Singh establishes that an acknowledgment after expiry cannot revive the time-barred right. Hence Section 18 does not operate to shift the date of default forward. [Paras 20, 21]

No application of Section 18; the alleged acknowledgment does not revive or extend limitation.

Consequences of time-barred Section 7 admission - setting aside admission and attendant CIRP orders - The admission of the Section 7 petition was set aside and all consequent orders (appointment of IRP, moratorium, freezing of accounts and related actions) were declared illegal and are set aside; the Corporate Debtor is released to function through its Board. - HELD THAT: - Because the Section 7 petition was held time barred and unsaved by Section 14 or Section 18, the Tribunal allowed the appeal, set aside the Adjudicating Authority's admission order, and declared void all consequential actions taken pursuant to that admission including appointment of the Interim Resolution Professional, moratorium and any publications or steps taken in the CIRP. The Adjudicating Authority was directed to fix IRP fees and costs as appropriate but the main effect is dismissal of the Section 7 application and closure of the proceedings, restoring management to the Corporate Debtor's Board. [Paras 22, 23, 24]

Admission under Section 7 is set aside; CIRP-related orders are declared illegal and vacated; the Corporate Debtor is released to function through its Board.

Final Conclusion: The Tribunal held that the Section 7 petition was time barred (date of default/NPA 30.06.2014; petition filed 08.11.2017), that neither SARFAESI/DRT actions nor the outstanding statement operated to extend or revive limitation under Section 14 or Section 18 of the Limitation Act, and accordingly allowed the appeal, set aside the Adjudicating Authority's admission and all consequential CIRP orders, dismissing the Section 7 application and restoring control of the Corporate Debtor to its Board.

Jurisdiction to search and seize consignments in transit - power of Excise officers to investigate invoking Sections 42 and 43 read with the Code of Criminal Procedure - application of Section 183 Cr.P.C. to offences committed on a journey - authority to search under Section 165 Cr.P.C. - confiscation proceedings and presumption in seizure cases - no fundamental right to trade or business in liquor (Khoday principle)

Jurisdiction to search and seize consignments in transit - power of Excise officers to investigate invoking Sections 42 and 43 read with the Code of Criminal Procedure - application of Section 183 Cr.P.C. to offences committed on a journey - authority to search under Section 165 Cr.P.C. - Whether the Excise officials of Assam had jurisdiction and authority to search, break the digital locks and seize IMFL consignments transiting through Assam en route from Arunachal Pradesh to Nagaland. - HELD THAT: - The court examined the scope of the Assam Excise Act, 2000 read with the Cr.P.C. and held that Sections 42 and 43 of the Act empower specially authorised Excise officers to investigate offences by exercising powers analogous to police officers under Sections 160-171 Cr.P.C. and, where grounds are recorded, to be treated as officers for the purposes of Section 166/190 Cr.P.C. Section 183 Cr.P.C. permits inquiry or trial by a court through whose local jurisdiction a person or thing passed during a continuous journey; this legal fiction applies to offences during transit. Section 165 Cr.P.C. authorises search where an investigating officer reasonably believes material for investigation is within his police-station limits. Applying these provisions, the court found that the Inspector of Excise had recorded suspicion with reasons regarding route violations and anomalies in consignment particulars, and therefore was authorised to carry out search and seizure including breaking the digital locks while the consignments were on a continuous journey through Assam. The mere fact that export originated in Arunachal Pradesh and delivery was in Nagaland did not oust Assam officials' jurisdiction to investigate alleged offences occurring during transit within Assam. [Paras 15, 18, 19, 20, 21]

The court held that the Excise officials of Golaghat were empowered to investigate, search and seize the consignments in transit through Assam and that the breaking of digital locks and seizure fell within the authorised powers under the Assam Excise Act read with the Cr.P.C.

Confiscation proceedings and presumption in seizure cases - no fundamental right to trade or business in liquor (Khoday principle) - Whether the writ petitions were maintainable insofar as confiscation proceedings before the Magistrate/Collector and prior rejection of zimma applications remained pending, and whether seizure violated any constitutional right to carry on liquor trade. - HELD THAT: - The court considered the respondents' reliance on ongoing confiscation proceedings and statutory presumptions applicable in such proceedings, noting that Sections governing confiscation authorise courts or the Collector to order confiscation and create presumptions where an offence is alleged. The High Court observed that interference by this court in the exercise of its Article 226 jurisdiction was permissible when jurisdictional challenge to the powers exercised by Excise officials was raised, because a finding that Assam officials lacked jurisdiction would render subordinate orders infructuous. On the constitutional point, the court relied on the established principle that there is no fundamental right to trade in liquor (Khoday), and therefore the petitioners' Article 300A complaint could not prevail to defeat valid investigatory or confiscation processes. Given the prima facie findings of route violation, mismatches in batch/date and adverse chemical analysis relied upon by respondents, the court found that proceedings for trial/confiscation were properly initiated and that the unchallenged interim orders rejecting zimma did not bar judicial scrutiny of the jurisdictional question. [Paras 9, 13, 21, 22]

The court refused to quash the excise/confiscation proceedings or to accede to the challenge based on the prior rejection of zimma; it also rejected the Article 300A contention and found no ground to interfere with the investigation and confiscation process.

