TaxTMI Updates e-Newsletter
Jun 22,2022

Prohibition on double adjudication under Section 73 and Section 74 - stay of demand notice - adjudication under Section 74 and subsequent issuance of notice under Section 73

Prohibition on double adjudication under Section 73 and Section 74 - adjudication under Section 74 and subsequent issuance of notice under Section 73 - Whether a demand notice under Section 73 could be issued in respect of the same cause of action after adjudication under Section 74 had been initiated and partly adjudicated. - HELD THAT: - The petitioner contended that the Respondent had earlier issued a show cause notice under Section 74 in form GST DRC 08 calling for reversal of alleged bogus input tax credit for the period stated, that the matter was adjudicated and decided partly in the petitioner's favour with no demand raised in the Refund Sanction/Rejection Order dated 18.05.2022, and that the Respondent had not preferred any appeal against that adjudication. The petitioner's case was that, having proceeded under Section 74, the Revenue could not issue a subsequent demand under Section 73 in respect of the same cause of action. The Court noted these contentions, issued notice to the Respondent and, without adjudicating the substantive controversy on merits, granted interim relief by staying the impugned Demand Notice dated 02.06.2022 (Form GST DRC 01A) until the next date of hearing. The Court did not determine the ultimate question of law on the interplay between Sections 73 and 74 or the permissibility of the subsequent demand; those contentions remain for adjudication on the returnable date.

Notice issued to the Respondent; interim stay granted on the Demand Notice dated 02.06.2022 until the next hearing.

Final Conclusion: Notice directed to be served on the Respondent and the impugned demand notice (Form GST DRC 01A dated 02.06.2022) stayed until the returnable date before the Roster Bench; substantive question regarding issuance of a Section 73 notice after adjudication under Section 74 reserved for further consideration.

Concealment of income - wilful failure to furnish return - survey under Section 133(A) of the Income Tax Act - prosecution for offences under Sections 276C(1), 276CC and 277 of the Income Tax Act - quashing of criminal complaint - abuse of process - acceptance of return and completion of assessment as a bar to prosecution

Concealment of income - wilful failure to furnish return - survey under Section 133(A) of the Income Tax Act - Complaint contains specific allegations that the petitioner concealed income and wilfully failed to furnish returns, disclosure of which arose from survey operations. - HELD THAT: - The court examined the complaint and the facts of the cases and recorded that in each assessment year the concealment of income was detected only after survey operations under Section 133(A) and that the petitioner thereafter filed returns in response to statutory notices. The complaint repeatedly alleges that the petitioner wilfully and deliberately did not file returns within the statutory due dates, filed returns only after survey/notice, thereby concealing true income and denying the assessing officer the opportunity to determine the correct income. On these averments the court concluded that specific and sufficient allegations of concealment and wilful omission are made to prima facie constitute the offences charged, and that those allegations are not merely general or formal but particularised by reference to survey, delayed filing and admissions of undisclosed income. [Paras 13]

The court held that the complaint, as it stands, makes out specific allegations of concealment and wilful failure to file returns warranting prosecution.

Acceptance of return and completion of assessment as a bar to prosecution - quashing of criminal complaint - abuse of process - Acceptance of the returns and subsequent completion of assessment does not, on the facts of these cases, preclude criminal prosecution or justify quashing the complaints. - HELD THAT: - The petitioner contended that because returns were ultimately filed, accepted and assessments completed, prosecution is futile and an abuse of process, relying on several precedents. The court analysed the cited authorities and distinguished them on facts: those decisions involved either mere delay in filing without survey-led disclosure, insignificant sums, or absence of wilful evasion. By contrast, in the present matters substantial undisclosed income was detected only after survey and the returns were filed only in consequence of survey/notice. The court held that where concealment is established by survey and returns are filed thereafter, the mere fact of subsequent assessment and payment of tax/penalty does not automatically bar criminal prosecution; the correctness and sufficiency of the allegations must be tested at trial rather than by summary quashing. The court further observed that economic offences are not confined by the same considerations of limitation invoked by the petitioner, and that the facts here justified permitting prosecution to proceed to trial. [Paras 14, 15, 16]

The court refused to quash the criminal complaints and held that the question of prosecution must go to trial; the petitions seeking quashing were dismissed.

Final Conclusion: The petitions challenging six criminal complaints were dismissed; the court found specific allegations of concealment and wilful failure to file returns (detected by survey) and held that acceptance of returns and completion of assessment did not warrant quashing the complaints; the matters are directed to trial for adjudication on evidence.

Reopening of assessment - Validity of notice under Section 148 - Reasons for reopening - Failure to disclose fully and truly all material facts - Judicial review of factual foundation for reopening

Reopening of assessment - Reasons for reopening - Failure to disclose fully and truly all material facts - Judicial review of factual foundation for reopening - Impugned notice under Section 148 for assessment year 2014-2015 and the order rejecting objections were vitiated because the reasons for reopening proceeded on an erroneous factual premise and did not specify any real failure by the petitioner to disclose material facts. - HELD THAT: - The reasons recorded for reopening stated that there was an excess booking under 'Other Expenses' (figures as stated in the reasons) and concluded that there was a failure to disclose fully and truly all material facts. However, the record of the original scrutiny assessment and assessment order show that the Assessing Officer had considered the petitioner's replies, details of expenses and annexures, and the petitioner had furnished detailed information in response to notices under Section 142(1) and during scrutiny. The reasons merely reproduce statutory language and assert that assessment record showed only a smaller figure, without specifying which material fact was not disclosed or explaining how the alleged second page of Note 15 came to be omitted from the assessment record. When the petitioner pointed out that the second page of Note 15 contained the relevant breakup (and therefore there was no unexplained excess), the officer while disposing of objections did not state that the second page was absent from the assessment record nor explain the sequitur of the omission. In these circumstances the factual foundation for reopening was not satisfactorily established and the reasons failed to demonstrate a real failure to disclose material facts warranting reopening; accordingly the notice and consequential order could not stand.

Impugned notice under Section 148 and the order rejecting objections quashed and set aside.

Final Conclusion: Writ petition allowed; rule made absolute in terms of the prayers seeking quashing of the notice dated 30 March 2021 and the order dated 20 January 2022; no order as to costs.

Direction for special audit under Section 142(2A) - principles of natural justice - requirement of hearing before directing special audit - prejudicial civil consequences of special audit

Direction for special audit under Section 142(2A) - requirement of hearing before directing special audit - principles of natural justice - Validity of an order under Section 142(2A) directing a special audit when no opportunity of hearing was given to the assessee - HELD THAT: - The Court accepted the petitioner's contention that no hearing was afforded before issuance of the direction dated 29 March 2005 directing a special audit. It held that the requirement of giving the assessee a reasonable opportunity of being heard prior to directing a special audit under Section 142(2A) must be read into the provision. The court relied on the Supreme Court decisions in Rajesh Kumar (two-judge bench) and the subsequent three-judge bench decision in Sahara India which confirmed that orders under Section 142(2A) attract civil consequences and are prejudicial to the assessee, and therefore the principles of natural justice are implicit in the provision. The judgment noted that the proviso inserted into Section 142(2A) with effect from 1 June 2007 merely clarifies the pre-existing legal position that a hearing is required. Applying these principles to the admitted facts that no hearing was given here, the order directing the special audit was vitiated for failure to observe natural justice. [Paras 4, 5, 6, 7]

The order under Section 142(2A) directing a special audit without giving the assessee an opportunity of hearing is invalid; the writ petition is allowed and Rule is made absolute.

Final Conclusion: Writ petition allowed; the impugned direction for a special audit dated 29 March 2005 is set aside on the ground that no opportunity of being heard was afforded to the assessee, in conformity with the law laid down by the Supreme Court and the proviso to Section 142(2A).

Disallowance in respect of bogus purchases - Principle that accepted sales preclude addition of entire purchase amount despite bogus purchases - Cessation of liability as a ground for addition - Effect of bar of limitation on existence of debt - Disallowance under section 41(1) of the Income Tax Act, 1961 (cessation of liability)

Bogus purchases - sale accepted by department - Disallowance in respect of purchases - Whether the Tribunal was justified in upholding the deletion of the Assessing Officer's full disallowance and confirming the CIT(A)'s direction to add only 12.5% of purchases as income in respect of alleged bogus purchases. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) who directed disallowance limited to 12.5% of purchases and addition of that proportion to the assessee's income. The court accepted the view, as applied in earlier Division Bench decisions, that where the Department has accepted the fact of sales, it is not necessary to add the entire amount of purchases even if purchases are held to be bogus, because there cannot be a sale without purchase. On the facts of the present case, which include acceptance of sales, the principle in those decisions governs and the Revenue's contention for total disallowance was rejected.

Tribunal correctly upheld CIT(A)'s limited disallowance; Revenue's challenge to direct total disallowance is dismissed.

Cessation of liability - Effect of bar of limitation on debt - Disallowance under section 41(1) of the Income Tax Act, 1961 (cessation of liability) - Whether liabilities barred by the Limitation Act have ceased to be debts and therefore must be treated as income and added under section 41(1). - HELD THAT: - The Tribunal and CIT(A) relied upon established precedents, including decisions cited from higher courts, holding that a liability barred by the statute of limitation does not cease to be a debt for the purpose of treating it as income. The court noted that mere barring by limitation does not extinguish the underlying debt and, following the cited authorities, rejected the Revenue's submission that such liabilities must be added to income under section 41(1). No contrary binding decision was shown to warrant a different conclusion in this case.

Liabilities barred by limitation do not automatically cease to be debts and cannot be added as income under section 41(1); Revenue's challenge is dismissed.

Final Conclusion: Both substantial questions of law raised by the Revenue were rejected; the Tribunal's order upholding the CIT(A)'s findings on limited disallowance of purchases and on non-addition of liabilities barred by limitation is maintained and the appeal is dismissed.

Prospective effect of Finance Act, 1991 amendment to Section 80HHC - treatment of commission income as export profit for the purpose of Section 80HHC - entitlement to deduction under Section 80HHC where commission is relatable to export and received in foreign exchange - remand to Assessing Officer for computation in light of legal conclusion

Prospective effect of Finance Act, 1991 amendment to Section 80HHC - treatment of commission income as export profit for the purpose of Section 80HHC - Whether the amendment made by the Finance Act, 1991 operated retrospectively so as to exclude commission from export profit for Assessment Year 1991-92 and whether commission relatable to export constitutes export profit eligible for deduction under Section 80HHC. - HELD THAT: - The Tribunal had held that the 1991 amendment operated retrospectively and therefore commission income must be excluded from business profit and turnover for computing deduction under Section 80HHC, resulting in denial of the deduction. The High Court observed that subsequent decisions of the Supreme Court, notably P.R. Prabhakar, have held that the amendment of 1991 is prospective and not retrospective. Applying that ratio, the Tribunal's foundational finding of retrospectivity does not survive. The Court further noted there was no dispute before the authorities that the commission in question was relatable to export and that the audited accounts showed the commission was received in foreign exchange and attributable to export. On those facts and in view of the Supreme Court's ruling, commission relatable to export constitutes export profit for the purpose of Section 80HHC and the assessee is entitled to the deduction claimed for Assessment Year 1991-92. [Paras 6, 7, 9, 10]

The Tribunal's conclusion as to retrospectivity and exclusion of commission is set aside; commission relatable to export is to be treated as export profit and the assessee is entitled to deduction under Section 80HHC for AY 1991-92.

Remand to Assessing Officer for computation in light of legal conclusion - Whether further proceedings are required to quantify the deduction and effect consequential calculations in light of the legal conclusion. - HELD THAT: - Having answered the legal question in favour of the assessee, the Court directed that the matter be sent back to the Assessing Officer for carrying out the necessary calculations. The High Court did not adjudicate on quantification or arithmetic adjustments but ordered remand for computation consistent with the legal findings in the judgment. [Paras 11, 12]

Matter remitted to the Assessing Officer to compute the deduction and take further steps as per law in accordance with this judgment.

Final Conclusion: The Tribunal's order is quashed and set aside. The legal question is answered for the assessee: the 1991 amendment is prospective and commission relatable to export forms part of export profit for claiming deduction under Section 80HHC for AY 1991-92. The matter is remitted to the Assessing Officer for computation and further proceedings consistent with this decision.

