TaxTMI Updates e-Newsletter
Jun 26,2020

Nature of supply - renting of immovable property versus construction - Composite supply - works contract - Schedule II classification - renting of immovable property and construction for sale during construction - Transfer of immovable property not leviable where entire consideration received after completion - Classification under Service Accounting Code 9954 - Classification under Service Accounting Code 997211 and exemption under Notification 12/2017 - Applicability of RERA and contract substance over nomenclature

Nature of supply - renting of immovable property versus construction - Schedule II classification - renting of immovable property and construction for sale during construction - Classification under Service Accounting Code 997211 and exemption under Notification 12/2017 - Whether the appellant's transactions for granting long term leases of identified apartments are transactions of renting of residential dwelling (exempt under SAC 997211 / Notification 12/2017) or not. - HELD THAT: - The Appellate Authority for Advance Ruling held that, notwithstanding the labels in the draft agreements, the transactions cannot be treated as ordinary renting of a completed residential dwelling. The authority relied on the timing and structure of the transactions - agreements entered during construction, staged payments linked to construction milestones, payment of substantial consideration prior to possession, lessees bearing maintenance and other clauses resembling sale/transfer arrangements - and the statutory matrix in Schedule II which treats construction of a building intended for sale (or where consideration is received before completion) as supply of services. The authority observed that the exemption for renting of residential dwelling under Notification 12/2017 applies to genuine renting of a completed residential unit for use as residence, and that the factual and contractual features here are inconsistent with that characterisation. The authority also noted judicial precedent and RERA registration which support examining substance over nomenclature; consequently the claim that the activity falls under SAC 997211 and is exempt was rejected. [Paras 44, 45, 46, 48, 49]

The transactions are not rent/lease of a completed residential dwelling entitled to exemption under SAC 997211 / Notification 12/2017; the appellant's claim of exemption was rejected.

Composite supply - works contract - Classification under Service Accounting Code 9954 - Transfer of immovable property not leviable where entire consideration received after completion - Whether the transactions constitute a composite supply in the nature of a works contract (as defined in Section 2(119) and Schedule II), and are therefore taxable as construction services under SAC 9954. - HELD THAT: - Applying Schedule II and the definition of 'works contract', the authority concluded that the arrangement is essentially for construction of residential flats for prospective customers with staged payments before completion and possession. The elements identified - construction activity undertaken by the developer, staged payment linked to construction milestones, transfer of substantial consideration prior to completion, and contractual clauses (maintenance, formation of association, obligations on delay) - demonstrate a composite supply involving transfer of property in goods in execution of construction and correspond to works contract services. On that basis the authority agreed with the earlier AAR that the principal character of the supply is construction/works contract and classified the activity under SAC 9954, attracting GST as a supply of services rather than being outside the levy as transfer of immovable property. [Paras 42, 44, 45, 46, 50]

The transactions qualify as a composite supply in the nature of a works contract and are correctly classified under SAC 9954 as taxable construction services; the AAR's classification is upheld.

Final Conclusion: The Appellate Authority affirmed the Authority for Advance Ruling: the agreements, although titled as leases, are in substance construction/works contract transactions and not exempt renting of residential dwellings; they are correctly treated as composite works contract supplies falling under SAC 9954 and taxable accordingly, and the appeal is dismissed.

Summary order. Application for urgent hearing dismissed as the cited High Court precedent relied upon by the petitioner has been stayed by the Supreme Court; urgent listing refused.

Carry forward of electronic credit ledger - availability of transitional credit on the appointed day - challenge to vires of subordinate rules as being ultra vires parent Act - provisional procedural directions pending higher court decision

Carry forward of electronic credit ledger - availability of transitional credit on the appointed day - Petition for direction to permit carrying forward eligible transitional credit into the electronic credit ledger and allegations of inability to do so due to system glitches - HELD THAT: - The petition seeks a direction to respondents to allow the petitioner to carry forward eligible credit (excise duty paid and reflected in the books as on the appointed day) into the electronic credit ledger. The Court did not adjudicate the substantive entitlement or resolve factual complaints about system glitches; instead notice was issued to respondents and directions were given for filing counter affidavits and rejoinders within specified timeframes to enable adjudication on merits after pleadings are complete.

Notice issued; respondents directed to file counter affidavits within four weeks and rejoinder affidavits, if any, within a further four weeks.

Challenge to vires of subordinate rules as being ultra vires parent Act - provisional procedural directions pending higher court decision - Contention that Rules 117 and 120A of the CGST Rules, 2017 are ultra vires Sections 140 and 174 of the CGST Act, 2017 and reliance on this Court's earlier decision in Brand Equity Treaties Ltd. - HELD THAT: - The Court recorded the petitioner's challenge to the vires of Rules 117 and 120A and the reliance on the Brand Equity decision, but refrained from deciding the vires question. Proceedings were directed to await the judgment of the Supreme Court in Union of India v. Brand Equity Treaties Limited & Ors., SLP (C) 7425 7428/2020, and the matter was listed accordingly for further consideration after the higher court's decision.

Adjudication on the vires challenge deferred pending the Supreme Court's judgment; matter listed for further hearing after that decision.

Final Conclusion: Notice issued; interlocutory directions given for filing of pleadings; substantive relief and the constitutional challenge to Rules 117 and 120A not decided and deferred pending the Supreme Court's decision in the related SLP, with the matter listed accordingly.

Maintainability of fresh writ petition pending transfer of earlier petition - interim relief in transferred proceedings - jurisdiction to entertain fresh proceedings during transit of transferred petition - listing of transferred petition for hearing

Maintainability of fresh writ petition pending transfer of earlier petition - jurisdiction to entertain fresh proceedings during transit of transferred petition - Fresh writ petition seeking prohibition of action in anti-profiteering proceedings could not be entertained while an earlier writ petition (W.P. No.3536/2019) stood transferred to the Court and no interim order had been made by the Supreme Court. - HELD THAT: - The Court noted that the Supreme Court had transferred W.P. No.3536/2019 to this Court and had granted liberty to the parties to seek interim relief in that transferred petition, but had not authorised or directed this Court to entertain any fresh writ petition. In that factual and procedural context the Court held it was not appropriate to entertain a separately filed fresh writ petition which sought the same interim protection as that available in the transferred matter. The Court balanced equities by directing the Registry to list the transferred petition for hearing on a fixed date and by giving the petitioner liberty to file the paper book if not received from the transferring High Court, rather than deciding the substantive contention in the freshly filed petition. [Paras 10, 11, 12, 13]

The petition could not be entertained; the Registry was directed to list W.P. No.3536/2019 on 29th June, 2020 and the petitioner was permitted to file the paper book if not received.

