TaxTMI Updates e-Newsletter
Jun 02,2020

Provisional attachment of property - Remedy under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 - Attachment under Section 83 of the Central Goods and Services Tax Act, 2017 - Proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 - Efficacy of alternative statutory remedy

Remedy under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 - Provisional attachment of property - Efficacy of alternative statutory remedy - Applicability of Rule 159(5) as an efficacious statutory remedy against provisional attachment and the consequent course to be adopted by the court. - HELD THAT: - The Court held that Rule 159(5) of the Central Goods and Services Tax Rules, 2017 is squarely applicable to the facts and provides an efficacious alternative remedy to challenge provisional attachment of property. Relying on the Division Bench decision of the Gujarat High Court in Pranit Hem Desai, which declined writ relief where the aggrieved party had a statutory objection remedy under rule 159(5), this Court observed that the petitioner was required to be afforded the remedy of filing an objection against attachment and that the competent authority is empowered to consider and release attached property after hearing. In view of the availability of that statutory remedy and the parity of circumstances with the cited decision, the Court directed that the writ petition be treated as an objection under rule 159(5) and be decided by the respondent authority within a short prescribed timeframe.

The writ petition is disposed of by directing respondent No.1 to treat it as an objection under Rule 159(5) and decide the same within three working days.

Final Conclusion: The Court declined to entertain the writ petition on merits and disposed it by directing the respondent to consider the petitioner's objection under Rule 159(5) of the CGST Rules, 2017 and decide it expeditiously within three working days.

Tax residency - Condition of presence under Section 6(1)(a) of the Income Tax Act, 1961 - Consent v. compulsion in presence - Question of fact - Assessing officer's jurisdiction to determine residency - Remand for adjudication by statutory authority

Condition of presence under Section 6(1)(a) of the Income Tax Act, 1961 - Consent v. compulsion in presence - Question of fact - Assessing officer's jurisdiction to determine residency - Days spent in India since 15th July, 2016 for determining tax residency and whether such presence was by consent or against the petitioner's will. - HELD THAT: - The Court held that whether the petitioner's presence in India since 15th July, 2016 was with his consent or was by compulsion is a question of fact. That factual determination is within the province of the assessing officer under the income-tax statutory scheme. The writ petition does not decide the merits of the contention that those days ought to be excluded for the purposes of Section 6(1)(a); instead the Court granted liberty to the parties to raise all relevant pleas before the statutory authority, which is directed to consider and decide the matter in accordance with law.

Writ petition disposed of by remanding the factual determination on presence/consent to the assessing officer for decision in accordance with law; parties given liberty to raise all pleas before the statutory authority.

Final Conclusion: The petition seeking exclusion of days and NRI treatment for FY 2018-19 and 2019-20 is not adjudicated on merits; the matter is remitted to the assessing officer/statutory authority to decide the factual question of consent/compulsion and determine tax residency in accordance with law.

Prima facie absence of legitimate tax demand - interim injunction restraining recovery of tax demand - intimation under Section 143(1) of the Income Tax Act - rectification of intimation - direction to file status report for examination of demand

Prima facie absence of legitimate tax demand - intimation under Section 143(1) of the Income Tax Act - Court's prima facie view on the legitimacy of the tax demand recorded in the intimation dated 20th November, 2017 - HELD THAT: - The Court, on the material placed before it, recorded a prima facie finding that there is no legitimate tax demand against the petitioner arising from the Intimation-Cum-Demand Notice issued under Section 143(1). This view was founded on the sequence of communications and rectification orders averred by the petitioner, which indicated that credit of TDS and self-assessment tax had been allowed at different stages and that adjustments concerning the donated amount had been addressed in earlier orders. The Court treated these inconsistencies in the respondents' orders as sufficient for forming a prima facie conclusion that the demand, as presently recorded, did not survive initial scrutiny.

Recorded a prima facie conclusion that no legitimate tax demand exists against the petitioner under the impugned intimation.

Interim injunction restraining recovery of tax demand - Whether respondents should be restrained from taking steps to recover the impugned demand pending further proceedings - HELD THAT: - In view of the Court's prima facie finding that the demand appears not to be legitimate, the respondents were restrained from taking any steps to recover the impugned demand contained in the Intimation-Cum-Demand Notice dated 20th November, 2017. The restraint is interlocutory in nature and directed to preserve the status quo until the respondents examine the matter and furnish the status report ordered by the Court. The order operates as a temporary measure without adjudicating the final merits of the tax liability.

Respondents restrained from initiating or continuing recovery proceedings in respect of the impugned demand until further orders.

Direction to file status report for examination of demand - rectification of intimation - Obligation of the respondents to examine the petitioner's contentions and report back to the Court - HELD THAT: - The Court directed the learned senior Standing counsel for the respondents to examine the matter and file a status report within two weeks. The direction followed from the history of initial intimation and subsequent rectification orders relied upon by the petitioner, which revealed multiple adjustments and alleged inconsistencies. The status report was ordered to enable the Court to receive an authoritative response from the Revenue on whether the entries and credits claimed by the petitioner have been correctly accounted for and whether any demand remains justified. The petitioner was granted liberty to file a rejoinder affidavit before the next date of hearing.

Respondents directed to examine the matter and file a status report within two weeks; rejoinder, if any, to be filed before the next date.

Final Conclusion: Notice issued; prima facie conclusion recorded that the impugned demand appears not to be legitimate; respondents restrained from recovering the demand and directed to examine the matter and file a status report within two weeks; matter listed for further hearing.

Summary order. The appeal is dismissed as being covered by this Court's decision in ITA No. 119 of 2018 titled The Commissioner of Income Tax (Exemptions), Chandigarh vs. M/s Adesh Foundation (Regd.); pending application(s), if any, stand disposed of.

Disallowance of interest under Section 36(1)(iii) of the Income Tax Act, 1961 - mixed bank account funds - accommodation entries in the form of sham share capital - acceptance of returns by the revenue as evidence of genuineness of transactions - reliance on administrative and judicial precedent

Disallowance of interest under Section 36(1)(iii) of the Income Tax Act, 1961 - mixed bank account funds - reliance on precedent - Whether advances made for purchase of land and construction, drawn from an account of mixed funds, were ineligible for deduction under Section 36(1)(iii). - HELD THAT: - The Assessing Officer held that the advances used for purchase of land and construction were not entitled to deduction as they were not shown to be from bank borrowings. The CIT(A) found that the funds used were interest-free and not loans from the bank; that factual finding was upheld by the Tribunal. The High Court noted that the matter is squarely covered by earlier decisions relied upon by the revenue and, on that basis, affirmed the appellate findings reversing the AO's additions (save for a limited sum sustained by the CIT(A)). The court therefore answered the question negatively to the revenue's contention and declined to disturb the finding that the impugned funds were not bank loans attracting disallowance under Section 36(1)(iii). [Paras 1]

The disallowance under Section 36(1)(iii) was not sustained; the factual finding that the funds were interest-free and not bank borrowings was upheld.

Accommodation entries in the form of sham share capital - acceptance of returns by the revenue as evidence of genuineness of transactions - Whether the receipt of share capital from two companies amounting to Rs. 3,87,50,000/- constituted accommodation entries or paper transactions. - HELD THAT: - The AO suspected that the share capital were accommodation entries because the subscribing parties purportedly had sufficient funds yet showed meagre business profits. On inquiry, the assessee produced the financiers and directors; the returns of those financiers had been accepted by the revenue. The Appellate Authorities held, on these facts, that the share money investment could not be treated as a paper transaction or accommodation entry. The High Court found no reason to take a different view and answered the contention of accommodation entries in the negative. [Paras 2]

The share capital receipts were not treated as accommodation entries; the addition was not sustained.

Final Conclusion: Both contentions raised by the revenue - disallowance under Section 36(1)(iii) in respect of advances from mixed funds, and that the share capital receipts were accommodation entries - were negatived on the facts and in law, and the appeal is dismissed.