Penalty under Section 271(1)(c) - concealment of income or furnishing inaccurate particulars - full and complete disclosure in the balance sheet - proviso to Explanation 10 of Section 43(1)

Penalty under Section 271(1)(c) - concealment of income or furnishing inaccurate particulars - full and complete disclosure in the balance sheet - Whether the deletion of penalty by the Tribunal was unsustainable because the assessee had submitted inaccurate particulars or concealed income when claiming depreciation. - HELD THAT: - The Tribunal recorded that the assessee had disclosed the subsidy and related figures in its balance sheet and had claimed depreciation on the windmill without reducing the subsidy amount; while the addition on merits was sustained, the Tribunal held that penalty principles are distinct and require satisfaction drawn from material that the assessee concealed particulars or furnished inaccurate particulars. The High Court examined the Tribunal's reasoning and the record placed before it and found no material to conclude that the assessee submitted inaccurate particulars to claim the deduction. The Court rejected the Revenue's submission that inapplicability of the proviso to Explanation 10 of Section 43(1) necessarily implies inaccurate particulars, holding that liability for penalty under Section 271(1)(c) requires independent satisfaction based on material that particulars were concealed or inaccurate.

Tribunal's deletion of penalty was upheld; no case made out for interference as there is no material showing concealment or inaccurate particulars.

Final Conclusion: The appeal is dismissed for lack of any substantial question of law: the Tribunal's deletion of the penalty under Section 271(1)(c) is sustained because there is no material to show concealment of income or furnishing of inaccurate particulars; the order does not decide the assessee's claim for deduction under Section 43(1), which remains subject to separate appeal.

Violation of principle of natural justice by insufficient time to reply to a notice under Section 148A(b) - compliance with Section 148A(c) duty to consider the assessee's reply before passing an order under Section 148A(d) - quashing of order under Section 148A(d) and remand for fresh decision - income escaping assessment

Violation of principle of natural justice by insufficient time to reply to a notice under Section 148A(b) - Impugned order under Section 148A(d) was passed in breach of natural justice because the assessee was not given reasonable time to file a reply to the notice under Section 148A(b). - HELD THAT: - The Court found that the show-cause notice under Section 148A(b) required the assessee to file a reply but did not afford the statutory minimum reasonable time (seven days) to do so. The order under Section 148A(d) was passed in great haste and without giving the petitioner adequate opportunity to be heard. This procedural omission amounted to a violation of the principles of natural justice and vitiated the order passed under Section 148A(d).

Order under Section 148A(d) quashed on the ground of breach of natural justice for failure to provide reasonable time to reply.

Compliance with Section 148A(c) duty to consider the assessee's reply before passing an order under Section 148A(d) - quashing of order under Section 148A(d) and remand for fresh decision - Assessing Officer failed to consider the assessee's reply dated 24th March, 2022 before passing the order on 29th March, 2022, thereby violating the statutory obligation to consider the reply under Section 148A(c). - HELD THAT: - The Court observed that the assessee's detailed reply was on record prior to the passing of the impugned order. Section 148A(c) casts an imperative duty ('shall') on the Assessing Officer to consider the reply to the notice under Section 148A(b) before making an order under Section 148A(d). By not considering the reply and the documents filed therewith, the Assessing Officer breached that mandate. The Court relied on consistent judicial precedent where similar omissions warranted quashing of orders under Section 148A(d) and remand for fresh consideration. Accordingly, the matter was directed to be decided afresh by a reasoned order after taking into account the assessee's reply.

Impugned order and subsequent notice under Section 148 quashed; matter remanded to the Assessing Officer to decide the Section 148A(b) notice by a reasoned order after considering the assessee's reply.

Final Conclusion: The impugned order under Section 148A(d) and the notice under Section 148 are quashed for breach of natural justice and failure to consider the assessee's reply; the matter is remitted to the Assessing Officer to pass a reasoned order on the Section 148A(b) notice after taking the reply into account.

Interest under Section 132-B(4) - compensation for wrongful withholding - restitutionary principle - award of interest from date of assessment until actual payment - interpretation of fiscal statute - plain meaning not to oust judicial relief

Interest under Section 132-B(4) - compensation for wrongful withholding - award of interest from date of assessment until actual payment - Whether the Court can award interest/compensation for delay by the revenue in releasing cash seized under search beyond the date of completion of assessment until actual payment. - HELD THAT: - The court found that Section 132-B(4)(b) prescribes that statutory interest runs from the date following the expiry of 120 days after the last search authorization to the date of completion of assessment, but that this does not preclude a judicial award of interest or compensation where the revenue wrongfully withholds seized amounts beyond the assessment date. The reasoning relies on the restitutionary principle affirmed by the Supreme Court in Sandvik Asia Ltd., that amounts wrongfully withheld by the revenue must be compensated, and on the decisions of the Delhi High Court applying that principle to delayed release of seized cash. The court rejected the revenue's submission that the statutory provision forbids any compensation beyond the date of assessment, holding that a specific statutory ceiling for interest up to assessment does not bar judicial relief for wrongful withholding after assessment where delay is attributable to the revenue. The petitioners limited their claim to compensation at 6% p.a.; applying the authorities and respecting that concession, the court granted compensation for the quantified delayed period as shown in the petitioners' chart, after crediting interest already paid by the revenue. [Paras 36, 37, 38, 42, 43]

Respondents directed to pay interest by way of compensation/damages for the period 03.03.2018 to 23.12.2019 at 6% p.a., after credit of interest already paid, within four weeks.

Final Conclusion: Writ petition allowed; respondents ordered to pay compensation/interest at 6% p.a. for the delayed period 03.03.2018 to 23.12.2019 (subject to credit of interest already paid) and to comply within four weeks.

Compounding of offence - compoundable offence - sanction for prosecution - previous sanction under Section 279(1) - failure to furnish return - Section 276CC - opportunity to be heard before instituting prosecution

Compounding of offence - sanction for prosecution - compoundable offence - previous sanction under Section 279(1) - Validity of the sanction for prosecution under Section 279(1) in respect of alleged willful failure to furnish return under Section 276CC and the relief of permitting compounding. - HELD THAT: - The Court observed that the offence alleged under Section 276CC is compoundable and that the sanction order recorded the factual basis for prosecution relating to income from the Golden Hillock project for FY 2011-12 (A.Y. 2012-13). The petitioners were given one show-cause opportunity before sanction was accorded but contended that no adequate opportunity to seek compounding was afforded and that one petitioner was incapacitated (hospitalised) at that time. The Department did not dispute that notices are ordinarily issued in such cases and accepted that an additional opportunity to compound could be afforded, subject to time limits. The Court concluded that, having regard to the compoundable nature of the offence, the limited opportunity previously afforded, the petitioners' factual circumstances, and the fact that no further criminal proceedings have progressed beyond cognizance (an interim stay operating), no prejudice would be caused to the Department by permitting one further opportunity to apply for compounding. Accordingly the writ petitions were allowed in part by directing the petitioners to file applications for compounding within six weeks and requiring the respondents to pass appropriate orders accepting or declining compounding within a reasonable time, preserving the petitioners' alternative remedies if compounding is declined. [Paras 6, 7, 8, 9]

Petitions allowed in part; petitioners permitted to file applications for compounding within six weeks and respondents directed to accept or decline such applications within a reasonable time, failing which prosecution continues.

Final Conclusion: Writ petitions allowed in part: petitioners granted one opportunity to apply for compounding of the compoundable offence (relating to FY 2011-12 / A.Y. 2012-13); respondents to decide on compounding within a reasonable time; if no application is filed within six weeks prosecution shall proceed; all other contentions kept open.

Treatment of bank cash deposits as gross receipts from profession - assessment under best judgment proceedings (section 144) - application of cash credits provisions vis-a -vis section 69A read with section 115BBE - prohibition against double addition / double counting of same receipts

Treatment of bank cash deposits as gross receipts from profession - prohibition against double addition / double counting of same receipts - Total cash deposits in bank accounts were to be treated as gross receipts from profession and 50% thereof treated as income from profession. - HELD THAT: - The Assessing Officer treated two portions of the same bank deposits differently: part of the deposits (pre demonetization) was treated as professional receipts and half of that estimated as income from profession, while the post demonetization deposits were separately treated as undisclosed income. The Tribunal held that treating the same set of bank transactions under two divergent heads amounted to double action on the same receipts and was not justified. Therefore the entire cash deposit in bank (including deposits made in the post demonetization period) must be regarded as gross receipts from profession and, applying the approach adopted below by the AO, 50% of such gross receipts is to be treated as income from profession for the assessment year. [Paras 9, 10]

Ground no. 2 is partly allowed by treating total cash deposits of Rs. 27,22,500 as gross receipts from profession and qualifying 50% of that amount as income from profession.

Application of cash credits provisions vis-a -vis section 69A read with section 115BBE - assessment under best judgment proceedings (section 144) - Provisions of section 69A read with section 115BBE did not apply to the post demonetization cash deposits once the deposits were accepted as business/professional receipts. - HELD THAT: - The AO had applied section 69A r.w.s. 115BBE to treat post demonetization deposits as undisclosed income. The Tribunal observed that since the AO had accepted deposits made in the pre demonetization period as business/professional receipts, no adverse finding was recorded against the post demonetization deposits except that they were cash deposits. In the absence of any independent adverse finding, the post demonetization deposits could not be subjected to the penal provisions of section 69A r.w.s. 115BBE; they must be treated on the same footing as business/professional receipts. Consequently, the addition under those provisions could not be sustained. [Paras 11]

Ground no. 3 is allowed and the addition of Rs. 13,00,000 made under section 69A r.w.s. 115BBE is deleted; those deposits are to be treated as business/professional receipts.

Final Conclusion: The appeal is partly allowed: the Tribunal directed that the entire bank cash deposits be treated as gross receipts from profession with 50% thereof to be assessed as income from profession, and deleted the addition made under section 69A read with section 115BBE in respect of the post demonetization deposits.

Non-compliance of rule 46A (admission of additional evidence and principles of natural justice) - Allowability of appropriations of profit / creation of reserves as deduction from business income - Applicability of section 43B and section 40(a)(ia) to provisions and gratuity/payable - Provisions made outside books and consequential adjustment in computation of taxable income - Verification and identification of NPA accounts for provision under section 36(1)(viia) - Remand for fresh adjudication and verification by assessing officer

Non-compliance of rule 46A (admission of additional evidence and principles of natural justice) - Provisions made outside books and consequential adjustment in computation of taxable income - Applicability of section 40(a)(ia) to interest provisions - Whether the first appellate authority erred in allowing part relief on an interest provision without compliance with rule 46A and without verification by the AO, and whether the matter requires remand for verification. - HELD THAT: - The Tribunal found that the ld. CIT(A) did not record any finding that the assessee's submission fell within the mandatory clauses of rule 46A, nor did he call for the AO's comments or cause independent verification of the working produced before him. The absence of verification and non-observance of the procedure prescribed by rule 46A renders the allowance susceptible to being set aside. The Tribunal observed that issues relevant to tax treatment - whether the manual provision was made in books or only in computation, the consequent adjustment in computing taxable income, the accounting treatment of any short provision in subsequent years, and the possible applicability of section 40(a)(ia) for non-deduction of tax at source - require enquiry and cannot be conclusively decided on the record before the Tribunal. The Tribunal therefore remitted the matter to the file of the ld. CIT(A) for compliance with rule 46A and for deciding the issue after affording opportunity to both parties and after verification in a speaking order; it clarified that where specific findings already exist they shall not be reopened. [Paras 3]

Matter remitted to the file of the ld. CIT(A) for compliance with rule 46A and for verification and fresh decision after hearing the parties.

Allowability of appropriations of profit / creation of reserves as deduction from business income - Proper characterisation of appropriation (reserve) versus business liability - Whether appropriations of profit characterized as statutory reserve, agriculture credit fund and building fund are deductible in computing business income. - HELD THAT: - The Tribunal applied settled law that income chargeable to tax must be computed according to the Act and that mere accounting appropriation of profit (reserves/appropriations) does not convert an appropriation into an allowable business expenditure. The ld. CIT(A) had allowed the appropriations relying on regulatory guidelines; however, the Tribunal noted that no specific provision or guideline justifying deduction was pointed out and that the sums are appropriations of profit and not provisions towards ascertained business liabilities. Reliance placed by Revenue on precedent supporting non-allowability of appropriations was not disputed. On this basis the Tribunal reversed the ld. CIT(A)'s findings and allowed Revenue's ground. [Paras 4, 5]

Findings of the ld. CIT(A) allowing the appropriations are reversed; the appropriations are not allowable deductions.