Interim relief in transferred proceedings - listing of transferred petition for hearing - Direction to list the petition transferred from the Bombay High Court and to permit filing of paper book if not received. - HELD THAT: - To protect the petitioner's right to seek interim relief in the transferred petition, the Court ordered the Registry to list W.P. No.3536/2019 on 29th June, 2020. Where the paper book had not yet been received from the Bombay High Court, the petitioner was granted liberty to file a complete paper book and an application for listing on the same date. This remedial direction was given in lieu of entertaining a separate fresh writ petition. [Paras 11, 12]

Registry to list the transferred W.P. No.3536/2019 on 29th June, 2020; petitioner permitted to file paper book if necessary.

Procedural exemption application - Interim exemption applications (CM Appls. 13193/2020 & 13233/2020) were allowed subject to just exceptions. - HELD THAT: - At the outset the Court allowed the pending miscellaneous applications for exemption, subject to just exceptions, and recorded that the matter was heard by video conferencing in view of its urgency. This was a procedural grant ancillary to the directions on listing the transferred petition. [Paras 1]

Exemption applications allowed subject to just exceptions.

Final Conclusion: The Court refused to entertain the freshly filed writ petition while the earlier petition transferred from the Bombay High Court awaited listing; instead it directed the Registry to list the transferred petition on 29th June, 2020 (permitting the petitioner to file the paper book if not received) and allowed the exemption applications subject to just exceptions.

Surplus on prepayment of deferred sales tax loan at net present value treated as capital receipt - attraction of section 41(1) by remission or cessation of a trading liability - liability to pay interest under sections 234B and 234C for default in advance tax in respect of tax determined under minimum alternate tax (MAT) - relevance of contemporaneous binding judicial precedent and bona fide reliance thereon

Surplus on prepayment of deferred sales tax loan at net present value treated as capital receipt - attraction of section 41(1) by remission or cessation of a trading liability - Whether the surplus arising on prepayment of deferred sales tax loan at net present value is taxable as a remission or cessation of a trading liability under section 41(1) or is a capital receipt not exigible to tax under that provision. - HELD THAT: - The Court held that the surplus arising from prepayment of a deferred sales tax loan at its net present value does not satisfy the ingredients of section 41(1) because there is no remission or cessation of the underlying obligation to remit sales tax; the statutory scheme only permits premature discharge by payment of the net present value and does not wipe out the liability. The Tribunal's reliance on the Bombay High Court decision in Sulzer India Ltd., which found the surplus to be a capital receipt and not taxable under section 41(1), was held to be correct and binding in view of subsequent affirmation by the Supreme Court in Balkrishna Industries Ltd. The Court noted that the conversion of collected sales tax into a deferred payment obligation and its premature settlement at NPV does not alter the real character of the transaction so as to create a deemed remission within section 41(1). Consequently, the addition by the Assessing Officer under section 41(1) was not sustainable. [Paras 14, 23, 24, 31]

Surplus on prepayment at NPV is a capital receipt and not taxable as remission or cessation of a trading liability under section 41(1); appeal dismissed on this ground.

Liability to pay interest under sections 234B and 234C for default in advance tax in respect of tax determined under minimum alternate tax (MAT) - relevance of contemporaneous binding judicial precedent and bona fide reliance thereon - Whether interest under sections 234B and 234C is chargeable where tax liability was determined under section 115JB (MAT) and advance tax was not paid in reliance on then-prevailing judicial precedent. - HELD THAT: - The Court affirmed the Tribunal's conclusion that although the Supreme Court in Rolta India Ltd. later held that interest under sections 234B and 234C is leviable in respect of MAT liability, at the relevant time the Karnataka High Court's decision in Kwality Biscuits Ltd. held that advance tax on book profits under the then-applicable provision was not exigible and therefore interest for non-payment was not chargeable. The Tribunal rightly took into account the contemporaneous binding precedent and the assessee's bona fide and plausible belief, concluding there was no deliberate default attracting interest. The later Supreme Court ruling did not retrospectively discredit the assessee's reasonable reliance on existing law at the time of the advance tax dates; hence the levy of interest was not upheld. [Paras 15, 36, 40, 47, 48]

Interest under sections 234B and 234C not chargeable in the facts where assessee relied on prevailing judicial precedent that no advance tax on MAT was payable; appeal dismissed on this ground.

Final Conclusion: Both substantial questions of law were answered in favour of the assessee: (i) the discount/surplus on prepayment of deferred sales tax loan at NPV is a capital receipt not taxable under section 41(1); and (ii) interest under sections 234B and 234C was not leviable in the facts due to the assessee's bona fide reliance on prevailing precedent. The Revenue's appeals are dismissed.

Reopening of assessment - Validity of reassessment proceedings - Reasons for reopening under section 148 communicated within reasonable time - Failure to disclose all material facts - Fair play rule in reassessment proceedings - Quashing of reassessment for non communication or inconsistent reasons

Reopening of assessment - Validity of reassessment proceedings - Assessee's entitlement to challenge the reopening of assessment on remand - HELD THAT: - The High Court's order dated 12.12.2011 expressly remanded the matter to the Tribunal and held that on remand parties are free to address arguments on all issues, including the aspect of reassessment. In view of that categorical direction, the assessee was entitled to challenge the reopening of assessment before the Tribunal notwithstanding that the coordinate bench earlier had not decided that issue. Consequently the Tribunal entertained and dealt with the assessee's legal objections to the reopening of assessments for the years in question. [Paras 24]

Assessee permitted to challenge the reopening of assessment on remand.

Reasons for reopening under section 148 communicated within reasonable time - Fair play rule in reassessment proceedings - Quashing of reassessment for non communication or inconsistent reasons - Whether reassessment proceedings were valid where the reasons supplied to the assessee were limited extracts different from the fuller reasons placed before higher authorities - HELD THAT: - The assessing officer furnished only brief extracts of reasons to the assessee at the time of reopening, whereas a substantially different and detailed 'form for recording reasons' and annexure were produced subsequently before the High Court. The Tribunal found that reasons actually relied upon by Revenue were not communicated verbatim to enable the assessee to defend the reopening, which contravenes the principle that recorded reasons must be furnished within a reasonable time so that objections can be taken and disposed of by a speaking order. Following the reasoning in the line of authority exemplified by Haryana Acrylic Manufacturing Co. and the Supreme Court direction in G.K.N. Driveshafts, nondisclosure of the true reasons (or supplying inconsistent reasons) vitiates the reassessment process and renders the notice and subsequent proceedings invalid. [Paras 25, 26, 27, 30]

Reassessment proceedings quashed as the reasons actually relied upon were not communicated to the assessee and the extracts supplied were inconsistent with the true reasons.