Jurisdiction of Assessing Officer - Validity of assessment framed without territorial jurisdiction - Notice under section 143(2) requirement - Vesting of jurisdiction under section 120 and section 124 - Acts done without jurisdiction are void ab initio - CBDT directions/instructions determining allocation of cases

Jurisdiction of Assessing Officer - Notice under section 143(2) requirement - Vesting of jurisdiction under section 120 and section 124 - Acts done without jurisdiction are void ab initio - Whether the assessment orders framed by ACIT, Circle-23(1), Hooghly, are void for lack of jurisdiction because the statutory notice under section 143(2) was not issued by the Assessing Officer vested with jurisdiction. - HELD THAT: - The Tribunal admitted the assessee's legal ground challenging jurisdiction and examined undisputed facts showing the returns were filed within the jurisdiction of ITO, Ward-23(4), Hooghly, and that gross total income fell within monetary limits governed by CBDT Instruction No.1/2011. The Revenue failed to produce any order, notification or transfer showing that jurisdiction had been validly conferred on ACIT, Circle-23(1). The Tribunal applied the statutory scheme under sections 120 and 124-jurisdiction over persons or areas must be conferred by the Board's directions/notifications and only an officer so vested can issue notice under section 143(2). Reliance was placed on earlier precedents of this Bench and other authorities holding that where an officer lacking jurisdiction issues the notice and proceeds to frame assessment, the assessment is invalid. The Tribunal observed that mere administrative or e-filing transfer or subsequent participation cannot supply jurisdiction where none was conferred by appropriate orders; concurrent jurisdiction requires specific conferral under section 120(4)/(5). Because the assessing officer who had jurisdiction did not issue the mandatory notice under section 143(2) and no competent transfer or notification was shown, the assessments framed by ACIT, Circle-23(1), were held to be without jurisdiction and therefore void ab initio. The Tribunal did not examine merits as the jurisdictional defect was dispositive. [Paras 6, 7, 9, 10]

Assessments framed by ACIT, Circle-23(1), Hooghly, for AY 2015-16 are quashed as having been completed without jurisdiction because the statutory notice under section 143(2) was not issued by the Assessing Officer vested with jurisdiction.

Final Conclusion: Both appeals are allowed and the assessment orders for Assessment Year 2015-16 passed by ACIT, Circle-23(1), Hooghly, are quashed for lack of jurisdiction.

Disallowance under section 14A - quantification of disallowance under Rule 8D(2)(iii) - treatment of exempt dividend income in computation of disallowance - application of binding precedents - annual value determination - agreed rent as determinant

Disallowance under section 14A - application of binding precedents - quantification of disallowance under Rule 8D(2)(iii) - Validity of the Commissioner (Appeals)'s recomputation/confirmation of disallowance under section 14A and Rule 8D(2)(iii) - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s treatment in respect of quantification under Rule 8D(2)(iii) where the CIT(A) had applied the jurisprudence of the jurisdictional High Court / binding tribunal precedent. The Tribunal found no infirmity in the CIT(A)'s approach which followed REI Agro and related authority; accordingly the revenue's challenge to the recomputation was dismissed. Where deletion under section 14A was claimed by the assessee, the CIT(A)'s reliance on the Special Bench decision in Vireet Investments Ltd. was accepted and the addition under section 14A was not sustained. [Paras 5, 6, 14, 15]

The recomputation/confirmation of disallowance under section 14A/Rule 8D(2)(iii) as upheld by the CIT(A) is sustained and the revenue's appeals on these points are dismissed; deletion of section 14A addition in favour of the assessee is also sustained where the CIT(A) applied Vireet Investments (SB).

Annual value determination - agreed rent as determinant - treatment of exempt dividend income - Validity of assessing officer's determination of annual letting value by reference to market searches instead of agreed/actual rent - HELD THAT: - The Tribunal agreed with the CIT(A)'s conclusion that imputing notional rental income by relying on market searches resulted in taxation of income that had not accrued to the assessee. The Tribunal endorsed the CIT(A)'s application of the Calcutta High Court's view that agreed/actual rent is the determinant factor for valuation, and therefore the AO's higher market-based annual letable value was set aside. [Paras 7, 17]

Addition on account of notional rental income was not sustainable; the CIT(A)'s acceptance of actual/agreed rent is upheld and the revenue's ground on annual value is dismissed.

Quantification of disallowance under Rule 8D(2)(iii) - disallowance under section 14A - Whether the quantification of disallowance under section 14A/Rule 8D was to be remitted for fresh consideration - HELD THAT: - In respect of certain assessment years and appeals by the assessee, the Tribunal found that the AO had not carried out a fresh quantification in accordance with law and that the matter required de novo consideration. The assessee expressly sought remand and the department did not object. The Tribunal therefore directed remand to the Assessing Officer for fresh adjudication of the quantum of disallowance, with directions to apply the principles and the CIT(A)'s approach indicated in an earlier order (CIT(A)-Kolkata dated 22.02.2019) in the exercise of reassessment/quantification. [Paras 11, 19]

Issue remitted to the file of the Assessing Officer for fresh adjudication of quantification of disallowance under section 14A/Rule 8D(2)(iii) in accordance with law and with directions noted by the Tribunal.

Final Conclusion: Revenue appeals dismissed insofar as recomputation under Rule 8D(2)(iii) and the imposition of notional rental income are concerned; additions under section 14A set aside where the CIT(A) followed binding authority. Quantification of the section 14A disallowance in certain appeals is remitted to the Assessing Officer for fresh adjudication in accordance with law; the assessee's appeals are allowed for statistical purposes.

Re-opening of assessment under section 147 of the Income-tax Act - reasons to believe - non-application of mind - requirement of credible and specific information for reassessment - sanction for reassessment - treatment of sale proceeds as cash credit under section 68 of the Income-tax Act - double addition

Re-opening of assessment under section 147 of the Income-tax Act - reasons to believe - requirement of credible and specific information for reassessment - non-application of mind - sanction for reassessment - Validity of the reassessment notice and reopening of assessment for AY 2011-12 - HELD THAT: - The Tribunal examined the reasons recorded for reopening and the material on which the Assessing Officer relied. The reasons alleged that the assessee received Rs.12,00,000 from another company as revealed by a cash-trail prepared by the Investigation Wing, and advanced further unrelated factual figures. The Bench found these factual assertions to be incorrect and noted that the AO had mixed up figures from another case. The AO failed to produce proof of sanction and, in any event, the correct sanctioning authority in the circumstances would have been ACIT/JCIT under the provisions cited by the AO. The record shows the AO accepted the Investigation Wing's report without applying his own mind; the reasons were founded on vague, incorrect and internally inconsistent figures and therefore did not disclose a bona fide 'reasons to believe' that income had escaped assessment. Reliance on the Investigation Wing's report without independent scrutiny, and reopening based on wrong facts, amount to non-application of mind rendering the reopening invalid. Applying authoritative precedents on the need for specific, credible material and an application of mind by the AO, the Tribunal held the reassessment proceedings to be bad in law and quashed the re-opening. [Paras 12, 13, 14, 15, 18]

Re-opening of assessment quashed as bad in law for want of credible/specific material, non-application of mind by the AO and absence of proper sanction/proof.

Treatment of sale proceeds as cash credit under section 68 of the Income-tax Act - double addition - Validity of the addition of Rs.15 lakhs made as unexplained cash credit in respect of sale of shares - HELD THAT: - On merits, the Tribunal noted that the assessee had recorded the purchase and sale of shares in its books, disclosed the transaction to the department, and furnished allotment advice and payment through banking channels evidencing acquisition and sale. The sale proceeds were declared as income by the assessee; treating the same gross receipt again as a cash credit under the relevant provision would amount to double addition. In view of the disclosure in books, supporting allotment/payment documents and the fact that the sale had been declared, the addition under the theory of unexplained cash credit was held to be arbitrary and not sustainable. [Paras 19]

Addition of Rs.15 lakhs in respect of sale of shares set aside as unsustainable being a declared sale supported by records; prohibition on double addition.

