TMI Tax Updates e-Newsletter
Jun 09,2026

Maintainability of writ petition - Availability of appeal under Section 107 - barred entertainment of the writ petitions - HELD THAT:- The special leave petition was dismissed, and the time granted by the High Court [2026 (6) TMI 306 - RAJASTHAN HIGH COURT] to file an appeal under Section 107 of the Central Goods and Services Tax Act, 2017 was extended by two weeks from date.

Seeking Extension of time to file statutory appeal - right to personal hearing - admissibility of additional documents - SC in ROSHAN SHARMA[2026 (3) TMI 644 - SC ORDER], held that the petitioner is permitted to prefer an appropriate statutory appeal within six weeks from the date of this order. - HELD THAT:- Time to prefer the appeal against the assessment order was extended on account of technical glitches, and the appeal already filed was directed to be heard on its own merits without objection as to the time within which it was preferred.

Denial of input tax credit to a purchasing dealer solely on the ground that the supplying dealer failed to deposit the tax collected from the purchaser -Bona fide purchase transactions and collusion- wrongly availed and utilized the ITC - Reading down - Natural justice - Vicarious liability -HELD THAT: - Following the Division Bench decision in National Plasto Moulding Vs. State of Assam & Ors. [2024 (8) TMI 836 - GAUHATI HIGH COURT], which in turn considered On Quest Merchandising India Pvt. Ltd. Vs. Government of NCT of Delhi [2017 (10) TMI 1020 - DELHI HIGH COURT] the Court held that a purchasing dealer who has bona fide transacted with a registered supplier and complied with statutory requirements cannot be denied input tax credit merely because the selling dealer failed to deposit the tax collected from the purchaser. The proper course in such a situation is to proceed against the defaulting supplier. The Court accepted that the present controversy stood covered by that binding decision and therefore no further adjudication on the merits of the demand was required. At the same time, it preserved the Department's liberty to proceed in accordance with law if there are materials indicating that the transactions were not bona fide or were entered into in collusion with the suppliers. [Paras 14, 15, 16, 17]

The impugned demand order and the appellate order were set aside, with liberty to the authorities to take action in accordance with law if the transactions are shown to be collusive or not bona fide.

Final Conclusion: The writ petition was allowed by setting aside the demand and appellate orders, the Court holding that input tax credit could not be denied to a bona fide purchasing dealer merely because the supplier failed to deposit the tax. Liberty was reserved to the Department to proceed in accordance with law if material exists showing collusion or absence of bona fides in the transactions.

Application seeking Anticipatory bail - Economic offences -Prior notice before coercive action - Blanket protection against arrest - Natural justice in criminal investigation - HELD THAT: - The Court noted that, according to the Department itself, the proceedings were at the stage of summons and no proposal seeking prior approval of the Commissioner for arrest had yet been moved. Even so, since investigation was continuing, it could not be said with certainty that there was no possibility of arrest in future. The impugned orders had not granted anticipatory bail, nor had they insulated the respondents from the investigation; on the contrary, they required the respondents to join investigation as and when called, while leaving the Department free to proceed in accordance with law if they failed to comply. In that background, the direction for seven days' prior notice before any coercive step was treated as a limited safeguard consistent with natural justice, enabling the respondents to avail legal remedies if an apprehension of arrest arose, and not as a blanket order covering all offences or future conduct. [Paras 29, 30, 31, 33]

The challenge to the notice direction failed, and the orders dismissing anticipatory bail while requiring seven days' prior notice before coercive action were upheld.

Final Conclusion: The petitions were dismissed. The Court held that the impugned directions did not confer blanket protection from arrest, but merely required prior notice before coercive action while preserving the Department's full authority to continue investigation and proceed in accordance with law.

Denial of input tax to a bona fide purchasing dealer - selling dealer failed to deposit the tax - availing ineligible input tax credit (ITC) on the strength of invoices issued to some proprietorship firm without actual receipt of goods and without actual supply of goods - Collusive purchase transactions - Reading Down -HELD THAT: - Following the Division Bench decision in National Plasto Moulding [2024 (8) TMI 836 - GAUHATI HIGH COURT], which had adopted the principle stated in On Quest Merchandising India Pvt. Ltd. [2017 (10) TMI 1020 - DELHI HIGH COURT], the Court held that a purchasing dealer cannot be penalised merely because the selling dealer failed to deposit the tax collected from the purchaser. The determinative principle applied was that the Department's remedy in such a situation lies against the defaulting supplier and not against a bona fide purchasing dealer. At the same time, the protection does not extend to transactions shown by material to be sham, collusive, or lacking bona fides. Since both sides accepted that the controversy stood covered by the Division Bench ruling, no further adjudication on merits was required. [Paras 14, 15, 16, 17]

The impugned demand order was set aside, with liberty to the authorities to proceed in accordance with law if material exists showing that the transactions were not bona fide or were entered into in collusion with the suppliers.

Final Conclusion: The writ petition was allowed by setting aside the impugned order confirming tax, interest and penalty. The Court held that input tax credit could not be denied to a bona fide purchasing dealer merely because the supplier failed to deposit the tax, while preserving the Department's liberty to act if the transactions are shown to be collusive or lacking bona fides.

Validity of assessment order and consequential demand notice under Section 73(9) - non-consideration of the reply and supporting documents - Violation of principles of natural justice​​​​​​​ - HELD THAT: - The Court found from the material produced that the petitioner had submitted a detailed reply to the show-cause notice along with supporting documents, and that the portal acknowledgment and email printout were also on record. In spite of this, the adjudicating authority proceeded on the basis that no reply had been received. Since the order was thus founded on a position contrary to the record, the Court held that the adjudicating authority had failed to consider the petitioner's reply and that such non-consideration amounted to a violation of the principles of natural justice. On that ground, the impugned order and consequential DRC-07 were quashed and the matter was remitted for fresh consideration after hearing the petitioner. [Paras 5, 6]

The impugned adjudication order and consequential DRC-07 were quashed, and the matter was remitted for fresh adjudication after considering the petitioner's reply and documents and after affording an opportunity of hearing.

Final Conclusion: The writ petition was allowed on the ground that the adjudicating authority ignored the petitioner's reply and proceeded contrary to the record. The matter was remitted for fresh consideration after taking the reply and supporting documents into account and after granting a hearing.

Validity of ex parte assessment order passed under Section 73 - No Opportunity of hearing - Principles of natural justice - Excess availment of ITC - Penalty under Section 73(9) read with Section 122(2)(a) and interest under Section 50 - HELD THAT:- The ex parte assessment order was set aside and the matter was remanded to the assessing authority to afford the assessee an opportunity to file reply and supporting documents and to pass fresh orders in accordance with law; consequential bank attachment, if any, was directed to be raised.

Cancellation of GST registration for non-furnishing of bank account details - Proper Officer failed to adhere to the specific statutory procedure under Form GST REG-31 - Adequate opportunity of hearing in registration cancellation - Principles of natural justice - Reasonable opportunity of hearing - non-compliance with Rule 10A - HELD THAT: - The Court held that, on a combined reading of Section 29 of the CGST Act with Rule 10A and Rule 21A(2A)(b) of the CGST Rules, contravention relating to bank account details must first be dealt with by suspension of registration and intimation in Form GST REG-31, granting thirty days to explain why cancellation should not follow. Since the impugned notice was issued in Form GST REG-17 and allowed only seven working days, the Proper Officer failed to adhere to the specific statutory procedure. The notice also did not properly specify the date and place of appearance. Where the statute prescribes the manner of doing an act, it must be done in that manner alone; departure from the prescribed form and time deprived the petitioner of an effective and reasonable opportunity of hearing and vitiated both the notice and the cancellation order. The cancellation order having also been passed before expiry of thirty days from the notice date was therefore unsustainable. [Paras 14, 15, 16, 17, 18]

The show-cause notice and the cancellation order were set aside, and the respondents were directed to restore the petitioner's GST registration, without affecting its liability to pay tax or discharge other statutory obligations.

Final Conclusion: The writ petition was allowed by holding that cancellation of registration for Rule 10A non-compliance had to follow the specific statutory route of Form GST REG-31 with thirty days' opportunity. As that procedure was not followed, the impugned notice and cancellation order were quashed and registration was directed to be restored.

Entitlement to bail in prosecution for alleged wrongful availment of input tax credit - Documentary evidence - Presumption of innocence - absence of antecedents, flight risk, tampering risk, or other circumstances justifying continued custody

Entitlement to bail in prosecution for alleged wrongful availment of input tax credit under the CGST Act where the case was based on documentary material, the maximum punishment was five years, investigation stood completed and no specific risk of tampering, intimidation or absconding was shown.

HELD THAT: - The Court held that pre-trial detention cannot be punitive and that the governing consideration in bail is securing the accused's presence at trial. It found that the prosecution had not shown any material indicating that release of the applicant would obstruct a fair trial, intimidate witnesses, tamper with evidence, evade the process of law, repeat the offence, or present a flight risk. The Court further noted that the prosecution was founded substantially on documentary and electronic evidence, the offence was compoundable, triable by a Magistrate, the maximum punishment prescribed was five years, the investigation had been completed and the complaint had already been filed, while the trial was not likely to conclude within a reasonable time. In those circumstances, and having regard to the presumption of innocence and the principle that bail is the rule and jail the exception, the applicant was held entitled to be enlarged on bail subject to conditions. [Paras 12, 13, 19, 20, 21]

Bail was granted subject to conditions, as continued custody was not justified on the material placed by the prosecution.

Final Conclusion: The Court granted bail in the GST prosecution, holding that continued pre-trial detention was unwarranted where the case rested on documentary evidence, investigation stood completed, the offences were triable by a Magistrate with a maximum sentence of five years, and no real apprehension of tampering, intimidation or absconding was shown.