Validity of reassessment proceedings - Consequences of quashing reassessment on other grounds raised by the assessee - HELD THAT: - Having quashed the reassessment proceedings for all three assessment years on the ground of invalid initiation, the Tribunal did not adjudicate the remaining substantive grounds of appeal (such as allocation of expenses and imposition of interest) because those issues became academic once reassessment proceedings were held invalid. [Paras 31]

Other grounds of appeal left undecided as consequential to quashing of reassessments.

Final Conclusion: On remand the Tribunal held that the assessee could challenge the reopening; found that the reasons actually relied upon by Revenue were not communicated to the assessee and that the extracts supplied were inconsistent with the true reasons, thereby quashing the reassessment proceedings for AYs 1989-90, 1990-91 and 1991-92; consequentially the Tribunal did not decide the remaining substantive grounds.

Jurisdiction of the Assessing Officer - notice under section 148 and validity of reopening - notice under section 143(2) and requirement of issuance by jurisdictional AO - vesting of jurisdiction by the CBDT under section 120 and effect under section 124 - acts done without jurisdiction are nullity

Jurisdiction of the Assessing Officer - notice under section 148 and validity of reopening - notice under section 143(2) and requirement of issuance by jurisdictional AO - acts done without jurisdiction are nullity - Validity of the reassessment proceedings framed after issuance of notice by a non-jurisdictional Assessing Officer - HELD THAT: - The Tribunal upheld the conclusion that the notice for reopening the assessment and subsequent proceedings were issued and carried out by an Assessing Officer who did not have jurisdiction vested by the Board/CBDT. The assessee raised objections under the statutory provision concerning jurisdiction within the prescribed period and the file was transferred, the transfer itself acknowledging lack of jurisdiction of the original AO. Relying on the statutory scheme of vesting of jurisdiction by the Board and the settled precedents that acts done by an authority lacking jurisdiction are void ab initio, the Tribunal held that a notice issued by a non-jurisdictional AO is illegal and the assessment completed pursuant to such notice is bad in law. As the defect related to absence of jurisdiction in issuance of the mandatory notice by the jurisdictional AO, the Tribunal declined to examine the merits of additions and other contentions as that would be an academic exercise. [Paras 6, 7]

Assessment framed after notice issued by a non-jurisdictional Assessing Officer is quashed; reassessment proceedings held to be without jurisdiction and bad in law.

Final Conclusion: The revenue's appeal is dismissed and the order of the CIT(A) upholding invalidity of the reassessment is affirmed; the cross-objection is dismissed as infructuous.

Transfer Pricing adjustment - Arm's Length Price - Most Appropriate Method - TNMM - Comparability and functional filters - Working capital adjustment - Risk adjustment - Profit Level Indicator computation - Assets received free of cost - scope of benefit/perquisite under Section 28(1)(iv) - Section 69 - unexplained investment - Deduction under Section 10A on enhanced profits

Transfer Pricing adjustment - Comparability and functional filters - Exclusion of four specified comparables (Infosys Ltd., Larsen & Toubro Infotech Ltd., Persistent Systems Ltd. and Thirdware Solutions Ltd.) from the final list of comparables. - HELD THAT: - The Tribunal examined the functional dissimilarities and features (ownership of IPRs/intangibles, product orientation, diversified services and absence of segmental data) relied upon in earlier decisions involving similarly placed assessees and concluded that the four named companies are functionally incomparable with the assessee. Following the precedents noted in the record, the Tribunal directed exclusion of these four companies from the comparable set and allowed the ground raised by the assessee to that effect. [Paras 13, 14, 15]

Ground No. 9 allowed; the four named companies are excluded from the final list of comparables.

Comparability and functional filters - Comparability of Akshay Software Technologies Ltd. to be reconsidered afresh by the TPO after affording opportunity of hearing to the assessee. - HELD THAT: - The Tribunal noted conflicting treatment and authority citations invoked by the parties and, having regard to the Tribunal's directions in a related earlier matter, directed that the question of Akshay's comparability be reconsidered by the TPO with opportunity to the assessee to be heard. No final finding on comparability was recorded by the Tribunal itself. [Paras 17, 18, 19, 21]

Comparability remanded to the TPO for fresh consideration and verification after hearing the assessee.

Comparability and functional filters - Comparability of Sasken Communication Technologies Ltd. to be reconsidered afresh by the TPO after affording opportunity of hearing to the assessee. - HELD THAT: - The Tribunal recorded the assessee's submissions on export-revenue and product/revenue composition and observed prior inconsistent treatment; in view of these considerations and earlier related directions, the Tribunal directed the TPO to re-examine Sasken's comparability with the assessee after hearing the assessee. [Paras 23, 24, 25, 26, 28]

Comparability remanded to the TPO for fresh consideration and verification after hearing the assessee.

Comparability and functional filters - Comparability of Maveric Systems Ltd. to be reconsidered afresh by the TPO after affording opportunity of hearing to the assessee. - HELD THAT: - The Tribunal noted inconsistent application of R&D and other filters by the TPO and DRP, recorded the assessee's submissions and earlier related tribunal directions, and directed that the TPO re-examine Maveric's comparability with opportunity to the assessee to be heard. [Paras 29, 30, 31, 32, 33]

Comparability remanded to the TPO for fresh consideration and verification after hearing the assessee.

Comparability and functional filters - Comparability of Sankhya Infotech Ltd. to be reconsidered afresh by the TPO after affording opportunity of hearing to the assessee. - HELD THAT: - The Tribunal observed that the DRP introduced new bases for exclusion (product development and R&D spend) without providing the assessee notice or a conclusive finding on the export-revenue filter. For these reasons the Tribunal directed fresh consideration by the TPO on both the export-revenue filter and the new filters applied by the DRP. [Paras 34, 35, 36]

Comparability remanded to the TPO for fresh consideration and verification after hearing the assessee.