Final Conclusion: The appeal is allowed: the reassessment notice/re-opening for AY 2011-12 is quashed for want of credible material, non-application of mind and absence of proper sanction/proof, and the addition made in respect of the sale of shares is set aside on merits as constituting an impermissible double addition.

Exemption for investment in new residential asset under section 54F - Date of purchase versus date of possession as relevant date for section 54F - Construction completion within three years for section 54F - Substance over form in determination of date of purchase - Effect of buyer's agreement clause reserving title until full payment

Exemption for investment in new residential asset under section 54F - Date of purchase versus date of possession as relevant date for section 54F - Effect of buyer's agreement clause reserving title until full payment - Precedent treating possession/full payment as date of purchase - Whether the assessee is entitled to exemption under section 54F where the buyers agreement was executed prior to the transfer of the original asset but possession and payment events occurred within the period prescribed by section 54F. - HELD THAT: - The Tribunal examined the factual matrix that the shares (original asset) were transferred on 17/08/2011 and that the buyers agreement for the flat was executed earlier but contained a clause explicitly stating that title would be conveyed only upon full payment and registration. The Tribunal applied the principle of substance over form and followed precedents which treat the date of completion of the allotment transaction - evidenced by full payment/registration/possession as applicable - as the effective date of purchase for the purposes of section 54F. Having regard to clause 46.0 of the buyers agreement (which reserved title until full payment and conveyance) and the subsequent possession/final payment falling within the statutory period allowed by section 54F, the Tribunal held that the purchase of the new residential asset was completed within two years from the date of transfer of the original asset. The Tribunal rejected the Assessing Officer's reliance on the date of execution of the buyers agreement as the date of purchase, preferring authorities which treat possession and completion of payment as determinative when the agreement itself preserves title until such completion. [Paras 4, 9]

The assessee is entitled to claim exemption under section 54F as the purchase of the residential property was completed within the period prescribed by the section; the CIT(A)'s contrary finding is set aside and the Assessing Officer is directed to allow the claimed deduction under section 54F.

Final Conclusion: The appeal is allowed; the Tribunal directed the Assessing Officer to grant the assessee the benefit of section 54F for the amount claimed, setting aside the CIT(A)'s disallowance.

Disallowance of business loss - genuineness of transactions - burden of proof - surrounding circumstances and preponderance of probabilities - oral business orders and evidentiary requirements - third party confirmations and examination

Disallowance of business loss - genuineness of transactions - burden of proof - oral business orders and evidentiary requirements - third party confirmations and examination - surrounding circumstances and preponderance of probabilities - Whether the business loss of Rs. 56,53,550/- claimed by the assessee for AY 2014-15 was rightly disallowed as not genuine. - HELD THAT: - The Tribunal examined the material relied upon by the Assessing Officer and the CIT(A) and the evidence produced by the assessee, including invoices, ledger entries and statements/replies of the two purchasers who were produced and examined before the CIT(A). The AO's conclusions rested on inferences drawn from similarity of correspondence, absence of securities, lack of civil suits and certain inspection notes; the AO treated the loss as a pre planned device to offset short term capital gain. The Tribunal accepted that commercial transactions and purchase orders can be oral and that parties' confirmations and replies to statutory notices, together with the invoices and ledger entries produced by the assessee, were relevant and material. On the record the AO failed to rebut those documentary and third party confirmations; the mere suspicion arising from similarity of communications or absence of litigation was held to be speculative and insufficient to displace the assessee's evidence. Applying the burden of proof principles, the Tribunal concluded that the AO had not established that the loss was fabricated and that, on the totality of facts and circumstances, the assessee had discharged the requisite onus to show the transactions were genuine. Accordingly the addition was reversed. [Paras 6, 7]

The disallowance of business loss of Rs. 56,53,550/- is set aside and the appeal is allowed.

Final Conclusion: The Tribunal reversed the orders of the Assessing Officer and the CIT(A), holding that the assessee's evidence and third party confirmations rebutted the AO's contention of sham transactions and deleting the addition of Rs. 56,53,550/- for AY 2014-15.

Expenditure incurred in relation to income not includible in total income - Section 14A and Rule 8D - satisfaction of the Assessing Officer - nexus between expenditure and exempt income - reasoned order requirement

Section 14A and Rule 8D - satisfaction of the Assessing Officer - nexus between expenditure and exempt income - Whether the Assessing Officer was entitled to invoke Rule 8D and compute disallowance under section 14A without recording satisfaction, after having regard to the assessee's accounts and explanations. - HELD THAT: - A conjoint reading of section 14A and Rule 8D requires a two-stage approach: first the Assessing Officer must, having regard to the assessee's accounts, record satisfaction that the assessee's claim about expenditure (including a claim of no expenditure) in relation to exempt income is incorrect; only thereafter may the AO determine the amount of disallowance under the prescribed method in Rule 8D. The AO in the present case proceeded directly to apply Rule 8D and compute a disallowance without recording any reasoned dissatisfaction with the assessee's explanation or examining the veracity of the claim that no expenditure (other than the demat charges already disallowed) was incurred for earning exempt dividend. A bare assertion of non-acceptance without reasons is arbitrary; reasoned satisfaction is a statutory pre-condition for invoking Rule 8D. Consequently the AO's action in making the disallowance without applying his mind to the accounts and without recording reasons is unsustainable. [Paras 8]

Disallowance made by the AO under Rule 8D upheld in form only after recording satisfaction is unsustainable; the addition under section 14A/Rule 8D is deleted and the assessee's appeal is allowed on this ground.

Reasoned order requirement - Expenditure incurred in relation to income not includible in total income - Whether the Commissioner (Appeals) properly adjudicated the legal question raised by the assessee regarding applicability of section 14A/Rule 8D. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) did not examine the substantive legal issue raised by the assessee-namely whether the AO had validly recorded dissatisfaction with the assessee's accounts as a pre-condition to invocation of Rule 8D-but instead accepted alternate contentions without adjudicating the core legal point. Such non-adjudication of a determinative legal issue renders the appellate order unsustainable. In view of the statutory requirement that the AO's satisfaction must be reasoned and recorded before Rule 8D is applied, the omission by the CIT(A) to decide that issue cannot be countenanced and the appellate authority's order is set aside. [Paras 8]

Ld. CIT(A)'s failure to adjudicate the legal issue regarding the AO's statutory satisfaction is unsustainable; his confirmation of the disallowance is set aside.

Final Conclusion: The Tribunal held that invocation of Rule 8D/section 14A requires a recorded, reasoned satisfaction by the Assessing Officer after having regard to the assessee's accounts; in the absence of such satisfaction the disallowance cannot be sustained. The CIT(A)'s non-adjudication of this legal issue was unsustainable. The disallowance made by the AO under section 14A read with Rule 8D is deleted and the assessee's appeal is allowed.

Requirement of specific initiation of penalty proceedings in respect of an addition - penalty under section 271(1)(c) in respect of unexplained cash credit - enhancement of income by appellate authority and its effect on penalty initiation - pronouncement of orders within 90 days under rule 34(5) of the ITAT Rules - exception for extraordinary circumstances - exclusion of COVID-19 lockdown period/force majeure from computation of statutory time-limits

Requirement of specific initiation of penalty proceedings in respect of an addition - penalty under section 271(1)(c) in respect of unexplained cash credit - enhancement of income by appellate authority and its effect on penalty initiation - Whether the penalty under section 271(1)(c) could be sustained in respect of an addition of Rs. 3,41,000 which was made by way of enhancement by the Commissioner (Appeals) without specific initiation of penalty proceedings in respect of that addition. - HELD THAT: - The Tribunal held that penalty can be imposed only where penalty proceedings have been specifically initiated in respect of the addition sought to be made the basis for penalty. In the present case no such addition of Rs. 3,41,000 was made by the Assessing Officer and consequently no specific initiation of penalty proceedings in respect of that amount by the Assessing Officer was shown. The addition of Rs. 3,41,000 arose as an "enhancement" by the Commissioner (Appeals). There was no record of specific satisfaction by the Commissioner (Appeals) initiating penalty in respect of that enhancement. In the absence of specific initiation and satisfaction, the imposition of penalty under section 271(1)(c) in respect of the enhancement lacked a legally sustainable foundation. On this basis the Tribunal deleted the impugned penalty. [Paras 5]

Impugned penalty under section 271(1)(c) in respect of the enhancement of Rs. 3,41,000 deleted; appeal allowed on this ground.