Liability of legal representatives for tax dues of deceased proprietor - business discontinued on death -Mandatory personal hearing in adverse tax determination - Requirement of speaking assessment order - Tax liability of a deceased sole proprietor -HELD THAT: - Following Hitesh Patel vs. State of Rajasthan & Ors. [2026 (2) TMI 1429 - RAJASTHAN HIGH COURT], the Court accepted that liability to pay tax, interest or penalty does not stand extinguished by death, and in a case of discontinuance of business it can be enforced against the legal representatives to the extent of the estate of the deceased. At the same time, the Court held that such liability remains subject to compliance with the statutory safeguard of personal hearing and the requirement that the determination be made by a reasoned and speaking order. Since the impugned proceedings were assailed on the ground that the demand was raised in the name of the deceased without affording hearing to the legal representatives, the petition was disposed of in the same terms as the earlier decision. [Paras 4, 6]

The impugned demand could not be sustained without compliance with the statutory requirement of hearing and a speaking order; the writ petition was accordingly disposed of in terms of the earlier decision.

Final Conclusion: The Court disposed of the writ petition in the same terms as its earlier decision, holding that though tax liability of the deceased may be pursued against the legal representatives in accordance with law, such determination must comply with the mandatory requirement of personal hearing and a speaking order. The other challenge raised in the writ petition was not pressed and was kept open.

Levy of penalty under Section 122(1)(vii) - absence of a proper notice - non-production of proof for inward supplies, including supporting documents - violation of natural justice - HELD THAT: - The Court noted that the show cause notice had alleged non-production of proof for inward supplies, including supporting documents. It held that, in a transaction of the nature involved, there ought to be proper matching of documents to establish actual receipt of goods and valid availment of input tax credit. The absence of weighment slips and RFID particulars was treated as material to the question whether the goods had in fact been received. The Court observed that input tax credit is provisional and can be denied where the assessee fails to prove receipt of goods or compliance with the statutory conditions for availment. On that reasoning, the contention that the impugned order travelled beyond the show cause notice or violated Section 75(7) was rejected, and the merits of the penalty were not interfered with in writ jurisdiction. [Paras 8, 9, 10]

The challenge to the penalty order on the ground of violation of Section 75(7) failed, with liberty to pursue the statutory appeal.

Final Conclusion: The writ petition was dismissed. The Court held that no violation of Section 75(7) was made out and left it open to the petitioner to file an appeal before the appellate authority within the remaining period of limitation.

Rejection of the refund application - Non-consideration of supplementary reply - Online adjudication under GST portal -Procedural fairness in electronic filing of replies - Principles of Natural Justice - Alternative Remedy - HELD THAT: - The Court held that where notices, replies and orders are ordinarily issued and exchanged through the Common Portal, the proceedings are designed to be conducted primarily through the online mode. In such a situation, it was not appropriate to expect the noticee to adopt a hybrid course by filing any further reply only through offline mode during personal hearing. The Court found that once online communication is the preferred and established mode, a corresponding mechanism must exist to enable filing of additional or supplementary replies online, subject to suitable control by the issuing authority. Since the record showed that the petitioner had raised a grievance ticket and had attempted to file a further reply but was prevented from doing so by the portal limitation, the order passed without that reply being brought on record suffered from a procedural defect. On that basis, the Court declined to relegate the petitioner to the appellate remedy and directed fresh consideration. The Court also observed that the GSTN Portal should be refined to provide a request-based facility for filing supplementary replies online. [Paras 10, 11, 12, 13, 14]

The impugned order was set aside and the matter was remitted for a fresh decision after granting the petitioner one opportunity to file an additional or supplementary reply through offline mode within the time allowed by the Court.

Final Conclusion: The writ petition was disposed of by setting aside the order rejecting refund and remitting the matter for fresh adjudication, since the petitioner had been prevented by the GST portal from filing a supplementary reply. The Court further directed consideration of an online mechanism for request-based filing of additional replies.

Anti-profiteering - Further investigation beyond original complaint - Effect of omission of rules constituting authority - Directory nature of time limit - Commensurate reduction in price - Interest and penalty for pre-amendment period.

Whether the order passed by erstwhile NAA is wholly without jurisdiction? - The erstwhile anti-profiteering authority had jurisdiction to direct further investigation into products beyond the original complaint. - HELD THAT: - It is not disputed in this proceeding that with effect from 15.11.2017, the rate of GST on the Fast-moving consumer goods (FMCG) for the products dealt by the M/s lifestyle International Pvt. Ltd., was reduced from 28 % to 18%. It is also not disputed and had never been highlighted by the Respondent that after such reduction of 10 % of rate of GST, the Respondent, to the contrary, did not reduce the MRP on FMCG products so as to pass on the benefit to the consumers. This issue was considered by the Hon’ble Delhi High Court in the Reckitt Benckiser India Pvt. Ltd. [2024 (1) TMI 1248 - DELHI HIGH COURT], vide Para 117. At Para 117 of the Hon’ble High Court has held that the fundamental presumption under section 171 that every tax reduction must result in “price reduction” is not correct. The use of the expression “shall” in section 171 of the Act, 2017 means that the supplier is required to pass on the benefit of the reduced tax rate and the benefit of input-tax credit, and that such passing on is to be carried out only by way of commensurate reduction of price of the goods or services. Accordingly, costing and market-related factors are irrelevant for NAA, as it is only required to examine whether or not there is any reduction in tax rate or benefit of accruing input-tax credits and if so, whether the same has been passed on by way of commensurate reduction of prices. The Delhi further held that the NAA is not concerned with the price determined by a supplier, for the supply of particular goods or services, exclusive of the GST or input-tax credit component. The supplier is at liberty to set his base prices and vary them in accordance with the relevant commercial and economic factors or any applicable laws. Consequently, NAA is only mandated to ensure that the benefit of reduced rates of taxes and input-tax credit is passed on. NAA cannot force the petitioners to sell their goods or services at reduced prices.

The Tribunal held that Rule 133(4) empowered the authority to direct further investigation or inquiry whenever the report of the DGAP required reconsideration, and that this power was not confined by the original complaint. Rule 133(5) was treated as clarificatory and not as a source of new jurisdiction. The Respondent's own submission that benefit may have been passed to customers other than the original purchaser furnished the basis for directing a wider investigation. The Tribunal also relied on the interpretation in Reckitt Benckiser India Pvt. Ltd. [2024 (1) TMI 1248 - DELHI HIGH COURT], that the scope of investigation under Rule 129 is wide and is not restricted to the goods or services mentioned in the complaint. [Paras 23, 24, 25, 26, 27]

The objection to jurisdiction was rejected.

Whether the omission of Rules, regarding the creation of NAA makes the whole process non-est? - The omission of the rules relating to constitution and functioning of the erstwhile authority did not render pending anti-profiteering proceedings or prior orders non-est. - HELD THAT: - The Tribunal examined the omitted rules and found that they related to constitution, appointment, secretarial support, quorum and tenure of the authority. It held that the statutory scheme did not abandon anti-profiteering control; only the forum changed. Since the functions were successively entrusted first to another authority and later to the GST Appellate Tribunal, the principle of succession applied. Earlier orders and pending proceedings therefore did not disappear merely because the procedural rules constituting the previous authority were omitted without an express saving clause. [Paras 30, 31, 32]

The proceedings were held to survive notwithstanding the omission of Rules 122, 124, 125, 134 and 137.

Limitation in anti-profiteering proceedings - Are the proceedings barred by limitation? - The time limit prescribed for decision of anti-profiteering proceedings was directory and not mandatory, and the proceedings were not barred by limitation. - HELD THAT: - Applying the reasoning noticed from Reckitt Benckiser India Pvt. Ltd. [2024 (1) TMI 1248 - DELHI HIGH COURT], the Tribunal held that where the rules prescribe a timeline but provide no consequence for non-compliance, the provision is directory. It further treated the anti-profiteering provisions as beneficial legislation aimed at consumer welfare, warranting a liberal construction. On that basis, lapse of the prescribed period did not abate the proceedings. [Paras 33, 34]

The plea of limitation was rejected.

Interest and penalty for pre-amendment period - Prospective operation of penal consequences - Interest and penalty could not be imposed for the profiteering period in question because the relevant provisions came into force later. - HELD THAT: - The Tribunal held that the statutory provision for penalty under Section 171(3A) and the provision for interest under Rule 133(3)(c) were introduced after the investigated period. Relying on DGAP v. Proctor & Gamble Group [2025 (9) TMI 732 - GSTAT NEW DELHI], it concluded that those consequences could not be applied to profiteering alleged for the period from 15.11.2017 to 31.01.2018. [Paras 35]

The Respondent was held not liable to interest or penalty.

Commensurate reduction in price - Benefit to each recipient - Methodology for computing profiteering - HELD THAT: - The Tribunal found that the reduction of GST from 28% to 18% was undisputed and that the Respondent had not shown that the benefit was passed on by commensurate reduction in price. Referring to Reckitt Benckiser India Pvt. Ltd.[2024 (1) TMI 1248 - DELHI HIGH COURT], it held that Section 171 obliges the supplier to pass on the tax reduction by way of price reduction, while base pricing freedom remains with the supplier subject to justification on cogent material if other factors are relied upon. The Respondent did not establish any such justification and instead disputed only the DGAP's methodology. The Tribunal treated the Respondent's own statement that part of the benefit may not have been passed to the very customer who purchased the goods as supporting the finding of profiteering. It further held that benefit allegedly passed to some other customers could not offset denial of benefit to the actual recipients, because each customer is entitled to receive the benefit. The challenge to inclusion of GST in the profiteered amount and the plea regarding refund from the Government were held to lie outside the scope of anti-profiteering adjudication. The objection that the DGAP had altered methodology was rejected, and comparison of average pre-rate reduction prices with post-rate reduction actual prices was accepted. On that basis, the DGAP's report was accepted to the extent of the quantified profiteering for the investigated period. [Paras 40, 41, 42, 43, 44]

The Respondent was held to have profiteered for the period 15.11.2017 to 31.01.2018, and was directed to deposit the quantified amount in the Central and State/UT Consumer Welfare Funds in the prescribed proportion.

Final Conclusion: The Tribunal rejected the objections as to jurisdiction, survival of proceedings after omission of the constitutive rules, and limitation. It held that the Respondent had profiteered by failing to pass on the GST rate reduction to recipients during 15.11.2017 to 31.01.2018, upheld the quantified amount for deposit in the Consumer Welfare Funds, and declined to impose interest or penalty for that period.