Comparability and functional filters - Comparability of 8K Miles Software Ltd. to be reconsidered afresh by the TPO after affording opportunity of hearing to the assessee. - HELD THAT: - The Tribunal noted that the DRP upheld exclusion on a new ground (use of intangibles) without confronting the assessee and without conclusively deciding the export-turnover filter; accordingly the Tribunal directed the TPO to reconsider comparability on both the export filter and the DRP-applied filters after hearing the assessee. [Paras 37, 38, 39]

Comparability remanded to the TPO for fresh consideration and verification after hearing the assessee.

Working capital adjustment - Rule 10B(3) - Working capital adjustment is required and the TPO is directed to allow it after verification and after affording opportunity to the assessee. - HELD THAT: - The Tribunal held that it is settled law that necessary adjustments must be made to the margins of comparables to reflect differences in working capital positions between the tested party and comparables. The TPO was directed to verify the assessee's computation of the working capital adjustment and to grant the adjustment after giving the assessee an opportunity of being heard. [Paras 40, 41, 42, 43]

TPO to allow working capital adjustment after verification and hearing; direction issued to recompute ALP accordingly.

Risk adjustment - Rule 10B(2) and Rule 10B(3) - Question of allowing risk adjustment remanded to the TPO for fresh consideration after examining the assessee's submissions and computations, with opportunity to be heard. - HELD THAT: - The Tribunal observed that the statute contemplates comparability assessment with reference to risks assumed by parties and that differences in risks may warrant adjustments. Having regard to the assessee's claim (captive status and lower risk profile) and precedents, the Tribunal directed the TPO to re-examine the issue of risk adjustment on the basis of the assessee's computations and submissions after hearing the assessee. [Paras 44, 45, 46]

Risk adjustment remanded to the TPO for fresh consideration and verification after hearing the assessee.

Profit Level Indicator computation - Profit Level Indicator (PLI) to be reworked by treating provision for doubtful debts as operating expenditure. - HELD THAT: - Relying on authoritative tribunal reasoning, the Tribunal held that provisions for doubtful debts and doubtful advances are part of operating activities governed by prudence and should be treated as operating expenditure for PLI computation. The Tribunal directed reworking of the PLI accordingly. [Paras 47, 48, 49]

TPO to rework the PLI by considering provision for doubtful debts as operating expenditure.

Section 69 - unexplained investment - Addition made under Section 69 of the Act in respect of certain assets received free of cost is not sustainable. - HELD THAT: - The Tribunal found no material to show that the assessee was the owner of the assets and noted the affirmation by the AE that assets were given free of cost. Consequently, the criteria for invoking Section 69 (unexplained investment) were not satisfied and the addition under Section 69 could not be sustained. [Paras 52, 59, 60]

Addition under Section 69 set aside.

Assets received free of cost - scope of benefit/perquisite under Section 28(1)(iv) - Deduction under Section 10A on enhanced profits - While the AO had brought the value of assets to tax under Section 28(1)(iv), the Tribunal refrained from adjudicating the Section 28(1)(iv) issue and directed that, if the addition stands, deduction under Section 10A shall be allowed on the enhanced profits. - HELD THAT: - The Tribunal accepted the assessee's contention that taxation under Section 69 was not sustainable and, exercising practical adjudicatory choice given the related ground on Section 10A, directed that the AO allow deduction under Section 10A on the enhanced profits resulting from any disallowance. Accordingly, Ground No.12 was allowed and Ground No.11 (challenge to 28(1)(iv)) was treated as academic and left open. [Paras 56, 57, 59, 61, 62]

Ground No.12 allowed - AO directed to allow deduction under Section 10A on enhanced profits; Section 69 addition set aside; Ground No.11 left open as academic.

Final Conclusion: The appeal is partly allowed. The Tribunal excluded four specified comparables from the comparable set, directed remand of comparability for five named companies to the TPO for fresh consideration after hearing the assessee, directed the TPO to allow working capital and to re-examine risk adjustments and to rework the PLI treating provisions for doubtful debts as operating expenditure, set aside the addition under Section 69, and directed that deduction under Section 10A be allowed on any enhanced profits; one challenge under Section 28(1)(iv) was left open as academic.

Unexplained expenditure u/s 69C - unexplained cash credits u/s 68 - burden of proof under section 68 - rejection of books of account - insignificant mistake cannot form basis for rejection of books of accounts

Unexplained expenditure u/s 69C - rejection of books of account - insignificant mistake cannot form basis for rejection of books of accounts - Deletion of addition made u/s 69C of the Act of Rs. 2,19,13,800/- on account of alleged unexplained expenditure in purchase of gold bullion was justified. - HELD THAT: - The Assessing Officer made the addition based on anomalies in an Item Movement Analysis sheet for two dates which showed apparent negative stock; the books of account, audited under section 44AB, and annual quantitative details of opening stock, purchases, sales and closing stock were accepted by the AO and were supported by bills and vouchers. The assessee explained that the discrepancies arose from unintentional mistakes in the accountant's computer-generated item movement analysis and furnished a corrected stock movement statement which, after remand verification with books, invoices and statements and recording of statements of the assessee, accountant and auditor, was not found to be defective by the AO. The Tribunal applied the principle that an insignificant mistake in a subsidiary statement cannot justify rejection of audited books or making additions when the annual accounts and supporting vouchers remain unchallenged, and found the AO's inquiry incomplete and the addition unsustainable. [Paras 11, 12, 13, 14, 15]

Addition made u/s 69C deleted and revenue's ground in respect of this addition dismissed.

Unexplained cash credits u/s 68 - burden of proof under section 68 - Deletion of addition made u/s 68 of the Act of Rs. 65,42,060/- on account of unexplained loan creditors was justified. - HELD THAT: - The assessee furnished loan confirmations, bank statements, PAN details and other documentary evidence under Rule 46A; remand verification was conducted and the AO examined 10 of the 13 creditors in person who confirmed the loans, while for the remaining three creditors bank records, confirmations, PAN and evidence of subsequent repayment were placed on record. The Tribunal applied settled law that once the assessee discharges the initial burden under section 68 by producing identity, creditworthiness and evidence of transactions, the burden shifts to Revenue to rebut the evidence. No material was produced by the AO to show that the evidences were unsatisfactory; consequently the CIT(A)'s deletion of the addition was affirmed. [Paras 20, 21, 22, 23, 24]

Addition made u/s 68 deleted and revenue's ground in respect of this addition dismissed.