Applicability of section 43B and section 40A(7) to gratuity and other provisions - Requirement of audit report, accounts and actuarial valuation for verification of provision - Whether the first appellate order allowing gratuity provisions complied with required verification and whether the matter should be remanded for fresh determination by the AO. - HELD THAT: - The Tribunal observed material inconsistencies between the auditor's report, the assessment order and the ld. CIT(A)'s findings. The ld. CIT(A) made no finding as to whether the opening provision had been reversed, or whether payments or accounting entries (debit/credit to P&L) supported his conclusion. The Tribunal emphasised that section 43B applies only to sums otherwise allowable and that allowance must be considered having regard to section 40A(7) and actuarial or scientifically validated basis for the provision. Given absence of balance-sheets, audit report on record before the AO and lack of adherence to the prescribed procedure under rule 46A, the Tribunal held that the matter requires restoration to the AO for speaking determination after hearing the assessee and, where necessary, seeking clarification from the auditors. [Paras 6, 7]

Findings of the ld. CIT(A) on gratuity provisions vacated; matter remanded to the AO for fresh adjudication in accordance with law.

Verification and identification of NPA accounts for provision under section 36(1)(viia) - Reliance on auditors' observations and requirement of AO's verification / sample verification - Whether the ld. CIT(A) erred in deleting disallowance of NPA provision without allowing the AO an opportunity to verify the veracity of the claim, in light of auditors' reservations about identification of NPA accounts. - HELD THAT: - The Tribunal noted the auditors' specific observation that the bank lacked a real time system for NPA identification and that unrealized interest had been booked as income, potentially overstating profit and inflating provisions. The ld. CIT(A) did not address the AO's recorded reasons nor the auditors' reservations. Proper identification of NPA accounts is a prerequisite for provisioning under section 36(1)(viia), and without such identification or suitable verification (including sample checks) the AO's caution was justified. The Tribunal relied on its earlier detailed examination in a related case and held that the matter must be remanded to the AO to ascertain correct quantification of provision, permitting the assessee to establish its claim and the AO to verify accounts or samples and apply the correct principles regarding reversal and adjustment of provisions. [Paras 8, 9]

Impugned deletion of disallowance on NPA provision set aside; matter remanded to the AO for verification and fresh determination.

Final Conclusion: The Revenue's appeals are allowed: for AY 2013-14 the appeal is allowed by reversing the allowance of appropriations (reserves) and remitting the interest-provision issue to the ld. CIT(A) for compliance with rule 46A and verification; for AY 2014-15 the appeal is allowed for statistical purposes, with the gratuity and NPA provision issues remanded to the AO for fresh adjudication in accordance with law after affording opportunity to the parties.

Unexplained cash credit under section 68 of the Income tax Act - reliance on bank cash withdrawals to explain cash deposits - restriction of disallowance by estimating percentage of purchases as bogus/unaccounted - application of precedential reasoning to quantify additions - consideration of business nature (unorganised, cash intensive trade) in assessing additions

Unexplained cash credit under section 68 of the Income tax Act - reliance on bank cash withdrawals to explain cash deposits - restriction of disallowance by estimating percentage of purchases as bogus/unaccounted - application of precedential reasoning to quantify additions - consideration of business nature (unorganised, cash intensive trade) in assessing additions - Whether the cash deposits totalling Rs.23,92,400/- are to be treated as unexplained cash credit and, if so, the appropriate quantum of disallowance under section 68 for AY 2009-10. - HELD THAT: - The Tribunal accepted that the assessee trades in an unorganised, cash intensive business and that substantial cash withdrawals (nearly matching the cash deposits) were recorded during the year. In the absence of material showing that withdrawn cash was used for non business purposes, the withdrawals could reasonably explain the deposits. The Tribunal applied established precedents which permit restriction of additions by estimating a proportionate percentage where purchases/deposits lack documentary support, and noted that earlier orders had reduced arbitrary or wholesale disallowances to a reasonable percentage taking into account the nature of business and typical gross profit margins. While the Commissioner (Appeals) had confirmed 25% of the questioned amount as disallowance relying on a decision in Vijay Proteins Ltd., the Tribunal, considering the assessee's business model, the near parity of withdrawals and deposits, and relevant decisions where smaller percentages were upheld, exercised its discretion to further reduce the addition. On these grounds the Tribunal restricted the disallowance to 10% of the cash deposits. [Paras 5, 6]

Part of the cash deposits of Rs.23,92,400/- stands as unexplained for the purposes of section 68, but the disallowance is restricted to 10% of the deposits; the appeal is partly allowed.

Final Conclusion: The ITAT, after considering the assessee's cash intensive unorganised trade, the pattern of withdrawals and deposits, and relevant precedents, reduced the addition made under section 68 for AY 2009-10 and confirmed a disallowance limited to 10% of the cash deposits, allowing the appeal in part.

Annual letting value - section 23(1)(c) of the Income-tax Act - vacancy allowance - property is let - lease commencement vs rent commencement - intention to let and efforts to let - income from other sources - disallowance of interest claimed against other sources

Section 23(1)(c) of the Income-tax Act - annual letting value - vacancy allowance - lease commencement vs rent commencement - property is let - Whether income from the property for AY 2016-2017 is to be assessed on the basis of Annual Letting Value or as per section 23(1)(c) (taking actual rent received or receivable) where lease was executed during the year but physical possession and rent commencement occurred later. - HELD THAT: - The Tribunal found that a registered lease deed was executed on 01.02.2016 within the relevant year while physical possession and rent commencement were from 01.06.2016. The lease deed expressly treated lease commencement as the date of execution and rent commencement as date of handing over physical possession; the lessee also paid an interest-free security deposit on execution. The Tribunal noted that post-2002 substitution of section 23, clause (c) applies where a property 'is let' but remains vacant during the year so that actual rent received/receivable is less than the amount for which the property might reasonably be expected to let. The Tribunal followed coordinate Benches which held that 'property is let' embraces cases where there is intention to let coupled with efforts, and that actual execution of a lease in the relevant year satisfies clause (c). Applying these principles, the Tribunal held that the property was let within the year (lease executed and security deposit paid) and, since no rent was receivable for the relevant period, the actual rent (nil) under clause (c) governs rather than ALV under clause (a). Accordingly the enhancement to ALV by the CIT(A) was set aside and the addition deleted. [Paras 7, 8]

Addition under house property on basis of ALV deleted; income to be determined under section 23(1)(c) (actual rent receivable), and addition deleted.

Income from other sources - disallowance of interest claimed against other sources - Whether the interest expenditure of Rs.2,89,211 claimed against income from other sources could be allowed. - HELD THAT: - The Assessing Officer disallowed the claimed interest deduction for lack of satisfactory evidentiary support. The CIT(A) reduced the disallowance but allowed only part of the claim, computing net income from other sources accordingly. The Tribunal found that the assessee had not produced documentary evidence to substantiate the claimed interest expenditure against other sources, and therefore upheld the CIT(A)'s reduced addition. [Paras 11]

Addition sustained to the extent confirmed by the CIT(A); ground challenging this disallowance dismissed.

Final Conclusion: The appeal is partly allowed: the addition under house property enhanced on ALV by the CIT(A) is deleted and income is to be determined under section 23(1)(c) (actual rent receivable), while the addition under other sources for unsubstantiated interest expenditure is confirmed as sustained by the CIT(A).

Deduction for employment-related allowances and reimbursements - Leave Travel Allowance (LTA) - Personal expenses not deductible against salary - Reconsideration and remand to Assessing Officer - Deduction for loss from house property and limitation for self-occupied property - Allowability of interest on borrowed capital for let-out property

Deduction for employment-related allowances and reimbursements - Leave Travel Allowance (LTA) - Personal expenses not deductible against salary - Reconsideration and remand to Assessing Officer - Claim of various deductions from salary including LTA and other employment-related expenses - HELD THAT: - The Tribunal noted that the assessee claimed multiple deductions against salary including LTA, food, medical, telephone, conveyance and other exemptions and that the Assessing Officer had added back the aggregate claimed amount to returned salary. The CIT(A) accepted only medical expenses and held that LTA and the other claims did not fall within the permissible deductions under the relevant provisions and confirmed the addition. The Tribunal observed that the record and the orders did not clearly disclose whether the assessee was entitled to the claimed LTA or whether LTA had been added to gross salary; accordingly the correctness of the LTA claim required fresh consideration by the Assessing Officer. However, the Tribunal agreed with the lower authorities that the claims for food, telephone, conveyance and the other exemptions were not related to earning of salary or employment exigencies and therefore properly disallowed. [Paras 7]

Part of the appeal is set aside and the specific claim for LTA of Rs.2,56,410 is remanded to the Assessing Officer for reconsideration; the disallowances of food, telephone, conveyance and other similar claims are confirmed.

Deduction for loss from house property and limitation for self-occupied property - Allowability of interest on borrowed capital for let-out property - Allowability of interest on borrowed capital claimed under income from house property - HELD THAT: - The assessee claimed interest on borrowed capital in respect of two house properties and set off a large house property loss against salary. The Assessing Officer allowed deduction to the extent of the statutory maximum for self-occupied property and disallowed the excess interest, treating the balance as not allowable. The CIT(A) affirmed the AO's computation and held that the claim appeared to be made to reduce salary unduly. The Tribunal found no infirmity in the concurrent findings of the AO and CIT(A) and declined to interfere with the disallowance of the excess interest and the addition made to income from house property. [Paras 10]

The appeal regarding the claim under income from house property is dismissed and the disallowance of interest beyond the allowed amount is upheld.

Final Conclusion: The appeal is partly allowed for statistical purposes: the claim for LTA is remitted to the Assessing Officer for fresh consideration, while the disallowances of other salary-related claims and the excess interest disallowed under income from house property are confirmed.

Re-opening of assessment under the Income-tax Act (section 147/148) based on fresh tangible material - Change of opinion - Reasonable belief of escapement of income - Requirement of fresh tangible material subsequent to assessment (Kelvinator principle)

Re-opening of assessment under the Income-tax Act (section 147/148) based on fresh tangible material - Change of opinion - Requirement of fresh tangible material subsequent to assessment (Kelvinator principle) - Validity of the second re-opening of assessment for AY 2012-13 - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer for both the first and second re-openings. At the first re-opening the AO had verified cash deposits and the assessee had furnished a sale agreement dated 16.09.2011 as the source of the deposits; the AO thereafter completed reassessment. The second re-opening was predicated on the same sale agreement and the same material which had been already in the AO's possession during the earlier reassessment. There was no fresh tangible material that came into the AO's possession subsequent to completion of the earlier reassessment to form a new reasonable belief of escapement of income. Applying the settled principle in CIT v. Kelvinator of India Ltd., the Tribunal held that a second re-opening based on the same material amounts to a change of opinion, which is impermissible. Since the AO did not rely on any new material discovered after the earlier reassessment, the subsequent reopening was held to be invalid. [Paras 8, 9]

Second re-opening of assessment quashed as being founded on change of opinion and not on fresh tangible material; reassessment accordingly invalid.

Final Conclusion: The Tribunal allowed the appeal, quashed the reassessment order passed under section 143(3) read with section 147 for AY 2012-13, and set aside the second re-opening as bad in law.

Refund in compliance with appellate Tribunal order - enforcement of CESTAT judicial order - interest payable on delayed refund under Section 27-A of the Customs Act - limitation defence under sub-section (3) of Section 27 of the Customs Act - withholding of payment on alleged address discrepancy

Refund in compliance with appellate Tribunal order - enforcement of CESTAT judicial order - Respondents were obligated to comply with the CESTAT order and return the amount directed by that Tribunal. - HELD THAT: - The court held that the CESTAT's order setting aside the original order and directing refund was a judicial order which the respondents were duty bound to implement. The respondents' failure to return the amount in terms of that appellate order could not be justified by re-arguing the entitlement or by treating the matter as a fresh refund claim. Accepting the respondents' stance would amount to impermissibly sitting in appeal over the CESTAT order and undermining its judicial character. Consequently, the respondents' withholding of the payment was unjustified and they were directed to make the payment in accordance with the CESTAT order within the time stipulated by the High Court.

Respondents directed to pay the amount awarded by the CESTAT forthwith in accordance with the Tribunal's order, within four weeks.