Scope of amendment to section 115BBE enhancing the rate of tax on unexplained income from 30% to 60% - Prospective or retrospective operation of taxing statutes - Enhanced tax on unexplained income u/s 115BBE -

HELD THAT:- The writ petitions were disposed of in view of the separate decision in Deepak Maratha [2026 (6) TMI 371 - RAJASTHAN HIGH COURT] with liberty to the petitioners to avail the statutory appellate remedy under Section 246A of the Income-tax Act, and the time spent in pursuing the writ petitions was directed to be excluded for limitation if such appeals are filed.

Validity of final assessment order passed u/s 144C - compliance with the directions issued by the Dispute Resolution Panel un/s 144C(13) -Validity of final assessment order passed contrary to binding directions

HELD THAT: - The Tribunal held that the statutory scheme requires the Assessing Officer to pass the final assessment order in conformity with the directions issued by the Dispute Resolution Panel. Mere absence of an order giving effect from the Transfer Pricing Officer did not permit the Assessing Officer to repeat the draft assessment figures or to ignore the Panel's express direction regarding recomputation of transfer pricing adjustment and deletion of the book profit adjustment. Since the impugned order was admittedly not aligned with the binding directions of the Panel, it was in clear violation of the governing provision and was therefore liable to be quashed. [Paras 9, 10]

The final assessment order was quashed as having been passed in breach of the mandatory requirement to conform to the Dispute Resolution Panel's directions.

Final Conclusion: The appeal was allowed on the short legal ground that the final assessment order had not been passed in conformity with the Dispute Resolution Panel's directions. The order was quashed, and the remaining grounds were left open as academic.

TP Adjustment - Foreign exchange fluctuation in transfer pricing margin computation - CSR donations and deduction u/s 80G - Foreign tax credit verification

TP Adjustment - Foreign exchange fluctuation in transfer pricing margin computation - Operating income under TNMM - Foreign exchange gain arising on realization of export proceeds from IT/ITES services rendered to associated enterprises in the normal course of business had to be treated as operating in nature while computing the profit level indicator under TNMM - HELD THAT: - The Tribunal held that the gain from foreign exchange fluctuation was on revenue account, being linked to realization of normal sale proceeds from export of services rendered to the associated enterprises. It rejected the Revenue's reliance on the safe harbour rules as determinative, noting that those provisions are optional and create a deeming fiction which had not been invoked by the assessee. Following the judicial precedents relied upon, the Tribunal held that such foreign exchange gain or loss forms part of operating income for computation of OP/TC under TNMM. Since the assessee contended that inclusion of such gain would render its margin at arm's length, the remaining transfer pricing objections on comparables, RPT filter and margin computation were treated as academic and were not adjudicated, with liberty to seek rectification if required.

The Assessing Officer was directed to verify that the foreign exchange gain arose from realization of normal export sale proceeds and, on such verification, to treat it as operating in nature; the remaining transfer pricing grounds were left unadjudicated as academic.

CSR donations and deduction under section 80G - Eligible donation to Odisha State Disaster Management Authority - Deduction under section 80G denied merely because the donation to Odisha State Disaster Management Authority formed part of the assessee's corporate social responsibility expenditure. - HELD THAT: - The Tribunal noted that the authorities had denied deduction only on the ground that the payment formed part of the assessee's CSR obligation under the Companies Act, 2013, though deduction for other CSR-linked donations had been allowed. It accepted the legal position emerging from the decisions cited before it that, while CSR expenditure may not be allowable as business expenditure under section 37(1), there is no general prohibition against claiming deduction under section 80G except in the specific cases excluded by that provision. As the assessee had produced the receipt and the certificate showing that the donee institution qualified under section 80G for the relevant assessment year, the claim was held admissible in accordance with law.

The Assessing Officer was directed to allow deduction under section 80G in accordance with law in respect of the donation made to Odisha State Disaster Management Authority.

Foreign tax credit verification - Double taxation relief under section 90 - The assessee's claim for double taxation relief under section 90 - HELD THAT: - The Tribunal recorded that both sides were ad idem that the assessee's claim for foreign tax relief should be restored to the Assessing Officer for verification. As the grievance was that the claim had been found correct in the assessment proceedings but credit was not actually granted in tax computation, the Tribunal remitted the matter for due verification and consequential grant in accordance with law. No independent question on the substantive entitlement to relief was adjudicated on merits.

The issue was restored to the file of the Assessing Officer to verify the claim and grant double taxation relief under section 90 in accordance with law.

Final Conclusion: The appeal was partly allowed. Foreign exchange gain relatable to realization of export service receipts was held to be operating in nature for transfer pricing purposes, deduction under section 80G in respect of the donation to Odisha State Disaster Management Authority was directed to be allowed in accordance with law, and the claim for relief under section 90 was restored to the Assessing Officer for verification.

Mechanical approval under section 153D - Unabated assessment and incriminating material - Mandatory recourse to section 153C for third-party search material - Project Completion Method in real-estate development - Evidentiary value of loose sheets - Source of cash deposit from agricultural income

Mechanical approval under section 153D - Non-application of mind - Consolidated approval - Approval granted for search assessments in a consolidated manner without year-wise consideration, file movement or reasons - HELD THAT: - The Tribunal held that the approval did not indicate movement of the file, did not grant approval for each assessment year separately and did not disclose any reason showing examination of the draft orders or record. Since the approval covered numerous cases on the same date and bore the features of a consolidated and mechanical exercise, it reflected total non-application of mind by the approving authority. As valid prior approval was a mandatory requirement, the defect vitiated the assessments themselves. [Paras 10, 13, 14]

The approval under section 153D was quashed and the assessments founded on such approval were held void ab initio.

Unabated assessment and incriminating material - Completed assessment under section 153A - HELD THAT: - The Tribunal found that for the relevant completed years the time for issuance of notice under section 143(2) had expired before the date of search, and the assessments had attained finality. It further found that the addition made by estimating income at a percentage of advances received was not based on any incriminating material found during search, and no such material was referred to while making the addition. In such circumstances, the completed assessments could not be disturbed in proceedings under section 153A. [Paras 16, 18, 19]

The assessments for the unabated years were quashed.

Mandatory recourse to section 153C for third-party search material - Jurisdictional defect in search assessment - Where the assessment was based on material found in search of another person, the Assessing Officer could proceed only under section 153C or framing assessment under section 143(3) read with section 144 or under section 153A - HELD THAT: - The Tribunal accepted that satisfaction for issuance of notice under section 153C had been recorded on 15.12.2015 and, on that basis, the relevant six-year block included AY 2014-15. It held that if the Revenue itself relied on documents unearthed during the search for making the assessment, the assessment for AY 2014-15 ought to have been framed only by following the mandatory procedure under section 153C. It further held that, where no incriminating material belonging to the assessee was seized in its own case and the material relied on was sourced from third-party searches, assumption of jurisdiction under section 153A without complying with section 153C was wholly invalid. [Paras 24, 25, 26, 27, 28]

The assessments framed without following section 153C were held without jurisdiction and quashed.

Project Completion Method in real-estate development - Rejection of accounting method without defects in books - Estimation of income on advances received - whether real-estate developer consistently following Project Completion Method could not be forced to adopt Percentage Completion Method or be subjected to ad hoc estimation of income on advances in the absence of defects in the books? - HELD THAT: - The Tribunal recorded that the assessee had consistently followed the Project Completion Method for its projects and that this was a recognised method of accounting. It found that the Assessing Officer had neither pointed out defects in the books nor recorded dissatisfaction as to their correctness or completeness before rejecting the method followed by the assessee. The addition by applying a flat rate on advances received was therefore an arbitrary estimate without legal basis, and the change from Project Completion Method to Percentage Completion Method could not be imposed merely on the Assessing Officer's view. [Paras 30, 32, 34, 35, 36]

The addition made by estimating income at a percentage of advances received was deleted.

Evidentiary value of loose sheets - Unaccounted receipts and payments - Corroborative evidence - Additions for alleged unaccounted receipts and payments sustained merely on the basis of loose papers containing rough notings without corroboration - HELD THAT: - The Tribunal found that the seized papers were loose sheets with rough notings and scribblings, without narration, signature or any reliable identification linking them to the assessee. No statement or independent inquiry supported the alleged transactions, and the additions had been made by picking figures from such papers and allocating them to the assessee on assumptions. In the absence of corroborative evidence establishing nexus with the assessee and the transactions, the loose sheets had no sufficient evidentiary value to sustain the additions. [Paras 42, 43, 44, 45]

The additions on account of alleged unaccounted receipts and payments were deleted.

Estimation of income on gross receipts - Absence of ownership or project execution - Estimated profit addition on gross receipts from a project where the assessee was neither the owner of the land nor the developer who executed the project - HELD THAT: - The Tribunal accepted the assessee's explanation that it was not the owner of the land, had not executed the project, and that the initial amounts received were transferred to the actual land-owning entities. In that factual position, computation of profit of the project and its allocation to the assessee on an assumed basis lacked foundation. The addition proceeded on an incorrect premise that the assessee had carried out the project and earned the project receipts. [Paras 49, 50]

The estimated income addition on gross receipts was deleted.

Source of cash deposit from agricultural income - Unexplained money under section 69A - Additional evidence before appellate authority - HELD THAT: - The Tribunal noted that the assessee had produced ledger accounts, Form-J evidencing sale of agricultural produce, purchase deeds of agricultural land, land records and cash book showing availability of cash. It found that these materials established ownership and cultivation of agricultural land as well as the source of cash deposited. Since the Assessing Officer had not pointed out any defect in the documentary evidence nor conducted inquiry to disprove the agricultural activity, the confirmation of the addition on presumptions was unsustainable. [Paras 52, 53, 54]

The addition treating the cash deposits as unexplained money was deleted.

Final Conclusion: The Tribunal quashed the impugned search assessments wherever they were founded on mechanical approval under section 153D or on jurisdictional non-compliance with section 153C, and also deleted the additions made on estimated revenue recognition, loose sheets, project receipts and unexplained cash deposits. The assessees' appeals were accordingly partly allowed.