Final Conclusion: Both additions-one under section 69C relating to alleged unexplained purchase of gold and the other under section 68 relating to unexplained loan creditors-were deleted by the first appellate authority and the Tribunal, after considering remand verification, documentary evidence and settled legal principles regarding burden of proof and treatment of insignificant clerical errors, dismissed the revenue's appeal for Assessment Year 2012-13.

Unabsorbed investment allowance - section 32A(6) of the Income-tax Act, 1961 - allowance of unabsorbed investment allowance in the hands of the transferee on merger - reliance on section 72A of the Income-tax Act, 1961

Unabsorbed investment allowance - section 32A(6) of the Income-tax Act, 1961 - reliance on section 72A of the Income-tax Act, 1961 - allowance of unabsorbed investment allowance in the hands of the transferee on merger - Allowability of the assessee's claim of unabsorbed investment allowance of erstwhile Flow-more Polyester Ltd. in the hands of the assessee under section 32A(6). - HELD THAT: - The Tribunal had earlier remitted the matter to the Assessing Officer to allow the benefit of unabsorbed investment allowance if the conditions of section 32A(6) were complied with. On remand the AO issued a show-cause and ultimately disallowed the claim on the ground that the assessee had not furnished sufficient documentary evidence and by emphasising provisions of section 72A, rather than examining whether the statutory conditions in section 32A(6) (with reference to sections 32A(3) and 32A(4) as applicable) were fulfilled. The CIT(A) found that the AO had not followed the Tribunal's direction and had erred in relying on section 72A instead of verifying compliance with section 32A(6)section 32A(6) are fulfilled the allowance must be given in the hands of the assessee. Accordingly the Tribunal upheld the CIT(A)'s allowance and dismissed the Revenue's appeal. [Paras 10, 11, 12]

The assessee's claim for unabsorbed investment allowance under section 32A(6) is allowable in the hands of the assessee; the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal concurs with the CIT(A) that the Assessing Officer misdirected himself by relying on section 72A instead of examining compliance with section 32A(6); finding that the assessee satisfied the statutory conditions, the claim for unabsorbed investment allowance is allowed and the Revenue's appeal is dismissed.

Benami transaction - Presumption as to purchase in name of wife or unmarried daughter - Concurrent findings in civil appeal - Non-joinder of necessary parties - Validity and operability of power of attorney executed by co-heir - Title in property standing in name of deceased owner

Benami transaction - Presumption as to purchase in name of wife or unmarried daughter - Concurrent findings in civil appeal - Whether the suit was barred under the Benami Transaction (Prohibition) Act, 1988 and whether that question could be reopened in the second appeal. - HELD THAT: - The Court held that the question whether the purchases were benami was a factual determination on which both the trial court and the appellate court gave concurrent findings. The purchases post enactment of the Benami Transaction (Prohibition) Act, 1988 fall within the statutory scheme where Section 3 contains a prohibition but sub section (2) creates an exception in respect of purchases in the name of a wife or unmarried daughter, attracting the presumption that such property was purchased for their benefit unless the contrary is proved. The appellate court applied the evidence, including recital in the sale deeds and oral testimony, and found the defendants' case creditworthy; such concurrent findings are not amenable to re examination in this second appeal. Reliance was placed upon the earlier decision referred to in the judgment [Nand Kishore Mehra Vs. Sushila Mehra] for the legal proposition regarding Section 3(2) and the limited scope of challenge where courts below have concurrently recorded findings. [Paras 18, 19, 20]

The suit is barred under the Benami Transaction (Prohibition) Act, 1988 as held by the courts below and that factual conclusion cannot be reopened in this second appeal.

Non-joinder of necessary parties - Title in property standing in name of deceased owner - Whether the suit was liable to be dismissed for non joinder of necessary parties and whether the sale deeds standing in the name of the deceased wife were the self acquired property of the plaintiff. - HELD THAT: - The Court agreed with the courts below that Lakhiya Devi (deceased) left behind several legal heirs whose interests were directly affected by the suit; the plaintiff did not implead those co heirs despite objection. The courts below found that the sale deeds stood in the name of the deceased and were not shown to be the plaintiff's self acquired property; evidence relied upon by defendants (including recital in sale deeds and testimony) supported the inference that the properties vested in the wife and her heirs. Because the relief claimed would impinge on the rights of non joined heirs, non joinder rendered the suit incompetent. These determinations of fact and consequence were affirmed. [Paras 20]

The suit is barred for non joinder of necessary parties and the sale deeds standing in the name of the deceased wife are not found to be the plaintiff's self acquired property.

Validity and operability of power of attorney executed by co-heir - Title in property standing in name of deceased owner - Whether defendant No.1 had valid right to execute the power of attorney in respect of the suit land and whether that power of attorney was valid, genuine and operative. - HELD THAT: - Having concluded that the properties stood in the name of the deceased and that her heirs had rights therein, the courts below found that defendant No.1, as a daughter and co heir, had the authority in respect of her share to execute a power of attorney. The appellate court upheld the trial court's finding that the registered power of attorney executed by defendant No.1 in favour of defendant No.2 was valid to the extent of her share, taking into account the ownership as determined by the concurrent findings. [Paras 20]

Defendant No.1 had a valid right to execute the power of attorney with respect to her share in the suit land and the power of attorney is valid and operative to that extent.

Final Conclusion: The second appeal is dismissed. The concurrent factual findings of the courts below that the purchases are not shown to be the plaintiff's self acquired property, that the suit is barred under the Benami Transaction (Prohibition) Act, 1988, that necessary co heirs were not impleaded, and that defendant No.1 validly executed a power of attorney to the extent of her share are affirmed; no substantial question of law is made out.

Right to make an effective representation - non-supply of remand orders - subjective satisfaction of the detaining authority - COFEPOSA detention - judicial remand

Non-supply of remand orders - right to make an effective representation - judicial remand - subjective satisfaction of the detaining authority - Non-supply of the copies of the remand orders to the detenue prevented an effective representation and vitiated the COFEPOSA detention order. - HELD THAT: - The Court found that the petitioner had sought copies of the periodic remand orders to enable an effective representation against the detention order. The respondents admitted receipt of the representation but did not show that the remand orders were furnished. The periodic extension of remand would have disclosed the stage of investigation, materials relied upon and the circumstances justifying continued custody; withholding those orders left the detenue unable to know what prompted extensions or what incriminating material had been collected while she was in custody. The Court distinguished the authority relied upon by respondents where only the substance of the remand order had been placed before the detaining authority; in the present case the remand orders were not furnished to the detenue and, therefore, her right to make an effective representation was prejudiced. For these reasons the Court held that the detention order, which rested on the subjective satisfaction of the detaining authority, was vitiated by the non-supply of the remand orders and could not stand. [Paras 10, 11, 12]

Impugned COFEPOSA detention order set aside on the ground that non-supply of remand orders deprived the detenue of the right to make an effective representation.