Interest payable on delayed refund under Section 27-A of the Customs Act - The petitioner was entitled to interest on the amount withheld from the date of the CESTAT order until actual payment. - HELD THAT: - The court observed that Section 27-A contemplates payment of interest on refunds and reflects Parliament's intent that amounts due and retained by revenue authorities carry interest. Whether denominated a statutory 'refund' or a payment pursuant to a judicial order, money belonging to the petitioner and retained by the respondents attracts interest. In view of the facts and the respondents' deliberate withholding, the court exercised discretion to award interest at a rate lower than the statutory range, fixing it at 10% per annum from the date of the CESTAT order until the date of payment.

Interest awarded at 10% per annum from the date of the CESTAT order until payment, to be paid along with the principal amount.

Limitation defence under sub-section (3) of Section 27 of the Customs Act - The respondents' reliance on sub-section (3) of Section 27 as a bar to executing the CESTAT order was rejected. - HELD THAT: - The High Court found the contention that sub-section (3) of Section 27 prohibited payment to be untenable in the face of a binding judicial order. The provision relied upon could not be used to nullify or override the appellate Tribunal's decision; to do so would amount to the executive sitting in appeal over a judicial determination. Therefore the limitation/technical objection under Section 27(3) could not justify withholding compliance with the CESTAT order.

Sub-section (3) of Section 27 does not operate to bar compliance with the CESTAT order in the facts of the case.

Withholding of payment on alleged address discrepancy - Alleged dispute regarding the petitioner's address did not justify withholding the payment directed by the Tribunal. - HELD THAT: - The court observed that even if there had been any error or discrepancy in the petitioner's address, such a defect would not constitute a lawful ground for denying the entitlement established by the CESTAT. Any clarification regarding address could and should have been obtained by the respondents through communication and did not permit protraction of compliance with the judicial order. The asserted address issue appeared to be raised merely to delay payment.

The address discrepancy contentions are rejected and do not excuse non-compliance with the Tribunal's order.

Final Conclusion: Writ petition allowed; respondents directed to pay the amount awarded by the CESTAT and interest at 10% per annum from the date of the CESTAT order until payment, the amounts to be paid within four weeks.

Vacation of office of director under Section 167(1)(b) - mandatory duty of Registrar to register electronic filings under Section 398(1)(f) - processing of e-Form DIR-12 for cessation/appointment of directors - effect of pendency of private disputes or sub-judice proceedings on statutory filings

Processing of e-Form DIR-12 for cessation/appointment of directors - vacation of office of director under Section 167(1)(b) - Registration/processing of the petitioner's e-Form DIR-12 seeking cessation of the 3rd respondent's directorship was withheld by the Registrar and whether such withholding was permissible. - HELD THAT: - The Court found that the petitioner had filed e-Form DIR-12 for cessation of directorship under the statutory ground that the director had absented herself from board meetings for the prescribed period. The Registrar's continued non-registration of the DIR-12 prevented the petitioner from carrying out further statutory filings relating to appointments and regularisations. The withholding of registration was held to be arbitrary and unreasonable where the form, on its face, sought cessation in accordance with law. The Court directed the Registrar to consider and process the submitted DIR-12 if it is in accordance with law, thereby restoring the procedural right of the company to have such changes recorded. [Paras 7, 9, 11]

The Registrar's withholding of processing/acceptance of the petitioner's DIR-12 was arbitrary and the Registrar is directed to consider the form for registration if it complies with law.

Mandatory duty of Registrar to register electronic filings under Section 398(1)(f) - processing of e-Form DIR-12 for cessation/appointment of directors - Whether the Registrar of Companies is obligated to register and accept electronic filings such as Form DIR-12 under the Companies Act regime. - HELD THAT: - Relying on the mandatory tenor of Section 398(1)(f), the Court held that the Registrar is under an obligation to register, process and accept the electronic filings envisaged by the statute. The use of the word 'shall' in Section 398(1)(f) denotes a mandatory duty on the Registrar to perform the acts directed by the Act in electronic form. Filing of DIR-12 is procedural and statutory; therefore the Registrar cannot withhold registration of such a form absent legal infirmity in the form itself. [Paras 10, 11]

Section 398(1)(f) imposes a mandatory duty on the Registrar to register electronic filings, and the Registrar cannot lawfully withhold registration of DIR-12 without valid legal grounds.

Effect of pendency of private disputes or sub-judice proceedings on statutory filings - processing of e-Form DIR-12 for cessation/appointment of directors - Whether pendency of private complaints, prosecution or other proceedings between the parties is a ground for the Registrar to decline or delay processing an otherwise compliant DIR-12. - HELD THAT: - The Court observed that the existence of private disputes, complaints, prosecutions or other proceedings between the parties before various fora does not, by itself, constitute a legal basis for the Registrar to withhold processing of a statutory electronic filing. The respondents' stand that they would await the outcome of pending litigations was rejected as an impermissible basis for withholding the filing. The Court emphasised that such pendency does not displace the Registrar's mandatory duty to register filings that comply with statutory requirements. [Paras 4, 9]

Pendency of private disputes or sub-judice proceedings is not a valid ground for the Registrar to withhold processing of an otherwise compliant DIR-12.

Final Conclusion: Writ petition disposed directing the Registrar of Companies to consider and process the petitioner's e-Form DIR-12 for cessation of directorship if it is in accordance with law; pendency of private litigation is not a ground to withhold such statutory filings; no order as to costs.

Bail under Section 439 CrPC - economic offences and bail - documentary evidence and tampering - effect of delay in arrest and investigation on bail - notice under Section 41A CrPC and arrest - conditions of bail to prevent prejudice to trial

Bail under Section 439 CrPC - economic offences and bail - documentary evidence and tampering - effect of delay in arrest and investigation on bail - notice under Section 41A CrPC and arrest - Applicants entitled to grant of bail in the FIR RCBD1/2014/E/0004/CBI/BS & FC - HELD THAT: - Applying the settled principles governing grant of bail, the Court accepted that although the allegations relate to grave economic offences with a large number of victims, that factor alone is not decisive. The applicants were not alleged to have induced investors into the CIS; their roles concern subsequent routing/diversion of funds through entities controlled by them. Investigation and original charge sheet had long antecedence (original charge sheet filed in 2016) and the present applicants were referred to earlier but were not arrested until the filing of the supplementary charge sheet on 31.12.2021. The evidence is largely documentary and already in possession of investigating agencies (including SEBI); there is no material showing tampering with evidence or influencing witnesses, and the statutory notices under Section 41A CrPC given to five applicants indicated arrest was not then contemplated without recorded reasons. Given prolonged investigation, absence of material to show tampering or flight risk, cooperation with investigation, and the likelihood of protracted trial, further incarceration was held unnecessary and bail was directed to be granted subject to stringent conditions to secure attendance and prevent prejudice to the prosecution. [Paras 11, 12, 15]

Applicants are entitled to be released on bail pending trial.

Conditions of bail to prevent prejudice to trial - Nature and scope of conditions to be imposed while granting bail - HELD THAT: - The Court imposed specific stringent conditions to ensure attendance at trial and to minimise risk of prejudice to the prosecution: each applicant to furnish a personal bond with two sureties (one surety to be spouse or blood relative), residential address to be furnished and verified by the IO, surrender of passports/not leaving the country without Special Court's permission, provision of working mobile numbers, attendance at the Special Court on every hearing unless exempted, fortnightly reporting to local police station on specified days and times, and a direction not to tamper with evidence or influence witnesses. The Court clarified these directions are for disposal of the bail applications and will not prejudice the trial. [Paras 16, 17]

Bail granted subject to the enumerated conditions.

Final Conclusion: Bail granted to the six applicants in connection with FIR RCBD1/2014/E/0004/CBI/BS & FC, subject to stringent conditions as directed; observations are confined to disposal of these bail applications and shall not prejudice the trial.

Existence of debt and default - admission under section 9 of IBC, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - operation of moratorium under Section 14 - initial CIRP costs and deposit by operational creditor - applicability of post filing increase in minimum threshold

Existence of debt and default - The Operational Creditor has proved the existence of debt and default by the Corporate Debtor. - HELD THAT: - The Bench relied on the Corporate Debtor's own reply dated 14.05.2016 in which the Corporate Debtor admitted that the original debit claim was revised and reduced, which amounted to an admission of liability. The Operational Creditor further produced evidence that defective goods were returned to the Corporate Debtor on 21.10.2015 and communicated by email on 24.10.2015. On the material before it the Tribunal found that the Petitioner had proved both the existence of the debt and default by the Corporate Debtor, thereby satisfying the statutory preconditions for an application under section 9 of the Code. [Paras 6]

Existence of debt and default established; statutory preconditions for admission under section 9 satisfied.

Applicability of post filing increase in minimum threshold - The increase in the minimum threshold effected by notification dated 24.03.2020 does not apply to the present petition. - HELD THAT: - The petition was filed on 22.06.2018. The Tribunal held that the subsequent notification raising the minimum threshold from Rs.1 lakh to Rs.1 crore, which came into effect on 24.03.2020, is not applicable to proceedings filed prior to that notification. Consequently, the statutory threshold change did not bar admission of the present petition. [Paras 6]

Post filing increase in threshold is not applicable; petition proceeds despite later notification.

Admission under section 9 of IBC, 2016 - initiation of Corporate Insolvency Resolution Process (CIRP) - appointment of Interim Resolution Professional - initial CIRP costs and deposit by operational creditor - operation of moratorium under Section 14 - The petition under section 9 is admitted; CIRP is ordered and directions incidental to admission are issued. - HELD THAT: - Having found debt and default and having rejected the contention that the earlier company petition or pleadings precluded the present claim, the Tribunal admitted the section 9 petition and directed initiation of CIRP against the Corporate Debtor. The Bench appointed an Interim Resolution Professional to carry out functions under the Code and directed the Operational Creditor to deposit initial CIRP costs (stated sum) with the IRP immediately on communication of the order. The Tribunal imposed the moratorium proscribing institution or continuation of suits, executions or actions to recover or enforce security against the Corporate Debtor and directed that supply of essential goods or services shall not be terminated during the moratorium. The public announcement and vesting of management in the IRP/RP were ordered and the Registry was directed to notify the Registrar of Companies. [Paras 6, 7]

Petition admitted; CIRP ordered; IRP appointed; moratorium and ancillary directions issued; registry to communicate order to parties and RoC.

Final Conclusion: The Tribunal admitted the section 9 petition filed on 22.06.2018, having found existence of debt and default. The CIRP against the Corporate Debtor is ordered, an IRP is appointed, initial CIRP cost deposit and moratorium directions are imposed, and ancillary procedural directions (public announcement, management vesting, communication to RoC) are given.

Avoidance transactions - fictitious sales - undervalued transaction - personal guarantee not extinguished by approval of resolution plan - Section 29A disqualification exemption for MSME under Section 240A - maintainability of applications under Section 66 - dismissal for lack of maintainability

Fictitious sales - avoidance transactions - Whether the transactions alleged as fictitious sales and other entries in the books of the corporate debtor constitute avoidance transactions susceptible to challenge under the Code. - HELD THAT: - The Tribunal examined the forensic report's findings of duplicated sales entries and alleged fictitious sales and noted the respondents' explanation that the duplicated invoice entry arose from a typographical/accounting error that was reversed and certified by the statutory auditor. The forensic report carried express disclaimers about the nature and reliability of its procedures and sources. On the material before it the Bench concluded that the transactions relied upon did not qualify as undervalued or fraudulent transactions warranting avoidance under the provisions invoked and that the Resolution Professional had verified the ledger entries. Consequently, the factual allegations were not found to establish avoidance liable to be set aside under the Code. [Paras 3, 6, 8]

Alleged fictitious sales and the identified ledger entries do not, on the record, amount to avoidance transactions justifying relief; claim dismissed on merits/maintainability grounds.

Undervalued transaction - avoidance transactions - Whether transfers to a related party (Anand Teknow LLC Oman) constituted undervalued transactions under the Code. - HELD THAT: - The applicants alleged the transfers were not in the ordinary course of business and characterised them as gifts/undervalued transactions. The respondents produced board minutes and contended the transfers were capital investment to incorporate a wholly owned subsidiary; the Resolution Professional certified and the CoC recorded satisfaction that no application under Section 66 was required. The Tribunal found that the transactions, as presented, did not meet the statutory criteria for undervalued or fraudulent transactions and therefore did not warrant setting aside under the provisions invoked. [Paras 3, 6, 8]

Transfers to the related entity were not found to be undervalued transactions requiring avoidance.