Inter-corporate loan and consideration for repayment - Taxability of loan under section 56(2)(x) - Effect of non-compliance with Companies Act on genuineness of loan

Whether unsecured inter-corporate loan received from a group company taxed as money received without consideration under section 56(2)(x) merely because of alleged non-compliance with corporate filing requirements? - HELD THAT: - The Tribunal noted that the Assessing Officer had not doubted the identity of the lender, the genuineness of the transaction, or the creditworthiness of the lender, and had invoked section 56(2)(x) only on the footing that the assessee had not complied with the relevant provisions of the Companies Act in relation to the loan. It accepted the appellate view that a loan carries the obligation of repayment and, therefore, cannot be treated as a receipt without consideration unless it is established that repayment has not taken place or will not take place. In that factual setting, belated or deficient compliance under the Companies Act could not by itself convert a bona fide loan transaction into taxable income under section 56(2)(x). [Paras 6, 7]

The deletion of the addition was upheld and the Revenue's challenge to tax the loan under section 56(2)(x) was rejected.

Final Conclusion: The Tribunal held that the inter-corporate loan received by the assessee from its group company was not taxable under section 56(2)(x) as a receipt without consideration. Since the Assessing Officer had not disputed the lender's identity, creditworthiness or the genuineness of the transaction, alleged non-compliance with the Companies Act alone could not justify the addition, and the Revenue's appeal was dismissed.

Reassessment beyond three years - Sanction u/s 151 - Jurisdictional validity of notice under section 148 - HELD THAT: - The Tribunal held that, for A.Y. 2017-18, the notice under section 148 having been issued on 15-07-2022 was beyond three years from the end of the relevant assessment year. In such a case, the approval required was that of the higher authority specified in section 151(ii), namely the Principal Chief Commissioner or Principal Director General or, where there is no such authority, the Chief Commissioner or Director General. Since the notice had been issued only with approval of the Principal Commissioner, the statutory requirement of sanction was not satisfied. Following the decision of the jurisdictional High Court and the co-ordinate Bench, the Tribunal treated the notice and the consequential reassessment as unsustainable in law. [Paras 6]

The legal ground was allowed and the assessment order was quashed; the remaining grounds were left open as academic.

Final Conclusion: The Tribunal allowed the appeal on the jurisdictional ground that the reassessment notice for A.Y. 2017-18, issued beyond three years, lacked sanction from the competent authority under section 151. The consequential assessment was quashed, and the grounds on merits were left open.

Addition u/s 56(2)(viib) - share valuation - 10% safe harbour - Curative amendment - Addition on shares issued to the resident shareholder under section 56(2)(viib) - variation between the issue price and the valuation under Rule 11UA remained within the 10% safe harbour introduced by Notification No. 81/2023 - HELD THAT: - The Tribunal held that, on a plain reading of the notification introducing sub-rule (4) in Rule 11UA, where the variation between the issue price and the value determined under the prescribed valuation mechanism does not exceed ten per cent, the issue price is deemed to be the fair market value. Since the difference in the present case was within that permissible range, the deeming fiction applied and no addition could survive.

Relying on M/s Sakshi Fincap Pvt. Ltd. [2024 (5) TMI 1232 - ITAT DELHI] the Tribunal accepted that the safe harbour provision was curative and applicable retrospectively. [Paras 7, 8, 9, 10]

The addition made under section 56(2)(viib) was deleted.

Legal and professional charges - Capital or revenue expenditure - Enduring benefit test - Expenditure on due diligence and professional advisory services connected with business structuring and growth was allowable as revenue expenditure or disallowed as capital expenditure merely because it also facilitated raising of equity funds - HELD THAT: - The Tribunal found that the expenditure was claimed to have been incurred for due diligence of the business, evaluation of the financial and operational position of the assessee, and obtaining professional advisory services in connection with overall business structuring and growth. Such services were not shown to relate to acquisition of any capital asset or to have resulted in an advantage of enduring nature in the capital field. Applying the settled principle from Empire Jute Co. Ltd. [1980 (5) TMI 1 - SUPREME COURT] the Tribunal held that expenditure incurred for facilitating business operations remains revenue in character unless it brings into existence a capital asset or enduring capital advantage. As the Assessing Officer had not demonstrated creation of any such asset or enduring benefit, the disallowance could not be sustained. [Paras 12, 13]

The disallowance of legal and professional charges was deleted.

Final Conclusion: The appeal was allowed. The Tribunal deleted both the addition under section 56(2)(viib), holding that the variation in share valuation was protected by the retrospectively applicable safe harbour, and the disallowance of legal and professional charges, holding them to be revenue expenditure.

Reassessment beyond three years u/s 149(1)(b) - Deemed information in search cases under Explanation 2 to section 148 - Use of material produced under section 131 after commencement of search - Estimation of unaccounted cash receipts by adding two zeroes - Profit estimation on unaccounted receipts - Unexplained investment in cash payments for land development

Reassessment beyond three years under section 149(1)(b) - Jurisdictional facts for notice under section 148 - Cash book entries as asset or books of account - HELD THAT: - The Tribunal held that once reopening is beyond three years, the conditions of section 149(1)(b) are jurisdictional and must be expressly satisfied in the recorded reasons. The seized material only contained details of cash receipts and cash payments and was not shown to relate to acquisition of any asset; nor did it constitute books of account or entries in books of account. The reasons recorded merely stated, in a vague manner, that escaped income was represented by an asset and entries in books, without identifying the nature of the asset or the relevant entries. The Tribunal further found that the Assessing Officer had proceeded mechanically on the quantification supplied by the investigation wing, without minimum verification of the nature of the transactions, attribution to the assessee for each year, or correct quantification of escaped income. Since the statutory preconditions for assumption of jurisdiction were not fulfilled, the notices were void ab initio. [Paras 24, 25, 26, 30, 35]

The notices under section 148 and the consequential reassessment orders for assessment years 2016-17 to 2019-20 were quashed.

Use of material produced u/s 131 after commencement of search - Illegal reliance on material not seized from searched premises - Requirement of section 148A procedure - Material produced by a third person in response to summons under section 131 after commencement of the search, and not found from the assessee's searched premises - HELD THAT: - The Tribunal found that the documents and phones in question were not found from the assessee's premises but were brought by another person in response to summons. In such a case, section 131(3) permitted impounding and retention of documents produced, but not seizure as if they were found in execution of the search warrant. It further held that the power under section 131(1A) to issue summons operates before action under section 132(1), and its use after commencement of search for obtaining and seizing such material was illegal. Therefore, such material could not be treated as search material for invoking section 148 read with Explanation 2(i), and the Department, if at all, had to proceed in accordance with section 148A. The notice issued on the basis of such material was therefore unsustainable. [Paras 33, 34, 35]

The reassessment notices founded on such material were held invalid.

Deemed information in search cases under Explanation 2 to section 148 - Proviso to section 148 - Escapement of income for the relevant assessment year - For assessment years 2020-21 to 2022-23, and mutatis mutandis for the company's assessment year 2022-23, notice under section 148 issued merely because a search had taken place; the reasons had to demonstrate, with reference to the relevant year, that the information discovered during search suggested escapement of income. - HELD THAT: - The Tribunal held that Explanation 2 to section 148 creates only a limited deeming fiction treating search as information, but it does not dispense with the requirement in the proviso to section 148 that the information must suggest escapement of income for the relevant assessment year. The scope of the deeming fiction could not be extended to deem the contents of the information or to override the jurisdictional requirements of section 147. The reasons recorded in the present case merely reproduced the investigation wing's quantification and invoked Explanation 2(i), without the Assessing Officer independently examining the seized material, identifying the escaped income, correlating it to the relevant year, or demonstrating how jurisdictional conditions stood satisfied. The Tribunal therefore held that notice under section 148 cannot issue automatically to a searched person and that independent application of mind in the recorded reasons is mandatory. [Paras 43, 44, 46, 48, 73]

The notices under section 148 and consequential reassessment orders for assessment years 2020-21 to 2022-23, including assessment year 2022-23 in the connected company appeal, were quashed.

Estimation of unaccounted cash receipts by adding two zeroes - Cross-examination of third-party witnesses - Profit estimation on unaccounted receipts - AO justification in treating all entries in the seized cash book and electronic records as figures recorded after suppressing two zeroes, but the estimate of profit at 16% on the admissible unaccounted receipts was sustainable. - HELD THAT: - The Tribunal accepted that the assessee did not dispute the existence of the seized cash book and electronic entries, but disputed the Department's theory that all figures had to be multiplied by hundred. It held that the conclusion of universal suppression of two zeroes rested principally on initial statements of two employees, both of whom later retracted with affidavits, while the managing director had categorically denied any such method of recording. The Tribunal also found that the post-search statements of eighteen third parties were based on stereotyped questioning, related only to selected entries out of a much larger body of transactions, and were relied on without affording effective cross-examination; such statements, without independent corroboration, could not justify extrapolating the theory to all entries. At the same time, the Tribunal held that where specific receipt entries were backed by corroborative material such as cash receipts, bills, vouchers, estimate slips, or WhatsApp chats, addition of two zeroes could be made for those entries alone. On the separate question of profit rate, the Tribunal upheld estimation at 16%, noting that the assessee had not justified its claim of 10% and that its own disclosed results for earlier years supported the higher rate on unaccounted receipts. The correct course was therefore to compute gross receipts from the cash book as recorded, except in entries specifically corroborated for two-zero suppression, and then apply 16% profit. [Paras 64, 65, 67, 68, 73]

The addition based on blanket multiplication of all cash-book entries by adding two zeroes was set aside; the Assessing Officer was directed to adopt cash receipts as recorded except where corroborative evidence existed, and the profit rate of 16% was upheld on the receipts so determined.

Unexplained investment in cash payments for land development - Third-party cash receipts as corroborative evidence - HELD THAT: - The Tribunal found that the cash receipts discovered in the survey of M/s. Unique Inflatables Ltd. constituted clear evidence of cash payments in connection with development of the land in question. It noted that the assessee did not dispute the underlying land development transaction and had offered only a general objection that the evidence was found from a third party. In the Tribunal's view, once the receipts evidenced cash payment for the admitted transaction, the objection as to third-party source of the document could not prevail. The Commissioner (Appeals) was therefore right in sustaining the addition under section 69. [Paras 72, 75]

The additions under section 69 for assessment years 2019-20 and 2022-23 were upheld.