Final Conclusion: The Habeas Corpus petition is allowed; the detention order dated 11.10.2019 under COFEPOSA is quashed and the detenu is directed to be set at liberty unless required in connection with any other case.

Revival and recall of dismissed insolvency petition - admission of corporate insolvency resolution process - claims of other creditors in insolvency proceedings - effect of settlement between parties on parallel insolvency order

Revival and recall of dismissed insolvency petition - effect of settlement between parties on parallel insolvency order - claims of other creditors in insolvency proceedings - Whether the appellant is entitled to seek recall of the NCLT order rejecting its section 7 petition and revival of its application in view of the admission and subsequent settlement and setting aside of the admission in a parallel petition. - HELD THAT: - The Court noted that a separate petition filed by another creditor (Dalmia Group Holdings) had been admitted earlier and an IRP appointed, pursuant to which the appellant filed its claim before the IRP. Subsequently, the respondent settled with Dalmia Group Holdings and the NCLAT set aside the admission order dated September 19, 2019, though the earlier admission order of August 8, 2019 was not disturbed. The Supreme Court observed that, given the settlement and the setting aside of the admission order in the parallel proceeding, the appellant is not foreclosed from approaching the NCLT to seek recall of the order dated September 4, 2019 which had rejected the appellant's petition on the ground of the earlier admission in the Dalmia petition. The Court left all contentions open and did not decide the merits of the appellant's claim, confining its direction to permitting the appellant to pursue recall and revival before the NCLT. [Paras 6]

Appellant may approach the NCLT to seek recall of the order dated September 4, 2019 and revival of C. P. (I. B.) No. 4000/MP/2018; all contentions left open.

Disposal of connected appeals - Disposition of the present appeals in light of the direction permitting the appellant to seek recall and revival. - HELD THAT: - In consequence of the direction that the appellant may seek recall and revival of its petition before the NCLT, the Supreme Court disposed of Civil Appeal No. 324 of 2020 and ordered that the same disposition shall govern the connected Special Leave Petitions and Civil Appeal noted in the order. The Court also disposed of pending applications and condoned delay where applicable. [Paras 7, 8, 9]

Civil Appeal No. 324 of 2020 and the connected matters are disposed of; pending applications disposed of and delay condoned.

Final Conclusion: The Supreme Court permitted the appellant to proceed before the NCLT to seek recall of the order rejecting its section 7 petition and revival of its application in view of the settlement and setting aside of the admission in the parallel proceeding; the listed appeals and connected matters were disposed of and all contentions reserved.

Corporate insolvency resolution process - operational debt - demand notice - existence of dispute - application under section 9 - interim resolution professional - moratorium

Application under section 9 - demand notice - existence of dispute - operational debt - Admissibility of the section 9 application and entitlement to initiate corporate insolvency process - HELD THAT: - The Tribunal examined the pleadings and documents and found that the demand notice issued by the operational creditor was delivered to the corporate debtor and that no reply raising existence of a dispute or proof of payment was filed within the statutory period. The applicant filed an affidavit under section 9(3)(b) stating that no dispute was raised. On the satisfaction of the requirements under section 9(5)(i)(a)-(d), including completeness of the application, non-repayment of the unpaid operational debt and absence of a notice of dispute, the Tribunal held that the operational creditor was entitled to file the section 9 application and that the application is maintainable. The Tribunal therefore admitted the petition and directed commencement of the corporate insolvency resolution process. [Paras 10, 12, 13, 14]

The section 9 application is admitted and the corporate insolvency resolution process against the corporate debtor shall commence from the date of this order.

Interim resolution professional - appointment of IRP - Appointment of an interim resolution professional and provisional funding for discharge of his duties - HELD THAT: - The petitioner had not proposed an IRP. The Tribunal appointed a named interim resolution professional and directed the petitioner to pay a specified sum to the IRP to meet initial expenses in accordance with the relevant IBBI regulations, subject to adjustment by the committee of creditors as accounted by the IRP. [Paras 15, 16]

A named interim resolution professional is appointed and the petitioner is directed to pay the interim sum to the IRP, subject to subsequent adjustment by the committee of creditors.

Moratorium - prohibitions under moratorium - Imposition and scope of moratorium under section 14 of the Code - HELD THAT: - Upon admission, the Tribunal declared the moratorium under section 14, setting out its operative prohibitions on institution or continuation of suits or proceedings, transfer or disposal of assets, enforcement of security interests and recovery of property in possession of the corporate debtor. The Tribunal clarified that the moratorium does not apply to transactions notified by the Central Government, supply of essential goods or services as specified, and, as per the Amendment Act, does not apply to a surety in a contract of guarantee to the corporate debtor. The IRP was directed to perform statutory functions and the management and personnel of the corporate debtor were directed to cooperate with the IRP. [Paras 18, 19, 20]

A moratorium is declared with the stated prohibitions and specified exceptions; the IRP shall perform his functions and the ex-management must cooperate.

Final Conclusion: The Tribunal admitted the section 9 petition, directed commencement of the corporate insolvency resolution process, appointed an interim resolution professional (with interim funding by the petitioner subject to adjustment), and declared the moratorium with the stated prohibitions and exceptions.

Admission stage of a Section 7 application under the Insolvency and Bankruptcy Code - timelines under the Insolvency and Bankruptcy Code - expedition in passing admission orders - non-mandatory nature of the statutory 14-day period for admission decision

Non-mandatory nature of the statutory 14-day period for admission decision - timelines under the Insolvency and Bankruptcy Code - The statutory 14-day period for decision on admission under Section 7 is not mandatory, but the Adjudicating Authority must act with utmost expedition having regard to the Code's timelines. - HELD THAT: - The Tribunal noted that the 14-day prescription for the Adjudicating Authority to pass an order on admission under Section 7 has not been held to be strictly mandatory. Nevertheless, in light of the statutory scheme and the emphasis on time-bound resolution under the Code, the Authority is required to determine such applications with promptness and due expedition. The court therefore treated the 14-day timeline as indicative of the urgency the statute contemplates, rather than an inflexible bar. [Paras 2]

The 14-day period is not mandatory but the Adjudicating Authority must decide admission applications with utmost expedition in accordance with the Code's timelines.