Section 29A disqualification exemption for MSME under Section 240A - Whether the Successful Resolution Applicant was disqualified under Section 29A or exempted by reason of the corporate debtor's MSME status under Section 240A. - HELD THAT: - The Tribunal noted that the corporate debtor is a registered MSME (recorded earlier) and held that Section 240A provides an exemption from compliance with sub-clauses (c) and (h) of Section 29A for such cases. On that basis the Bench concluded that the Resolution Applicant was not disqualified under the challenged provisions and that the resolution plan stood within the statutory framework. [Paras 5, 8]

Resolution Applicant not disqualified under Section 29A due to the MSME exemption under Section 240A; the approved resolution plan is in order on this ground.

Personal guarantee not extinguished by approval of resolution plan - Whether inclusion of a clause preserving personal guarantees in the resolution plan extinguishes creditors' rights against personal guarantors. - HELD THAT: - Relying upon the settled principle that approval of a resolution plan does not automatically discharge a personal guarantor of liabilities arising under an independent contract, the Tribunal observed that a clause preserving personal guarantees in the plan does not bar creditors from pursuing separate remedies against guarantors. The applicants' contention that such a clause would extinguish proceedings against personal guarantors was rejected. [Paras 4, 8]

Clause preserving personal guarantees does not extinguish creditors' rights to proceed against personal guarantors.

Maintainability of applications under Section 66 - dismissal for lack of maintainability - Whether a dissenting financial creditor may maintain an application under Section 66 (and related provisions) seeking avoidance/recourse, or whether such applications are restricted to the Resolution Professional or liquidator. - HELD THAT: - The Tribunal held that an application under Section 66 may be filed only by the Resolution Professional or the liquidator. The applicant is a dissenting financial creditor and not the Resolution Professional; accordingly the applicant lacked the statutory locus to initiate proceedings under Section 66. The Bench therefore found the present application not maintainable on this ground and proceeded to dismiss it. The Tribunal also noted that, on the merits, the alleged transactions did not qualify as avoidance/fraudulent transactions but emphasized lack of standing as a separate and sufficient basis for dismissal. [Paras 7, 8]

Application by the dissenting financial creditor under Section 66 is not maintainable and the petition is dismissed on that ground (with merits also not made out).

Final Conclusion: The application by the dissenting financial creditor alleging avoidance, undervalued transactions and seeking rejection of the approved resolution plan is dismissed: the Resolution Applicant is not disqualified by Section 29A due to the MSME exemption under Section 240A; the clause preserving personal guarantees does not extinguish creditors' remedies; and the dissenting creditor lacked locus to file proceedings under Section 66, rendering the application not maintainable (merits also not established).

Default and admissibility of Section 9 petition under the Insolvency and Bankruptcy Code - maintainability on ground of limitation - acknowledgement of debt and extension of limitation - initiation of Corporate Insolvency Resolution Process and moratorium - appointment of Interim Resolution Professional

Maintainability on ground of limitation - acknowledgement of debt and extension of limitation - The defence of limitation raised by the Corporate Debtor is rejected on the ground that the Corporate Debtor acknowledged the debt within the period of limitation. - HELD THAT: - The Tribunal examined the date of default (invoice due date) and the filing date of the Section 9 petition but found that the Corporate Debtor had, by emails dated 27.03.2015, 10.09.2015, 24.09.2015 and 18.11.2015, admitted its financial difficulty and the existence of outstanding dues and undertook steps to arrange funds. Those communications were treated as acknowledgements by the Corporate Debtor for the purpose of extending the period of limitation. The Operational Creditor further placed on record a LinkedIn profile and email correspondence to demonstrate that the individuals from whom acknowledgements arose were representatives/officials of the Corporate Debtor or its group and that the correspondence related to the debt claimed. On that basis the Tribunal held that limitation could not be invoked to defeat the petition and that the debt and default were established. [Paras 16, 18, 19]

Limitation defence is negatived; the acknowledgements evidenced in the record extend the period of limitation and the claim is not time-barred.

Default and admissibility of Section 9 petition under the Insolvency and Bankruptcy Code - initiation of Corporate Insolvency Resolution Process and moratorium - appointment of Interim Resolution Professional - The Company Petition under Section 9 is admitted and CIRP is initiated against the Corporate Debtor with consequential orders including appointment of an Interim Resolution Professional and imposition of moratorium. - HELD THAT: - Having found that the Operational Creditor proved the existence of the debt and default and that the limitation defence failed, the Tribunal proceeded to admit the petition. The Tribunal directed initiation of the Corporate Insolvency Resolution Process, appointed an Interim Resolution Professional to perform functions under the Code, required the Operational Creditor to deposit initial CIRP costs, and imposed the statutory moratorium together with ancillary directions (public announcement, vesting of management in the IRP/RP, cooperation by suspended directors/employees, and communication to Registrar of Companies). [Paras 20]

The petition is admitted; CIRP is ordered to commence, an Interim Resolution Professional is appointed, and moratorium and ancillary directions are imposed.

Final Conclusion: The Tribunal rejected the Corporate Debtor's limitation defence on the basis of admitted communications constituting acknowledgements, held that debt and default were proved, admitted the Section 9 petition, directed initiation of CIRP against Biltube Industries Limited, appointed an Interim Resolution Professional and imposed the statutory moratorium with usual consequential directions.

Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process - date of default and quantification of default - bar under Section 10A regarding defaults during the COVID-19 period - admission of petition on establishment of debt and default exceeding statutory threshold - moratorium under Section 14 of the I&B Code - appointment of Interim Resolution Professional

Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process - date of default and quantification of default - admission of petition on establishment of debt and default exceeding statutory threshold - Whether the Financial Creditor established debt and default sufficient to admit the Section 7 petition and initiate CIRP. - HELD THAT: - The Tribunal recorded that the corporate debtor, in its reply, acknowledged the debt due to the Financial Creditor (recorded at para 6 and noted in para 7). The Financial Creditor produced particulars of instalment-wise defaults under Contract No.179643. The Bench held that defaults falling before the application of the Section 10A bar could be taken into account and, after excluding defaults falling within the protected COVID-19 period, quantified the actual default attributable to admissible pre-bar instalments. Since the admissible default amount exceeded the statutory threshold of Rupees One Crore, and the petition was otherwise complete and in proper form, the Section 7 petition was admitted and CIRP ordered to be initiated (para 8). [Paras 7, 8]

The Section 7 petition was admitted as debt and default were established and the admissible default exceeded the threshold limit.

Bar under Section 10A regarding defaults during the COVID-19 period - date of default and quantification of default - Whether defaults occurring during the protected COVID-19 period under Section 10A are to be excluded from consideration for admission. - HELD THAT: - The Tribunal examined the schedule of defaults and observed that several instalment defaults proceeded on and after 05.04.2020. The Bench held that defaults falling on or after the period covered by Section 10A (the COVID-19 protection period) cannot be considered as defaults for the purpose of admission under Section 7. Accordingly, only instalments with defaults prior to the protected period were counted in the admissible default amount; defaults on or after the protected dates were excluded from computation (para 8). [Paras 8]

Defaults occurring within the Section 10A protected period are excluded from consideration; only pre-Section 10A defaults were counted for admission.

Moratorium under Section 14 of the I&B Code - appointment of Interim Resolution Professional - Whether moratorium should be declared and an Interim Resolution Professional appointed upon admission of the Section 7 petition. - HELD THAT: - On admitting the petition, the Tribunal declared the moratorium under Section 14 of the I&B Code with the usual consequential prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security, and recovery of property. The Bench appointed the proposed insolvency professional as Interim Resolution Professional, recorded his registration and declaration, directed the Financial Creditor to deposit an amount to meet IRP expenses and ordered public announcement and communication of the order to relevant parties. The directions follow the statutory consequences of admission under Section 7 and applicable I&B Code provisions (paras 9 and ORDER). [Paras 9]

Moratorium declared and the proposed insolvency professional appointed as Interim Resolution Professional; consequential directions issued.

Final Conclusion: The Section 7 petition by the Financial Creditor was admitted: the Tribunal excluded defaults falling within the Section 10A COVID-19 protection period, quantified the admissible pre-bar default (exceeding the one crore threshold), declared moratorium under Section 14 and appointed the Interim Resolution Professional with consequential directions.

Liquidator's powers under the Code - Right to take custody and possession of corporate debtor's assets - Duty of police to assist enforcement of orders - Preservation and protection of assets during liquidation - Interim direction for delivery of possession to liquidator

Liquidator's powers under the Code - Right to take custody and possession of corporate debtor's assets - Duty of police to assist enforcement of orders - Whether the Liquidator is entitled to take custody and possession of the Durgapur Unit and whether police authorities must render assistance to enable the Liquidator to discharge his statutory duties. - HELD THAT: - The Tribunal noted that the Liquidator is an officer appointed under the Code with statutory powers to take into custody and control all assets, property, effects and actionable claims of the Corporate Debtor and to take measures necessary to protect and preserve such assets. The Tribunal found that Respondent Nos. 2 and 3 did not provide timely assistance which hindered the Liquidator from obtaining possession of the Durgapur Unit and thereby frustrated the discharge of his duties. Having regard to the Liquidator's statutory role and the need to protect the corporate assets pending liquidation, the Adjudicating Authority directed immediate handover of the premises and the movables belonging to the Corporate Debtor to the Liquidator. The Tribunal further directed that in case of resistance by Respondent No. 1 or his associates, the police authorities shall provide all assistance, take immediate legal action including lodging FIRs and deal with obstruction strictly in accordance with law. The Tribunal specified a date for the Liquidator to attend the premises with necessary force to be provided by the police and to file a report thereafter. [Paras 16, 17]

Respondent No. 1 directed to immediately hand over possession of the Durgapur Unit and movables to the Liquidator; Respondent Nos. 2 and 3 directed to provide all assistance and protection to effect possession and to take legal action against any obstruction; Liquidator to attend on 15th June, 2022 with required assistance and file a report within one week.

Final Conclusion: The interlocutory application is disposed by directing immediate delivery of possession of the Durgapur Unit and its movables to the Liquidator, with police assistance to be rendered to effect and protect possession and to deal legally with any obstruction; the Liquidator to take possession on 15th June, 2022 and file a report within one week.

Reconstruction of lost title deeds - certified copies to be treated as original - obligation to hand over documents under section 25 of the Insolvency and Bankruptcy Code, 2016 - application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 - non-cooperation of erstwhile promoters as ground for reconstruction - directions to registry/issuing authorities to furnish certified copies

Reconstruction of lost title deeds - certified copies to be treated as original - non-cooperation of erstwhile promoters as ground for reconstruction - Whether, in the facts of this case, certified copies of the documents listed in the schedules can be directed to be issued and treated as original documents for all future purposes. - HELD THAT: - The Tribunal found on the record that the Resolution Applicant, having paid the approved resolution amount and taken over the corporate debtor as a going concern, is entitled to the corporate debtor's documents and title deeds but was unable to obtain originals due to persistent non-cooperation by the erstwhile promoters/directors despite prior orders. Given the inability to procure original title deeds and the practical necessity-including bankers' requirements-the Tribunal concluded that reconstruction by obtaining certified copies is the only viable remedy. Balancing the entitlement under the Code to hand over documents post-resolution with the factual impediment of non-cooperation, the Tribunal directed the concerned registries/authorities to issue certified copies on application and allowed such certified copies to be treated as 'Original' for all future purposes; the Tribunal also required the Resolution Professional to apply immediately to the respective authorities attaching the relevant schedules, and specified that the Resolution Applicant shall bear the cost of obtaining such certified copies. The directions are limited to issuance of certified copies and their treatment as originals until and unless original documents are recovered, and envisage that once originals are obtained they will be handed over to the Resolution Applicant. [Paras 8, 9]

Application allowed; 2nd to 8th Respondents directed to issue certified copies of documents in the respective schedules upon application, such certified copies to be treated as original for all future purposes; 1st Respondent to file applications with schedules; Applicants to bear the cost.

Final Conclusion: The application under section 60(5) of the Code is allowed: certified copies of the documents specified in the respective schedules shall be issued by the 2nd to 8th Respondents on application, treated as originals for all future purposes, the Resolution Professional to apply to relevant authorities with the schedules, and the Resolution Applicant to bear the cost; the matter is closed.