Unexplained investment in cash payments for land development - Unsigned cash receipt - HELD THAT: - The Tribunal found that the material relied on for this year was an unsigned receipt downloaded from a mobile phone, and the statement of the recipient did not clearly confirm receipt of cash under that unsigned document. It held that if the addition rested only on an unsigned receipt, the transaction could not be treated as conclusively proved. Since the record lacked clarity on whether there existed an original signed cash receipt, the matter required factual verification by the Assessing Officer. The Tribunal accordingly directed that the addition could survive only if a signed cash receipt was available and supported the payment; otherwise it had to be deleted. [Paras 77]

The issue was remitted to the Assessing Officer to verify the existence of a signed receipt; the addition would stand only if such signed receipt was available, failing which it must be deleted.

Final Conclusion: The Tribunal partly allowed the appeals. Reassessment notices issued under section 148 were quashed for assessment years 2016-17 to 2022-23 on the jurisdictional grounds discussed, the addition based on blanket multiplication of cash-book entries by adding two zeroes was modified while retaining profit estimation at 16% on the receipts as redetermined, the section 69 additions relating to M/s. Unique Inflatables Ltd. were upheld for assessment years 2019-20 and 2022-23, and the corresponding addition for assessment year 2023-24 was restored for limited verification.

Deductibility of one-time settlement paid to contractors - Amortisation of revenue expenditure in absence of statutory provision - Re-examination of disallowance under section 14A

One-time settlement to contractors - Business expenditure u/s 37 or restricted to one-fifth by analogy to employee settlement payments u/s 35DDA -Inapplicability of amortisation by analogy to voluntary separation payments - HELD THAT: - The Tribunal found from the agreements and the additional evidence that the payments were made to contractors, with tax deducted at source u/s 194C, and that the responsibility of settling with the contract workers remained with the contractors. The material admitted in evidence showed that the payments were made to avoid disruption to the day-to-day running of the business and to buy peace with the contract workers during restructuring. On that basis, the expenditure was held to have been incurred wholly and exclusively for the purpose of business and to be revenue in nature. The Tribunal further held that the comparison drawn by the Commissioner (Appeals) with payments made to employees under a voluntary separation scheme was misconceived, since such employee payments were governed by section 35DDA, whereas the impugned contractor settlement was required to be tested u/s 37. In the absence of statutory basis, restricting the deduction to one-fifth on an equitable amortisation theory could not be sustained. [Paras 7]

The assessee was entitled to deduction of the entire contractor settlement payment, and the balance disallowance of four-fifths was directed to be deleted.

Disallowance relating to exempt income - Consideration of suo motu disallowance - Fresh examination under Rule 8D - HELD THAT: - The Tribunal noted that the Assessing Officer initiated the exercise on the incorrect premise that no suo motu disallowance had been made, even though the computation of income contained such details. It also found that, beyond the notice issued under section 142(1), no specific show cause notice had been issued on the proposed disallowance, and that the Assessing Officer had not properly examined the matter with reference to the assessee's own disallowance. At the same time, the Tribunal recorded that the assessee had not furnished full particulars and workings of the suo motu disallowance in response. In view of these deficiencies on both sides, the issue was held to require reconsideration by the Assessing Officer with reference to the assessee's computation and such further material as may be called for. [Paras 11]

The disallowance was remitted to the Assessing Officer for fresh consideration in accordance with law after considering the assessee's suo motu disallowance and the supporting details.

Treaty-rate claim in relation to dividend distribution tax - assessee's additional ground claiming application of treaty rates to dividend distribution tax on dividends paid to non-resident shareholders - HELD THAT: - The Tribunal first admitted the additional ground as a pure legal issue not requiring investigation of new facts. On the merits of further disposal, it noted the assessee's reliance on the Bombay High Court decision in M/s. Colorcon Asia Pvt. Ltd. [2025 (12) TMI 677 - BOMBAY HIGH COURT] but also recorded that further proceedings on that issue had been stayed by the Supreme Court in the revenue's appeal [ 2026 (6) TMI 374 - SC ORDER] . Since the assessee's treaty-based contention had not been examined by the lower authorities and the governing issue was awaiting final resolution by the Supreme Court, the Tribunal considered it appropriate not to adjudicate the claim finally at that stage. The matter was therefore directed to be decided afresh on the basis of the Supreme Court's final decision, after giving the assessee reasonable opportunity of hearing. [Paras 12, 14]

The additional ground was admitted, and the issue was remitted to the Assessing Officer for decision afresh in the light of the Supreme Court's final ruling on the controversy.

Final Conclusion: The assessee succeeded on the issue of deduction of the one-time settlement paid to contractors, the Revenue's challenge to that relief failed, and the issue relating to disallowance connected with exempt income was remitted for fresh examination. The additional treaty-rate claim concerning dividend distribution tax was admitted and also remitted for fresh consideration, with the assessee's appeal allowed for statistical purposes and the Revenue's appeal dismissed.

Condonation of delay in appeal - Dismissal in limine by Commissioner (Appeals) - Adjudication of appeal on merits - Principles of natural justice - Dismissal of the assessee's appeal solely on the ground of delay, without affording a final opportunity to explain the delay and without examining the material on record, was not sustainable - HELD THAT: - Following CIT Vs. Premkumar Arjundas Luthra (HUF) [2016 (5) TMI 290 - BOMBAY HIGH COURT] Tribunal held that the appellate authority could not dismiss the appeal in limine on the ground of delay alone without referring to and discussing the contents available on record.

As the assessee had not furnished reasons for delay in terms of the statutory requirement, the proper course, in the interest of substantive justice and natural justice, was to grant one final opportunity to explain the delay. The appellate authority was therefore required first to decide the question of condonation of delay and, if the delay was condoned, to adjudicate the appeal on merits in accordance with law. [Paras 6, 7, 8]

The impugned order was set aside and the matter was restored to the Commissioner (Appeals)/NFAC to consider condonation of delay afresh after giving the assessee an opportunity of hearing and, if delay is condoned, to decide the appeal on merits.

Final Conclusion: The Tribunal held that the appeal could not be rejected in limine on delay alone in the circumstances of the case. The matter was remanded to the Commissioner (Appeals)/NFAC for fresh consideration of condonation of delay after giving one final opportunity to the assessee, and for decision on merits if the delay is condoned.

Unexplained cash credit on cash deposits during demonetisation - Cash deposits sourced from recorded cash sales - Acceptance of books of account and trading results - Double addition of disclosed sales receipts

HELD THAT: - The Tribunal held that no interference was warranted with the appellate order deleting the addition. It accepted that the assessee's books of account and trading results had not been rejected, and that the sales forming the source of cash deposits stood recorded in the regular books.

Tribunal noted the appellate finding that the assessee had sufficient stock to effect the sales, that the sales had already been offered to tax, and that the AO had not pointed out defects in the books or in the cash book. On that footing, once the trading results and purchases were accepted, the corresponding cash sales and resulting deposits could not be treated again as unexplained cash credit under section 68, as that would amount to taxing the same receipts twice.

Following the coordinate bench decisions cited Adarsh Kanch Udyog P. Ltd. [2025 (3) TMI 1699 - ITAT DELHI], MOBI TRADELINK [2024 (12) TMI 1767 - ITAT DELHI],M/s HKT Retail Ventures Pvt. Ltd [2025 (5) TMI 887 - ITAT DELHI] and finding the facts to be akin, the Tribunal sustained the deletion of the addition. [Paras 7, 10]

The addition under section 68 read with section 115BBE on cash deposits was not sustainable, and the order deleting it was confirmed.

Final Conclusion: The Tribunal upheld the deletion of the addition made on cash deposits during the demonetisation period and dismissed the Revenue's appeal. It held that, the books and trading results having been accepted and the deposits having been explained as recorded sales receipts, no separate addition under section 68 was permissible.

Taxability of redevelopment agreement value - Accrual of real income - Co-operative housing society as representative body

Addition of the redevelopment agreement value as income from other sources in the hands of the co-operative housing society - HELD THAT: - The Tribunal found that the redevelopment agreement, though registered for stamp duty purposes, was never acted upon: the building was not handed over, no demolition or reconstruction took place, no payment or bank guarantee was received, and the members continued in possession. The agreement value adopted for stamp duty was therefore only a notional figure and did not result in any real or enforceable income accruing to the assessee. The Tribunal further held that the assessee-society functioned only as a representative and administrative body for its members and was not shown to be the owner of the flats; consequently, even otherwise, the redevelopment-related value could not be brought to tax in its hands. Following ITO vs. Lotia Court Co-op Housing Society Ltd. [2008 (6) TMI 382 - ITAT MUMBAI] the addition was rightly deleted. [Paras 11, 12, 13]

The deletion of the addition was upheld and the Revenue's challenge failed.

Final Conclusion: The Tribunal held that the redevelopment agreement value adopted for stamp duty did not give rise to taxable income in the hands of the assessee-society, as the agreement was never implemented and no real income accrued. The Revenue's appeal was accordingly dismissed.

Revision u/s 263 - lack of enquiry - Bad debts written off - revisional order treating the assessment as erroneous and prejudicial to the interests of the Revenue for failure to verify the claim described as provision for bad and doubtful debts, and for incorrect adoption of assessed income -

HELD THAT: - The Tribunal held that the material noticed by the Principal Commissioner showed that the claim did not satisfy the basic requirement of written off in the books of account. The order records that the assessee was still pursuing recovery of the dues and that the debts had not been written off in its books. In that situation, the Assessing Officer's failure to examine the allowability of the claim justified invocation of revisional jurisdiction on the ground of lack of proper enquiry and verification. Since the revisional direction was only to make proper enquiry, apply the correct provisions of law, and grant opportunity of hearing, the Tribunal found no infirmity in the order under section 263. The Tribunal also upheld the consequential direction regarding the excess levy of demand. [Paras 10]

The order under section 263 was sustained and the assessee's challenge was rejected.

Final Conclusion: The Tribunal dismissed the appeal and upheld the revisional order under section 263. It held that the assessment had been passed without proper verification of the bad debt claim and the incorrect adoption of assessed income, warranting fresh examination by the Assessing Officer in accordance with law.