Pronouncement of orders within 90 days under rule 34(5) of the ITAT Rules - exception for extraordinary circumstances - exclusion of COVID-19 lockdown period/force majeure from computation of statutory time-limits - Whether the delay in pronouncing the Tribunal's order beyond 90 days from conclusion of hearing was vitiating where the delay occurred during the period affected by the COVID-19 lockdown and related extraordinary circumstances. - HELD THAT: - The Tribunal observed that rule 34(5) ordinarily requires pronouncement within 90 days but itself contemplates that, in exceptional and extraordinary circumstances, a further period may be fixed. Noting the nationwide and jurisdictional lockdowns, notifications treating the pandemic as a disaster/force majeure, and orders of higher courts extending limitation and time-frames, the Tribunal held that the lockdown period could not be treated as an "ordinary" period for computing the 90-day limit. The exceptional disruption to judicial functioning caused by COVID-19 justified excluding the lockdown period when computing the 90 days under rule 34(5). Consequently, the delay in pronouncement in the present case was excused and did not vitiate the order; the Tribunal also observed that benches retain discretion to refix matters for clarifications where warranted by the time-lag, but no such exercise was required here. [Paras 7, 8, 9, 10]

Delay in pronouncement beyond 90 days excused by exclusion of the COVID-19 lockdown/extraordinary period from computation of the 90-day limit; order validly pronounced.

Final Conclusion: Appeal allowed: penalty under section 271(1)(c) in respect of the appellate enhancement of Rs. 3,41,000 deleted; delay in pronouncement of the Tribunal's order beyond 90 days was excused by exclusion of the COVID-19 lockdown period from computation of the time-limit; order pronounced under rule 34(4).

Interconnection usage charges (IUC) not fees for technical services - TDS liability under section 194J - Human intervention test for characterization of services - Rule 34(5) of the Appellate Tribunal Rules, 1963 - exclusion of lockdown period for pronouncement of orders - Effect of Covid-19 lockdown on time-limits and pronouncement of judicial orders

Interconnection usage charges (IUC) not fees for technical services - TDS liability under section 194J - Human intervention test for characterization of services - Interconnection/roaming charges paid by the assessee are not fees for technical services and therefore are not subject to deduction of tax at source under section 194J of the Act. - HELD THAT: - The Tribunal, after considering the material on record and relying on coordinate decisions (including the Ahmedabad and Jaipur Benches and the Karnataka High Court decisions discussed by the CIT(A)), accepted that the roaming/interconnection process between telecom operators operates automatically and does not involve human/manual intervention. The factual conclusion that the process is automatic led the Tribunal to hold that such payments do not fall within the ambit of 'fees for technical services' and thus do not attract TDS under section 194J. The Revenue's challenge was rejected as it failed to controvert the assessee's contentions and the Tribunal found no infirmity in the CIT(A)'s reliance on the precedents which treated similar interconnection charges as outside section 194J. [Paras 5, 6]

Revenue's appeal dismissed on the ground that IUC/roaming charges are not fees for technical services and no TDS under section 194J was payable.

Rule 34(5) of the Appellate Tribunal Rules, 1963 - exclusion of lockdown period for pronouncement of orders - Effect of Covid-19 lockdown on time-limits and pronouncement of judicial orders - The period of Covid-19 lockdown is to be excluded while computing the 90-day period under Rule 34(5) for pronouncement of Tribunal orders, permitting delayed pronouncement in view of extraordinary circumstances. - HELD THAT: - Relying on the coordinate Bench's reasoning and relevant orders of higher courts and authorities addressing the pandemic, the Tribunal interpreted the term 'ordinarily' in Rule 34(5) pragmatically. Given the nationwide lockdown, official notifications treating the pandemic as a disaster and extensions of limitation by superior fora, the Tribunal held that the lockdown period is extraordinary and may be excluded when computing the 90-day pronouncement window. The Tribunal accordingly pronounced the order after the hearing date by excluding the lockdown period from the limitation computation and noted that benches retain discretion to refix hearings for clarification if needed. [Paras 8]

Pronouncement of the order beyond 90 days is justified by excluding the lockdown period; order pronounced under Rule 34(4).

Final Conclusion: Revenue's appeal is dismissed on merits: the IUC/roaming charges do not constitute fees for technical services attracting TDS under section 194J for AY 2007-08; additionally, the Tribunal excluded the Covid-19 lockdown period for computing the pronouncement timeline under Rule 34(5), validating the delayed pronouncement of this order.

Disallowance on account of bogus purchases - genuineness of transactions and evidentiary burden - taxation of profit element embedded in doubtful purchases - appellate interference with factual conclusions - pronouncement of orders - Rule 34(5) of the Appellate Tribunal Rules, 1963 - exclusion of lockdown period for computation of limitation - extraordinary circumstances - Covid-19 and force majeure

Disallowance on account of bogus purchases - genuineness of transactions and evidentiary burden - taxation of profit element embedded in doubtful purchases - appellate interference with factual conclusions - Validity of the addition made by treating certain purchases as bogus and the correctness of restricting the disallowance to a percentage of alleged purchases - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the First Appellate Authority, including ledger copies, invoices, and bank payments. The Tribunal noted that sales were not doubted and that purchases were evidently utilised for contract work which received payments from the municipal authority; therefore the fact of purchase could not be rejected merely because some suppliers were found deficient by Sales Tax authorities. The CIT(A)'s approach of taxing only the profit embedded in the doubtful transactions rather than disallowing the entire purchases was found to be consistent with precedent and the facts - the assessee had recorded a gross profit in books and had documents showing delivery and banking payments. In these circumstances the Tribunal held there was no reason to interfere with the CIT(A)'s restriction of disallowance to 5% of the alleged purchases and dismissed the Revenue's appeal. [Paras 4]

Revenue's appeal dismissed; disallowance confined to 5% of the alleged purchases upheld.

Pronouncement of orders - Rule 34(5) of the Appellate Tribunal Rules, 1963 - exclusion of lockdown period for computation of limitation - extraordinary circumstances - Covid-19 and force majeure - Whether the Tribunal could pronounce the order beyond ninety days from conclusion of hearing in view of the Covid-19 lockdown - HELD THAT: - Relying on the coordinate Bench's reasoning and relevant judicial and executive steps recognizing the pandemic as an extraordinary disruption (including directions and extensions by higher courts and governmental notifications treating Covid-19 as a disaster/force majeure), the Tribunal held that the period of lockdown should be excluded while computing the 90-day limitation in Rule 34(5). The Tribunal observed that the rule itself contemplates exceptional circumstances and that the unprecedented nationwide lockdown and attendant disruptions justify exclusion of that period. On that basis the delay in pronouncing the order was held permissible and the order was pronounced under the Rules. [Paras 7, 8]

Lockdown period excluded for computation of the 90-day pronouncement period; pronouncement beyond ninety days held permissible in the circumstances.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against the CIT(A)'s order for A.Y. 2010-11, upholding the restriction of disallowance to 5% of the alleged bogus purchases; separately, the Tribunal held that the Covid-19 lockdown period is to be excluded in computing the 90-day limit under Rule 34(5), thereby validating the delayed pronouncement of the order.

Corpus donation and application of section 11(1)(d) - 15% accumulation under section 11(1)(a) based on gross receipts - carry forward and set off of excess application of income - tax deducted at source treated as application of income - establishment expenses as application of income

Corpus donation and application of section 11(1)(d) - Treatment of corpus donations received during the year and correctness of AO's adverse inference treating entire corpus as normal donation - HELD THAT: - The Tribunal examined the statements and covering letters of the eleven donors called by the AO. Ten donors appeared and ten statements were recorded; eight donors corroborated that their contributions were corpus donations. Two donors admitted their contributions were normal donations totaling Rs. 60,000. The AO's drawing of an adverse inference against the entire corpus donation of Rs. 7,95,000 was held to be erroneous in respect of donors who had appeared and confirmed corpus purpose. Consequently, the addition sustained by the CIT(A) of Rs. 2,95,000 was restricted and the addition was confined to the aggregate sum admitted by two donors as not corpus, i.e., Rs. 60,000, giving relief for the balance that was substantiated as corpus. [Paras 5]

Addition reduced and restricted to Rs. 60,000; ground partly allowed.

