TaxTMI Updates e-Newsletter
Jun 10,2021

Interim stay - demand notice for recovery of refunded tax - attachment/freezing of bank account - consideration of special rate under the rules - restraint on coercive action pending administrative consideration

Interim stay - demand notice for recovery of refunded tax - attachment/freezing of bank account - Validity and immediate enforceability of the demand notice dated 01.01.2021 and the subsequent notice dated 22.04.2021 for attachment of the petitioner's bank account were restrained by interim order. - HELD THAT: - The Court considered the petition challenging the demand notice purportedly seeking refund recovery and the order authorising attachment of the petitioner's bank account. Having noted a similar interim order passed in WP(C) No.2431/2021 and on the respondents' acceptance of notice, the Court directed that, in the interim, the Revenue Authorities shall not act upon the demand notice dated 01.01.2021 nor upon the notice dated 22.04.2021 for attaching or freezing the petitioner's bank account. The Court expressly restrained the bank and the respondents from remitting any amount lying in the petitioner's account to the GST authorities pursuant to the attachment notice. [Paras 5, 6, 7, 8]

Revenue and bank respondents are restrained, by interim order, from enforcing the demand notice dated 01.01.2021 or from attaching/remitting amounts from the petitioner's bank account pursuant to the notice dated 22.04.2021.

Consideration of special rate under the rules - restraint on coercive action pending administrative consideration - The petitioner's request for fixation of a special rate was directed to be considered by the authorities and coercive action was restrained pending that consideration. - HELD THAT: - The Court recorded the submission of the learned Standing Counsel that the authorities are examining the petitioner's request for fixation of a special rate and that the matter is likely to be concluded within four weeks. On that basis, and having noted the submission, the Court directed that the authorities will not take any coercive action against the petitioner in terms of the impugned demand notice until such consideration is concluded. The Court thus preserved the petitioner's position pending administrative determination of the special-rate prayer. [Paras 5, 9]

Authorities to consider the petitioner's request for fixation of a special rate and shall refrain from taking coercive action under the demand notice until conclusion of that consideration.

Final Conclusion: Interim relief granted: the Revenue and bank respondents are restrained from enforcing the demand notice dated 01.01.2021 or attaching/remitting amounts under the notice dated 22.04.2021, and the authorities shall consider the petitioner's request for fixation of a special rate (with no coercive action to be taken until that consideration is complete); list after three weeks.

Opportunity of personal hearing - Mandatory compliance of Section 75(4) of the Central Goods and Services Tax Act, 2017 - Validity of order of demand in absence of personal hearing - Remand for fresh consideration and direction to grant hearing

Opportunity of personal hearing - Mandatory compliance of Section 75(4) of the Central Goods and Services Tax Act, 2017 - Validity of order of demand in absence of personal hearing - Impugned order dated 09.02.2021 is sustainable having regard to the requirement of Section 75(4) of the Act. - HELD THAT: - Sub Section (4) of Section 75 mandates that an opportunity of hearing must be granted where an adverse decision is contemplated against the person chargeable with tax. Although a show cause notice calling for objections was issued, the second respondent did not serve a notice of personal hearing indicating the date of hearing as required by the second limb of Section 75(4). The Court found this omission to be a breach of the mandatory statutory requirement and consequently held that the order passed without complying with the obligation to grant personal hearing could not be sustained. The failure to provide the statutorily mandated personal hearing vitiated the impugned order of demand.

Impugned order dated 09.02.2021 set aside for non compliance with the mandatory personal hearing under Section 75(4) of the Act.

Remand for fresh consideration and direction to grant hearing - Opportunity of personal hearing - Whether the matter should be remanded for fresh consideration and what directions should be given. - HELD THAT: - Having set aside the order for want of the mandatory personal hearing, the Court remanded the matter to the second respondent for fresh consideration. The remand is for the limited purpose of affording the petitioner the opportunity of personal hearing and of considering any objections the petitioner may file. To ensure finality, the Court permitted the petitioner to submit objections within one week from receipt of a copy of the order and directed the second respondent to pass appropriate orders thereafter after granting the personal hearing.

Matter remanded to the second respondent for fresh consideration after affording personal hearing; petitioner permitted to file objections within one week.

Final Conclusion: Writ petition allowed; the order of demand dated 09.02.2021 is set aside for failure to grant the mandatory personal hearing under Section 75(4) and the matter is remanded for fresh consideration after affording the petitioner an opportunity of personal hearing, with liberty to file objections within one week.

Scope of Public Interest Litigation in criminal matters - maintainability of PIL - scope of High Court's interference with investigatory timelines - effect of delay in filing charge-sheet and resultant judicial orders under the Code of Criminal Procedure - role of the Code of Criminal Procedure as a complete code governing detention, investigation and remedy

Scope of Public Interest Litigation in criminal matters - maintainability of PIL - Whether the petition filed as a Public Interest Litigation challenging non-filing of charge-sheet and grant of bail is maintainable as a PIL. - HELD THAT: - The Court found that the petition, brought by a practicing advocate, does not involve any element of public interest and therefore is not maintainable as a Public Interest Litigation. The subject-matter-alleged delay in investigation and consequent orders in a specific criminal case-involves private/particular controversy between parties and does not attract PIL jurisdiction. The Court emphasised that absence of broader public interest precludes conversion of such a grievance into a PIL and refuses to exercise jurisdiction on that basis.

Petition is not maintainable as a Public Interest Litigation and admission is declined.

Effect of delay in filing charge-sheet and resultant judicial orders under the Code of Criminal Procedure - scope of High Court's interference with investigatory timelines - role of the Code of Criminal Procedure as a complete code governing detention, investigation and remedy - Whether the High Court should interfere with the trial court's order(s) (including allowance of application under the procedural provisions for non-filing of charge-sheet and grant of regular bail to accused) on the ground that investigation was not completed within time. - HELD THAT: - The Court observed that the Code of Criminal Procedure provides the statutory scheme and safeguards regarding detention, investigation and the consequences of non-filing of a charge-sheet. Delay or inability of the investigating agency to complete investigation may arise for various reasons, and does not, by itself, establish a public-interest ground warranting High Court interference. In the facts before the Court, no sufficient legal basis was shown to upset the trial court's orders or to invoke extraordinary jurisdiction; consequently, the High Court declined to intervene in respect of alleged non-filing of charge-sheet and earlier grant of bail.

No interference with the trial court's orders; petition dismissed on merits for lack of basis to exercise interference.

Final Conclusion: The High Court declined to admit the petition, holding it not maintainable as a Public Interest Litigation and refusing to interfere with the trial court's orders concerning non-filing of the charge-sheet and grant of bail, noting that the Code of Criminal Procedure furnishes the appropriate procedural safeguards.

Treatment of interest on inter-company loans - commercial expediency of intra-group financial assistance - concurrent finding - application of S.A. Builders principle - disallowance under Section 14A read with Rule 8D - diversion of borrowed funds - nexus between borrowed funds and business purpose - presumption that investments are made out of surplus funds

Treatment of interest on inter-company loans - commercial expediency of intra-group financial assistance - application of S.A. Builders principle - concurrent finding - Validity of the Tribunal's and CIT(A)'s deletion of disallowance of interest of Rs. 11.11 Crores paid in respect of financial assistance given to the wholly owned subsidiary - HELD THAT: - The Court held that the interest of Rs. 11.11 Crores was incurred in the course of providing financial assistance to the wholly owned subsidiary for its power generating business and that the arrangement envisaged payment of interest from the first quarter of calendar year 2011, which was in fact received. Relying on the reasoning applied in S.A. Builders, the Commissioner (Appeals) and the Tribunal recorded concurrent findings that the payment related to commercial expediency and was not a sham. Those concurrent factual findings were held not to be perverse and therefore sustainable. [Paras 6]

The first substantial question is answered against the revenue and in favour of the assessee; the disallowance of Rs. 11.11 Crores was correctly set aside.

Disallowance under Section 14A read with Rule 8D - Whether the Tribunal rightly dealt with the claim for disallowance under Section 14A read with Rule 8D and the correctness of directing re-working of the disallowance - HELD THAT: - The Commissioner (Appeals) negatived certain submissions of the assessee and directed the Assessing Officer to re-work the disallowance; the Tribunal affirmed that direction. The High Court observed that because the matter was remitted for re-computation/verification by the authorities, there was no necessity for the Court to answer the second substantial question of law. [Paras 7]

The Tribunal's affirmation of the direction to the Assessing Officer to re-work the Section 14A disallowance is maintained; the question was not answered on merits by the Court and has been left for the Assessing Officer to reconsider.

Diversion of borrowed funds - nexus between borrowed funds and business purpose - presumption that investments are made out of surplus funds - concurrent finding - Validity of the deletion of disallowance of interest (approximately Rs. 11.39 Crores) on the ground of diversion of borrowed capital for interest-free advances to sister concerns - HELD THAT: - The Commissioner (Appeals) examined particulars furnished by the assessee and found a nexus between the loan and the assessee's business and further concluded that investments were to be presumed made out of surplus funds rather than borrowed funds being diverted. The Tribunal upheld these concurrent factual findings. The High Court held that these concurrent findings were not perverse and accordingly sustained the deletion of the disallowance. [Paras 8]

The third substantial question is answered in the negative and against the revenue; the disallowance on account of alleged diversion of borrowed funds was correctly deleted.

Final Conclusion: The appeals by revenue are dismissed: the deletion of the disallowance of interest of Rs. 11.11 Crores and the deletion of interest disallowance alleged on diversion of borrowed funds are upheld; the challenge to the Section 14A disallowance was not decided on merits and the matter stands remitted to the Assessing Officer for re-working as directed by the lower authorities.

Recording of satisfaction under section 153C - jurisdiction to proceed under section 153C - escapement of income - effect of an earlier invalid notice on subsequent valid proceedings - scope of judicial review under Article 226 in tax assessment proceedings - provisional attachment

Jurisdiction to proceed under section 153C - escapement of income - scope of judicial review under Article 226 in tax assessment proceedings - Challenge to assumption of jurisdiction under Section 153C and contention that proceedings are without jurisdiction for want of escapement of income - HELD THAT: - The court held that whether there has been escapement of income and the proper person/entity in whose hands any undisclosed income must be assessed are matters of fact and deduction for the Assessing Officer to determine on the basis of materials and explanations. Determination of escapement involves disputed facts and cannot be resolved in a writ petition under Article 226; therefore the court declined to interfere with the AO's assumption of jurisdiction and remit the matter to the assessment proceedings for adjudication on merits. [Paras 23, 24]

Challenge to jurisdiction on the ground of non-escapement of income rejected; jurisdictional question to be decided by the Assessing Officer in assessment proceedings.

Recording of satisfaction under section 153C - effect of an earlier invalid notice on subsequent valid proceedings - Validity and effect of satisfaction notes and notices issued under Section 153C, including the impact of an earlier notice dated 14.06.2019 said to be issued without satisfaction - HELD THAT: - The court found on the record that the Investigating Officer recorded satisfaction on 30.09.2019 (satisfaction notes for the relevant parties were placed on record) and that no valid satisfaction had been recorded as of June 2019; consequently the notice dated 14.06.2019 was issued without the statutory precondition and was therefore invalid. However, an earlier invalid notice is to be treated as non-existent and does not vitiate subsequent valid proceedings. The notice dated 30.09.2019, supported by satisfaction recorded on that date, is a valid basis for issuing notices under Section 153C and for continuing assessment proceedings. [Paras 30, 31, 32, 33, 36]

The notice dated 14.06.2019 is invalid for want of recorded satisfaction; that invalid notice is to be ignored and does not vitiate the valid notice dated 30.09.2019 which is supported by satisfaction recorded on 30.09.2019.