Unexplained money under Section 69A - Cash deposits during demonetisation - Source of cash from sale of agricultural land

HELD THAT: - The Tribunal held that the determinative question was whether the source of the cash deposits had been satisfactorily explained. It found that the assessee had produced the agreement of sale-cum-GPA showing receipt of sale consideration for agricultural land, and the explanation that the cash was retained and later deposited after demonetisation was, on the facts, bona fide and acceptable. The Tribunal further noted that the assessee had no other source of income for the year and that the Assessing Officer had not disputed the fact of sale of agricultural land. In these circumstances, treating the deposits as unexplained money merely on the basis of a contrary probability assessment was held to be inconsistent with the material on record. [Paras 8]

The addition under Section 69A in respect of the cash deposits was deleted.

Final Conclusion: The Tribunal allowed the assessee's appeal and held that the cash deposits during demonetisation stood satisfactorily explained as arising from the sale proceeds of agricultural land. The addition made under Section 69A was therefore directed to be deleted.

Denial of Registration of charitable trust - Genuineness of activities - Benefit to specified persons - Charitable education versus profit-making activity - Approval under section 80G

Rejection of registration for a trust running a paramedical college, and consequential rejection of approval -HELD THAT: - The Tribunal held that, since the trust had already started its activities in the financial year 2023-24 and had itself shown receipts from the paramedical college, the contention that activities were not required to be examined at the stage of registration had no relevance in the facts of the case. It found that the trust did not furnish material to explain what work was done by the persons covered by section 13(3) for whom salary payments were claimed, nor did it produce supporting evidence to justify those payments. The salary paid to such specified persons formed a significant part of the total expenditure, and the objection regarding benefit to interested persons remained unrebutted. The Tribunal further accepted the finding that the trust's educational activity generated substantial surplus in its first year and was being carried on on a commercial basis for earning business income rather than for charitable purposes. On that reasoning, the findings of violation through benefit to specified persons, non-genuineness of activities, and profit-oriented conduct were upheld, and the denial of registration as well as the consequential denial of approval were sustained. [Paras 6, 7, 8, 9, 10]

The rejection of registration and the consequential rejection of approval were sustained.

Final Conclusion: The Tribunal upheld the order refusing registration and consequential approval, holding that the trust had already commenced activities, failed to establish the genuineness of its conduct in relation to payments to specified persons, and was carrying on educational activity on a commercial and profit-oriented basis. The assessee's appeals were dismissed.

Imposition of penalty under section 112(a) - Misdeclaration of value - False or incorrect declaration -Liability to confiscation as condition precedent - HELD THAT: - The Tribunal held that imposition of penalty under section 112(a) of the Customs Act is dependent upon the goods being liable to confiscation. Since the adjudicating authority had already recorded a finding that the imported goods were not liable to confiscation, the statutory foundation for penalty under section 112(a) ceased to exist. On that basis, the order dropping proceedings against the respondents disclosed no error. [Paras 6]

The penalties proposed under section 112(a) were not imposable, and the departmental appeals were liable to be dismissed.

Final Conclusion: The Tribunal found no infirmity in the order dropping penalty proceedings against the respondents, as the goods had been held not liable to confiscation. All five departmental appeals were accordingly dismissed.

Penalty under section 112(b) for carriage of seized gold and silver ornaments - Town seizure - Proof of foreign origin and smuggling - absence of proof of foreign origin, smuggling, and conscious knowledge - illicit importation, conscious knowledge, and a nexus linking the person to handling, concealing, transporting, or harbouring the offending goods -HELD THAT: - The Tribunal held that, in a town seizure, penalty under Section 112(b) can be sustained only where the Department establishes the essential elements of foreign origin of the goods, illicit importation, conscious knowledge of their smuggled character, and a concrete nexus of the person proceeded against with the offending goods. On the record, the investigation did not conclusively establish that the seized gold had been imported from Nepal. The CRCL report showing gold purity of 98.15% was found insufficient to prove foreign origin, particularly when imported foreign gold ordinarily exceeds 99.9% purity. The material relied upon by the Department was also held inadequate to establish deliberate involvement or conscious knowledge on the part of the appellants that the goods were smuggled. In the absence of satisfactory proof of foreign origin and smuggling, the question of nexus lost significance, and the penalty could not be sustained. [Paras 10, 11, 12, 13]

The penalties imposed on both appellants under Section 112(b) were set aside and the appeals were allowed with consequential relief.

Final Conclusion: The Tribunal held that the Department had failed to establish the foreign origin and smuggled character of the seized gold, as well as the appellants' conscious knowledge required for penalty under Section 112(b). The penalties imposed on both appellants were therefore set aside and the appeals were allowed.

Transaction value - Customs valuation of related party imports - related persons - Evidentiary value of documents - Confiscation for misdeclaration of value - Penalty for alleged overvaluation

Whether the value declared, should be rejected in terms of rule 12 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 read with section 14 of the Customs Act and re-determined under rule 4/9 of the 2007 Valuation Rules read with section 14 of the Customs Act ? - HELD THAT: - The Tribunal accepted the finding that, although the importers and the overseas supplier were related, the relationship had not influenced the price. The contracts were composite EPC contracts awarded through international competitive bidding to the lowest bidder, and the pricing process was found to be transparent and independent. The Tribunal further noted that the third show cause notice arose out of the same common investigation and the same set of documents as the earlier two show cause notices, in respect of which proceedings had already been dropped and that outcome had attained finality. It also accepted the finding that the bankers' documents relied upon for alleging overvaluation lacked the certificate required under section 138C(4) of the Customs Act and, therefore, could not sustain rejection of the declared value. On that basis, the declared transaction value was rightly accepted. [Paras 42, 45, 54]

The Principal Commissioner rightly held that there was no basis to reject the declared transaction value or to redetermine the assessable value.

Confiscation for misdeclaration of value - Penalty for alleged overvaluation - Absence of misdeclaration - HELD THAT: - Once the allegation of overvaluation and misdeclaration of value failed, the foundation for confiscation under section 111(m) also failed. The Tribunal approved the finding that the value had been correctly declared and that the goods, in the absence of any sustainable misdeclaration of value, were not liable to confiscation. Consequently, penalty under section 112(a) could not be imposed, and the allegation of false or incorrect declaration necessary to support penalty under section 114AA also did not survive. [Paras 55, 56, 57]

Confiscation and consequential penalties on the importers were rightly held to be unsustainable.

Final Conclusion: The Tribunal held that the impugned proceedings were founded on the same investigation and material as the earlier show cause notices which had already failed, and that the declared transaction value could not be rejected. As no misdeclaration of value was established, confiscation and penalties also did not survive, and the department's six appeals were dismissed.

Relinquishment of title to warehoused goods - Payment of Customs duty on warehoused goods - Benefit of the provisions of Section 68 - Option to relinquish before clearance for home consumption -HELD THAT: - The Tribunal held that the proviso to Section 68 permits the owner of warehoused goods to relinquish title at any time before an order for clearance for home consumption is made, and upon such relinquishment the owner is not liable to pay duty. This statutory consequence is excluded only where an offence appears to have been committed. On the facts recorded, the appellants had relinquished title to the goods and no offence under the Customs Act, 1962 was found against them. The Tribunal further held that relinquishment made after issuance of the show-cause notice did not deprive the appellants of the benefit of Section 68. The departmental circular relied on by the Tribunal also clarified that after such relinquishment there is no liability to pay duty on warehoused goods. [Paras 5, 6]

The demand of duty, redemption fine and penalty sustained in the impugned orders could not be maintained and the appeals were allowed.

Final Conclusion: The Tribunal held that, as the appellants had relinquished title to the warehoused goods before any order for clearance for home consumption and no offence was found, no customs duty was payable on such goods. The impugned appellate orders were therefore set aside and both appeals were allowed.

Amendment of bill of entry for inadvertent misclassification - Correction of self-assessment under Sections 149 and 154 - Documentary evidence in existence at the time of clearance -Appeal under Section 128, exclusive remedy - HELD THAT: - The Tribunal held that self-assessment is an assessment, but a change in such assessment is not confined only to the appellate remedy under Section 128. Where the importer sought amendment of the bills of entry within a short time of filing them and claimed that the wrong tariff heading had been declared inadvertently, the request was capable of consideration under Section 149 and also under Section 154. Relying on Dimension Data India Pvt. Ltd. versus Commissioner of Customs [2021 (1) TMI 1042 - BOMBAY HIGH COURT], the Tribunal accepted that amendment of a bill of entry after clearance is permissible on the basis of contemporaneous documentary evidence, and that correction of accidental slips or omissions is distinct from appellate jurisdiction. Consequently, rejection of the amendment request merely because no appeal had been filed against the assessment was unsustainable. [Paras 5]

The impugned order was set aside and the appeal was allowed with consequential relief as per law.

Final Conclusion: The Tribunal held that the request to correct the tariff classification in the bills of entry could be pursued under the statutory power of amendment and correction, and was not liable to be rejected merely because no appeal had been filed against the self-assessment. The order of the Commissioner (Appeals) was therefore set aside and the appeal was allowed.

Penalty for alleged illegal export of restricted goods - Exported goods were established to be restricted fertilizer (Muriate of Potash) instead of industrial salt - Classification by chemical composition​​​​​​​ -Proof of misdeclaration of export goods - Evidentiary value of test report in export classification dispute - HELD THAT: - The Tribunal held that, on the material relied upon, the decisive factor for determining whether the product was industrial salt or fertilizer was the content of potassium chloride. However, the test report relied upon by the adjudicating authority did not state the percentage of potassium chloride. In that situation, the report did not furnish the determinative basis necessary to conclude that the export goods were muriate of potash or that the appellant had misdeclared restricted goods. The Tribunal also noted that, on the evidence referred to, the allegation that the goods were muriate of potash had not been established. In the absence of admissible evidence proving the restricted nature of the goods, the penalty could not stand. [Paras 10, 11]

The penalty was set aside and the appeal was allowed with consequential relief.

Final Conclusion: The Tribunal held that the departmental evidence did not establish that the export goods were muriate of potash rather than industrial salt, since the relied upon test report lacked the determinative chemical particulars. The penalty imposed on the appellant was therefore set aside and the appeal was allowed.