Application under section 9 of the Insolvency and Bankruptcy Code - demand notice under section 8 of the Insolvency and Bankruptcy Code - pre-existing dispute - existence of dispute raised in reply to demand notice - pendency of proceedings under Section 138 of the Negotiable Instruments Act - rejection/dismissal of insolvency petition on account of a plausible pre-existing dispute

Application under section 9 of the Insolvency and Bankruptcy Code - existence of dispute raised in reply to demand notice - pendency of proceedings under Section 138 of the Negotiable Instruments Act - rejection/dismissal of insolvency petition on account of a plausible pre-existing dispute - Whether the Section 9 petition is maintainable where the corporate debtor had, in reply to the demand notice, stated that disputes including proceedings under Section 138 of the N.I. Act were pending between the parties. - HELD THAT: - The adjudicating authority examined the record and noted that in response to the demand notice the corporate debtor had informed the operational creditor that the matter was sub judice before the Fast Track Criminal Court, Chennai and had indicated that letters and correspondence supporting the dispute would be supplied. Those contentions and related documents were thereafter placed on the record before this Authority. Given the existence of such pre existing disputes and the pendency of proceedings under Section 138 of the Negotiable Instruments Act between the parties, the petition under Section 9 could not be admitted. The Authority applied the well established principle that where a plausible pre existing dispute exists and is shown on the record, the operational creditor is disentitled from having the corporate insolvency resolution process initiated, and therefore the petition must be rejected. [Paras 33, 34]

The petition under Section 9 is rejected and the corporate insolvency resolution process is not initiated.

Final Conclusion: C.P. (IB) No.1780/KB/2019 is dismissed on the ground that a pre existing dispute, including pending proceedings under Section 138 of the Negotiable Instruments Act, was shown in reply to the demand notice, disentitling the operational creditor from initiation of the corporate insolvency resolution process.

Cognizance and summoning of accused - offences under the Insolvency and Bankruptcy Code (Sections 70, 73(b) and 19(1) read with Section 235A) - officer in default - failure to cooperate with Resolution Professional - concealment of assets and documents during Corporate Insolvency Resolution Process - dispensing with pre-summoning evidence under proviso to Section 200 CrPC - trial by Special Court constituted under the Companies Act - institution of complaint by authorized officer of IBBI under Section 236(2) of the Code

Cognizance and summoning of accused - offences under the Insolvency and Bankruptcy Code (Sections 70, 73(b) and 19(1) read with Section 235A) - failure to cooperate with Resolution Professional - concealment of assets and documents during Corporate Insolvency Resolution Process - officer in default - Cognizance taken and accused summoned for alleged offences under the Insolvency and Bankruptcy Code arising from non-cooperation with the Resolution Professional and concealment of material facts/assets. - HELD THAT: - After considering the documentary evidence placed on record the Court was satisfied that prima facie offences under the Code had been committed by the accused. The complaint alleges that the accused, being directors/authorized signatory and thus officers in default of the corporate debtor, wilfully failed to provide books, financial statements, accounting data and concealed assets despite directions of the NCLT and requests from the Resolution Professional, and continued representations to homebuyers despite cancellation of the lease. On this basis the Court took cognizance and directed that all five accused be summoned to face prosecution for violation of the specified provisions of the Code.

Cognizance is taken and the five accused are summoned to face prosecution; they are to be summoned on filing of process within 15 days and the matter listed for further proceedings.

Dispensing with pre-summoning evidence under proviso to Section 200 CrPC - institution of complaint by authorized officer of IBBI under Section 236(2) of the Code - Pre-summoning evidence dispensed with because the complaint was instituted by a public servant in his official capacity and the complainant (IBBI) was duly authorised to file the complaint. - HELD THAT: - The complaint was instituted through the General Manager of IBBI, in whose favour an authorization letter empowered him to institute the complaint. Section 236(2) of the Code confers power on the complainant (IBBI) to set criminal law in motion through its authorized officer. As the complaint was made by a public servant in his official capacity, the proviso to Section 200 CrPC allows dispensation of pre-summoning evidence. The Court, therefore, dispensed with the pre-summoning evidence accordingly.

Pre-summoning evidence is dispensed with and proceedings directed to issue summons to the accused.

Trial by Special Court constituted under the Companies Act - This Court has jurisdiction to try the offences as a Special Court constituted under the Companies Act in terms of the notified order. - HELD THAT: - The complainant placed on record the notification (S.O. 2554(E) dated 27.07.2016) by which this Court was conferred jurisdiction to try offences in the capacity of a Special Court under Section 435(1)(a) of the Companies Act, 2013. In view of the statutory scheme under the Code and the notification, the Court is competent to take cognizance and proceed as a Special Court for offences under the Code.

The Court proceeded to take cognizance and exercise jurisdiction as the Special Court to try the offences alleged in the complaint.

Final Conclusion: The Court, exercising jurisdiction as a Special Court, took cognizance of alleged offences under the Insolvency and Bankruptcy Code based on documentary material, dispensed with pre-summoning evidence as the complaint was filed by an authorised public servant of IBBI, and directed that the five accused be summoned to face prosecution; matter listed for further proceedings.

Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification of tax dues before 30.06.2019 - written communication/admission as constituting "quantified" demand - effect of subsequent show cause notice on eligibility - Form 2 / Form 2A / Form 3 procedure under SVLDRS

Eligibility under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - quantification of tax dues before 30.06.2019 - written communication/admission as constituting "quantified" demand - effect of subsequent show cause notice on eligibility - Petitioner was eligible to file a declaration under the SVLDR Scheme because tax dues had been quantified by written communication/admission on or before 30.06.2019, and a subsequent show cause notice with a marginally different quantification did not defeat eligibility. - HELD THAT: - The scheme excludes persons whose tax quantification arising from an inquiry, investigation or audit has not been quantified on or before 30.06.2019. "Quantified" is a written communication of the amount payable. CBIC Circular dated 12.12.2019 and the FAQ clarify that eligibility is judged as on the relevant date (30.06.2019) and that a written communication during inquiry/investigation admitting liability qualifies as quantification. The record shows an inquiry was pending and the director of the petitioner, in his statement recorded on 25.06.2019, admitted the tax liability which constituted a written communication quantifying the dues before 30.06.2019. A later show cause notice issued after 30.06.2019 which recorded a marginally different amount does not alter eligibility because the criterion is the position as on the cut off date and the admitted figure need only bear some resemblance to subsequently quantified dues. Reliance on a prior decision with similar facts supports that discrepancy in figures post cut off is immaterial to eligibility. Accordingly the designated committee's rejection on the ground that quantification was not final by 30.06.2019 was incorrect. [Paras 8, 11, 13, 14, 15]

Declaration accepted as meeting the eligibility criteria of the Scheme; rejection on the ground of ineligibility set aside.

Form 2 / Form 2A / Form 3 procedure under SVLDRS - Respondent (Designated Committee) was directed to issue Form 3 (statement in electronic form) indicating the amount payable in accordance with subsection (4) of Section 127 of the Finance Act, 2019, since petitioner had accepted the estimate by filing Form 2A. - HELD THAT: - The designated committee had issued Form 2 showing the estimated amount and the petitioner filed Form 2A agreeing to that estimate. Having held that the petitioner was eligible under the Scheme, the designated committee is required to proceed to the next statutory step and issue Form 3 reflecting the amount payable. The court directed that Form 3 be issued in accordance with the statutory provision within a specified time frame. [Paras 16]

Designated Committee to issue Form 3 within 15 days from upload of the order, indicating the amount payable in accordance with the Scheme.

Final Conclusion: Petition allowed. The declaration filed by the petitioner under the SVLDR Scheme was wrongly rejected; petitioner was eligible as tax dues had been quantified by written admission before 30.06.2019. The designated committee is directed to issue Form 3 indicating the amount payable within 15 days. No order as to costs.

Delay and laches - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDR scheme procedural compliance - rejection of application under the SVLDR scheme - approach to court at the earliest possible date - equity - clean hands doctrine

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - SVLDR scheme procedural compliance - rejection of application under the SVLDR scheme - The petitioner's entitlement to adjudication under the SVLDR Scheme in light of its status as a co-noticee and non-compliance with scheme procedures. - HELD THAT: - The Court recorded that the petitioner filed an application under the SVLDR Scheme which, on the acknowledgement (Annexure P-2), showed the petitioner to be a co-noticee and that further eligibility depended upon the main noticee discharging its dues. The acknowledgement also indicated issuance of SVLDR-2 and contained specific instructions/remarks. The petitioner did not produce evidence of compliance with those instructions or of taking the further steps required by the Scheme; instead, it chose not to pursue the procedural opportunities afforded by the Scheme. The Court held that the Scheme prescribes steps which applicants must follow and that the mere filing of the initial form, without adherence to the subsequent procedural directions (including awaiting discharge by the main noticee where applicable), did not entitle the petitioner to adjudication under the Scheme. The Court further noted that the petitioner failed to file supporting documents other than the CESTAT order and did not challenge the rejection within any reasonable time. On these facts the Court upheld the validity of the authority's rejection of the application and found no basis to direct further adjudication under the now-closed Scheme. [Paras 7, 9]

The petitioner's request for adjudication under the SVLDR Scheme is not maintainable due to its status as a co-noticee and failure to comply with the procedural requirements of the Scheme; rejection need not be set aside.

Delay and laches - approach to court at the earliest possible date - equity - clean hands doctrine - Whether the petition is liable to be dismissed on the ground of unexplained delay and laches and for the petitioner having not come to court with clean hands. - HELD THAT: - The Court observed that the rejection was communicated to the petitioner on 25.12.2019 but the writ petition was filed only on 31.05.2022, a delay of approximately 2.5 years. The petitioner relied on alleged non-supply of a speaking order and on the COVID-19 exclusion of limitation, but produced no supporting documentary evidence and did not attempt to challenge the rejection within the pre-Covid period or promptly thereafter. The Court applied established principles that relief by writ should ordinarily be sought at the earliest and that unexplained delay and laches may disentitle a petitioner to equitable relief, particularly where rights of third parties or the finality of a time-bound scheme may be affected. The Court also noted deliberate concealment in pleadings of the acknowledgement's remarks and held that one seeking equity must come with clean hands. On these grounds, and having found no cogent explanation for the delay or for non-compliance with the Scheme procedure, the Court concluded that the petition should be dismissed. [Paras 9, 10, 11, 13, 14]

The writ petition is dismissed on the grounds of unexplained delay and laches and the petitioner's failure to come with clean hands; equitable relief is denied.

Final Conclusion: The petition is dismissed: the petitioner is not entitled to adjudication under the SVLDR Scheme due to procedural non-compliance and its co-noticee status, and the writ is barred by inordinate and unexplained delay coupled with failure to come to court with clean hands; all pending applications are closed.

Delay and laches - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - failure to comply with procedural requirements of settlement scheme - entitlement to remedy under a closed settlement scheme - doctrine of clean hands - discretion to refuse relief on ground of delay

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - failure to comply with procedural requirements of settlement scheme - Challenge to the Designated Committee's rejection of applications under the SVLDR Scheme where petitioners did not follow scheme-prescribed steps and did not produce required documents - HELD THAT: - The Court held that the acknowledgment receipts (SVLDR-1) reflected specific instructions and requirements - including production of supporting documents, proof of pre-deposit and appearance for personal hearing - which the petitioners did not comply with or fail to demonstrate compliance. The petitioners had not filed the relevant documents or shown that they availed the further opportunities indicated in the Scheme; indeed some acknowledgements were incomplete or duplicated. Given that the Scheme prescribes procedures and steps to be followed by applicants, the petitioners could not ignore those procedural requirements and then seek to assail the rejection. Non compliance and the absence of any pleading or evidence showing adherence to the prescribed process justified refusal to entertain the challenge to the rejection. [Paras 7, 9]

Petitions challenging rejection under the SVLDR Scheme were dismissed for failure to comply with the Scheme's procedural requirements and for non-disclosure of compliance in the pleadings.