15% accumulation under section 11(1)(a) based on gross receipts - Whether the allowed accumulation under section 11(1)(a) is to be computed on gross receipts or on net receipts after deduction of revenue/expenditure - HELD THAT: - Relying on coordinate bench precedent and the reasoning of higher authorities applied therein, the Tribunal held that the 15% accumulation under section 11(1)(a) is to be computed on gross receipts. Expenditures which constitute application of income are not to be excluded before computing the permissible accumulation. Applying that principle to the assessee's figures, the AO was directed to allow the claimed 15% of gross receipts as the allowable accumulation. [Paras 9]

Accumulation under section 11(1)(a) allowed at 15% of gross receipts as claimed by the assessee.

Carry forward and set off of excess application of income - Allowability of carry forward and set off of excess application of income from earlier year against income of the year under appeal - HELD THAT: - Following binding precedents of higher courts and coordinate benches, the Tribunal held that excess application of income in an earlier year may be carried forward and set off against the income of subsequent years for purposes of section 11(1)(a). On that basis the assessee's claim for setting off the earlier year excess application was accepted and the amount claimed was directed to be allowed as application of income in the year under appeal. [Paras 11]

Excess expenditure of earlier year allowed to be set off; assessee's claim allowed.

Tax deducted at source treated as application of income - Whether amounts deducted as tax at source on income, but attributable to the assessee and not spent, can be treated as application of income for exemption purposes - HELD THAT: - Relying on precedent of the Calcutta High Court, the Tribunal held that there is no reason to deny exemption on the portion of income which was reduced by tax deducted at source when that income is otherwise eligible and treated as application of income. The AO was directed to allow the tax deducted amount as application of income. [Paras 13]

Tax deducted at source allowed to be treated as application of income; directed to be allowed.

Establishment expenses as application of income - Whether establishment (salaries and miscellaneous) expenses claimed by the trust are application of income for charitable purposes and the correctness of AO's estimate - HELD THAT: - Applying the precedent of the Calcutta High Court, the Tribunal held that salaries and miscellaneous expenses incurred for carrying out the objects and purposes of the trust constitute application of income for charitable purposes. The AO's higher estimate was found to be arbitrary; the Tribunal directed allowance of the establishment expenses as actually claimed by the assessee. [Paras 14]

Establishment expenses claimed by the assessee allowed as application of income; AO directed to accept the claimed amount.

Final Conclusion: Appeal partly allowed: addition in respect of corpus donations reduced and restricted to the amount admitted by donors; 15% accumulation under section 11(1)(a) to be computed on gross receipts; earlier year excess application and tax deducted at source accepted as application of income; establishment expenses allowed as claimed. Directions issued to the AO to give effect to these findings.

Rectification under section 154 - intimation under section 143(1) - set-off of carried forward long-term capital loss against long-term capital gain - clerical error in e-filing/return - error apparent on face of record - e-filing and XML data entry errors

Rectification under section 154 - intimation under section 143(1) - set-off of carried forward long-term capital loss against long-term capital gain - clerical error in e-filing/return - error apparent on face of record - Whether the intimation issued under section 143(1) can be rectified under section 154 to allow set-off of long-term capital losses carried forward from earlier assessment years which were not claimed in the online return due to a clerical error. - HELD THAT: - The Tribunal found that the assessee had long-term capital losses carried forward from A.Y. 2010-11 and A.Y. 2013-14 and that those carried forward losses were shown in the return filed for the year under consideration. The Assessing Officer rejected the rectification application under section 154 on the ground that no claim for set-off had been made in the return; the CIT(A) upheld that view. The Tribunal, however, accepted the assessee's case that a clerical mistake in the e-filing process by the tax advisor's office led to the omission of the specific set-off claim from the electronic return, noting the susceptibility of the e-filing/XML process to data-entry errors. The Tribunal relied on the Coordinate Bench decision in Shrikant Real Estates (P) Ltd. v. ITO (ITA No. 4304/Mum/2012) which recognised that where the electronic return and related schedules demonstrate the intention to claim an item but a data-entry/formatting error prevents its appearance at the correct place, the omission may be a rectifiable mistake apparent on the face of the record. Applying that principle to the present facts and given that the carried forward losses were shown in the return, the Tribunal directed the AO to rectify the intimation under section 143(1) as sought and to allow the set-off of the carried forward long-term capital losses against the long-term capital gain for the year under consideration. [Paras 6, 7]

The Tribunal allowed the appeal, directed the Assessing Officer to rectify the intimation under section 143(1) under section 154 and to allow the claimed set-off of the carried forward long-term capital losses.

Final Conclusion: Appeal allowed; intimation under section 143(1) to be rectified under section 154 to permit set-off of long-term capital losses carried forward from A.Y. 2010-11 and A.Y. 2013-14 against the long-term capital gain of the year under consideration.

Impleadment of a representative association as party respondent - interim relief for release of containers on payment of charges - compliance of Container Freight Stations with executive directions - directions governing filing of counter-affidavits and rejoinders

Impleadment of a representative association as party respondent - Application by Container Freight Stations Association of India for impleadment as party respondent. - HELD THAT: - The Court allowed the applications for impleadment filed by the Container Freight Stations Association of India on the basis that the petition raises issues having wide-ranging implications for Container Freight Stations. The association is therefore permitted to be added as a party respondent and the petitioner directed to file an amended memo of parties within one week.

CFSAI impleaded as party respondent; petitioner to file amended memo of parties within one week.

Interim relief for release of containers on payment of charges - Whether petitioners are entitled, pending adjudication, to have containers released by CFSs/ICDs in minor ports on payment of charges. - HELD THAT: - Relying on the Court's earlier order in WP(C) 3029/2020 (M/s Polytech Trade Foundation v. Union of India & Ors.), the Court granted the petitioner liberty, without prejudice to rights and contentions and subject to the outcome of the present petition, to secure release of their containers at Container Freight Stations and Inland Container Depots in minor ports upon payment of such charges as may be demanded by those CFSs/ICDs. This operates as an interim direction limited to minor ports and does not decide the merits of the underlying contentions.

Petitioner may have containers released at CFSs/ICDs in minor ports on payment of demanded charges, subject to rights and outcome of petition.

Compliance of Container Freight Stations with executive directions - directions governing filing of counter-affidavits and rejoinders - Treatment of CFSs/ICDs in major ports and procedural timetable for pleadings. - HELD THAT: - The Court recorded the respondent's submission that CFSs in major ports are bound by the respondent's direction dated 23.04.2020 and that steps are being taken to ensure compliance. Procedurally, notice was issued in the petition; counsels accepted notice and were granted three weeks to file counter-affidavits, with two weeks thereafter for any rejoinder. The matters are listed for further hearing along with WP(C) 3029/2020.

CFSs in major ports to comply with the respondent's direction; counter-affidavits due in three weeks and rejoinders in two weeks; matter listed for hearing on 23 July 2020.

Final Conclusion: The applications for impleadment by the Container Freight Stations Association of India are allowed; interim liberty granted to obtain release of containers at CFSs/ICDs in minor ports on payment of demanded charges; CFSs in major ports are to comply with the respondent's direction; procedural timetable for filings and listing on 23 July 2020 fixed.