Provisional attachment - scope of judicial review under Article 226 in tax assessment proceedings - Petition to quash provisional attachment order and related show cause/assessment notices - HELD THAT: - Having rejected the challenge to jurisdiction and having found that satisfaction was recorded on 30.09.2019 thereby validating the subsequent notices, the court held that the petitioner's challenge to the impugned notices (including the show cause notice and the assessment notices issued under Section 153C) must fail. The court therefore refused to quash the provisional attachment/orderly proceed with assessment and directed that assessment proceedings shall continue in accordance with law. [Paras 16, 36, 38]

Prayer to quash the notices and related proceedings dismissed; assessment proceedings to continue and Writ Petition dismissed.

Final Conclusion: The Writ Petition challenging notices under Section 153C, the show cause notice and provisional attachment is dismissed: questions of escapement of income and jurisdiction are left to the Assessing Officer to decide on the materials, the earlier notice of 14.06.2019 (issued without recorded satisfaction) is invalid but is to be ignored and does not vitiate the valid notices supported by satisfaction recorded on 30.09.2019, and the assessment proceedings shall continue in accordance with law.

Cause of action - writ jurisdiction under Article 226 - non-justiciability of disputed facts in writ proceedings - Tax Recovery Officer notice to Sub-Registrar - requirement to approach competent authority - remedial mechanism under Rule 11, Schedule II of the Income Tax Act

Cause of action - Tax Recovery Officer notice to Sub-Registrar - Impugned letter addressed by the Tax Recovery Officer to the Sub-Registrar does not, by itself, furnish a cause of action for entertaining the writ petition. - HELD THAT: - The Court examined the letter dated 22.09.2009 sent by the Tax Recovery Officer to the Sub-Registrar seeking certain details and observed that an administrative request for information and an intimation to the Sub-Registrar not to register transfers without prior approval does not per se confer a cause of action for constitutional writ relief. If the petitioner is aggrieved by particulars contained in the communication, the appropriate course is to submit explanations, objections or supporting documents before the competent administrative authority rather than invoke collateral writ jurisdiction directly. [Paras 2, 3, 4, 6]

The letter does not, standing alone, constitute a justiciable cause of action; the writ petition cannot be maintained on that basis.

Writ jurisdiction under Article 226 - non-justiciability of disputed facts in writ proceedings - requirement to approach competent authority - remedial mechanism under Rule 11, Schedule II of the Income Tax Act - Disputed factual matters arising from the impugned communication are not to be adjudicated in writ proceedings under Article 226 and the petitioner must avail the statutory/administrative remedy. - HELD THAT: - The Court held that factual disputes underlying the impugned communication must be resolved by the competent authority and cannot be decided in writ proceedings. The judgment directs the petitioner to pursue remedies available under the scheme of the Income Tax Act, specifically invoking the procedure provided in Rule 11, Schedule II, by submitting evidence and objections to the appropriate authorities for consideration and decision. The Court therefore declined to adjudicate the merits of the factual contentions in these proceedings and granted liberty to the petitioner to approach the competent authority for redress. [Paras 5, 6]

Writ jurisdiction is inappropriate for resolving the contested facts; petitioner must seek relief before the competent authority under the statutory procedure.

Final Conclusion: The writ petition is dismissed on the grounds that the impugned communication to the Sub-Registrar does not itself furnish a cause of action and disputed factual issues cannot be adjudicated under Article 226; liberty is granted to the petitioner to pursue remedies before the competent authority under the statutory procedure (Rule 11, Schedule II of the Income Tax Act). No costs.

Unexplained cash deposits - addition under section 69A of the Act - explanation by opening cash balances - burden of proof on the Revenue - finality of accepted cash balance

Unexplained cash deposits - addition under section 69A of the Act - explanation by opening cash balances - burden of proof on the Revenue - finality of accepted cash balance - Whether the additions made by the Assessing Officer under section 69A treating the excess of cash deposits over declared salary as unexplained money are sustainable in view of the assessee's explanation based on available opening cash balances and balance sheets. - HELD THAT: - The Tribunal examined the balance sheets placed on record and noted undisputed cash-on-hand figures accepted by the Assessing Officer for the years ending 31/3/2012 and 31/3/2013 which attained finality. Successive balance sheets showed cash on hand at the end of each year sufficient to account for the impugned bank deposits in subsequent years. The authorities below proceeded on conjecture and surmise by treating deposits exceeding salary as unexplained without confronting or disproving the assessee's explanation that amounts from opening cash balances were deposited in subsequent years. Where the assessee gives a prima facie satisfactory explanation supported by balance-sheet figures and there is no material to the contrary, the burden to bring such deposits to tax lies on the Revenue. The Assessing Officer and the Commissioner (Appeals) erred in ignoring the opening cash balances and in sustaining additions on the basis that the salary alone could not explain the deposits. [Paras 6, 7, 8]

Impugned additions treating the excess deposits as unexplained money are deleted and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals for AYs 2014-15 to 2018-19, deleting the additions made on account of alleged unexplained cash deposits because the assessee satisfactorily explained the deposits by reference to available opening cash balances and the Revenue failed to discharge its burden to rebut that explanation.

Excess provision of bad and doubtful debts - treatment of provision as income on reversal - reversal of provision taxed in earlier year - double taxation - deduction under Sec.80P(2)(a)(i)

Excess provision of bad and doubtful debts - treatment of provision as income on reversal - reversal of provision taxed in earlier year - double taxation - Whether the addition of Rs.5,00,000 as excess provision of BDDR confirmed by the Commissioner of Income Tax (Appeals) is justified. - HELD THAT: - The assessee had reversed an excess BDDR provision during the year which, according to the assessee, arose from amounts provided out of income of earlier years that had already been offered to tax. The Assessing Officer treated the reversal as taxable income and the CIT(A) confirmed that any excess provision returned in the year should be assessed as income, noting the assessee's earlier claim of exemption under Sec.80P(2)(a)(i) up to 2006-07. The Tribunal accepted the assessee's submission that the provision was created out of earlier years' income which had been subjected to tax in those years; taxing the same amount again on reversal in the current year would therefore result in double taxation. For this reason the Tribunal held that the addition confirmed by the CIT(A) was not justified and ought to be deleted. [Paras 7, 8]

Addition of Rs.5,00,000 as excess BDDR confirmed by the ld.CIT(A) is not justified and is deleted; the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal for A.Y. 2014-15, setting aside the CIT(A)'s confirmation of the addition of excess BDDR on the ground that the provision related to earlier years' income already taxed and its reversal would amount to double taxation.

Existence of business for tax purposes - remand for fresh adjudication - unexplained cash credit under section 68 - allowability of depreciation and business expenses contingent on existence of business - set off of brought forward business losses and unabsorbed depreciation - admissibility and verification of documentary evidence for export receipts - confrontation of inspector's report

Existence of business for tax purposes - confrontation of inspector's report - Whether the assessee carried on software development business during the year and whether the Inspector's field report and other material were properly confronted and evaluated. - HELD THAT: - The Tribunal found that the assessing officer had obtained an inspector's report concluding that no business activity was being carried on at the premises and that local enquiries indicated no activity for several years. The assessee produced a software development agreement, export invoices and bank-related evidence and made submissions as to employees, electricity payments and RBI-permitted repatriation, but those documentary materials were not examined conclusively in the record before the Tribunal. The Tribunal observed inconsistencies in the assessee's account about ownership and use of premises and noted that the assessing officer's doubts about technical competence, infrastructure and supporting enquiries were not satisfactorily addressed. Given these unresolved factual contradictions and the incomplete verification of bank and regulatory corroboration, the Tribunal concluded that the question of whether business was carried on requires fresh, detailed inquiry. The matter was therefore restored to the Commissioner (Appeals) with directions to afford the assessee opportunity to produce fresh evidence, to confront and verify the inspector's findings, and to make necessary enquiries (including with the bank and regulatory authorities) and to examine continuity of similar activity in subsequent years. [Paras 9, 10, 11, 12, 13]

Issue remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication after confronting the inspector's report, permitting additional evidence and conducting necessary enquiries to determine whether the assessee carried on the software development business.

Unexplained cash credit under section 68 - allowability of depreciation and business expenses contingent on existence of business - set off of brought forward business losses and unabsorbed depreciation - admissibility and verification of documentary evidence for export receipts - Whether receipts shown as business income could be treated as unexplained cash credits and whether claimed deductions (depreciation, business expenses) and set off of brought forward losses/unabsorbed depreciation are allowable. - HELD THAT: - The Tribunal held that these consequential matters turn on the primary factual question of whether the assessee carried on the software development business. Because documentary evidence relating to export receipts, bank remittances and RBI permissions was not fully verified on record and the assessing officer's enquiries (including inspection findings) raised material doubts, the Tribunal declined to decide these issues on merits. The Tribunal directed that the Commissioner (Appeals) in the fresh adjudication must examine and verify the documentary proofs, make enquiries with banks and regulatory authorities where necessary, and determine whether the receipts are genuine business receipts (thus not chargeable as unexplained cash credit under section 68) and whether depreciation, expenses and set off claims are allowable depending on the outcome as to existence of business activity. [Paras 5, 6, 11, 12, 13]

These issues are remanded for fresh adjudication to the Commissioner of Income Tax (Appeals), who shall verify documentary evidence, conduct necessary enquiries and decide the question of treatment of receipts, allowability of deductions and entitlement to set off in accordance with the finding on existence of business.

Final Conclusion: The Tribunal set aside the order of the Commissioner (Appeals) and restored the issues to his file for fresh adjudication, permitting the assessee to produce further evidence and directing the Commissioner (Appeals) to conduct or obtain proper enquiries (including verification with banks and regulatory authorities) before deciding whether the assessee carried on software development business and, consequentially, whether receipts are to be treated as unexplained cash credit and whether deductions and set offs are allowable; appeal allowed for statistical purposes.