Cost Audit - Nature of coal beneficiation or washing - Production Or Manufacture - Applicability of cost audit to coal beneficiation activities - non-compliance with the requirement of appointing a cost auditor and maintaining cost records under the Companies Act, 2013 - Quashing of criminal complaint where liability turns on mixed question of fact and law -HELD THAT: - The Beneficiation of coal by way of wet process was considered in detail in the case of Tata Steel Ltd. [2015 (10) TMI 2386 - SUPREME COURT] It was explained that when Beneficiation is done through wet process, it increases the moisture percentage of Beneficiated coal by around 8% to 15%. After Beneficiation, apart from the clean coal (required in Blast furnace for Steel making coal), the by-products named as Middling (ash 40-45%), Tailings (ash 40-45%) and Rejects (ash 60-65%), are also obtained. Thus, 100 tonnes of raw coal would produce approximately 115 tonnes of washed product.

In Gramophone Co. of India Ltd. vs. Collector of Customs, Calcutta [1999 (11) TMI 62 - SUPREME COURT], the Supreme Court examined earlier cases and held that ‘manufacture’ implies a change, but every change is not manufacture and yet, every change of an article is the result of treatment, labour and manipulation, but something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character and use. In this case, the word ‘manufacture’ has various shades of meanings, but unless defined under the Act, it is to be interpreted in the context of the object and the language used in the section. It would not be applicable in cases where only processing activity is carried out. Further, such production activity, must be met by an industrial undertaking.

In the case of Global Coal and Mining Pvt. Ltd. vs. Commissioner of Service Tax, Delhi [2019 (7) TMI 1701 - CESTAT NEW DELHI] the Supreme Court while considering the Beneficiation activity undertaken by the Petitioner, held that while considering the scope of services in relation of mining, the services of Beneficiation of coal would be apart from mining activity brought under the ambit of service tax.

The aforesaid discussion, therefore, shows that the Beneficiation of Coal falls in the category of ‘manufacture’. Rules 3 and 4 of the Companies (Cost Records and Audit) Rules, 2014 provides for the requirement of Cost Records and Cost Audit, to be applicable to such a product or service.

The Court examined the petitioner's own corporate objects and statutory filings, including the product description and ITC code disclosed in Form AOC-4 XBRL, along with Rules 3 and 4 of the Companies (Cost Records and Audit) Rules, 2014. On the basis of the authorities discussed, the Court held that coal beneficiation improves the grade and quality of raw coal and yields a commercially improved output, and therefore it cannot be said per se that such activity is outside the ambit of manufacture or production for purposes of cost records and cost audit. The Court further held that whether, in the petitioner's actual process, the post-washing product retains its original characteristics or amounts only to processing is a mixed question of fact and law requiring evidence, and such a defence cannot be conclusively accepted in proceedings for quashing. [Paras 61, 62, 64, 65]

The prayer for quashing was rejected, leaving it open to the petitioner to lead evidence in the trial to establish its defence.

Final Conclusion: The petition for quashing was dismissed. The Court held that coal beneficiation cannot, at the threshold, be treated as being outside the scope of manufacture or production for purposes of cost audit, and that the petitioner's contrary defence raises a mixed question of fact and law to be examined at trial.

Effect of Non-registration of an FIR Or non-filing of a complaint in respect of a scheduled offence for Enforcement Directorate proceeding under PMLA - Scheduled offence as jurisdictional prerequisite - Powers under Section 50 and civil action under the PMLA - proceeds of crime - Settlement immunity under the Income-tax Act - Sui generis procedure - Overriding effect - No res judicata in money-laundering proceedings -Whether the power to issue summons and record statements under Section 50 is an exercise of the inquiry function and distinct from investigation for the purpose of prosecuting the offender ?

Enforcement Case Information Report - Non-statutory internal document - Quashability of ECIR - The ECIR under the PMLA is not a statutory instrument comparable to an FIR and cannot be quashed as if it were the foundational jurisdictional document for proceedings under the Act. - HELD THAT: - Relying on Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)], the Court held that the PMLA does not require registration of an ECIR in the manner contemplated for an FIR under the Code of Criminal Procedure. The ECIR is only an internal departmental record created before penal action or prosecution, and even its non-registration does not prevent the authorities under Section 48 from commencing inquiry or taking civil action in relation to proceeds of crime. Since the ECIR has no statutory status and no independent legal consequence of the kind attached to an FIR, a prayer to quash it is misconceived. [Paras 17, 18, 30]

The challenge to the ECIR failed.

Inquiry under Section 50 of the PMLA - Summons for production of documents and evidence - Absence of prior scheduled offence FIR - The power to issue summons and record statements under Section 50 of the PMLA can be exercised as part of the inquiry function even without a prior FIR or complaint in respect of a scheduled offence. - HELD THAT: - The Court held, on the basis of Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)], that the expression 'investigation' in the PMLA is contextually interchangeable with inquiry for collection of evidence to facilitate action under the Act. The summons power under Section 50 is directed to ascertaining the existence of proceeds of crime and the involvement of persons connected with them, and at that stage the person summoned does not assume the character of an accused. The exercise under Section 50 is therefore part of the civil and evidentiary machinery of the Act, not necessarily the commencement of prosecution, and does not depend on prior registration of a predicate offence. [Paras 19, 20, 22, 23, 24]

The summons issued under Section 50 were held to be legally valid.

Civil action for proceeds of crime - Provisional attachment under Section 5 of the PMLA - Section 66(2) information sharing - Prior registration of a scheduled offence is required for prosecution for money laundering, but not for initiation of civil action such as attachment or inquiry under the PMLA. - HELD THAT: - The Court drew the distinction, expressly stated in Vijay Madanlal Choudhary v. Union of India [2022 (7) TMI 1316 - SUPREME COURT (LB)], between the penal and civil limbs of the Act. Prosecution for the offence of money laundering rests on the existence of a scheduled offence, but the machinery for prevention, inquiry and provisional attachment cannot be so construed as to await prior registration of such offence in every case, since that would frustrate the statutory purpose of securing the proceeds of crime. Referring to Section 66(2), the Court observed that when action is initiated without a prior FIR, information is to be shared with the concerned agency for necessary action; however, non-registration of an FIR by the jurisdictional police on such information does not invalidate the civil action already commenced by the Enforcement Directorate. [Paras 21, 25, 26, 27, 30]

The absence of a prior FIR or complaint in respect of a scheduled offence did not bar the Enforcement Directorate from initiating civil action under the PMLA.

Settlement immunity under the Income-tax Act - Independence of PMLA proceedings - No bar from order under Section 245D(4) - Immunity or conclusiveness arising from settlement proceedings under the Income-tax Act does not bar proceedings under the PMLA. - HELD THAT: - The Court rejected the contention that the settlement order under the Income-tax Act foreclosed further action under the PMLA. It held that, in view of the second proviso to Section 245H, immunity from prosecution in settlement proceedings is confined to offences under the Income-tax Act and the Wealth-tax Act, and cannot extend to offences under the PMLA or other independent enactments. The Court further held that the subject matter and statutory object of the PMLA are distinct from tax settlement proceedings, and therefore the settlement order has no res judicata or estoppel effect against the Enforcement Directorate's inquiry into proceeds of crime. [Paras 28]

The settlement proceedings under the Income-tax Act were held not to preclude action under the PMLA.

Final Conclusion: The appeal was dismissed. The Court upheld the view that the ECIR is only an internal non-statutory document, that inquiry powers under Section 50 and civil action under the PMLA do not depend on prior registration of a scheduled offence, and that the income-tax settlement proceedings did not bar the Enforcement Directorate from proceeding under the PMLA.

Assessable value of job-work manufactured goods - Applicability of depot-based valuation - Extended limitation for suppression of material facts - plea of limitation - Show-cause notice barred under Section 11A - High Court in VANTECH CHEMICALS [2025 (12) TMI 1850 - TELANGANA HIGH COURT] held that, the impugned show-cause notice invoking depot-based valuation and the extended period of limitation was issued in accordance with law and suffered from no jurisdictional or procedural infirmity - HELD THAT:- Delay was condoned, the Court declined to interfere with the impugned High Court order, and clarified that the petitioner would be at liberty to challenge the subsequent Order in Original, to be considered on its own merits.

Lapsing of CENVAT credit on exemption of one among multiple final products - demand of an amount equal to 10%/5% of the value of exempted final products cleared to domestic area in terms of rule 6(3) - Dutiable and exempted final products - maintenance of separate accounts and non-availment of credit on inputs used exclusively for exempted clearances - Export under bond of exempted goods and exclusion from Rule 6(3)

Rule 11(3) lapsing of credit - Common inputs used for dutiable and exempt final products - CENVAT credit balance lying as on 01.03.2008 did not lapse merely because some final products manufactured from common inputs became exempt while other final products remained dutiable. - HELD THAT: - The Tribunal held that the show cause notice did not propose recovery of credit attributable to inputs lying in stock, in process, or contained in finished stock, but sought recovery of the entire opening balance. On the admitted position that common inputs were used for manufacture of both exempt and dutiable final products, rule 11(3) could not be applied so as to force lapsing of the balance credit, because credit remained utilizable for payment of duty on the final products that continued to be dutiable. The earlier decision in the respondent's own case in Sharp Menthol [2014 (12) TMI 952 - CESTAT NEW DELHI] was treated as settling this position, and the departmental attempt to enlarge the controversy beyond the show cause notice was rejected. [Paras 28, 30, 31, 32, 33]

The demand based on alleged lapsing of the opening credit balance under rule 11(3) was rightly dropped.

Rule 6(3) option with assessee - Separate accounts for exempted domestic clearances - An amount equal to 10% or 5% of the value of exempted goods cleared in the domestic market could not be demanded under rule 6(3) when the assessee maintained separate accounts, did not take credit on inputs used for exempt domestic clearances, and had not exercised any option under rule 6(3). - HELD THAT: - The Tribunal accepted the finding that separate accounts were maintained for dutiable and exempt goods and that no CENVAT credit had been taken on inputs used in the manufacture of exempt final products cleared domestically. It further held that rule 6(3) merely provides options to the assessee, and in the absence of exercise of such option the department cannot compel payment of 10% or 5% of the value of exempt goods. As there was also no proposal in the show cause notices to recover wrongly taken credit on the relevant inputs or input services, the demand under rule 6(3) was unsustainable. The plea that payment made for a few months amounted to irrevocable exercise of option was also rejected, since such case was not set up in the show cause notices or grounds of appeal and, in any event, re-credit had been permitted without objection. [Paras 42, 43, 44, 45, 46]

The demand of 10% or 5% of the value of exempted goods cleared for home consumption was not maintainable and was correctly dropped.