Judicial discretion in confirmation of court-conducted sale - subsequent higher offer after auction - adequacy of sale price and duty to obtain best price for creditors - power to reopen or set aside confirmed sale where price is inadequate - requirement of openness in auction to secure remunerative price

Judicial discretion in confirmation of court-conducted sale - subsequent higher offer after auction - adequacy of sale price and duty to obtain best price for creditors - Whether the sale confirmed in favour of the highest bidder at the e-auction should be maintained notwithstanding a subsequent higher offer submitted by a non-participant, or whether the court should reopen proceedings to secure a better price. - HELD THAT: - The Court analysed settled principles that the court, when confirming a sale of assets of a company in liquidation, must satisfy itself that the price offered is reasonable and adequate having regard to market value, because the court is custodian of the interests of the company and its creditors. While earlier authority recognises that once the court is satisfied about adequacy of price a subsequent higher offer ordinarily is not a valid ground to refuse confirmation, other decisions permit reopening where the confirmed price is inadequate and a materially higher offer is shown. Applying these principles to the record, the Court found that (i) the initial reserve had been fixed at a substantially higher figure and the confirmed bid (Rs. 28.15 crores) was materially lower than earlier/reserve expectations and significantly lower than the subsequent offer (Rs. 30.69 crores) tendered after the e-auction by the present appellant; (ii) the explanation for the appellant's non-participation in the e-auction did not inspire confidence, but that factor alone could not outweigh the obligation to fetch the best price for creditors; and (iii) having regard to authorities recognising the court's power to set aside or reopen a sale where the confirmed price is inadequate, the learned Company Judge should have permitted re-auction (or otherwise ensured realisation of a better price) rather than confirm and allow extension. On that basis the Court concluded that confirmation ought not to stand and directed a fresh e-auction to be held within a fixed time frame. [Paras 26, 28, 30, 31, 32]

Orders confirming sale in favour of the highest bidder were set aside and the Official Liquidator's prayer for fresh e-auction was allowed; the confirmed sale was not maintained because the court must ensure adequate price realization for creditors.

Requirement of openness in auction to secure remunerative price - power to reopen or set aside confirmed sale where price is inadequate - Whether the application for extension of time to deposit the balance sale consideration should have been allowed so as to preserve the confirmed sale, or whether leave to extend should be refused and fresh e-auction ordered. - HELD THAT: - The Court considered the application for extension of time filed by the confirmed purchaser, which the Company Judge had allowed by modifying payment deadlines. Noting the competing considerations - the purchaser's plea of lockdown-related difficulty and the creditors' interest in realizing the best price - the Court held that, given the peculiarity of the case (a substantially higher subsequent offer and an initial reserve fixed much higher), it was inappropriate to sustain the confirmation and grant further extensions so as to preserve a sale that did not secure the best available price. Consequently the extension order was set aside along with the confirmation order, and fresh e-auction was directed. The Court nonetheless recorded that the successful appellant had given an undertaking as to minimum bidding and was to bear costs of the fresh auction. [Paras 22, 24, 30, 31, 32]

The extension order was set aside; instead of preserving the confirmed sale by granting further time, the Court ordered fresh e-auction to ensure realization of a better price.

Final Conclusion: The High Court set aside the Company Judge's orders confirming the sale and granting extension of time, allowed the Official Liquidator's prayer for a fresh e-auction to obtain a higher/adequate price for the creditors, directed the fresh e-auction to be completed within 60 days of certified copy, recorded the appellant's undertaking as to minimum bid and imposed on the appellant the costs of conducting the fresh e-auction.

Privity of contract - jurisdiction of Micro and Small Enterprises Facilitation Council under section 18 of the MSME Development Act, 2006 - definition of "buyer" and "supplier" under the MSME Development Act, 2006 - power to refer to arbitration under section 18(3) where no amount is due - effect of contractual clauses prohibiting subcontracting and continuing responsibility of contractor for subcontractors' acts

Privity of contract - definition of "buyer" and "supplier" under the MSME Development Act, 2006 - jurisdiction of Micro and Small Enterprises Facilitation Council under section 18 of the MSME Development Act, 2006 - power to refer to arbitration under section 18(3) where no amount is due - Whether the State Level Industry Facilitation Council could validly direct arbitration proceedings to include the petitioner when there was no privity of contract between the petitioner and the MSME applicants - HELD THAT: - The Court found as an admitted fact and on construction of contract clauses (notably clauses 4.8.1.0 to 4.8.5.0) that respondent no.4 subcontracted without the petitioner's consent and that there was no contractual privity between the petitioner and respondents no.2 and 3. The definitions in the MSME Act show that liability under Chapter V (including sections 15, 17 and 18) arises only where a buyer has received goods or services from a supplier for consideration. Although respondents no.2 and 3 qualify as "suppliers" under section 2(n)(iii), the petitioner did not buy or receive services from them and therefore cannot be treated as a "buyer" liable to make payment under section 15/17. The Council's reasoning-relying on perceived knowledge of the petitioner and on clubbing separate proceedings-failed to address the contract terms and this Court's earlier finding that there was no privity of contract with respondent no.3. The Council improperly cancelled its earlier order and proceeded to include the petitioner in arbitration despite absence of any amount due from the petitioner to the MSME parties. Consequently, the Council lacked jurisdiction to refer the petitioner to arbitration under section 18(3) of the MSME Act, insofar as no liability of the petitioner to pay respondents no.2 or 3 was established. [Paras 15, 16, 17, 18, 19]

The reference to arbitration insofar as it arrays the petitioner is quashed; the Council's order of 17th April, 2018 is modified to exclude the petitioner and shall operate only qua the other parties.

Final Conclusion: Petition partly allowed. The impugned order of the State Level Industry Facilitation Council dated 17th April, 2018 is modified by striking down the reference to arbitration insofar as it arrays the petitioner; the order remains operative as between the other parties. No order as to costs.

Suppression of material facts - Clean hands doctrine - Writ jurisdiction under Article 226 - BIFR sanctioned scheme and its implementation - Interim relief vacated

Suppression of material facts - Clean hands doctrine - Writ jurisdiction under Article 226 - Whether the petition challenging the meeting dated 27.11.2015 and seeking quashing of its resolutions is maintainable and entitled to relief under Article 226 in view of alleged suppression of material facts by the petitioners. - HELD THAT: - The High Court found that there were disputed questions of fact between the parties and that material facts were suppressed by the petitioners when approaching the Court under writ jurisdiction. The petitioners had not disclosed their resignation letters dated 4.2.2015, prior appointments and dealings with respondents nos.1 and 2 (including shareholders' agreement, indemnity bond and guarantees dated 27.9.2007), and other matters relevant to the claim of continued promoter status. The Court noted that BIFR had sanctioned a rehabilitation scheme (SS13) on 17.7.2013 and was functional at the time the interim order was obtained; thus the petitioners' assertions regarding BIFR's non-functioning were incorrect. Applying established principles that a litigant seeking equitable writ relief must come with clean hands, and that suppression of material facts which would have affected the Court's exercise of discretion disentitles the litigant to relief, the Court held that the suppression was material and prejudicial to the exercise of writ jurisdiction. Reliance on precedents concerning oppression/mismanagement was examined but the Court observed those authorities addressed different factual matrices and did not override the consequence of material suppression here. In these circumstances the writ petition could not be entertained on merits. [Paras 6, 8, 11, 12]

Writ petition dismissed on the ground of suppression of material facts; interim relief vacated and rule discharged.

Final Conclusion: The petition under Article 226 is dismissed for suppression of material facts; the interim relief granted earlier stands vacated and the rule is discharged with no order as to costs.

Dismissal for non-prosecution - non-appearance - adjournment for default - restoration of appeal - Sab-ka-viswas (legacy dispute resolution scheme) 2019

Dismissal for non-prosecution - non-appearance - adjournment for default - restoration of appeal - Sab-ka-viswas (legacy dispute resolution scheme) 2019 - Whether the appeal should be dismissed for non-prosecution in view of persistent non-appearance by the appellant and adjournments granted, and whether the appellant may seek restoration if it so wishes. - HELD THAT: - The Tribunal recorded repeated failures of the appellant (or its counsel) to appear at multiple listed hearings despite adjournments being granted, including specific notation that the last opportunity had been given. The authorized representative for the respondent informed the Tribunal that, according to available information, the appellant had opted for the Sab-ka-viswas (legacy dispute resolution scheme) 2019 but had not filed any supporting papers with the Registry. In these circumstances the Tribunal exercised its power to dismiss the appeal for non-prosecution. The order also recognises that if the appellant has not in fact applied under the SVLDRS (Sab-ka-viswas) and wishes to pursue the appeal, the proper remedy is to apply for restoration of the appeal to the Tribunal. [Paras 1, 3, 4]

Appeal dismissed for non-prosecution; appellant permitted to seek restoration of the appeal if it wishes.