Disallowance under section 14A read with rule 8D(2)(ii) - attribution of interest-bearing expenditure to exempt income - presumption that investments are funded out of interest free funds where such funds are sufficient - reversal of addition where assessing officer fails to rebut availability and use of interest free funds

Disallowance under section 14A read with rule 8D(2)(ii) - attribution of interest-bearing expenditure to exempt income - presumption that investments are funded out of interest free funds where such funds are sufficient - reversal of addition where assessing officer fails to rebut availability and use of interest free funds - Validity of the disallowance under section 14A read with rule 8D(2)(ii) where the assessee furnished that investments were made out of its own interest free funds which were sufficient to cover the investments. - HELD THAT: - The Tribunal examined the factual and financial material considered by the CIT(A) showing that the assessee had substantial interest free funds (reserves and share capital) materially in excess of the investments in question. Applying the principle, as articulated by the jurisdictional High Court, that where both interest bearing borrowings and interest free funds exist a presumption arises that investments will be out of interest free funds if those funds are sufficient, the Tribunal found that the Assessing Officer did not rebut that presumption with specific findings. The CIT(A) had relied on the balance sheet particulars and relevant precedents and held that the impugned disallowance under rule 8D(2)(ii) was not sustainable. The Tribunal, after considering the AO's contention that a portion of investments were short term, observed that the AO nonetheless failed to make any specific finding to displace the presumption that the investments attributable to exempt income were financed from interest free funds. On that basis, and having regard to the authorities relied upon by the CIT(A), the Tribunal concluded that deletion of the addition was justified. The same reasoning was applied mutatis mutandis to the other assessment years where facts were identical. [Paras 5, 6, 7]

The disallowance under section 14A read with rule 8D(2)(ii) is not sustainable as the AO failed to rebut the presumption that investments were made out of sufficient interest free funds; the CIT(A)'s deletion of the addition is upheld and the revenue's grounds are dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeals for A.Y. 2010-11, 2011-12, 2013-14 and 2014-15, upholding the CIT(A)'s deletion of the addition under section 14A read with rule 8D(2)(ii) on the ground that the Assessing Officer failed to rebut the presumption that the assessee's sufficient interest free funds financed the investments.

Disallowance under Section 14A read with Rule 8D of the Income-tax Rules - non-applicability of Section 14A where no exempt income is earned or receivable - deletion of Section 14A addition where assessment record shows no exempt income - weight of judicial precedents in interpreting applicability of Section 14A

Disallowance under Section 14A read with Rule 8D of the Income-tax Rules - non-applicability of Section 14A where no exempt income is earned or receivable - deletion of Section 14A addition where assessment record shows no exempt income - Whether disallowance under Section 14A r.w.r. Rule 8D can be made when the assessee has not earned any exempt income in the relevant assessment year. - HELD THAT: - The Assessing Officer made a disallowance under Section 14A r.w.r. Rule 8D based on the quantum of investments, notwithstanding that the return and assessment record show no exempt income for the year. The CIT(A) examined the facts and accepted the assessee's position that no exempt income was earned or receivable in the relevant year, and deleted the addition. The Tribunal upheld the CIT(A)'s conclusion, noting that authorities have consistently held that Section 14A and Rule 8D are not invocable where there is no actual receipt or accrual of exempt income in the relevant previous year. The CIT(A) relied on judicial pronouncements including PCIT v. Oil Industry Development Board , PCIT v. Ballarpur Industries Ltd. , CIT (Central)-1 v. Chettinad Logistics (P.) Ltd. , Cheminvest Ltd. v. CIT , Kamat Hotels (India) Ltd. v. DCIT , Principal Commissioner of Income-tax-04 v. IL&FS Energy Development Company Ltd. and Assistant Commissioner of Income Tax v. Gini & Jony Ltd. , which support the principle that in the absence of exempt income no disallowance under Section 14A r.w.r. Rule 8D is permissible. The Revenue failed to produce cogent material to controvert the factual finding of no exempt income or to show why the established legal principle should not apply. On this basis the Tribunal declined to interfere with the deletion of the addition. [Paras 5, 6, 7, 8]

The deletion of the Section 14A disallowance by the CIT(A) is upheld and the revenue's appeals are dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeals for A.Y. 2015-16 and A.Y. 2016-17, upholding the CIT(A)'s deletion of the Section 14A r.w.r. Rule 8D addition on the ground that no exempt income was earned or receivable during the relevant years.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - addition sustained on estimated basis - disallowance of bogus purchases - assessment completed under section 143 read with section 147

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - addition sustained on estimated basis - disallowance of bogus purchases - Whether penalty under section 271(1)(c) could be sustained where the addition for bogus purchases was confirmed by the appellate authority on an estimated basis. - HELD THAT: - The Assessing Officer made additions by disallowing alleged bogus purchases following reopening of assessment; the Commissioner (Appeals) sustained part of the addition by estimating income/gross profit at 15% of the disputed purchases. The Tribunal applied the legal principle that where an addition is sustained on an estimated basis by the appellate authority, the imposition of penalty under section 271(1)(c) cannot be sustained. Having regard to the facts and the judicial position relied upon, the Tribunal held that penalty levied by the AO and confirmed by the Commissioner (Appeals) was not maintainable when the quantum of disallowance was determined on estimation, and therefore set aside the penalty and directed its deletion. [Paras 6]

Penalty under section 271(1)(c) deleted because the addition was sustained on an estimated basis by the Commissioner (Appeals).

Final Conclusion: The appeal is allowed; the order of the Commissioner (Appeals) confirming penalty under section 271(1)(c) is set aside and the assessing officer is directed to delete the penalty.

Reopening of assessment - reassessment proceedings - change of opinion - income escaping assessment - application of mind during original assessment - Kelvinator principle

Reopening of assessment - change of opinion - application of mind during original assessment - income escaping assessment - Kelvinator principle - Validity of reassessment proceedings initiated after scrutiny when the assessing officer relied on existing material and altered the earlier conclusion on depreciation claim. - HELD THAT: - The Tribunal examined whether the notice under section 148/assessment under section 147 could be sustained where the depreciation claim in respect of windmill had been considered and allowed in the original scrutiny assessment under section 143(3). The assessing officer, after having earlier verified documents and applied his mind, subsequently formed a belief of escapement of income relying on the same existing records and reduced the depreciation on a different view. There was no new tangible material placed on record which would demonstrate that income had escaped assessment. Applying the principle in Kelvinator that a case cannot be reopened on a mere change of opinion, the reassessment was found to be invalid. Because the reopening was held to be unsupported by new material and amounted to a mere change of opinion, there was no need to decide the issue on merits.

Reopening of assessment declared invalid and reassessment proceedings quashed; appeal dismissed.

Final Conclusion: The appeal by the revenue is dismissed; reassessment was invalid as it was based on a mere change of opinion despite the assessing officer having earlier examined and accepted the depreciation claim during the original scrutiny assessment, and no new material was available to justify reopening.

Exemption under section 54B - Burden of proof and onus shifting - Admissibility and evidentiary value of 7/12 extract and Form 8 - Reliance on belated site inspection and post-sale photographs - Effect of co-owner's assessment allowing deduction on another co-owner

Exemption under section 54B - Admissibility and evidentiary value of 7/12 extract and Form 8 - Burden of proof and onus shifting - Reliance on belated site inspection and post-sale photographs - Effect of co-owner's assessment allowing deduction on another co-owner - Assessee's claim of exemption under section 54B was allowable and the additions made by the AO/CIT(A) were to be deleted. - HELD THAT: - The Tribunal examined whether the statutory conditions for exemption under section 54B were satisfied. The assessee produced primary documentary evidence in the form of government revenue records (7/12 extract and Form 8) and an affidavit from the cultivator asserting cultivation on the lands in the relevant two-year period preceding transfer. Once the assessee discharged this initial onus, the burden shifted to the Revenue to rebut those materials by tangible, corroborative evidence. The authorities below rejected the documents mainly on conjectural grounds: (a) that 7/12 entries were maintained mechanically; (b) a site inspection report and photographs produced after about 31/2 years showing the lands as barren; (c) sale deeds containing statements about difficulty of cultivation; and (d) absence of expenditure vouchers. The Tribunal held that (i) 7/12 and Form 8 are government records entitled to prima facie credence and could not be lightly dismissed without enquiry of the land revenue authorities; (ii) a belated site inspection and photographs taken post-sale cannot reliably displace contemporaneous land revenue entries and the affidavit of the cultivator for the period prior to transfer; (iii) once the assessee furnished primary evidence, secondary inferences based on lack of vouchers or on the manner of sale (per sq. metre) were insufficient for the Revenue to negativate the claim; and (iv) the Revenue had accepted the deduction under section 54B in respect of a co-owner for the same land after scrutiny, which militated against adverse treatment of the assessee in the absence of stronger contradictory proof. For these reasons the Tribunal found the authorities below had not produced adequate corroborative material to displace the assessee's evidence and thus the exemption under section 54B was allowable. [Paras 10, 11, 12]

The addition made by the Assessing Officer/CIT(A) was deleted and the assessee's ground of appeal allowing deduction under section 54B was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the assessee had discharged the initial onus by producing land revenue records and an affidavit of the cultivator, the Revenue failed to bring adequate corroborative evidence to rebut those materials, and therefore the exemption under section 54B for AY 2016-2017 must be allowed.

Requirement of furnishing draft assessment order to the eligible assessee under section 144C - procedure under section 92CA(3) for giving effect to Tribunal's directions - appeal-effect order - partial effect order by the Transfer Pricing Officer - right of the assessee to challenge draft assessment before the DRP - quashing of final assessment for failure to follow statutory draft-order procedure

Requirement of furnishing draft assessment order to the eligible assessee under section 144C - procedure under section 92CA(3) for giving effect to Tribunal's directions - partial effect order by the Transfer Pricing Officer - appeal-effect order - Validity of the assessment order dated 20.10.2016 framed pursuant to the TPO's order dated 20.09.2016 giving partial effect to the Tribunal's directions where no draft assessment order was furnished to the assessee - HELD THAT: - The Tribunal recorded that after its earlier order directing re-examination of comparables and verification of risk adjustment, the TPO did not follow the course of reexamination by issuing a final order under the statutory scheme but instead passed an order titled 'Order giving partial effect to the directions of Hon'ble ITAT'. The AO framed the assessment pursuant to that TPO order without issuing the draft assessment order required by the procedure under section 144C read with the mechanism for giving effect to Tribunal directions under section 92CA(3). By omitting to furnish a draft assessment order, the assessee was deprived of the opportunity to challenge proposed variations before the DRP (or to be treated as an 'eligible assessee' for that purpose). The Tribunal relied on precedent where final assessments were quashed for the same procedural lapse and held that an assessment framed without the mandatory draft-assessment step is not sustainable. Applying that determinative reasoning to the facts-i.e., that the order passed by the TPO/AO was procedurally contrary to the requirements for giving effect to the Tribunal's directions-the impugned assessment was liable to be quashed. [Paras 11, 14, 15, 16]

Assessment order dated 20.10.2016 is invalid and the order of the CIT(A) quashing that assessment is upheld

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s quashing of the assessment framed pursuant to the TPO's 'partial effect' order, holding that framing a final assessment without issuing the draft assessment order under the statutory procedure was unsustainable.

Bogus purchases - hawala operators - ad-hoc 10% addition on alleged bogus purchases - addition measured by excess gross profit rate of bogus purchases - remand to Assessing Officer for computation and verification - information obtained under section 133(6)

Ad-hoc 10% addition on alleged bogus purchases - bogus purchases - Whether the confirmation of an ad-hoc addition equal to 10% of the alleged bogus purchases was justified. - HELD THAT: - The Assessing Officer made a 100% addition on account of alleged bogus purchases identified from information supplied by the Sales Tax Department; the CIT(A) confirmed an ad-hoc addition equal to 10% of the total alleged bogus purchases. The Tribunal referred to the decision of the Hon'ble Bombay High Court in Pr. CIT v. Mohammad Haji Adam & Co. and held that an ad-hoc 10% addition is not warranted. The correct approach is to determine the excess gross profit rate earned on the transactions declared as bogus over the gross profit rate on genuine purchases, and to make addition to the extent of that difference. Applying that principle, the Tribunal set aside the CIT(A)'s order and remitted the matter to the Assessing Officer to undertake the computation of the excess gross profit rate and make addition accordingly after affording the assessee a reasonable opportunity of being heard. [Paras 6, 7]

CIT(A)'s confirmation of a flat 10% addition is set aside; the matter is remitted to the AO to compute and add the excess gross profit rate on bogus purchases.