Delay and laches - entitlement to remedy under a closed settlement scheme - discretion to refuse relief on ground of delay - doctrine of clean hands - Whether the petitions could be entertained despite a 2.5 year delay after communication of the rejection and after the SVLDR Scheme had closed - HELD THAT: - The Court found that the rejection email dated 25.12.2019 was available to the petitioners but the writ petitions were filed only on 31.05.2022. The petitioners failed to provide a cogent explanation for the delay, their averments about non-supply of a speaking order were unsupported by documents and were contradicted by the acknowledgement receipts. Reliance on COVID-era limitation exclusions was found misplaced. The Court applied settled principles that delay and laches may disentitle a petitioner to equitable relief where no satisfactory explanation is offered and rights of others or closure of statutorily limited schemes would be disturbed. Further, because the SVLDR Scheme had a limited window which had ended and no new scheme was in force, the petitioners could not claim the benefit after the Scheme's closure. The Court also noted that petitioners had not come with clean hands by concealing the instructions recorded in the acknowledgements. [Paras 9, 10, 11, 13, 14]

Petitions were dismissed on grounds of inordinate delay and laches, absence of satisfactory explanation, the closure of the SVLDR Scheme, and petitioners' failure to come with clean hands.

Final Conclusion: The writ petitions challenging the Designated Committee's rejection under the SVLDR Scheme are dismissed: the petitioners failed to comply with the Scheme's procedural requirements, offered no satisfactory explanation for the 2.5 year delay after communication of rejection, relied on misplaced limitation arguments, and concealed material compliances; all pending applications stand closed.

Delay and laches - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - procedural compliance under scheme - condonation of delay - clean hands doctrine

Delay and laches - condonation of delay - Whether the writ petition challenging rejection of the SVLDR application is maintainable despite the petitioner's delay in approaching the Court. - HELD THAT: - The Court found that the rejection was communicated on 25.12.2019 and the present petition was filed on 31.05.2022, a lapse of approximately 2.5 years. The petitioner did not provide cogent documentary explanation for the long delay, and the only explanations offered (requests for a speaking order and the onset of COVID-19) were unsupported or inadequate. Reliance on the Supreme Court's suo motu directions excluding time was held misplaced because courts functioned in a truncated manner during that period and the petitioner still made no timely move. Applying settled principles that petitions filed after long delay may be refused unless satisfactorily explained, and noting that representations or informal steps do not ordinarily suffice to excuse delay, the Court held that the petitioner failed to discharge the burden to justify the delay and laches and therefore lost the right to equitable relief. [Paras 8, 9, 10, 11]

Petition dismissed on the ground of inordinate delay and laches; condonation of the elapsed period is refused.

Procedural compliance under scheme - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Whether the petitioner's challenge succeeds despite non-compliance with procedural steps and specific instructions in the SVLDR Scheme process. - HELD THAT: - The acknowledgement (Form SVLDR-1) recorded specific instructions including that the redemption fine was out of the scheme's purview and that an undertaking was required in terms of the CBIC circular. There was no pleading or documentary proof that those instructions were complied with or that the petitioner pursued the further steps prescribed by the Scheme. The Court observed that applicants were given opportunity to participate further but the petitioner chose not to follow the prescribed procedure. Given the petitioner's failure to follow mandatory procedural requirements of the Scheme and absence of any attempt to cure those deficiencies contemporaneously, the Court declined to set aside the rejection on procedural grounds. [Paras 7, 9]

Rejection not set aside for failure to comply with procedural requirements of the SVLDR Scheme.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Whether relief under the SVLDR Scheme can be granted after the Scheme and its proceedings have been closed. - HELD THAT: - The Scheme was time bound, operative from 01.09.2019 with declarations to be made electronically on or before 31.12.2019. The Scheme and its proceedings have since concluded and no replacement scheme has been promulgated by the Ministry of Finance. In these circumstances, and in absence of any contemporaneous compliance or timely challenge, the petitioner failed to show any cause why relief under a closed scheme should be granted. The Court therefore held that the passage of time and the closure of the Scheme precluded granting the relief sought. [Paras 8, 13]

No relief can be granted under the SVLDR Scheme once the Scheme and its proceedings have been closed.

Clean hands doctrine - Whether equitable relief should be denied on account of the petitioner's concealment of material facts and non-disclosure. - HELD THAT: - The Court observed that the petitioner omitted to disclose in the petition that the acknowledgement contained specific compliance instructions and that those instructions were likely not followed. This concealment, together with the failure to explain delay and non-compliance, amounted to seeking equity with unclean hands. Applying the principle that one who seeks equitable relief must come with clean hands, the Court concluded that the petitioner was not entitled to equitable relief in these circumstances. [Paras 11, 14]

Equitable relief denied on account of petitioner's lack of clean hands and non-disclosure.

Final Conclusion: The writ petition is dismissed. The petitioner's challenge to the rejection of its SVLDR application is rejected on grounds of inordinate delay and laches, failure to comply with the Scheme's procedural requirements, the closure of the SVLDR Scheme proceedings, and the petitioner's conduct inconsistent with the clean hands doctrine; all pending applications are closed.

Summary order. Petitioner permitted to file legible copies of documents; writ petition (challenging order of Commissioner (Appeals) dated 28.10.2020) listed for further hearing on 18.08.2022; petitioner directed to place before the Court any subsequent orders of the Supreme Court relied upon and the question of delay noted for consideration.

Suppression of facts - extended period of limitation - intent to evade payment of service tax - requirement that show cause notice plead grounds on which extended limitation is invoked - proviso to Section 73(1) - strict construction of exceptions permitting five year period

Suppression of facts - extended period of limitation - intent to evade payment of service tax - requirement that show cause notice plead grounds on which extended limitation is invoked - Whether invocation of the five year extended period under the proviso to Section 73(1) was justified in the absence of a pleaded or proved wilful suppression with intent to evade tax, and whether the Commissioner could record a finding going beyond the show cause notice. - HELD THAT: - The Tribunal examined the proviso to Section 73(1) and the settled precedents which construe the expression suppression of facts strictly and require deliberate, wilful conduct with intent to evade payment of duty/tax. The Court noted that mere omission or failure to pay does not amount to suppression unless there is a positive, deliberate act to hide correct information. The show cause notice here merely stated that the assessee suppressed the value of taxable services; it did not allege suppression with intent to evade payment for the purpose of invoking the five year proviso. Allegations of intent in the notice related to penalty provisions and not to the invocation of Section 73(1). The Commissioner's order recorded a finding of evasion and invoked the extended period, but that finding was unsupported by pleading in the show cause notice and was recorded without adequate reasons. Reliance on authorities was made to the principle that adjudicatory orders cannot go beyond the scope of the show cause notice, and that the burden to prove suppression for invoking the extended limitation lies on the Revenue. Applying these principles, the Tribunal held that the extended period could not be validly invoked on the basis of the notice and material before the Commissioner. [Paras 21, 22, 23, 24, 25]

Invocation of the extended five year limitation under the proviso to Section 73(1) was not justified; the Commissioner's finding went beyond the scope of the show cause notice and was unsustainable.

Final Conclusion: The impugned order dated 03.08.2017 is set aside and the appeal is allowed.

Cenvat credit on input services - nexus between input services and manufacture of final product - distribution of proportionate credit through ISD - audit objection as basis for show cause notice - precedent and consistency of departmental treatment

Cenvat credit on input services - nexus between input services and manufacture of final product - distribution of proportionate credit through ISD - audit objection as basis for show cause notice - Entitlement to Cenvat credit on input services reflected in ISD invoices and proportionately distributed to other units, where department's denial was founded on alleged lack of nexus with manufacturing. - HELD THAT: - The proceedings arose from an audit objection and a consequential show cause notice proposing denial of Cenvat credit on certain input services. The Tribunal noted that identical services and allegations had earlier been the subject of adjudication in respect of the assessee's other unit, where the adjudicating authority and subsequently the Tribunal/Commissioner (Appeals) had dropped the major portion of the demand and the department did not proceed further. The appellant relied on its own favourable tribunal orders and several precedents in which the nexus between the impugned services and manufacture of the final product was recognised. Given that the same services and factual matrix had been upheld in the appellant's other unit and that earlier adverse demands were not pursued by the department, the Tribunal held that the issue was no longer res integra. Applying those consistent decisions and the accepted departmental position in the related proceedings, the Tribunal concluded that the appellant was entitled to Cenvat credit on the input services in question and that the audit-based denial could not be sustained.

Impugned order modified; appeal allowed and Cenvat credit in respect of the input services upheld.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant is entitled to Cenvat credit on the impugned input services (distributed through ISD), the denial based on the audit objection being unsustainable in view of identical favourable decisions in respect of the same services and the department's acceptance/inaction in related proceedings.

Cenvat credit on input service - refund versus credit election - suo-moto credit - limitation for availment of credit on ISD invoices - non-application of post-facto amendment to earlier invoices - requirement that grounds must be raised in the show cause notice

Cenvat credit on input service - refund versus credit election - Validity of availment of Cenvat credit by the appellant after their refund claim was rejected and the Tribunal disposed the refund appeal as infructuous. - HELD THAT: - The Tribunal held that the appellant had an option to either pursue refund or avail Cenvat credit under the Cenvat Credit Rules, 2004. The appellant availed credit after the refund claim stood rejected and after the Tribunal disposed the appeal as infructuous on the ground that credit had been taken. The denial of credit on the ground that it was taken suo-moto is not sustainable where the credit was availed for the first time after the refund route failed. Consequently, there is no subsisting case against the appellant once the refund issue ceased to exist. [Paras 4]

Availment of Cenvat credit by the appellant after rejection of the refund claim and disposal of the refund appeal is valid; impugned denial on that basis is set aside.

Suo-moto credit - requirement that grounds must be raised in the show cause notice - Whether the adjudicating authorities could deny credit on grounds of limitation and treat the credit as suo-moto when such grounds were not pleaded in the show cause notice. - HELD THAT: - The Tribunal found that the show cause notice alleged only that credit was taken suo-moto; the additional finding by the lower authorities that credit was barred by the one-year limitation was not pleaded in the show cause notice. A party cannot be expected to meet a ground that was not raised in the notice. Therefore, the limitation plea could not be sustained as it was not part of the show cause allegations and the appellant had no opportunity to address it in the proceedings. [Paras 4]

The denial of credit on limitation grounds not pleaded in the show cause notice is not sustainable.

Limitation for availment of credit on ISD invoices - non-application of post-facto amendment to earlier invoices - Applicability of the one-year limitation to availment of Cenvat credit in respect of ISD invoices and effect of amendment prescribing a one-year time limit on invoices dated prior to the amendment. - HELD THAT: - The Tribunal observed that availment of credit on ISD invoices is not subject to any prescribed time limit, and where the invoice predates the amendment that introduced a one-year limitation, that limitation does not apply retrospectively to such invoices. Reliance on the limitation ground therefore fails both because ISD invoices lack a time-bar provision and because the invoices in question were issued prior to the amendment introducing the one-year rule. [Paras 4]

One-year limitation does not apply to the appellant's ISD invoices issued prior to the amendment; therefore the limitation ground fails.

Final Conclusion: The impugned appellate order denying Cenvat credit is set aside and the appeal is allowed: the appellant validly availed credit after the refund claim was rejected, the limitation ground was not raised in the show cause notice and cannot be sustained, and the one-year time bar does not apply to the ISD invoices issued prior to the amendment.

Principles of natural justice - use of computer-generated mismatch reports - reconciliation procedure for mismatch and cross-examination of other-end dealer - verification of third-party data and requirement to furnish particulars - assessment set aside and remand for fresh adjudication - time-bound completion of reassessment within 180 days - consideration of limitation in mismatch cases

Principles of natural justice - use of computer-generated mismatch reports - verification of third-party data and requirement to furnish particulars - Whether assessments framed on the basis of mismatch reports and third party material were valid when particulars relied upon were not furnished and adequate opportunity of hearing was not given - HELD THAT: - The Court found that the impugned assessments were framed on the basis of mismatch between the petitioner's returns and third party data (including check post and other departmental records) and that particulars of the third party material relied upon were not supplied to the petitioner. The procedure mandated by the department requires issue of a show cause notice with all connected details and affords the dealer an opportunity of personal hearing (physical or virtual), including provision for cross examination of the other end dealer where appropriate, in order to satisfy the requirements of natural justice. In view of the absence of furnished particulars and hearing before confirmation of the proposals, the assessments could not stand. The Court therefore set aside the impugned orders and directed that the reassessment procedure conform to the verification and hearing safeguards articulated in the departmental Circular No.5/2021. [Paras 9, 10, 11, 12]

Impugned assessments set aside for want of compliance with principles of natural justice and for failure to furnish particulars of third party material; reassessment to follow the procedure in Circular No.5/2021.