Final Conclusion: The appeal was dismissed for non-prosecution due to persistent non-appearance; the appellant may apply for restoration of the appeal and pursue remedy if it has not availed or properly filed documents under the Sab-ka-viswas (legacy dispute resolution scheme) 2019.

Admissibility of Cenvat credit on capital goods used for job work under Notification No. 214/86 - suo motu reversal and re credit of Cenvat credit without filing refund application under Section 11B - entitlement under Rule 6(5) of the Cenvat Credit Rules, 2004

Suo motu reversal and re credit of Cenvat credit without filing refund application under Section 11B - Legality of suo motu re credit taken after a voluntary reversal and whether a refund application under Section 11B was required for such reversal/re credit. - HELD THAT: - The Tribunal applied the reasoning of the Hon'ble High Court of Madras in ICMC Corporation Ltd. and held that reversal of an accounting entry is not equivalent to an outflow of funds requiring a refund claim under Section 11B. The Court observed that reversal is an accounting measure and does not amount to unjust enrichment; consequently a suo motu reversal and subsequent re credit does not mandatorily entail filing an application under Section 11B. The tribunal further noted that where the entries relate to inputs/services covered by Rule 6(5) of the Cenvat Credit Rules, 2004, taking note of the reversal and re credit is permissible and consistent with the legal position recognised by the High Court and the tribunal's earlier findings in the appellant's own case. [Paras 6, 7]

Suo motu reversal and subsequent re credit did not require a refund claim under Section 11B; re credit was permissible.

Admissibility of Cenvat credit on capital goods used for job work under Notification No. 214/86 - entitlement under Rule 6(5) of the Cenvat Credit Rules, 2004 - Whether the appellant was entitled to avail Cenvat credit on capital goods used for carrying out job work under Notification No. 214/86. - HELD THAT: - The tribunal recorded that the core question of admissibility of credit on capital goods used for job work had already been decided in the appellant's favour by the tribunal in its earlier order dated 06.06.2019. Relying on that precedent and the High Court of Madras decision which supports availability of credit in comparable circumstances (including recognition of Rule 6(5) credits), the tribunal found the Revenue's objection unsustainable as regards the balance credit taken by the appellant. The impugned demand for reversal of the entire credit was therefore not maintainable in view of the earlier adjudication and applicable judicial authority. [Paras 6, 7]

Appellant entitled to the Cenvat credit on capital goods used for job work; the demand for reversal was not sustained.

Final Conclusion: Appeal allowed; the demand for reversal of the Cenvat credit (including the re credit taken) was set aside, the appellant's entitlement to the contested credit being upheld in view of the tribunal's earlier order and the High Court of Madras decision.

CENVAT credit for payment of service tax on Goods Transport Agency (GTA) services - finality of tribunal orders / res judicata - prohibition against re raising a settled demand (issue estoppel) - double levy / double recovery

CENVAT credit for payment of service tax on Goods Transport Agency (GTA) services - finality of tribunal orders / res judicata - prohibition against re raising a settled demand (issue estoppel) - double levy / double recovery - Whether the demand confirmed by the adjudicating and first appellate authorities in respect of credit claimed on GTA services could be sustained where identical demands for the same periods had earlier been decided in favour of the assessee by this Tribunal and the Revenue had not shown any order setting aside those decisions. - HELD THAT: - The Tribunal examined the record and found that the identical demand had earlier been adjudicated by this Bench in Final Order Nos. 226 to 275 of 2011 dated 04.02.2011 (and in Final Order No. 1834 of 2009 dated 27.11.2009 for an allied period), decisions which were not shown to have been disturbed by any higher forum. The appellant produced the earlier Tribunal orders and the Revenue's appeals to the High Court were dismissed in respect of the Order dated 27.11.2009, rendering that decision final. In these circumstances the re raising and confirmation of the same demand by the adjudicating authority amounted to attempting to levy a liability already settled in favour of the assessee, effectively resulting in double levy/double recovery. The Tribunal held that the proper course, if the Revenue wished to challenge the earlier Tribunal decisions, was to pursue appropriate appellate remedy rather than re initiating adjudication on the identical issue; absent any order setting aside the earlier Tribunal findings, the impugned demand could not be sustained. The Tribunal therefore set aside the demand and the impugned order. [Paras 4, 5, 6, 7]

The demand confirmed in the impugned order and the impugned order are set aside; the appeal is allowed with consequential benefits as per law.

Final Conclusion: The Tribunal allowed the appeal, setting aside the demand and the impugned order because the identical liability for the same periods had already been adjudicated in favour of the assessee by this Bench (and upheld by the High Court in one instance), and the Revenue had not produced any order setting aside those earlier decisions; consequential benefits granted as per law.

Mandatory pre-deposit under Section 48(4)(ii) of the VAT Act - remittance to the Tribunal for decision on merits subject to condition precedent of pre-deposit - condonation of delay in filing appeal - relief from pre-deposit in taxation matters requires a strong prima facie case and is not to be granted routinely - maintainability of proceedings under Section 55 and prior statements made in earlier proceedings

Condonation of delay in filing appeal - Condonation of delay in filing the writ appeal for 64 days. - HELD THAT: - The Division Bench considered IA-1 of 2020 seeking condonation of a 64-day delay in presentation of the writ appeal. Although the court expressed dissatisfaction with the explanations offered, it exercised discretion in the larger interest of justice and condoned the delay, permitting the appeal to be heard. The court therefore admitted the appeal for consideration despite the delayed filing. [Paras 1]

Delay of 64 days in filing the appeal is condoned and the appeal is admitted for hearing.

Mandatory pre-deposit under Section 48(4)(ii) of the VAT Act - remittance to the Tribunal for decision on merits subject to condition precedent of pre-deposit - maintainability of proceedings under Section 55 and prior statements made in earlier proceedings - Whether the Single Judge erred in remitting the matter to the Tribunal and granting 30 days to make the mandatory pre-deposit, in circumstances where the appellant had earlier represented that arrangements for pre-deposit had been made. - HELD THAT: - The Bench examined the record of the earlier Tax Case (Tax Case 68/2019) in which the appellant had, during hearing, represented that it had made arrangements to meet the requirement of the mandatory deposit. The Single Judge relied on those recorded submissions and, applying relevant precedent, remitted the matter to the Tribunal with 30 days' time to make the deposit so the appeal could be restored and decided on merits. The Division Bench found no ground to interfere with that approach because the appellant had previously asserted ability to arrange the pre deposit and had not made out the exceptional prima facie case necessary to justify waiver or relaxation of the pre deposit in revenue matters. Consequently, the remittance subject to deposit was upheld, with the court directing that the 30 day period for deposit shall run from the date of the present order. [Paras 9, 10, 11, 14]

The remittal to the Tribunal subject to making the mandatory pre deposit is upheld; the appellant is given 30 days from this order to deposit the required amount and obtain restoration of the appeal.

Relief from pre-deposit in taxation matters requires a strong prima facie case and is not to be granted routinely - Whether the appellant was entitled to relaxation or waiver of the mandatory pre-deposit. - HELD THAT: - The court considered the appellant's plea for relaxation based on alleged loss from a fire and financial difficulty. It applied the established principle that waiver or reduction of pre deposit in taxation and revenue matters is not to be granted routinely and requires demonstration of a strong prima facie case. Having regard to the appellant's earlier recorded statement that arrangements for the pre deposit had been made and to the legal standard, the court held that the appellant had not shown entitlement to any relaxation. The precedents relied upon by the appellant were examined and found not to assist on the admitted facts. [Paras 6, 12, 13]

No relaxation or waiver of the mandatory pre deposit is warranted on the facts; the appellant must comply with the pre deposit requirement.