Remand to Assessing Officer for computation and verification - information obtained under section 133(6) - Whether the assessment should be restored to the Assessing Officer for determination of the addition on the basis directed by the Tribunal and after verification in light of the information from Sales Tax authorities. - HELD THAT: - Having rejected the ad-hoc 10% approach, the Tribunal directed that the Assessing Officer should examine the material, verify the information supplied (including that obtained from Sales Tax and banks), determine the gross profit rates on genuine and alleged bogus purchases, compute the difference, and make additions only to the extent of that excess gross profit rate. The Tribunal expressly remitted the matter for this exercise and required that the assessee be given reasonable opportunity of hearing before concluding the reassessment computation. The Tribunal applied the same direction to the cross-appeal filed by the assessee, thereby remitting that appeal as well to the AO for adjudication in accordance with the stated principle. [Paras 7, 10]

Matter remitted to the Assessing Officer for verification and computation of addition in accordance with the excess gross profit rate methodology, with opportunity to the assessee.

Final Conclusion: Both the Revenue's and the assessee's appeals are allowed for statistical purposes; the Tribunal set aside the CIT(A)'s ad-hoc 10% addition and remitted the matters to the Assessing Officer to compute additions by determining the excess gross profit rate on alleged bogus purchases (after verification and hearing), in accordance with the Bombay High Court precedent relied upon.

Taxation of income in the hands of the right person - Assessment additions based on admissions recorded during search under section 132(4) - Protective assessment versus substantive assessment - Distinct legal personality of a company

Taxation of income in the hands of the right person - Assessment additions based on admissions recorded during search under section 132(4) - Protective assessment versus substantive assessment - Distinct legal personality of a company - Whether the additions made in the assessee's hands based on admissions and seized material could be sustained when the seized material and reconciled books showed the amounts pertained to the company M/s. VNR Infrastructure Limited - HELD THAT: - The Tribunal examined the Assessing Officer's additions which were founded on admissions recorded during search and on seized material. The Commissioner (Appeals) had deleted the additions in the individual assessee's hands after finding that the seized material and subsequent reconciliation with regular books showed the entries related to the company's business and the amounts had been or could be assessed in the hands of M/s. VNR Infrastructure Limited. The Tribunal applied the established principle that tax must be levied on the right person - i.e., the person liable under law in respect of particular income - and that a company is a distinct legal entity separate from its directors. Noting that the Revenue did not controvert that the impugned amounts related to the company or identify the company's assessment as not dealing with those amounts, the Tribunal held there was no reason to upset the appellate finding that the income is chargeable to the company and not to the individual. Reliance was placed on the determinative proposition that an Assessing Officer must tax the person actually liable; accordingly protective assessments in the company's hands did not justify sustaining substantive additions against the individual once the material indicated the income belonged to the company. The Tribunal therefore upheld the Commissioner (Appeals)'s deletion of the additions. [Paras 4, 5, 6]

The deletions of the additions in the assessee's hands were upheld and the Revenue's appeals dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeals for AY 2010-11 to 2014-15, upholding the Commissioner (Appeals)'s deletion of additions in the individual assessee's hands on the ground that the relevant seized material and reconciled books showed the income pertained to the company M/s. VNR Infrastructure Limited, which is the entity liable to be taxed.

Estimation of profit element embedded in alleged bogus purchases - bogus or non-existent suppliers and taxability of embedded profit - corroborative evidence and one-to-one nexus between purchases and sales - addition by estimation where purchases cannot be verified - reliance on information from investigative agencies as a basis for inquiry

Estimation of profit element embedded in alleged bogus purchases - bogus or non-existent suppliers and taxability of embedded profit - corroborative evidence and one-to-one nexus between purchases and sales - Whether the Commissioner (Appeals) was justified in restricting the addition to 12.5% of the alleged bogus purchases instead of restoring the Assessing Officer's addition of 19.5% - HELD THAT: - The Tribunal examined the CIT(A)'s reasoning which accepted that corresponding sales were not doubted and that the Assessing Officer had treated various suppliers as bogus on the basis of statements and enquiries. The CIT(A) applied precedent holding that where the sales are accepted, and it is probable that purchases were made from some source though not verifiable from the recorded suppliers, the correct approach is to tax the excess profit element embedded in such purchases rather than disallow entire purchases. The CIT(A) relied on judicial authorities and a series of Mumbai Tribunal decisions estimating gross profit at 12.5% in cases involving hawala-generated bogus purchase bills. Having considered the facts and precedents, the Tribunal found the estimation of profit at 12.5% to be a reasonable and established method of computing the addition where purchase invoices and suppliers cannot be satisfactorily verified, and where the AO has not conclusively proved nonexistence of corresponding sales. The Tribunal therefore concluded there was no infirmity in the CIT(A)'s restriction of the addition to 12.5% and rejected the Revenue's challenge to restore the AO's higher estimate. [Paras 6, 8]

CIT(A)'s order restricting the addition to 12.5% of the alleged bogus purchases is upheld; Revenue's appeal dismissed.

Final Conclusion: The appellate tribunal upheld the Commissioner (Appeals)'s estimation of addition at 12.5% of the alleged bogus purchases for A.Y.2009-10 and dismissed the Revenue's appeal.

Number of appeals to be filed - interpretation of Rule 6A of CESTAT Procedure Rules, 1982 - effect of Explanation to Rule 6A regarding orders-in-original - requirement of separate appeals where multiple assessment orders exist

Number of appeals to be filed - interpretation of Rule 6A of CESTAT Procedure Rules, 1982 - effect of Explanation to Rule 6A regarding orders-in-original - Whether one memorandum of appeal suffices where the impugned order-in-appeal disposes of matters relating to multiple bills of entry or whether separate appeals must be filed corresponding to each order-in-original. - HELD THAT: - Rule 6A, on its face, permits filing one Memorandum of Appeal against an order or decision notwithstanding the number of bills of entry dealt with in that order. However, the Explanation to Rule 6A clarifies that where the impugned order-in-appeal has been passed with reference to more than one order-in-original, the number of memoranda of appeal must correspond to the number of orders-in-original. In the present case the 84 bills of entry were each challenged before the Commissioner (Appeals) such that there were effectively 84 orders-in-original for the purposes of the Explanation. The bench therefore treated the 84 bills of entry as equivalent to 84 assessment orders, bringing the case within the Explanation and requiring separate appeals. The decision in Eicher Motors Limited was held to be factually distinguishable and not applicable to the present factual matrix. The tribunal's prior order in Do Best Infoway supporting the requirement of multiple appeals where bills of entry constitute distinct orders-in-original was followed. [Paras 4, 5]

Where the impugned order-in-appeal arises out of multiple orders-in-original (here, 84 bills of entry each challenged), separate appeals corresponding to each order-in-original must be filed; one appeal is not sufficient.

Final Conclusion: The appellant was directed to file 83 more appeals within four weeks, since the 84 bills of entry were treated as equivalent to 84 orders-in-original and therefore require 84 separate memoranda of appeal under the Explanation to Rule 6A.

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - dispensing with meeting of unsecured creditors - compliance with Foreign Exchange Management (Non Debt Instruments) Rules and FDI automatic route - amendment of Memorandum of Association and compliance with Section 13 of the Companies Act, 2013 - conformity with Accounting Standards under Section 133 of the Companies Act, 2013

Scheme of Amalgamation - sanction under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation of the Transferor Company into the Transferee Company. - HELD THAT: - The Tribunal considered the petition under Sections 230-232 and the Scheme placed on record, the board resolutions approving the Scheme, convening and results of the shareholders' meetings, newspaper publication and service of notices on regulatory authorities, the report of the Official Liquidator, the response of the Income Tax Department, and certificates from the respective statutory auditors regarding accounting treatment. Having found no impediment on these materials and after considering the Regional Director's representation, the Tribunal granted sanction to the Scheme while recording that the petitioners must comply with statutory requirements in law and that sanction will not bar subsequent action for any statutory violation. [Paras 14, 15, 16, 17, 18]

The Scheme is sanctioned under Sections 230-232 of the Companies Act, 2013 and the petition is disposed of.

Compliance with Foreign Exchange Management (Non Debt Instruments) Rules and FDI automatic route - Resolution of the Regional Director's observation regarding requirement of RBI approval for issuance of shares to non resident shareholders pursuant to the Scheme. - HELD THAT: - The Tribunal recorded the Regional Director's request for clarification from RBI concerning allotment of shares to foreign body corporates. The petitioners filed an affidavit stating both companies fall under the 100% automatic route and will comply with applicable FEMA provisions at the time of issue of shares. No further objection was raised by the Regional Director at hearing. On the materials before it the Tribunal accepted the filings and proceeded to sanction the Scheme, subject to the petitioners' statutory compliance obligations. [Paras 12, 13]

The Regional Director's observations were considered and, in view of the petitioners' affidavit and absence of further objection, the Tribunal sanctioned the Scheme while leaving compliance with FEMA/FDI requirements to the petitioners.

Amendment of Memorandum of Association and compliance with Section 13 of the Companies Act, 2013 - Treatment of proposed alteration of the main object clause of the Transferee Company's Memorandum of Association as effected by the Scheme. - HELD THAT: - The Regional Director noted that the Scheme contemplates alteration of the Transferee Company's main object clause and submitted that such amendment falls within the Registrar of Companies' domain and must be effected in compliance with Section 13 of the Companies Act, 2013. The Transferee Company assured compliance. The Tribunal sanctioned the Scheme but made clear that the petitioners remain bound to comply with statutory requirements, which includes following the procedure under Section 13 for amendment of the Memorandum of Association. [Paras 12, 15, 17]

The Tribunal sanctioned the Scheme while directing that amendment of the Memorandum of Association be effected in accordance with Section 13 and other statutory requirements.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation of Boston Scientific Service Private Limited into Boston Scientific Technology & Engineering Services Private Limited under Sections 230-232 of the Companies Act, 2013, subject to the petitioners' compliance with applicable statutory and regulatory requirements; CA (CAA)-17(PB)/2021 is disposed of.

Power of judicial authority to refer parties to arbitration under amended Section 8 of the Arbitration and Conciliation Act, 1996 - Prima facie existence of a valid arbitration agreement - Arbitrability of disputes involving allegations of fraud, misrepresentation and criminal proceedings - Effect of non-payment of stamp duty on arbitrability of commercial agreements - Distinction between contractual reliefs and statutory reliefs in relation to reference to arbitration - Res judicata and prior adjudication in relation to referral to arbitration

Power of judicial authority to refer parties to arbitration under amended Section 8 of the Arbitration and Conciliation Act, 1996 - Prima facie existence of a valid arbitration agreement - Application under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the parties to arbitration was maintainable and is to be allowed. - HELD THAT: - The Tribunal examined the legislative intent and the effect of the 2015 amendment to Section 8 which uses the mandatory word 'shall' and requires a judicial authority to refer parties to arbitration where an arbitration agreement prima facie exists. The Tribunal found that the Definitive Agreement dated 31.03.2006 containing Clause 29 (an arbitration clause) has been acted upon by the parties, including earlier constitution of an Arbitral Tribunal by the Delhi High Court, and that no court or forum has declared the Definitive Agreement null and void. Having regard to the statutory mandate and relevant precedents cited in the judgment, the Tribunal concluded that the sole ground for refusing a Section 8 reference would be a prima facie finding that no valid arbitration agreement exists, which was not established on the record before it. The Tribunal therefore held that the application under Section 8 is maintainable and should be allowed.