Reconciliation procedure for mismatch and cross-examination of other-end dealer - assessment set aside and remand for fresh adjudication - time-bound completion of reassessment within 180 days - consideration of limitation in mismatch cases - Directions for fresh consideration of mismatch based assessments and the procedure and time limits to be followed on remand - HELD THAT: - The Court directed that the departmental procedure embodied in Circular No.5/2021 be followed in the present matters. Show cause notices containing necessary enclosures shall be issued to the petitioner within four weeks, and thereafter the Assessing Authority shall complete the assessment in accordance with law and the Circular, including allowing cross examination and reconciling data with the other end authority, within 180 days from the date of issue of the show cause notice. The Circular also contemplates examination of limitation issues and use of best judgment assessment or revision where appropriate; those procedural and limitation considerations are to be applied on reassessment as prescribed. [Paras 9, 10, 11, 12]

Matters remitted for fresh adjudication in accordance with Circular No.5/2021; show cause notices to be issued within four weeks and reassessments completed within 180 days, with limitation and other procedural rules to be considered as applicable.

Final Conclusion: The impugned assessments for the specified periods are set aside; the matters are remitted for fresh adjudication in accordance with the departmental Circular No.5/2021, with show cause notices to be issued within four weeks and reassessments to be completed within 180 days, after affording the petitioner the procedural safeguards prescribed therein.

Remission of sentence - appropriate sentence for offence under Section 138 of the Negotiable Instruments Act - compensation under Section 357(3) Cr.P.C. - interest on compensation at 9% per annum - distinction between conviction under Section 138 and money-recovery proceeding

Remission of sentence - appropriate sentence for offence under Section 138 of the Negotiable Instruments Act - Whether the first appellate court was justified in modifying the sentence imposed by the trial court by reducing imprisonment from three months to imprisonment till rising of the court. - HELD THAT: - The High Court held that the appellate court modified only the sentencing part without assigning adequate reasons for concluding that the original sentence was excessive. The appellate court's observation that pecuniary compensation may better serve justice in offences under Section 138 N.I. Act was found to be a misconception of law because conviction under Section 138 is not a money-recovery proceeding and, once the offence is proved, the court is obliged to impose an appropriate sentence within the statutory limits. Reliance on the principle that a 'flea-bite' sentence is unjustified where the cheque amount remains unpaid (as noted in Suganthi Suresh Kumar v. Jagdeeshan and the judgment cited by the petitioner) supports the conclusion that reduction from a definite sentence of three months to imprisonment till rising of the court was without proper application of mind. Consequently the appellate modification of sentence was set aside and the trial court's sentence restored. [Paras 6, 7, 8, 9, 10]

Impugned reduction of sentence set aside; sentence imposed by the trial court (simple imprisonment for three months) restored and respondent no.2 directed to surrender to undergo sentence.

Compensation under Section 357(3) Cr.P.C. - interest on compensation at 9% per annum - Whether the appellate court was justified in increasing the compensation awarded by the trial court, and what relief as to compensation and interest should follow. - HELD THAT: - The High Court interfered with the appellate court's enhancement of compensation because the appellate court modified the sentencing part on a misconception and there was no justification to increase the compensation in the manner done. The court restored the compensation as awarded by the trial court and directed that the complainant is at liberty to realise the awarded compensation along with interest at 9% per annum from the date of the trial court's judgment until recovery. The direction to award interest aligns with the legal position noted in the authorities relied upon by the petitioner that interest at 9% p.a. is incumbent on the convict in respect of compensation under Section 357(3). [Paras 5, 6, 10]

Enhancement of compensation by the appellate court set aside; compensation as awarded by the trial court restored and ordered to be realized with interest at 9% per annum from the date of the trial court's judgment until recovery.

Conviction under Section 138 of the Negotiable Instruments Act - acquittal where not the drawer of the cheque - Whether the findings of conviction of respondent no.2 and acquittal of respondent no.1 should be interfered with. - HELD THAT: - The High Court declined to disturb the concurrent findings of fact recorded by the trial and appellate courts that respondent no.2 was guilty of the offence under Section 138 N.I. Act and that respondent no.1 was rightly acquitted as she was not the drawer of the cheque. Those findings remained intact and were not reopened on the application under Section 482 Cr.P.C. [Paras 3, 5, 10]

Conviction of respondent no.2 and acquittal of respondent no.1 left unaffected.

Final Conclusion: The petition is disposed of by setting aside the appellate court's modification of sentence and enhancement of compensation; the trial court's sentence of simple imprisonment for three months and its award of compensation are restored, respondent no.2 directed to surrender to undergo sentence and to pay the trial-court awarded compensation with interest at 9% p.a. from the date of the trial court judgment until recovery; concurrent findings on conviction and acquittal are maintained.

Offence under Section 138 of Negotiable Instruments Act - presumption under Section 139 of Negotiable Instruments Act - rebuttal of statutory presumption - liability of proprietor for acts of proprietorship concern - validity of notice to proprietor of proprietorship firm - effect of corporate merger on locus to prosecute

Offence under Section 138 of Negotiable Instruments Act - presumption under Section 139 of Negotiable Instruments Act - rebuttal of statutory presumption - Conviction under Section 138 of the Negotiable Instruments Act was sustainable on the evidence produced by the complainant. - HELD THAT: - The complainant proved issuance of two cheques by the accused (Exs. P-2 and P-3) and their return unpaid for insufficiency of funds (Exs. P-4 and P-5). Legal notice demanding payment was issued and postal records show intimation delivered though the accused did not collect the postal article (Exs. P-6 and P-7), giving rise to the statutory presumption under Section 139 of the N.I. Act. The complainant produced loan documents and related records (Exs. P-8 to P-11 and P-14-P-16) which were not denied in cross-examination and establish the loan transaction and the accused's connection to it. The accused's defence - that the loan was to a proprietorship concern and not personally to him - was rejected because documentary material showed the accused as proprietor and signatory to the loan documents; hence the presumption was not successfully rebutted. On appreciation of oral and documentary evidence, both the trial Court and the appellate Court correctly held the accused guilty under Section 138. [Paras 13, 14, 15, 16, 20]

Conviction under Section 138 sustained; presumption under Section 139 arises and was not rebutted on the facts, warranting affirmation of guilt and sentence.

Effect of corporate merger on locus to prosecute - The complainant-company and its authorised Power of Attorney holder had locus to prosecute despite dates of particular power of attorney documents, by reason of merger and the produced authorisation. - HELD THAT: - Although one General Power of Attorney (Ex. P-1) was dated after filing of the complaint, the complainant produced another Power of Attorney in favour of the same representative and documents showing that earlier companies were merged into the present complainant entity. The trial and appellate Courts found, and the petitioner's counsel did not dispute, that by judicial order the merged entities ceased and the surviving company acquired rights and liabilities of the merged company. The cause title also identified the complainant as a division of the merged entity and the representative was shown to be authorised to prosecute. In these circumstances the complaint was not filed by an unauthorised person and the plea on this ground fails. [Paras 17, 18]

The complainant has locus to prosecute and the Power of Attorney and merger evidence preclude a finding of want of authorisation.

Liability of proprietor for acts of proprietorship concern - validity of notice to proprietor of proprietorship firm - Notice addressed to the accused in his individual name was valid and prosecution of the proprietor for a cheque issued by the proprietorship concern is maintainable. - HELD THAT: - The loan documents and other records show the accused as proprietor of M/s. Vertical Network Communication. A proprietorship concern is not a separate legal entity and may be sued in the name of its proprietor. Reliance on the decision of the Delhi High Court (Shankar Lal Aggarwal v. Balram Luthra) supports that a notice sent to a proprietor in his individual capacity is valid even if the proprietorship is not separately named. Given that the accused was the proprietor and had executed loan documents, the contention that notice was invalid because it did not name the proprietorship separately was rejected. [Paras 16, 19]

Notice to the accused in his personal name was valid and the proprietor could be prosecuted for the dishonour of cheques issued by the proprietorship.

Final Conclusion: Criminal Revision Petition dismissed; the judgments of conviction and sentence dated 24.08.2012 (trial Court) and 25.03.2013 (confirming appeal) are confirmed, there being no perversity or illegality requiring interference.

Proclaimed offender declaration - registration of FIR under Section 174-A IPC - complaint under Section 138 of the Negotiable Instruments Act - withdrawal/compromise of main complaint - abuse of process of court

Registration of FIR under Section 174-A IPC - complaint under Section 138 of the Negotiable Instruments Act - withdrawal/compromise of main complaint - abuse of process of court - proclaimed offender declaration - Whether FIR registered under Section 174-A IPC and consequential proceedings ought to be quashed where it was registered pursuant to an order declaring the petitioner a proclaimed person in proceedings under Section 138 of the Negotiable Instruments Act, and the main complaint has thereafter been withdrawn on compromise. - HELD THAT: - The Court applied the view of co-ordinate Benches that where an FIR under Section 174-A IPC is registered only because the accused was declared a proclaimed person in pending proceedings under Section 138 of the Negotiable Instruments Act, continuation of such FIR becomes an abuse of the process of the court if the main complaint under Section 138 has been withdrawn on compromise. The order dated 16.01.2020 shows the complainant in the Section 138 proceedings withdrew the complaint as payment had been made and the proceedings were dismissed as withdrawn; consequentially the proclaimed-offender declaration and the FIR registered pursuant thereto lost their operative purpose. In these circumstances and following the precedents relied upon, the continuation of criminal proceedings under Section 174-A would be unjust and contrary to the interests of justice, warranting quashing of the FIR and all subsequent proceedings.

Impugned FIR registered under Section 174-A IPC and all subsequent proceedings are quashed as continuation would be an abuse of the process of court in view of withdrawal/compromise of the main Section 138 complaint.

Final Conclusion: The petition is allowed; FIR No. 880 dated 20.05.2019 registered under Section 174-A IPC at Police Station Shivaji Nagar, Gurugram, and all consequential proceedings are quashed.

Presumption under Section 118 of the Negotiable Instruments Act - rebuttal of presumption on preponderance of probabilities - comparison of signatures under Section 73 of the Evidence Act - onus of proof shifting upon satisfactory initial rebuttal - entitlement to interest and costs in civil suits

Presumption under Section 118 of the Negotiable Instruments Act - rebuttal of presumption on preponderance of probabilities - comparison of signatures under Section 73 of the Evidence Act - Whether the Plaintiff is entitled to recover the claim on the basis of the promissory note dated 30.11.2015 (Ex.P13). - HELD THAT: - Ex.P13, being a promissory note, attracts the mandatory presumption under Section 118 that it was made for consideration and on the date it bears, once execution is proved. The Defendant denied execution of Ex.P13 and relied on signature differences and antecedent admissions in earlier pleadings. Section 73 allows comparison with admitted signatures; the Defendant admitted signatures on Exs.P8, P9 and P12. Visual comparison revealed that the disputed signature on Ex.P13 tallies with the admitted signatures. The Court examined antecedent documents (including Ex.P3, Ex.P4, Exs.P5/P7/P9 and the letter Ex.P12) and found that they disclose outstanding liabilities as on 30.11.2015, so it is not improbable that some debt remained. Applying the tests laid down by the Supreme Court, the Defendant failed to show that the existence of consideration was so improbable that a prudent person would act on that basis; the initial onus to make out a probable defence was not discharged. Consequently the presumption under Section 118 stood unrebutted and the Plaintiff was entitled to succeed on the basis of Ex.P13. [Paras 12, 13, 15, 16, 17]

The Plaintiff proved execution of Ex.P13 by comparison of admitted signatures and failed to be rebutted by the Defendant; the presumption under Section 118 applies and the Plaintiff is entitled to the claim based on Ex.P13.

Entitlement to interest and costs in civil suits - Rate of interest payable from date of plaint to realization and award of costs. - HELD THAT: - Although Ex.P13 stipulates interest at 24% per annum, the Plaintiff limited the plaint claim for pre-plaint interest to 6% per annum (from 30.11.2015 to 28.11.2018) and sought higher post-plaint interest. Having regard to prevailing rates and the circumstances, the Court awarded interest at 9% per annum from the date of the plaint until realization. Applying the loser pays principle and taking into account court fee and other expenses, the Court awarded costs in favour of the Plaintiff amounting to a consolidated sum which includes court fee, lawyer's fees and other expenses. [Paras 18, 19]

Interest at 9% per annum is awarded from the date of plaint until realization; the Defendant is directed to pay the Plaintiff costs as ordered.

Final Conclusion: The suit is decreed: the Defendant is directed to pay the Plaintiff the decretal sum together with interest at 9% per annum from the date of plaint until realization, and to pay the costs as awarded.