Final Conclusion: The appeal is dismissed; delay in filing the appeal is condoned. The Single Judge's order remitting the matter to the Tribunal subject to the appellant making the mandatory pre deposit is affirmed, but the Court grants the appellant 30 days from the date of this order to make the deposit so that the appeal may be restored and decided on merits.

Condonation of delay - application of section 5 of the Indian Limitation Act under section 9(6) of the Trade Tax Act - affidavit unrebutted - service of assessment order on unauthorized person - restoration of appeal subject to deposit

Condonation of delay - affidavit unrebutted - service of assessment order on unauthorized person - Delay in filing the first appeal was to be condoned. - HELD THAT: - The Court examined the application under section 5 of the Indian Limitation Act (applied as per section 9(6) of the Trade Tax Act) accompanying the appeal and found that the reasons given - namely that the impugned assessment order had been shown as served on a person who was never an employee of the applicant, that the society had undergone closure and revival affecting knowledge and filing, and that the responsible officer had taken voluntary retirement - were supported by an affidavit which remained unrebutted. Having regard to those facts and the bona fides demonstrated by the applicant about delayed knowledge of the order, the Court held that notwithstanding the substantial delay, the reasons were sufficient to warrant condonation of delay.

Delay in filing the appeal is condoned and the impugned orders of the two inferior fora are set aside on this ground.

Restoration of appeal subject to deposit - The first appeal was to be restored to its original number subject to a condition. - HELD THAT: - On finding sufficient grounds for condonation, the Court directed that the First Appeal No.1322 of 2016 (year 2003-04) be restored to its original number. The restoration was made conditional upon the applicant making a specified deposit with the Legal Services Authority within the time fixed, and production of proof of such deposit for the appeal to be placed for hearing. This direction implements restoration as the consequential relief following allowance of the revision against the orders which had refused condonation.

The first appeal is restored to its original number on production of proof of the prescribed deposit within the time directed; thereafter the appeal shall be heard.

Final Conclusion: The revision is allowed: the orders refusing condonation are set aside, delay is condoned, and the first appeal for the year 2003-04 is restored subject to compliance with the deposit condition imposed by this Court.

Reversal of Input Tax Credit where inputs are destroyed at an intermediary stage of manufacture - no reversal of Input Tax Credit for inputs consumed as invisible/manufacturing loss - treatment of Input Tax Credit on goods manufactured and traded - direction to pass fresh orders on merits - reversal of Input Tax Credit under Section 19(9)(iii) of TNVAT Act, 2006

Reversal of Input Tax Credit where inputs are destroyed at an intermediary stage of manufacture - no reversal of Input Tax Credit for inputs consumed as invisible/manufacturing loss - reversal of Input Tax Credit under Section 19(9)(iii) of TNVAT Act, 2006 - Input Tax Credit availed on inputs consumed in the course of manufacture (invisible/manufacturing loss) is not liable to be reversed. - HELD THAT: - Relying on the Court's earlier decision in M/s. Ran India Steels (P) Ltd., the expression of inputs "destroyed at some intermediary stage of manufacture" contemplates inputs withdrawn at an intermediary stage and incapable of further use (sold as scrap/waste or physically destroyed with no residual value). Inputs that are consumed during the manufacture as an "invisible loss" do not fall within that expression and therefore do not warrant reversal of Input Tax Credit. The authorities must confine reversals to instances of physical destruction or withdrawal at an intermediary stage and not to inputs consumed in production. [Paras 5, 6]

Reversal of Input Tax Credit on inputs consumed as manufacturing loss is not permissible; such credits cannot be denied on that ground.

Treatment of Input Tax Credit on goods manufactured and traded - direction to pass fresh orders on merits - The impugned orders confirming demand insofar as they seek to deny Input Tax Credit on goods manufactured and traded by the petitioner, and to demand tax on manufacturing loss on traded goods, are not sustainable and require reconsideration. - HELD THAT: - The Court held that there is no warrant to deny Input Tax Credit availed on goods manufactured and traded by the petitioner unless other provisions of law justify such denial. Because the respondent's orders also included turnover of goods purportedly purchased and sold and confirmed demand in respect of manufacturing loss on traded goods, those portions of the impugned orders are liable to be set aside. The matter is remitted for fresh adjudication on merits, taking into account the legal distinction between consumed inputs and inputs destroyed at an intermediary stage as explained above. [Paras 7, 8, 9]

Portions of the impugned orders demanding tax on manufacturing loss relating to traded goods are set aside; respondent directed to pass appropriate fresh orders on merits within three months.

Final Conclusion: Writ petitions disposed by applying the Court's earlier ruling that Input Tax Credit need not be reversed for inputs consumed as part of manufacture; orders confirming demand in respect of manufacturing loss on traded goods are set aside and remitted to the assessing authority for fresh decision on merits within three months; no costs.

Burden shifting under Sections 118 and 139 of the Negotiable Instruments Act - Requirement of a legally enforceable debt or liability for offence under Section 138 of the Negotiable Instruments Act - Rebuttal of statutory presumption on preponderance of probabilities - Use of Section 269SS of the Income Tax Act as evidentiary factor - Judicial power under Section 311 CrPC to summon material witness

Burden shifting under Sections 118 and 139 of the Negotiable Instruments Act - Rebuttal of statutory presumption on preponderance of probabilities - Requirement of a legally enforceable debt or liability for offence under Section 138 of the Negotiable Instruments Act - Whether the accused successfully rebutted the statutory presumptions under Sections 118 and 139 NIA so as to displace the prosecution's case and warrant acquittal. - HELD THAT: - The Court analysed settled principles that once the execution of the cheque is proved, presumptions under Ss. 118 and 139 arise and cast an evidential burden upon the drawer, but the standard to rebut is that of preponderance of probabilities. Applying these principles to the evidence, the Court found material lacunae in the complainant's case: absence of particulars about the relationship with the accused, the source and mode of payment of the alleged loan, and contradictions/omissions in evidence. The defence raised a probable and consistent explanation that the cheque leaflets were in third party possession and that the complainant had no independent proven dealing with the accused. The Court held that these circumstances were sufficient to rebut the statutory presumptions on the preponderance test and to shift the evidential burden back to the complainant, which the prosecution failed to discharge. Consequently the conviction could not be sustained and the accused was entitled to the benefit of doubt and acquittal. [Paras 31, 41, 45, 49, 50]

Statutory presumptions under Ss. 118 and 139 were rebutted on the preponderance of probabilities; convictions set aside and accused acquitted.

Use of Section 269SS of the Income Tax Act as evidentiary factor - Judicial power under Section 311 CrPC to summon material witness - Whether deficiencies in the complainant's evidence (non explanation of source/mode of funds, failure to examine material witness) materially weakened the prosecution case. - HELD THAT: - The Court noted that the complainant admitted handing over cash yet did not explain source or mode of payment, nor recorded the transaction in his books; such silence bears upon credit under Section 114(g) Evidence Act. While contravention of Section 269SS/271D of the Income Tax Act is not an element of the NIA offence, it is a relevant factor in assessing credibility. Further, the Court observed that the complainant could and should have produced or got summoned the material witness who allegedly saw the transaction; failure to examine that witness under Section 311 CrPC (whose jurisdiction to summon is wide) left a lacuna in the prosecution case. Taken together, these evidentiary defects weighed in favour of the accused and contributed to the successful rebuttal of presumptions. [Paras 36, 38, 39, 42, 43]

Deficiencies in the complainant's evidence and non examination of a material witness materially undermined the prosecution case and supported acquittal.

Final Conclusion: The High Court held that, on the material before it, the accused successfully rebutted the statutory presumptions under Ss. 118 and 139 NIA by raising probable defences and exposing material infirmities in the complainant's case (including unexplained source/mode of funds and non examination of a material witness); convictions by the trial and appellate Courts were set aside and the accused was acquitted.