Application under Section 8 is allowed and parties are referred to arbitration.

Arbitrability of disputes involving allegations of fraud, misrepresentation and criminal proceedings - Allegations of fraud, misrepresentation or pending criminal proceedings do not, by themselves, oust the jurisdiction of an Arbitral Tribunal to decide the disputes arising under the agreement. - HELD THAT: - Relying on recent judicial clarifications, the Tribunal observed that issues of fraud or misrepresentation, and even the existence of parallel criminal proceedings, are matters that can be addressed by the Arbitral Tribunal. The Tribunal noted that the Apex Court has indicated that whether an arbitrator has jurisdiction is itself an arbitrable question. Thus, the defence that the arbitration agreement is vitiated by fraud or that criminal proceedings preclude arbitration was rejected as a ground to refuse the Section 8 reference in the present facts.

Allegations of fraud or concurrent criminal proceedings do not preclude reference to arbitration.

Effect of non-payment of stamp duty on arbitrability of commercial agreements - Defect in stamping of the agreement does not preclude reference to arbitration in the circumstances of this case. - HELD THAT: - The Tribunal considered the contention that the Definitive Agreement was not properly stamped and might be inadmissible or unenforceable. Having regard to recent judicial authority discussed by the parties, the Tribunal accepted that non-payment of stamp duty on a commercial contract does not necessarily render the arbitration clause unenforceable. On the material before it, and in light of applicable precedent, the Tribunal declined to treat alleged stamp defects as a bar to referring the disputes to arbitration.

Alleged stamping defects do not defeat the Section 8 reference.

Distinction between contractual reliefs and statutory reliefs in relation to reference to arbitration - Res judicata and prior adjudication in relation to referral to arbitration - Disputes arising under the Memorandum of Understanding and the Definitive Agreement are contractual and arbitrable; prior proceedings and interlocutory orders do not operate as res judicata to bar the Section 8 reference in the absence of prior determination on the arbitration agreement itself. - HELD THAT: - The Tribunal evaluated the contention that the reliefs sought in the company petition were statutory (and hence non-arbitrable) and that earlier orders of NCLAT or other courts operate as res judicata. It held that the contractual rights and duties under the MoU and Definitive Agreement lie at the core of the present disputes and are capable of being resolved by arbitration; any statutory reliefs claimed in the company petition would depend on the outcome of arbitration and could diminish or survive accordingly. The Tribunal further observed that the earlier appointed Arbitral Tribunal had not passed any interim or final award and that the points were not previously adjudicated so as to attract res judicata.

Contractual disputes under the agreements are arbitrable and prior proceedings do not bar the reference to arbitration on the record before the Tribunal.

Final Conclusion: The application under Section 8 of the Arbitration and Conciliation Act, 1996 is allowed; the parties are referred to arbitration to resolve disputes arising from the Memorandum of Understanding and the Definitive Agreement dated 31.03.2006, including issues of validity, fraud and stamping, leaving any statutory reliefs claimed in the company petition to stand determined in the light of the arbitral award.

Scheme of Merger - convening of shareholders' meetings by video conferencing - dispensing with meetings of secured and unsecured creditors - Nil creditor certificate and creditors' consent affidavit - notice to regulatory and statutory authorities under Section 230(5) - time-bound opportunity to file objections - filing of Chairman's Report and presentation of Company Petition

Scheme of Merger - convening of shareholders' meetings by video conferencing - Fixing and directing convening of meetings of equity shareholders of the Transferor Companies and the Transferee Company by video conferencing on specified dates and times with specified quorum, chairperson, scrutinizer and publication requirements. - HELD THAT: - The Tribunal directed that meetings of equity shareholders for each of the Transferor Companies (Bagh Kothi Investment and Finance Pvt. Ltd., Blue Bell Finance Ltd., Danveer Investments Pvt. Ltd., GPN Associates Pvt. Ltd., Nandi Mercantiles Pvt. Ltd.) and the Transferee Company (Star Infovision Pvt. Ltd.) be convened on 28th July, 2021 at the times specified in the order, to be conducted through Video Conferencing. The order prescribes notice procedures (registered post/speed post or email to last known addresses), a clear 30 days' notice period, publication in specified newspapers, quorum rules (and adjournment/30 minute rule), appointment of the chairperson (with an alternate) and the scrutinizer, and filing of the Chairman's Report with the Tribunal within seven days of the meeting. These directions implement the statutory scheme for convening shareholder meetings for sanctioning the Scheme of Merger and ensure procedural compliance for virtual meetings as ordered by the Tribunal.

Meetings of equity shareholders shall be convened on the dates and times specified, by VC, with the prescribed notice, quorum, chair and scrutinizer, and the Chairman's Report to be filed within seven days of each meeting.

Dispensing with meetings of secured and unsecured creditors - Nil creditor certificate and creditors' consent affidavit - Allowing dispensation of meetings of secured and/or unsecured creditors for specified companies where nil creditor certificates or unanimous consent affidavits were produced. - HELD THAT: - The Tribunal examined the certificates issued by an independent Chartered Accountant and the consent affidavits of unsecured creditors filed in the typed set. Where a Transferor/Transferee Company had no secured and/or unsecured creditors and a Nil Certified statement was placed on record, the Tribunal found no need to convene meetings of such creditors. Where unsecured creditors existed but had furnished affidavits constituting 100% in value consenting to the Scheme and to dispense with meeting(s), the Tribunal allowed dispensation under Clause (9) of Section 230 of the Companies Act, 2013. The order thus dispensed with holding meetings of secured and/or unsecured creditors for the companies so identified, on the basis of the filed certificates and unanimous consents.

Meetings of secured and/or unsecured creditors are dispensed with for those companies which produced Nil creditor certificates and/or unanimous creditors' consent affidavits, as recorded in the application.

Notice to regulatory and statutory authorities under Section 230(5) - time-bound opportunity to file objections - Directing service of statutory notices under Section 230(5) to the Regional Director, Income Tax Authorities, Registrar of Companies and Official Liquidator, and providing a 30-day period for objections or representations. - HELD THAT: - Pursuant to the Applicants' prayers, the Tribunal ordered notices to be issued to the Regional Director (Northern Region), Ministry of Corporate Affairs, the Income Tax Authorities, the concerned Registrar of Companies and the Official Liquidator in accordance with Section 230(5) of the Companies Act, 2013. The authorities were directed to file any objections or representations within 30 days from receipt of the notice, failing which it would be presumed that they had no objections. This gives statutory consultees a time-bound opportunity to raise objections before the Tribunal proceeds further on the Scheme.

Notices shall be issued to the specified authorities under Section 230(5) and they may file objections/representations within 30 days of receipt, failing which no objection will be assumed.

Filing of Chairman's Report and presentation of Company Petition - Directing publication and service of notices, filing proof, filing of Chairman's Reports and timeline for presentation of the Company Petition after compliance. - HELD THAT: - The Tribunal directed the Applicant Companies to place the notice on their website (if any) and on the registered office notice board, to send private notices to the statutory authorities by speed post and to file proof of service along with the newspaper publication affidavit before the next hearing. It further directed that the Company Petition(s) shall be presented within seven days from the date of filing the Chairman's Reports with the registry. These directions organise the procedural steps necessary for the Tribunal to consider the petition after stakeholders and authorities have been informed and the Chairman's Reports have been filed.

Applicants to publish and serve notices and file proof; Chairman's Reports to be filed and, thereafter, the Company Petition(s) to be presented within seven days of filing those reports.

Final Conclusion: The Tribunal directed convening of shareholders' meetings by VC with specified procedural safeguards, dispensed with creditor meetings where Nil certificates or unanimous consents were filed, ordered statutory notices under Section 230(5) to relevant authorities with a 30-day window for objections, and directed publication, service and filing steps including filing of Chairman's Reports and presentation of the Company Petition(s); the application is disposed of accordingly.

Proof of claim - condonation of delay - directory nature of regulation 12(2) - time-bound nature of CIRP - prejudice to information memorandum and resolution plan - mistake by Resolution Professional

Proof of claim - condonation of delay - directory nature of regulation 12(2) - time-bound nature of CIRP - prejudice to information memorandum and resolution plan - mistake by Resolution Professional - Whether the applicant's belated proof of claim should be considered and the RP directed to admit the claim despite delay - HELD THAT: - The Tribunal found that the CIRP was initiated on 25.02.2020 and the public announcement fixed 12.03.2020 as the last date for submission of claims. The applicant filed its claim only on 24/26.12.2020 and the RP rejected it on 03.05.2021. Although the RP mistook the applicant's e-mail for a repetition of another claim-a genuine factual mistake-this did not relieve the applicant of its duty to pursue the claim or to approach the Adjudicating Authority within a reasonable time. The Tribunal rejected the applicant's contention that pandemic-related lockdowns or the directory character of the earlier regulation 12(2) entitled automatic condonation of delay. It emphasised that condonation is a discretionary remedy requiring good and sufficient reasons and that treating a directory timeline as a means to defeat the Code's objectives would undermine the time-bound insolvency regime. The Tribunal further held that admitting the belated claim at a stage when the CoC had approved a resolution plan (and the information memorandum would thereby require alteration) would prejudice other stakeholders and effectively restart the CIRP, contrary to the Code's object. The fact that the CIRP period had been extended did not justify reopening the process, particularly when the extended period was nearing its end and allowing the claim could invite similar belated claims and convert a time-bound process into an open-ended one. Applying these considerations, the Tribunal exercised its discretion against condonation and dismissed the application. [Paras 31, 33, 36, 38, 43]

Application dismissed and the request to direct the Resolution Professional to consider the belated claim denied.

Final Conclusion: The application seeking directions to the Resolution Professional to consider the belated proof of claim is dismissed for want of sufficient grounds to condone the delay; admitting the claim at this stage would prejudice the CIRP and defeat the time-bound object of the Code.

Admission under Section 7 of the Insolvency and Bankruptcy Code - corporate insolvency resolution process (CIRP) initiation - existence of debt and default - evidentiary sufficiency of loan documents and dishonour of cheque - moratorium under Section 14 of the Insolvency and Bankruptcy Code - public announcement and submission of claims under Section 15 - appointment and consent of Interim Resolution Professional

Existence of debt and default - evidentiary sufficiency of loan documents and dishonour of cheque - The petition established that a debt was due and that the corporate debtor was in default. - HELD THAT: - The Tribunal examined the loan documentation placed on record by the financial creditor including the demand promissory note, letter of undertaking, money receipt, ledger entries, bank statements showing disbursement, the cheques provided as assurance and the recall notice. The banker's remark of mismatch of signature resulting in dishonour of the principal repayment cheque, together with the computation of outstanding interest and the financial creditor's supporting documents, were found to substantiate the claim. The corporate debtor's reply did not controvert the core factual matrix and, in paragraph 9 of its reply affidavit, the corporate debtor itself stated inability to pay and intention to clear dues as soon as possible, which the Tribunal treated as admission of default. Consequently the requisites for a Section 7 application were held to be satisfied on the material before the Adjudicating Authority. [Paras 6, 8, 9, 15, 16]

The Tribunal held that the loan was disbursed and the corporate debtor was in default, and that the Section 7 petition met the required statutory requisites.