Admission stage of a Section 7 application under the Insolvency and Bankruptcy Code - expedition in passing admission orders - The Adjudicating Authority was directed to accord priority to the pending Section 7 application and pass the admission-stage order within a specified short period. - HELD THAT: - Having observed prolonged inaction at the pre-admission stage and the need for timely resolution under the Code, the Tribunal disposed of the appeal by directing the Adjudicating Authority to prioritize the matter and endeavour to pronounce the admission-stage order within 15 days. The direction is administrative and time-bound to ensure the statutory objective of prompt adjudication is met. [Paras 3]

The Adjudicating Authority must accord priority and endeavour to pass the admission-stage order in the pending Section 7 application within 15 days.

Final Conclusion: The appeal was disposed of by directing the Adjudicating Authority to prioritize the Section 7 application and decide the admission-stage issue within 15 days, while reaffirming that the statutory 14-day period is not mandatory but necessitates expedition in accordance with the Code's timelines.

Compromise prior to constitution of committee of creditors - power under rule 11 of the National Company Law Appellate Tribunal Rules, 2016 - setting aside admission order under section 7 of the Insolvency and Bankruptcy Code, 2016 - release from the rigour of insolvency process

Compromise prior to constitution of committee of creditors - setting aside admission order under section 7 of the Insolvency and Bankruptcy Code, 2016 - release from the rigour of insolvency process - Settlement reached between the financial creditor and the corporate debtor before constitution of the committee of creditors and its effect on the admission of the section 7 petition. - HELD THAT: - The Tribunal recorded that the parties reached and signed a written terms of settlement prior to constitution of the committee of creditors and that the financial creditor accepted this position. The appellant undertook to pay the admitted fee and cost of the interim resolution professional. In view of the settlement concluded before the CoC was constituted, the Appellate Tribunal exercised its powers under rule 11 of its Rules to set aside the impugned admission order. Consequent on setting aside the admission, the corporate debtor was released from the rigour of the insolvency process and permitted to function through its board of directors immediately. The interim resolution professional was directed to hand over records and premises of the corporate debtor on receipt of the fee and cost admitted by the appellant. [Paras 6, 7]

Impugned admission order dated September 19, 2019 set aside; corporate debtor released from the insolvency process and restored to board control; interim resolution professional to hand over records and premises on receipt of admitted fees and costs.

Final Conclusion: Appeal allowed on the basis of a pre CoC settlement; admission under section 7 set aside, the corporate debtor restored to its board, and the interim resolution professional to hand over records on payment of admitted fees and costs; no order as to costs.

Manufacture - process amounting to manufacture - repacking/relabeling - confiscation of goods - option to redeem on payment of fine - common adjudication - preclusive effect of prior adjudication on identical issue

Process amounting to manufacture - manufacture - repacking/relabeling - Whether the activity of affixing holograms (revalidation) on CFLs carried out in the appellant's warehouses amounted to manufacture in terms of Section 2(f)(iii) of the Central Excise Act, 1944. - HELD THAT: - The Tribunal recorded that the identical controversy regarding the revalidation/affixation of holograms - characterised by the Department as repacking/relabeling rendering the goods marketable - had been the subject matter of common adjudication by the Commissioner of Central Excise, Gurgaon I. By Order-in-Original dated 23.05.2017 the Commissioner dropped the demands and proceedings in respect of all the appellant's warehouses, holding on merits that the said activity did not constitute manufacture under Section 2(f)(iii). The Tribunal accepted that adjudicatory finding in favour of the appellant on the determinative question whether the process amounted to manufacture. [Paras 3]

The activity of affixing holograms (revalidation) did not amount to manufacture in terms of Section 2(f)(iii) as held by the Commissioner in the common adjudication, and that finding stands for the purposes of this appeal.

Confiscation of goods - option to redeem on payment of fine - preclusive effect of prior adjudication on identical issue - Whether the impugned order confiscating goods seized on search, with an option to redeem on payment of fine, is sustainable after the common adjudication in favour of the appellant. - HELD THAT: - Having accepted the Commissioner, Gurgaon I's prior adjudication which disposed of the departmental demands on merits in favour of the appellant, the Tribunal held that the separate order of confiscation (with redemption on payment of fine) could not be sustained. The confiscation order proceeded on the premise that the revalidation amounted to manufacture and hence clearances were liable to duty; that premise was negatived by the common order which disposed of identical proceedings across all warehouses. For that reason the Tribunal set aside the impugned confiscation order and allowed the appeal, granting consequential relief as appropriate. [Paras 3, 4]

Impugned order of confiscation (with option to redeem by payment of fine) is unsustainable and is set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the order confiscating the goods (with option to redeem on payment of fine), and granted consequential relief, having applied the earlier common adjudication which held that the revalidation/affixation of holograms did not amount to manufacture.

Limitation - suppression of facts - disclosures in ER-2 returns - extended period under Section 11A

Limitation - disclosures in ER-2 returns - suppression of facts - Whether the show cause notice issued in September 2016 in respect of clearances made in September 2011 is barred by limitation in view of disclosures made in ER-2 returns. - HELD THAT: - The Tribunal applied the view taken in earlier decisions of High Courts and the Tribunal that where an assessee has made adequate disclosures in the prescribed ER-2 returns, the Department had knowledge of the relevant facts and cannot treat those facts as suppressed. In such circumstances the extended period of limitation (the invocation of which depends on the requisite ingredients being satisfied) cannot be validly invoked. The Bench noted that the earlier Tribunal order (Final Order No. 76379/2019) had set aside the impugned demand on the ground of limitation after recording that disclosures were made in ER-2 returns and that High Court authority supports the proposition that ER-2 returns, when correctly and fully filed, preclude a finding of suppression. Applying that reasoning to the present case, the show cause notice issued in September 2016 for the September 2011 clearances was held to be time-barred.

The impugned order confirming demand is set aside as barred by limitation and the appeal is allowed with consequential relief.

Final Conclusion: The appeal was allowed on the ground that adequate disclosures in ER-2 returns precluded a finding of suppression and rendered the show cause notice issued in September 2016 in relation to September 2011 time barred; the impugned order is set aside with consequential relief.