Final Conclusion: Writ petitions dismissed. The High Court held that the Assam Excise officials lawfully exercised investigatory and search-and-seizure powers in respect of the consignments while on transit through Assam; confiscation proceedings and statutory presumptions could proceed, and no constitutional right to trade in liquor entitled the petitioners to relief.

Dismissal for want of prosecution - right to reasonable opportunity of hearing - onus on appellant to prosecute revision - service of notice and duty to appear - revision under the M.P. Commercial Tax Act, 1994 - revisional jurisdiction

Dismissal for want of prosecution - right to reasonable opportunity of hearing - service of notice and duty to appear - onus on appellant to prosecute revision - Validity of dismissal of the revision for want of prosecution and whether the petitioner was denied a reasonable opportunity of hearing. - HELD THAT: - The Court examined the original records and found that the petitioner filed the revision and it was listed on multiple dates between 11/10/2004 and 14/3/2005. Notices were issued during pendency, but the record does not contain endorsements confirming their receipt. The Court held that because the revision was instituted by the petitioner, it was his duty to remain aware of the hearing dates and to appear; non-service endorsements on the record did not absolve him of that responsibility. The revisional authority dismissed the revision for want of prosecution after the petitioner failed to appear, and the Court found no illegality, impropriety or rampant irregularity in that order. The Court emphasised that a petitioner who does not choose to appear on listed dates after preferring a revision runs the risk of dismissal for want of prosecution, and apportioned responsibility to the petitioner for the impugned order. [Paras 4, 5]

The dismissal of the revision for want of prosecution was valid; there was no denial of reasonable opportunity of hearing and the impugned order does not deserve interference.

Final Conclusion: The petition is dismissed; the impugned order dismissing the revision for want of prosecution is upheld and the records are to be returned to the Additional Advocate General's office after acknowledgment.

Re-opening of assessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 - limitation for reopening and effect of statutory amendment extending the period - cessation of jurisdiction after expiry of limitation - quashing of reassessments as barred by limitation

Re-opening of assessment under Section 25(1) of the Kerala Value Added Tax Act, 2003 - limitation for reopening and effect of statutory amendment extending the period - Assessments initiated by Exts.P1, P2 and P13 in respect of the year 2011-2012 were barred by the period of limitation for reopening and thus could not be validly reopened. - HELD THAT: - The Court accepted the petitioners' submission that the disputed assessments relate to the year 2011-2012 and that the limitation for reopening under Section 25(1) had been subject to amendment which substituted five years with six years. The Court examined the chronology of pre-assessment notices and found that the proceedings were initiated beyond the applicable limitation period. In view of the statutory limitation and the settled position of law relied upon by the petitioners, the Court held that the assessing officers no longer had jurisdiction to reopen the assessments for the stated period. The Court noted that earlier decisions of this Court had addressed the jurisdictional issue and were relied upon by the petitioners; the respondents did not press a contrary legal principle capable of sustaining the reopenings. [Paras 4]

Exts.P1, P2 and P13 quashed; writ petition allowed.

Final Conclusion: The writ petition was allowed: the reassessment proceedings (Exts.P1, P2 and P13) relating to the tax period 2011-2012 were held to be barred by the limitation for reopening and were quashed.

Exercise of revisionary power under Section 56(1) of the KVAT Act - alternative statutory remedy by way of revision under Section 59 of the KVAT Act - jurisdictional error and violation of principles of natural justice - interpretation of entry 36 in accordance with Rule 23 of the Rules of Interpretation - stay of recovery pending adjudication of statutory revision - condonation of delay in filing statutory revision

Exercise of revisionary power under Section 56(1) of the KVAT Act - jurisdictional error and violation of principles of natural justice - interpretation of entry 36 in accordance with Rule 23 of the Rules of Interpretation - Impugned orders passed by the Deputy Commissioner under Section 56(1) do not suffer from jurisdictional error or violation of natural justice and call for adjudication in revision rather than interference by writ jurisdiction. - HELD THAT: - The Court agreed with the Single Judge that the Deputy Commissioner's cancellation of the modified assessments under Section 56(1) cannot be impugned in writ jurisdiction in the absence of any jurisdictional error, breach of natural justice or contravention of statutory provisions. The determinative question - whether the appellant's product falls under entry 36 as to be interpreted under Rule 23 - requires authoritative interpretation and merits elaborate consideration which is appropriate in the statutory revisional forum. No binding pronouncement from this Court or the Supreme Court on the interpretation was shown to warrant exercise of extraordinary constitutional jurisdiction. Accordingly, the contentions about failure to have regard to earlier amendments, prior orders and decisions, and other favourable assessments raise merits that can be effectively agitated and decided in revision under the statutory scheme, and do not establish grounds for quashing the impugned orders in writ jurisdiction. [Paras 2, 3, 6]

The challenge to Exts.P1 and P2 does not disclose jurisdictional defect or violation of natural justice; the appropriate remedy is revision under Section 59 and the court will not interfere in the writ appeal.