Admission under Section 7 of the Insolvency and Bankruptcy Code - corporate insolvency resolution process (CIRP) initiation - moratorium under Section 14 of the Insolvency and Bankruptcy Code - public announcement and submission of claims under Section 15 - appointment and consent of Interim Resolution Professional - On the basis of the established debt and default, the petition was admitted and CIRP was ordered with consequential directions including moratorium, public announcement, appointment of IRP and deposit for IRP expenses. - HELD THAT: - Having found that the statutory preconditions for admission under Section 7 were made out, the Tribunal admitted the petition and directed initiation of the CIRP. A moratorium was declared for the purposes set out in the Code, and the IRP was directed to make the public announcement and call for submission of claims. The Tribunal also accepted the supplementary affidavit concerning consent to act by the proposed IRP and appointed Mr. Anneel Saraogi as Interim Resolution Professional. Further administrative directions were given to convene the Committee of Creditors within the prescribed timeline, and the financial creditor was directed to deposit an initial amount to meet IRP expenses. The orders included communication and filing directions customary on admission. [Paras 17, 18, 19]

The Tribunal admitted the Section 7 petition, ordered initiation of CIRP, declared moratorium, directed public announcement and claims process, appointed an IRP and directed deposit for preliminary IRP expenses.

Final Conclusion: The Section 7 petition was admitted; the Corporate Insolvency Resolution Process against Citylife Retail Private Limited is initiated, moratorium declared, a public announcement and claims process directed, Mr. Anneel Saraogi appointed as Interim Resolution Professional and preliminary deposit for IRP expenses directed.

Approval of resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 - Compliance with requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Eligibility and disqualification under Section 29A of the Insolvency and Bankruptcy Code, 2016 - Priority payment of insolvency resolution process costs - Treatment of operational creditors vis-a -vis liquidation value - Performance security requirement under Regulation 36B(4A) of the CIRP Regulations, 2016 - Scope of adjudicating authority's review of commercial decisions of the Committee of Creditors - Grant and limits of reliefs and concessions in a resolution plan (including Section 32A implications) - Ceasing of moratorium on approval of resolution plan

Approval of resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 - Scope of adjudicating authority's review of commercial decisions of the Committee of Creditors - Whether the resolution plan approved by the Committee of Creditors can be sanctioned under Section 31(1) of the Code. - HELD THAT: - The Adjudicating Authority examined the Resolution Plan placed by the Resolution Professional and the compliance certificate. The CoC approved the plan with 100% voting share, well above the statutory threshold. The Tribunal noted that its role is limited to screening compliance with statutory requirements and not to substitute its view for the commercial wisdom of the CoC. In absence of any discrimination or contravention of law, and since the CoC's decision was reasoned and self speaking, the plan was fit for approval. The Tribunal accepted that the total realisation under the plan (aggregate consideration) exceeded the average liquidation value reported by registered valuers, reinforcing that acceptance is advantageous to stakeholders. [Paras 37, 38, 40, 41, 42]

The Resolution Plan approved by the Committee of Creditors is sanctioned under Section 31(1) of the Code.

Compliance with requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Priority payment of insolvency resolution process costs - Treatment of operational creditors vis-a -vis liquidation value - Whether the Resolution Plan satisfies the specific conditions set out in Section 30(2)(a)-(f) of the Code. - HELD THAT: - The Resolution Professional certified compliance in Form H and the Tribunal examined material aspects: (i) the plan provides for payment of CIRP costs in priority from the upfront amount (clause references in the plan and RP's certificate), (ii) the plan provides for payment to operational creditors not less than the amount payable in liquidation as required, (iii) the plan provides for post implementation management and control and adequate supervision mechanisms, and (iv) the plan does not contravene applicable law and must comply with other Board specified requirements. The Tribunal expressly clarified that insolvency resolution process costs shall be paid in entirety in priority, and that the Resolution Applicant must adhere to applicable laws even if not explicitly mentioned in the plan. [Paras 29, 30, 31, 35, 45]

The Tribunal is satisfied that the Resolution Plan meets the requirements of Section 30(2) of the Code.

Eligibility and disqualification under Section 29A of the Insolvency and Bankruptcy Code, 2016 - Whether the Resolution Applicant was eligible and not barred under Section 29A of the Code. - HELD THAT: - The Resolution Applicant furnished declarations and undertakings regarding eligibility, and the Resolution Professional certified in Form H that the applicant does not fall under any disqualifying categories under Section 29A. The Tribunal recorded that the RP's certification on eligibility is part of the compliance assessment and found no contrary material to displace that certification. [Paras 32, 36]

The Resolution Applicant is held to be eligible and not disqualified under Section 29A of the Code.

Performance security requirement under Regulation 36B(4A) of the CIRP Regulations, 2016 - Whether the Resolution Applicant complied with the performance security requirement under Regulation 36B(4A). - HELD THAT: - The Resolution Professional certified that the Resolution Applicant made the requisite RTGS payment to the account of the Corporate Debtor in compliance with Regulation 36B(4A). The Tribunal accepted the RP's certification as part of the compliance record. [Paras 33, 36]

The requirement of Regulation 36B(4A) regarding performance security has been complied with.

Grant and limits of reliefs and concessions in a resolution plan (including Section 32A implications) - Which reliefs and concessions sought in the Resolution Plan are permitted by the Tribunal. - HELD THAT: - The Tribunal considered Chapter IX of the Resolution Plan seeking exemptions (registration charges, stamp duty, taxes and fees) and other concessions including immunity for pre CIRP offences. The Tribunal declined the exemption in respect of payment of registration charges, stamp duty, taxes and fees arising from implementation of the plan. However, relief under Section 32A (exemption from liability for certain pre CIRP offences) was granted to the Resolution Applicant. The Tribunal clarified that any other reliefs beyond those expressly granted would not be construed as granted, and any exemptions contrary to law are not granted. For reliefs beyond the Tribunal's jurisdiction, the Monitoring Committee may approach appropriate authorities. [Paras 34, 43]

Certain reliefs (including Section 32A protection) are granted as stated; exemptions contrary to law or beyond Tribunal's jurisdiction are not granted.

Ceasing of moratorium on approval of resolution plan - Effect of approval on the moratorium order under Section 14 of the Code. - HELD THAT: - Upon approval of the Resolution Plan, the Tribunal excluded the period spent under adjudication and declared that the moratorium previously imposed under Section 14 shall cease to have effect from the date of the order. The Tribunal further directed transmission of CIRP records to the IBBI and declared the approved plan effective from the date of the order. [Paras 46, 47, 48]

Moratorium under Section 14 ceases to have effect from the date of this order; the approved Resolution Plan becomes effective from the date of the order.

Final Conclusion: The Tribunal, after screening the Resolution Plan and certifications of the Resolution Professional, found that the plan complies with the requirements of Section 30(2) and related Regulations, the Resolution Applicant is eligible under Section 29A and Regulation 36B(4A) obligations are met, certain statutory exemptions were refused while protection under Section 32A was granted, and accordingly sanctioned the Resolution Plan under Section 31(1); the moratorium is terminated and the plan becomes effective from the date of the order.

Extension of period of limitation due to COVID-19 - submission and consideration of Resolution Plan - registration of Corporate Debtor as MSME upon production of Udyam registration - direction to Resolution Professional to place Resolution Plan before Committee of Creditors - no further extension of time for submission of Resolution Plan

Submission and consideration of Resolution Plan - direction to Resolution Professional to place Resolution Plan before Committee of Creditors - no further extension of time for submission of Resolution Plan - Applicant's request for time to submit a Resolution Plan and consequent directions to the Resolution Professional. - HELD THAT: - The Tribunal recorded that a prior interlocutory order had directed the applicant to submit an Expression of Interest/Resolution Plan within a specified period and had set out the conditions for registration of the Corporate Debtor as an MSME on production of Udyam registration. Noting that the period originally granted had expired and that the applicant had not filed the Resolution Plan despite lapse of time, the Tribunal, with mutual consent of the parties, permitted a final, short extension. The Tribunal directed that the applicant must submit the Resolution Plan within one week from receipt of the order; upon such submission the Resolution Professional is duty-bound to place the Resolution Plan before the Committee of Creditors for consideration and further steps; and the Tribunal made clear that no further time would be granted for submission of the Resolution Plan. The Tribunal's order was given in the context of the applicant's reference to the Supreme Court's order on extension of limitation due to COVID-19, but the relief granted was limited to a definitive short extension for filing the plan and procedural directions as above. [Paras 6]

Application disposed of by granting the applicant one final week to submit the Resolution Plan; the Resolution Professional shall place any such plan before the Committee of Creditors without delay, and no further time will be allowed for submission.

Final Conclusion: The Tribunal granted a final one week extension for submission of the Resolution Plan, directed the Resolution Professional to place any plan so submitted before the Committee of Creditors for consideration, and declined to permit any further extension.

Financial creditor - financial debt - admission of debt in balance sheet - limitation - admission as starting point - corporate insolvency resolution process - moratorium under Section 14 - appointment of Interim Resolution Professional - jurisdiction of Adjudicating Authority

Financial creditor - financial debt - admission of debt in balance sheet - limitation - admission as starting point - The applicant is a financial creditor, financial debt has become due and default has occurred, and the claim is not time-barred in view of admission in the corporate debtor's financial statements. - HELD THAT: - The Tribunal found that the loan disbursement by the applicant to the corporate debtor is admitted and that the corporate debtor's account statements and audited financial statements for the years ending 31.03.2017 and 31.03.2018 reflect the debt and the agreed interest @10% p.a., confirming receipt of the financial debt and its debit in the books. The Tribunal relied on the principle that an entry in the balance sheet constitutes an admission of debt as stated by the Supreme Court in Asset Reconstruction Company (India) Limited Vs Bishal Jaiswal &Anr , and held that such admission operates as the relevant acknowledgment for limitation, rendering the application within the three-year period counted from the date of admission. Consequently, default is established and the Section 7 application is maintainable and not barred by limitation. [Paras 10, 11, 12, 14]

Application under Section 7 is maintainable; financial debt and default are established and the claim is not time-barred due to admission in the financial statements.

Jurisdiction of Adjudicating Authority - This Tribunal has jurisdiction to entertain the application. - HELD THAT: - The registered office of the corporate debtor is situated in Delhi, and on that basis the Tribunal recorded that it has the territorial jurisdiction to hear and decide the application under the Code. [Paras 13]

The National Company Law Tribunal, New Delhi Bench, has jurisdiction to entertain and adjudicate the application.

Appointment of Interim Resolution Professional - An Interim Resolution Professional (IRP) is appointed and related procedural conditions are directed. - HELD THAT: - The applicant proposed Mr. Gaurav Katiyar as IRP. The Tribunal appointed him as Interim Resolution Professional subject to the condition that no disciplinary proceedings are pending against him and that he files the specific consent in Form 2 and requisite disclosures under the IBBI Regulations within one week. The Tribunal also directed the financial creditor to deposit a security amount with the IRP to meet initial expenses, to be adjusted by the Committee of Creditors later. [Paras 15, 16]

Mr. Gaurav Katiyar is appointed as Interim Resolution Professional subject to the specified conditions; the financial creditor directed to deposit funds for IRP's expenses.