Right to be heard - natural justice - COVID-19 lockdowns and procedural fairness - remand for fresh adjudication - inter-State branch transfer versus sale

Right to be heard - natural justice - COVID-19 lockdowns and procedural fairness - remand for fresh adjudication - Whether the assessment order dated 31.03.2020 was vitiated for denial of adequate opportunity to place documentary evidence in view of the COVID-19 pandemic and lockdown. - HELD THAT: - The Court found that the petitioner had raised substantial contentions on law and facts and had repeatedly sought further opportunity to produce documentary evidence after the initial personal hearing of 16.07.2019. The respondents did not dispute existence of the lockdown in March 2020 or that the petitioner had sought and been permitted to furnish documents later; yet invoices electronically submitted on 30.03.2020 and 31.03.2020 were not considered and no further personal or virtual hearing was granted before finalizing the assessment on 31.03.2020. In these circumstances, and having regard to the impact of the COVID-19 lockdown on the petitioner's ability to retrieve and furnish older documents, the impugned assessment was held to be vitiated by denial of adequate opportunity to be heard and to place evidence. [Paras 23, 24]

Impugned Final Assessment Order No.53355 dated 31.03.2020 set aside and matter remitted for fresh determination after affording hearing to the petitioner within two months; petitioner granted one month to file documentary evidence.

Inter-State branch transfer versus sale - remand for fresh adjudication - Whether the turnover of Rs. 40,68,01,526/- characterised as inter-State purchases/branch transfers involved an element of sale and could sustain the tax demand. - HELD THAT: - The Court recorded that the petitioner contended the impugned turnover related to goods received under inter-State purchase and inter-unit transfer and therefore did not involve any element of sale; the respondents disputed neither the lockdown nor the petitioner's requests for further opportunity. Rather than adjudicating the substantive controversy on merits, the Court held that, because the petitioner was denied adequate opportunity to place documentary evidence, the question of whether tax could lawfully be demanded on the said turnover must be examined afresh by the assessing authority after giving the petitioner a hearing and considering the documents to be filed. The matter was therefore remitted to the first respondent for fresh consideration in accordance with law. [Paras 23, 24]

Substantive determination on whether the inter-State branch transfers involved a taxable sale remitted to the first respondent for fresh adjudication after affording hearing and considering documentary evidence.

Final Conclusion: Writ petition allowed; assessment order dated 31.03.2020 under the CST Act, 1956 for the period April, 2015 to March, 2016 set aside for denial of opportunity to be heard during the COVID-19 lockdown and remitted to the assessing authority to determine afresh after affording hearing and considering the petitioner's documentary evidence within the timelines directed.

Violation of principles of natural justice - denial of fair opportunity of being heard - assessment set aside and remitted for fresh adjudication - insufficiency of time to file detailed reply and place on record documents - need for reasoned order after personal hearing

Violation of principles of natural justice - denial of fair opportunity of being heard - insufficiency of time to file detailed reply and place on record documents - assessment set aside and remitted for fresh adjudication - personal hearing and filing of reply with supporting material - Impugned Assessment Order dated 28.03.2020 set aside on ground of denial of opportunity to be heard and remitted for fresh consideration. - HELD THAT: - The show-cause notice dated 12.02.2020 afforded the petitioner only seven days to file a reply covering a period exceeding five years, which was held to be unreasonably short. The petitioner had promptly sought additional time by letter dated 20.02.2020 to gather earlier tax invoices and obtain legal advice; that request was reasonable in the factual matrix and was overlooked by the assessing officer. There was no material to demonstrate service of the endorsement dated 28.02.2020 relied upon in the impugned order. Given the inadequate opportunity and the assessing authority's failure to consider the petitioner's request before passing the assessment, principles of natural justice were violated. Accordingly, the assessment could not be sustained and the matter was remanded for fresh adjudication with directions to admit the petitioner's reply and supporting material, to afford a personal hearing, and to pass a reasoned order within the stipulated time. [Paras 17, 18, 19, 20, 21]

Assessment Order No.40122 dated 28.03.2020 set aside; matter remitted to the 1st respondent to pass a fresh reasoned order in accordance with law within three months after allowing the petitioner six weeks to file its reply and supporting material and after affording a personal hearing.

Final Conclusion: Writ petition allowed; impugned assessment set aside and remitted for fresh decision in accordance with law within three months, petitioner granted six weeks to file reply and supporting material and to be afforded a personal hearing; no order as to costs.

Offence under Section 138 of the Negotiable Instruments Act - Vicarious liability of company officers under Section 141 of the Negotiable Instruments Act - Requirement to implead the company where cheque is issued on behalf of the company - Necessity of specific averment that the person was in charge of and responsible for conduct of company's business - Proviso to Section 138 - conditions precedent for maintainability of complaint

Requirement to implead the company where cheque is issued on behalf of the company - Offence under Section 138 of the Negotiable Instruments Act - Complaint under Section 138 read with Section 141 was not maintainable against the petitioner where the cheque was issued on behalf of a company which was not impleaded and no demand was made on the company. - HELD THAT: - The court held that the disputed cheque was issued on behalf of a company registered under the Companies Act and therefore the legal consequences of Sections 138 and 141 must be examined first. Section 141 makes a company and those in charge of its business liable when the offence under Section 138 is committed by the company; consequently, vicarious liability of officers can arise only in conjunction with prosecution of the company. Reliance is placed on the line of decisions beginning with Aneeta Hada , and followed in subsequent authorities such as Anil Gupta , S.M.S. Pharmaceuticals , K.K. Ahuja , National Small Industries Corpn. Ltd. and Himanshu , which establish that (a) a complaint must aver that the accused was in charge of and responsible for conduct of the company's business when liability is sought under Section 141(1); (b) persons who sign a cheque on behalf of a company may be proceeded under Section 141(2) only with appropriate averments regarding consent, connivance or negligence; and (c) there cannot be vicarious liability of company officers in absence of the company being arraigned. Applying these principles, the court found that only the petitioner had been served with the demand notice and only he had been named in the complaint; the company was not arraigned and no demand was served on it. Under these circumstances the complaint seeking to proceed under Section 138/141 against the petitioner is not maintainable. [Paras 6, 9, 14, 15, 16]

The complaint and the order framing charge under Section 138 N.I. Act against the petitioner are not maintainable in the absence of the company being impleaded and served; the impugned order is set aside.

Final Conclusion: Petition allowed; the order dated 20.05.2019 framing charge under Section 138 N.I. Act is set aside for lack of maintainability as the company, on whose behalf the cheque was issued, was not impleaded and no demand was made on it; petitioner remains free to pursue other remedies.