Alternative statutory remedy by way of revision under Section 59 of the KVAT Act - stay of recovery pending adjudication of statutory revision - condonation of delay in filing statutory revision - Directions regarding entertainability of a Revision Petition, consideration of delay condonation having regard to time spent in earlier proceedings, and interim restraint on recovery or modification of assessments pending revision. - HELD THAT: - The Court directed that if the appellant files a Revision Petition before the Commissioner it shall be entertained; any application for condonation of delay shall take into account the time spent prosecuting the writ petition and the present writ appeal. The Commissioner is also directed to consider any interim application for stay expeditiously. To facilitate this remedy the Court restrained the assessing authority from passing any modified orders pursuant to Exts.P1 and P2 for a limited period (one month) and noted the earlier three-week stay granted by the Single Judge. These directions are procedural and ancillary to the primary conclusion that the statutory revisional forum is the proper forum to decide the substantive controversy. [Paras 6, 7, 8]

The Commissioner shall entertain the Revision Petition, consider delay-condonation in light of time spent in earlier proceedings, decide interim stay applications without delay; assessing authority is restrained from issuing modified orders for one month.

Final Conclusion: The writ appeal is dismissed on merits; the impugned orders do not exhibit jurisdictional or procedural infirmity warranting interference under Article 226, and the appellant is directed to pursue the available statutory remedy of revision under Section 59 with the Commissioner, with directions to consider condonation of delay and interim stay applications, and with a limited restraint on the assessing authority from passing modified orders for one month.

Seizure - chance recovery - empowered officer under sections 41 and 42 of the NDPS Act - compliance with statutory safeguards for search and seizure - prima facie material for framing of charge - communication to narcotics authority and subsequent seizure

Seizure - empowered officer under sections 41 and 42 of the NDPS Act - compliance with statutory safeguards for search and seizure - chance recovery - Whether the act of Income Tax officers on 7th January 2014 in collecting and keeping the suspected substance amounted to a "seizure" under the NDPS Act such that non compliance with the empowerment requirements of sections 41 and 42 would vitiate the prosecution. - HELD THAT: - The Court examined the chronology and context of the Income Tax search (7th-10th January 2014), the contemporaneous panchanama and communications to the narcotics authority, and the principles in Roy V.D. and subsequent decisions on empowered officers and on "chance recovery." It held that where contraband is stumbled upon in the course of a different statutory search (income tax proceedings) and there is no evidence that the income tax officers were conducting the search with the purpose or belief of detecting narcotics, the act of isolating and placing the substance in a safe pending direction could not be equated with a statutory "seizure" by an empowered officer. Applying the concept of chance recovery as explained by the Supreme Court, the Court found that the Income Tax officers' actions lacked the requisite intent and statutory authority to constitute a seizure under sections 41/42 and that the subsequent communication to, and action by, the narcotics authority answered the procedural requirement. The Court, however, noted that any delay in communication might affect witness credibility, which is a matter for trial. [Paras 24, 26, 27, 28, 29]

The Income Tax officers' taking of the suspected substance on 7th January 2014 did not amount to a statutory "seizure" under the NDPS Act that would, by itself, vitiate the prosecution; the circumstances attract the doctrine of chance recovery and required communication to the narcotics authority.

Prima facie material for framing of charge - communication to narcotics authority and subsequent seizure - Whether the learned Special Judge erred in refusing the applicant's discharge application and in holding that there was material warranting framing of charge under section 8(c) read with section 21(b) of the NDPS Act. - HELD THAT: - Having found that the initial act by Income Tax officers did not constitute a fatal statutory seizure, the Court evaluated the record relied upon by the Special Judge, including statements incriminating the accused and the sequence of events culminating in NCB's verification and seizure. The Court concluded that there existed adequate material giving rise to a strong suspicion against the applicant to justify framing of charge; challenges to procedure and delay raised factual credibility issues to be tested at trial rather than by discharge. Accordingly, no interference with the Special Judge's order was warranted in revisional jurisdiction. [Paras 5, 30]

The Special Judge rightly rejected the discharge application; there was sufficient prima facie material to frame charges and the revisional court will not interfere.

Final Conclusion: The revision is dismissed. The High Court upheld the Special Judge's refusal to discharge the accused, holding that the Income Tax officers' act of isolating the substance did not amount to a statutory seizure under the NDPS Act and that there was sufficient prima facie material to frame charges; issues of delay and witness credibility are left open for trial.