Moratorium under Section 14 - corporate insolvency resolution process - On admission, the moratorium under Section 14 of the IBC follows and the CIRP is initiated with attendant consequences. - HELD THAT: - The Tribunal admitted the Section 7 application and held that, as a consequence under Section 7(5), the moratorium envisaged by Section 14(1) is triggered in relation to the corporate debtor, with provisos and the applicability of Sections 14(2) to 14(4) during the moratorium period. The order directed communication of the admission to the parties, the IRP and the IBBI as required. [Paras 17, 18]

Moratorium under Section 14 is operative upon admission and the corporate insolvency resolution process is to proceed in accordance with the Code.

Final Conclusion: The Section 7 application filed by the applicant is admitted: the applicant is held to be a financial creditor, default and debt are established and not time-barred due to admission in the corporate debtor's financial statements; the National Company Law Tribunal, New Delhi has jurisdiction; an Interim Resolution Professional is appointed subject to conditions and deposit of funds for expenses is directed; and the moratorium under Section 14 is declared to follow upon admission.

Extension of corporate insolvency resolution process beyond 330 days - exceptional circumstances for extension of CIRP - exclusion of period of judicial intervention from CIRP computation - duty of resolution professional to ensure timely conduct of the CIRP and not to stall proceedings - power of the Adjudicating Authority to extend CIRP

Extension of corporate insolvency resolution process beyond 330 days - exceptional circumstances for extension of CIRP - duty of resolution professional to ensure timely conduct of the CIRP and not to stall proceedings - power of the Adjudicating Authority to extend CIRP - Application for extension of CIRP by further 60 days beyond 370 days - HELD THAT: - The Tribunal refused the further extension sought by the Resolution Professional. It noted the governing principle that 330 days (including time taken in legal proceedings and extensions) is the outer limit, and that extension beyond 330 days is permissible only in exceptional circumstances where it serves stakeholders' interest (para 11). The Bench observed that an earlier order had granted a 40 day extension to enable the CoC to consider a resolution plan but, on the material before it, the CoC had not considered the plan within that extended period and the Resolution Professional failed to explain why the CoC did not act (paras 5-7). The Tribunal found that the Resolution Professional had effectively stalled the process by not placing the plan before the CoC pending adjudication of a claim, despite no stay being granted, and thereby acted suo moto to restrain the CoC's functioning (paras 6-8). Reliance on authorities permitting limited extensions in exceptional cases was considered, but the Tribunal emphasised that such extensions are exceptional and not to be treated as precedent (paras 10-13). In those circumstances, and because cogent reasons for non compliance with the earlier direction were not furnished, the Tribunal declined to exercise its discretion to grant a further 60 day extension (para 14). [Paras 11, 14, 15]

Application for further extension by 60 days beyond 370 days is dismissed.

Final Conclusion: The Adjudicating Authority declined to grant the additional 60 day extension of the CIRP beyond 370 days, dismissing the application on the ground that the Resolution Professional and the CoC failed to justify the delay and the RP had stalled the process without any stay.

Verification of claims by the Resolution Professional - admissibility of secondary evidence - evidentiary value of receipt of payment and bank records under Regulation 8A(2) - duty of the IRP/RP to collate and not adjudicate claims - provisional acceptance of claims subject to verification - extinguishment of undecided claims upon approval of a resolution plan

Verification of claims by the Resolution Professional - admissibility of secondary evidence - evidentiary value of receipt of payment and bank records under Regulation 8A(2) - duty of the IRP/RP to collate and not adjudicate claims - provisional acceptance of claims subject to verification - Whether the Resolution Professional was entitled to refrain from finally admitting the applicant's cash payment claim on the sole ground that the corporate debtor's books were not produced and the money receipt may be forged, and whether the documents produced by the applicant sufficed for verification under applicable regulations and evidence law. - HELD THAT: - The Tribunal examined Regulation 8A(2) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Section 63 of the Indian Evidence Act, 1872, and found that the existence of debt may be proved by "receipt of payment made" and that copies/photocopies fall within secondary evidence where appropriate. The applicant had submitted photocopies of money receipts and a passbook showing withdrawals closely preceding the payment date; two of the three receipts were found genuine and the third was only subject to the RP's apprehension of forgery without any final finding. The RP had provisionally accepted Rs. 7 lakhs subject to verification but delayed finalisation, relying on non-production of books of accounts by the suspended promoters. The Tribunal held that the inability of the RP to obtain the debtor's books from the suspended board did not justify keeping the applicant's claim pending where supporting documents admissible under Regulation 8A(2) and secondary evidence rules were produced. The Tribunal further noted the statutory duty of the IRP/RP is to receive and collate claims (Section 18 and Regulations) and that unlike a liquidator the RP is not vested with independent adjudicatory power to finally admit or reject claims; Regulation 13 requires verification within seven days from last date of receipt of claims and does not permit the RP to sit on verification until books are produced. Applying these principles to the material before it, the Tribunal concluded that the RP erred in law in not finalising the applicant's claim on the stated grounds and that the documents furnished warranted verification and acceptance in accordance with the Regulations and evidence law. The Tribunal therefore directed the RP to verify the claim on the basis of the money receipts and bank statement and to declare that the applicant's total claim is Rs. 9 lakhs, after which the RP may inform the resolution applicant of such acceptance. [Paras 25, 26, 27, 31, 32]

The RP exceeded his duty by not finalising the applicant's claim; the applicant's photocopied receipts and bank passbook suffice for verification under Regulation 8A(2) read with Section 63 of the Evidence Act, and the RP is directed to verify and declare the claimant's total admitted claim as Rs. 9 lakhs and inform the resolution applicant.

Extinguishment of undecided claims upon approval of a resolution plan - Whether the respondent's reliance on authorities holding that undecided claims stand extinguished after approval of a resolution plan barred the applicant's remedy before the Tribunal in the present facts. - HELD THAT: - The Tribunal considered the precedents cited by the RP concerning extinguishment of undecided claims on approval of a resolution plan but found those decisions distinguishable. In this case the applicant had filed his claim within the prescribed period and the RP had provisionally accepted the claim subject to verification prior to COC approval; therefore the RP and prospective resolution applicant were aware of the provisional acceptance. Given provisional admission and the existence of supporting documents admissible under Regulation 8A(2), the Tribunal held that the cited decisions were not applicable to deny the applicant relief. The Tribunal accordingly did not apply extinguishment principles to defeat the applicant's claim and instead directed the RP to complete verification and finalise acceptance. [Paras 28, 29, 30, 31, 32]

The authorities on extinguishment of undecided claims were held inapplicable to the facts; provisional acceptance submitted before COC approval and supporting documents precluded dismissal on that ground, and the RP must verify and finalise the claim.

Final Conclusion: The Tribunal allowed the petition and directed the Resolution Professional to verify the applicant's claim on the basis of the money receipts and bank statement, declare that the applicant's total admitted claim is Rs. 9 lakhs (instead of the Rs. 2 lakhs earlier admitted), and inform the resolution applicant of such acceptance; IA/5623/2020 disposed of.

Consultation with noticee before issuance of show-cause notice - personal hearing in terms of Circular No.1053/02/2017-CX dated 10.03.2017 - abeyance of show-cause notice - restraint on coercive action pending adjudication - no adjudication on merits

Consultation with noticee before issuance of show-cause notice - personal hearing in terms of Circular No.1053/02/2017-CX dated 10.03.2017 - abeyance of show-cause notice - Show-cause notice dated 22.04.2021 to be kept in abeyance and the petitioner to be afforded a personal hearing in terms of the Circular dated 10.03.2017 by the show-cause notice issuing authority. - HELD THAT: - The petition challenged the validity, timeliness and authority of the show-cause notice and sought consultation as envisaged by the Circular dated 10.03.2017. Noting that the proceedings were at a preliminary stage and without adjudicating on the merits of the contentions raised by either side, the Court directed that the show-cause notice be kept in abeyance and that the petitioner be given an opportunity of personal hearing pursuant to the Circular. The Court emphasised expedition of the preliminary proceedings and made clear that the order was rendered on the peculiar facts before it and without forming any adjudicative view on the substantive contentions. In the event the authority, after hearing, concludes revival is warranted, it may issue notice reviving the show-cause notice as if it were the original notice dated 22.04.2021.

Show-cause notice dated 22.04.2021 kept in abeyance; petitioner to be afforded personal hearing under the Circular; authority may revive the notice after hearing.

Restraint on coercive action pending adjudication - no adjudication on merits - No coercive steps shall be taken against the petitioner until conclusion of adjudication arising from the show-cause notice, in view of the revenue's undertaking. - HELD THAT: - The learned counsel for the revenue stated that the petitioner would be afforded an opportunity of hearing and, until completion of adjudication, would not be subjected to any coercive action permissible in law. Taking this assurance into account and to ensure expeditious resolution at the nascent stage of proceedings, the Court recorded that no coercive steps shall be taken pending adjudication. The Court expressly refrained from deciding the substantive contentions and kept all contentions of both sides open.

Revenue restrained from taking coercive steps until adjudication is completed; substantive contentions left open.

Final Conclusion: Petition disposed by directing abeyance of the show-cause notice, grant of personal hearing to the petitioner in terms of the Circular dated 10.03.2017 and restraint on coercive action until adjudication; order recorded as without prejudice to merits and not to be treated as precedent; parties to cooperate for expeditious disposal.

Input Tax Credit reversal - sales suppression based on departmental mismatch reports - furnishing of departmental data and opportunity to rebut - pre-assessment notice and audi alteram partem - de novo assessment on remand

Sales suppression based on departmental mismatch reports - furnishing of departmental data and opportunity to rebut - Validity of additions for alleged sales suppression founded on internal web reports and mismatch between the assessee's annexures and third party dealers. - HELD THAT: - The Court set aside the additions made in the assessment dated 25.10.2019 which were founded on departmental internal web reports and cross verification showing mismatch. Noting that a departmental intra mechanism to deal with mismatches had been directed previously but not implemented, the Court held that the Department must collate and furnish to the assessee all materials on which the alleged mismatch is based and afford the assessee an opportunity to respond before finalising assessment. In light of these requirements and the absence of pre assessment notice service as admitted by the Department, the impugned additions were set aside and the matter remitted for fresh consideration. [Paras 3, 4]

Additions for alleged sales suppression set aside; Department to furnish mismatch materials and afford opportunity to rebut; assessment to be completed de novo.

Input Tax Credit reversal - pre-assessment notice and audi alteram partem - de novo assessment on remand - Validity of reversal of Input Tax Credit on purchases from dealers whose registrations are stated to be cancelled. - HELD THAT: - The Court quashed the impugned order to the extent it reversed ITC on the stated ground, noting procedural deficiencies including non service of pre assessment notice as admitted in the counter. The assessment order was set aside and the matter remitted to the Assessing Officer to hear the assessee on the materials and to pass a speaking order of assessment de novo in accordance with law and principles of natural justice. The Court provided a specific date for appearance and a timeline for completion, and cautioned that failure of the assessee to appear would revive the impugned order. [Paras 4, 5]

Reversal of ITC set aside and remitted for fresh de novo assessment after furnishing of materials and hearing; specified directions for appearance and time frame issued.