Rule 6(6)(v) export under bond - Exempted goods exported under bond - Rule 6(3) was inapplicable to exempted final products exported under bond, and the department could not sustain the export-related demand on a ground not contained in the show cause notices. - HELD THAT: - The Tribunal noted that the departmental appeal on this issue was confined to the period after amendment of the export notification, but the show cause notices contained no allegation founded on that amendment or on any prohibition against export of exempt or nil-rated goods under bond. That contention was therefore not open in appeal. On merits, the Tribunal held that by virtue of rule 6(6)(v), goods exported under bond stand outside rule 6(3), so the amount calculated as 10% or 5% of the value of exempted exported goods was not recoverable. The finding was reinforced by the fact that the exports had in fact been allowed under bond by the proper officer and those permissions were never challenged. [Paras 48, 49, 50, 54, 55]

The demand relatable to exempted goods exported under bond was rightly rejected.

Final Conclusion: The Tribunal upheld the common adjudication order dropping all three show cause notices. It held that the opening CENVAT credit did not lapse under rule 11(3), that no amount under rule 6(3) could be forced on exempt domestic clearances in the absence of exercise of option and where separate accounts were maintained, and that rule 6(3) was inapplicable to exempted goods exported under bond; accordingly, the departmental appeals were dismissed.

Scope of input service- CENVAT credit on service tax paid for handling, transporting and crushing ore in captive mines - Services used in relation to manufacture - Processes incidental or ancillary to manufacture -HELD THAT: - The Tribunal held that the definition of input service under Rule 2(l) is of wide amplitude. For a manufacturer, it covers any service used directly or indirectly, in or in relation to manufacture, including processes incidental or ancillary to manufacture. Since the expression "manufacture" takes its meaning from the Central Excise Act, it includes any process incidental or ancillary to the completion of the manufactured product. On that construction, services used for mining, handling and crushing the ore in the captive mines formed part of the process connected with manufacture of the final product. The Commissioner's approach of restricting credit only to the portion of ore that ultimately reached the factory was held to be erroneous, because the correct test is whether the service is used in or in relation to manufacture, and not whether every part of the material subjected to the process physically enters the factory. Removal of unwanted material during crushing was part of the manufacturing chain and did not take the services outside the ambit of input service. [Paras 13, 14, 15, 17, 18]

The denial of CENVAT credit on the disputed mining, handling and crushing services was set aside on merits, and the consequential interest and penalty were also held unsustainable.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order. It held that the disputed services used in the captive mines were input services in relation to manufacture, notwithstanding that a portion of the ore was discarded during crushing, and therefore the demand, interest and penalty could not survive.

Entitlement to receive the refund amount already sanctioned - pre-deposit under Section 35F - Implementation of refund order - Unjust enrichment - Reopening of Cenvat credit deduction - Refund credited to Consumer Welfare Fund - Whether the Revenue was correct in deducting the Cenvat Credit amount from the refund that was required to be granted to the appellants in terms of the Final Order of this bench ? - HELD THAT: - In case the appellants availed and/or utilised Cenvat Credit which was not permissible, revenue could have proceeded against the appellants to recover such credit. Having missed the opportunity, revenue cannot re-open the issue of amount of refund or of Cenvat Credit while implementing an order which was issued by this bench, in consequence of the appeals filed by the appellants against the crediting of the refund to consumer Welfare fund. We find that it was held in Nokia India Sales P. Ltd v CC [2024 (10) TMI 1138 - CESTAT NEW DELHI]; Objects D’ Art India [2016 (5) TMI 831 - CESTAT MUMBAI]; Ma Care [2017 (4) TMI 547 - CESTAT MUMBAI] and ABB Ltd v CC [2004 (10) TMI 222 - CESTAT, NEW DELHI] that where the Deputy Commissioner passes an Order sanctioning the refund and directing it to be credited to consumer welfare fund and the department does not prefer an appeal against the portion of the order sanctioning the refund and only the assessee prefers appeal against the direction to credit the sanctioned refund to Consumer Welfare fund, then and accordingly if the assessee succeeds on the issue of unjust enrichment in appeal, the sanctioned refund has to be paid to the assessee.

The Tribunal held that its earlier order only recognised the appellant's entitlement to receive the refund amount already sanctioned, subject to deduction of the Cenvat credit as accepted and already factored in by the original authority. That order did not authorise a fresh or second deduction of such credit, much less an enhanced deduction. The original refund orders had been passed after verification and calculation by the adjudicating authority, and the department had not appealed against that quantification. Consequently, the refund quantum attained finality. If the department disputed the admissibility of the credit or considered the quantification incorrect, it had to challenge the original orders or proceed separately in accordance with law; it could not reopen the matter in appellate proceedings confined to the question whether the sanctioned refund should be paid to the appellants or credited to the Consumer Welfare Fund. The Commissioner (Appeals) was therefore wrong in holding that quantification had not attained finality. [Paras 13, 14, 15, 16]

The enhanced deduction of Cenvat credit and consequent reduction of the refund were held unsustainable; the impugned orders were set aside and the appeals were allowed.

Final Conclusion: The Tribunal held that the refund amounts as quantified in the original orders had attained finality since the department had not appealed those orders. The department was not entitled, while implementing the earlier order on unjust enrichment, to re-quantify the refund by making a fresh or increased deduction of Cenvat credit; both appeals were accordingly allowed.

Classification of goods - MAMA zarda - classifiable as chewing tobacco under CETI 2403 99 10 Or as zarda scented tobacco under CETI 2403 99 30 - Duty demand -Penalty under rule 26 in absence of finding that goods were liable to confiscation.

Classification of MAMA zarda - HELD THAT: - The Tribunal found that from August, 2012 up to March, 2016 the appellant had consistently declared the product as chewing tobacco in its ER-1 returns and the department had also, through its own orders issued from 2012 up to 2016, classified the product under CETI 2403 99 10. Relying on the principle noticed in Commissioner of Central Excise and S.T., Alwar vs. Tara Chand Naresh Chand [2023 (10) TMI 1112 - SUPREME COURT] the Tribunal held that where both the assessee and the department had consistently treated the product under the same tariff entry, the department could not subsequently contend that it fell under a different entry as zarda scented tobacco. On that basis, the duty demand founded on reclassification was unsustainable, making it unnecessary to examine the other contentions. [Paras 33, 34, 35, 36, 37]

The demand of central excise duty, differential duty, interest and penalty against the appellant was set aside.

Penalty under rule 26 in absence of finding that goods were liable to confiscation - HELD THAT: - The Tribunal held that rule 26(1) makes liability to confiscation of the goods an essential precondition for imposition of penalty. The impugned order contained no discussion or finding that the goods were liable to confiscation; it merely observed so while imposing the penalties. The Tribunal therefore concluded, in line with Shri Ramesh Garg, Chairman of M/s K.S. Oil Ltd. vs. Commimissioner, CGST, Customs & Central Excise [2024 (12) TMI 1731 - CESTAT NEW DELHI], that in the absence of such a finding, penalties under rule 26 could not be imposed. [Paras 38, 40, 41, 42]

The penalties imposed on M/s. R.R. Jhiriwal, Robin Jhiriwal and M/s. Rajan Jhiriwal under rule 26 were set aside.

Final Conclusion: The Tribunal held that the appellant's product remained classifiable as chewing tobacco under CETI 2403 99 10, since both the appellant and the department had consistently treated it so. Consequently, the duty demand and connected penalties failed, and the separate penalties under rule 26 were also set aside for want of any finding that the goods were liable to confiscation.

Entitlement to bail pending trial - conspiracy and participation in a homicidal assault - Balancing gravity of offence with age, health and evidentiary inconsistency - Differentiation of roles in bail adjudication - CCTV recording of the incident, recordings of calls exchanged by and between the accused persons, and accounts of various eyewitnesses.

Bail in murder and conspiracy cases - Advanced age and medical condition in bail consideration - Evidentiary inconsistency at bail stage - Bail of the septuagenarian accused charged with murder and conspiracy was to be considered separately despite the seriousness of the offences. - HELD THAT: - The Court held that though the governing principle is that bail is the rule and jail the exception, in grave offences such as murder and conspiracy that principle must be balanced against the prima facie case, gravity of the offence, nature of evidence, antecedents, role attributed, likelihood of influencing witnesses, possibility of absconding, age and medical grounds. On the material then available, the Court was not persuaded that there was no overt act, no material linking the homicidal death with the conspiracy, or no shared intention. Even so, in the case of Sheikh Mehmood and Ravinder Kumar Gupta, the Court found that their advanced age warranted distinct treatment; additionally, one was stated to be in poor health requiring regular care and the evidence against the other was, to some extent, prevaricating and inconsistent. Those circumstances justified release on bail subject to conditions ensuring an unhindered trial. [Paras 34, 35, 36, 37, 38]

Sheikh Mehmood and Ravinder Kumar Gupta were directed to be released on bail on terms and conditions to be fixed by the trial court, with liberty to cancel bail in case of breach.

Prima facie case in bail matters - Shared intention and conspiracy at bail stage - Renewal of bail prayer on progress of trial - Bail of the remaining accused was liable to be refused at the present stage in view of the prima facie material and the nature of the accusations. - HELD THAT: - Applying the same bail principles, the Court found prima facie material on record indicating an overt act connected with the homicidal death, material linking the incident with the alleged conspiracy, and shared intention. In that view, and having regard to the seriousness of the allegations, rejection of bail for the remaining appellants followed. The Court, however, directed expedition of the trial and permitted those appellants to renew their prayer for bail before the appropriate court after substantial progress in recording prosecution evidence. [Paras 31, 32, 33, 40, 41]

The prayers for bail of Parshotam Singh, Suraj Singh, Vikas Singh and Sandeep Charak were rejected at that stage, with liberty to seek bail again after further progress of the trial.

Final Conclusion: The appeals were disposed of by granting bail to Sheikh Mehmood and Ravinder Kumar Gupta on conditions, while refusing bail to the other four appellants at that stage. The trial court was requested to expedite the trial, and the remaining appellants were left free to renew their bail request after further progress in the prosecution evidence.