Final Conclusion: The impugned assessment dated 25.10.2019 is set aside insofar as it makes additions for alleged sales suppression and reverses Input Tax Credit; the Assessing Officer is directed to furnish the departmental materials constituting the basis of mismatch, hear the assessee on 29 April 2021 (or by mutually convenient video/physical hearing) and pass a speaking de novo assessment order within six weeks thereafter; failure of the assessee to appear will revive the impugned order.

Illegal detention and non-compliance with D.K. Basu safeguards - Grant of bail on account of procedural infirmity - Compliance with Sections 41 and 42 of the NDPS Act - Validity of search conducted by a woman constable in presence of senior officers - Arrest memo formalities and intimation to family

Illegal detention and non-compliance with D.K. Basu safeguards - Arrest memo formalities and intimation to family - Grant of bail on account of procedural infirmity - Whether the petitioner was entitled to bail on account of belated formal arrest, alleged illegal custody overnight and non-compliance with the safeguards laid down in D.K. Basu - HELD THAT: - The Court found that although the petitioner was apprehended at about 8:00-8:30 p.m. on 17th December, 2020 and kept in custody overnight at the Narcotics Cell, the formal arrest was recorded only later in the forenoon of 18th December, 2020. The arrest memo records that the wife was informed and bears her thumb impression, but the case diary does not clearly explain how or when intimation was given or how the family reached Court. The police retained custody of the seized material overnight and the ruqqa was sent only in the early morning; the Court regarded the belated formal arrest and lack of clarity about compliance with the requirement of informing family as disturbing and amounting to procedural infirmity. Having regard to the petitioner's clean antecedents and the circumstances of the delay in formalising arrest and intimation, the Court exercised its discretion to relieve the procedural taint by releasing the petitioner on bail. [Paras 10, 11, 12]

Bail granted to the petitioner on furnishing bond and surety, subject to conditions including not leaving NCT of Delhi without permission and intimating any change of address or mobile number.

Validity of search conducted by a woman constable in presence of senior officers - Compliance with Sections 41 and 42 of the NDPS Act - Whether the search of the co-accused by a lady constable and the searches/apprehension complied with legal requirements under the NDPS Act - HELD THAT: - The Court recorded that the lady constable conducted the search of the co-accused in the presence of the ACP and SI who formed part of the raiding team, and that the searches took place in a public place rather than within a building or conveyance. On these facts the Court held that the search by the woman constable, undertaken to maintain dignity and conducted in the presence of authorized senior officers, did not vitiate the search. For similar reasons the Court concluded that Sections 41 and 42 of the NDPS Act were not shown to have been violated on the material before it. [Paras 5, 8]

Searches upheld as not vitiated and compliance with Sections 41 and 42 NDPS Act found on the material before the Court.

Final Conclusion: The petition for regular bail is allowed on the ground of procedural infirmity arising from the belated formal arrest and lack of clarity about intimation to family; searches and compliance with Sections 41 and 42 NDPS Act were not held vitiated. The petitioner is released on bail subject to bond, surety and other conditions specified by the Court.

Dishonour of cheque - Service of demand notice by registered post - Presumption under Section 27 of the General Clauses Act and Section 114 of the Evidence Act - Cognizance under Section 142 of the Negotiable Instruments Act - Strict interpretation of penal provisions - Quashing proceedings under inherent jurisdiction (Section 482 Cr.P.C.)

Dishonour of cheque - Service of demand notice by registered post - Presumption under Section 27 of the General Clauses Act and Section 114 of the Evidence Act - Cognizance under Section 142 of the Negotiable Instruments Act - Maintainability of the complaint under Section 138 read with Section 142 of the Negotiable Instruments Act when the complaint states dispatch of a demand notice by registered post but does not expressly record the date of its receipt by the drawer. - HELD THAT: - The Court examined the proviso to Section 138 and the cognizance requirement in Section 142 and applied the principles of presumption of service. The complaint averred that the demand notice was sent by registered post on 16-03-2016; the petitioner did not deny receipt before the trial court and participated in proceedings thereafter, including referring to compromise and seeking adjournments. Relying on the established presumption that communications sent by registered post are delivered in the ordinary course (and on the reasoning in C.C. Alavi Haji v. Palapetty Muhammed regarding Section 114 Evidence Act and Section 27 GC Act), the Court held that service would be deemed effected on 16-03-2016. The mandatory 15 day period therefore ran from 16-03-2016 to 30-03-2016 and the complaint filed on 31-03-2016 was after expiry of that period; accordingly the complaint was competent and the trial court rightly took cognizance and issued process. The Court rejected the contention that absence of an express recital of receipt in the complaint rendered the complaint premature, observing there is no legal requirement to state more than dispatch in the complaint once dispatch is pleaded and no denial of receipt is made. [Paras 18, 19, 20]

The complaint filed on 31-03-2016 is maintainable; service of the demand notice dated 16-03-2016 is to be presumed and cognizance taken by the trial court was proper.

Quashing proceedings under inherent jurisdiction (Section 482 Cr.P.C.) - Attachment, proclamation and warrant orders - Whether other incidental orders passed by the trial court (including proceedings for proclamation, attachment of property and issuance of warrants) warranted interference by the High Court in the quash petition. - HELD THAT: - The petitioner challenged various subsequent orders of the trial court, including orders for proclamation, attachment and issuance of warrants. The High Court examined the challenge and found no ground to interfere with those orders in the context of the present petition. The Court treated those proceedings as validly conducted and held that they do not justify quashing the complaint or the impugned cognizance order. [Paras 22]

Challenges to the other orders of the trial court do not merit interference; those proceedings are not quashed.

Final Conclusion: The petition under the High Court's inherent jurisdiction is dismissed: the complaint under Section 138 NI Act filed on 31-03-2016 is maintainable as the demand notice of 16-03-2016 is presumed served and the trial court rightly took cognizance; incidental orders of the trial court require no interference.

Suspension of sentence - enlargement on bail pending disposal of revision - grant of bail on conditions - identity verification by affixing photograph and left thumb impression in surety bond - monthly appearance before trial court during pendency of revision - exemption from surrender in view of pandemic - conviction under the Negotiable Instruments Act for dishonour of cheque

Suspension of sentence - enlargement on bail pending disposal of revision - conviction under the Negotiable Instruments Act for dishonour of cheque - Substantive sentence of imprisonment suspended pending disposal of the criminal revision petition and petitioners enlarged on bail. - HELD THAT: - The Court noted that the petitioners were convicted and sentenced by the Sessions Court for offences under the Negotiable Instruments Act, and that the petitioners raised arguable points and pointed out infirmities and contradictions in the prosecution case. Given that the criminal revision petition raised these arguable points and was not likely to be taken up for final hearing in the near future, the Court concluded that suspension of the substantive sentence was warranted pending disposal of the revision petition. The relief was granted while leaving the conviction and the revision petition for adjudication on merits by the appellate forum. [Paras 6, 7]

CRL. M.P. No. 5841 of 2021 allowed; substantive sentence suspended pending disposal of the revision petition and petitioners enlarged on bail.

Grant of bail on conditions - identity verification by affixing photograph and left thumb impression in surety bond - monthly appearance before trial court during pendency of revision - Bail granted subject to specified conditions regarding bond, sureties, identity verification and monthly attendance before the trial court. - HELD THAT: - The Court prescribed conditions for enlargement on bail: execution of a bond with two sureties each, affixing of photographs and left thumb impressions in the surety bond, and permitting the trial court to obtain identity documents to ensure identity. The petitioners were directed to appear before the trial court on the first working day of every month at the stated time until disposal of the revision petition, with provision for filing an application under Section 317 Cr.P.C. if unable to attend on any particular date and for appearing on an alternative date as directed by the trial court. These conditions were imposed as safeguards while suspending the substantive sentence. [Paras 7]

Bail enlarged subject to the court-prescribed bond, surety, identity-verification and monthly appearance conditions.

Exemption from surrender in view of pandemic - Petition seeking exemption from surrender before the trial court allowed in view of the pandemic. - HELD THAT: - Considering the prevailing pandemic situation, the Court allowed the petition for exemption from surrender. The order exempted the petitioners from immediate surrender pursuant to the conviction, while other conditions of bail and the suspension of sentence were addressed separately. [Paras 8]

CRL. M.P. No. 5844 of 2021 allowed; petitioners exempted from surrender in view of the pandemic.

Final Conclusion: The Court suspended the substantive sentence of imprisonment pending disposal of the criminal revision petition and enlarged the petitioners on bail subject to specified conditions (bond with sureties, identity verification and monthly attendance), and, in light of the pandemic, exempted the petitioners from surrender before the trial court.

Appeal against acquittal - Re-appreciation of evidence in appeal against acquittal - Double presumption of innocence on acquittal - Presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption on balance of probabilities

Appeal against acquittal - Re-appreciation of evidence in appeal against acquittal - Double presumption of innocence on acquittal - Whether the appellate court should interfere with the trial court's order of acquittal. - HELD THAT: - The Court reviewed settled principles that an appellate court has full power to review, re-appreciate and reconsider evidence underpinning an acquittal but must bear in mind the double presumption of innocence enjoyed by the accused and should not disturb an acquittal if two reasonable conclusions are possible. Authorities were examined and the Court emphasised that interference is warranted only in exceptional cases where there are compelling and substantial reasons, or where the trial court's conclusion is perverse, ignores material evidence, or is based on an erroneous view of law or fact. Applying these principles to the evidence on record, the Court found that the trial court's approach was not shown to be patently illegal or perverse and that the view taken below was a possible and reasonable view of the material before it. Consequently, interference with the acquittal was not justified in the present appeal. [Paras 8, 9, 10, 12]

The acquittal recorded by the trial court is not interfered with.

Presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption on balance of probabilities - Whether the presumption under Section 139 of the N.I. Act operated in favour of the complainant and, if so, whether the accused successfully rebutted it. - HELD THAT: - The Court accepted the legal proposition that where a cheque bears the accused's admitted signature a presumption under Section 139 arises in favour of the complainant that the cheque was issued for consideration. However, on the facts of this case the accused led credible material and circumstances - including evidence of an earlier loan/transaction for a different sum, contemporaneous bank records showing presentation and payment of a cheque for a lesser amount, discrepancies in the complainant's account of dates, and weaknesses in the testimony of supporting witnesses - which made the non-existence of the claimed consideration sufficiently probable. The accused did not deny his signature but asserted that the cheque entries were not in his handwriting and that a signed blank cheque was handed over as security and later misused. Having regard to these matters and applying the test of preponderance of probabilities, the Court concluded that the presumption under Section 139 was rebutted on the available evidence and that the complainant failed to prove execution and delivery of the cheque as pleaded. [Paras 11, 12]

The presumption under Section 139 was rebutted on the facts; the prosecution failed to prove execution and delivery of the cheque.

Final Conclusion: The appeal against the trial court's acquittal is dismissed; there is no sufficient ground to set aside the acquittal as the presumption under Section 139 N.I. Act was rebutted on the evidence and the trial court's conclusion is a possible and reasonable view.