TaxTMI Updates e-Newsletter
Jun 30,2026

Denial of anOpportunity of hearing - Service of show cause notice through GST portal - Failure to enable effective response - Principles of Natural Justice - HELD THAT: - The Court held that, on the record before it, the petitioner had not been able to receive the show cause notice and consequently had been deprived of the opportunity to respond to the proceedings. Since the petitioner could not file a reply, the matter required restoration to the stage of reply so that the competent authority could consider the petitioner's response and pass a reasoned order after granting hearing. The defect found was thus the denial of an effective opportunity to answer the show cause notice, and not an adjudication on the underlying tax demand on merits. [Paras 7, 8]

The appeal order and the adjudication order were quashed, and the petitioner was permitted to file a reply to the show cause notice within the time granted, to be followed by fresh consideration and a reasoned order after hearing.

Final Conclusion: The writ petition was disposed of by setting aside the adjudication and appellate orders on the ground that the petitioner had not been able to receive the show cause notice and respond to it. The matter was remitted to the authority to consider the petitioner's reply for the financial year 2019-2020 and pass a fresh reasoned order after hearing.

Transit anticipatory bail - Interim protection to approach jurisdictional court - Limited Period Relief - Flight Risk - Co-operation With Investigation - Surrender of Passport - HELD THAT: - The Court held that, without expressing any opinion on the merits of the alleged tax evasion case, interim anticipatory protection for a limited period would serve the ends of justice where the petitioners apprehended arrest before they could approach the competent court having territorial jurisdiction. Taking note of the respondents' objection regarding flight risk, the Court considered it appropriate to balance the grant of transit anticipatory bail with protective conditions, including execution of bond, co-operation in investigation and surrender of passports. [Paras 5, 7]

Transit anticipatory bail was granted for a limited period of ten days to enable the petitioners to move the jurisdictional court at Chennai, subject to conditions.

Final Conclusion: The petitions were allowed and the petitioners were granted limited interim anticipatory protection to approach the jurisdictional court for regular anticipatory bail. The protection was made conditional to safeguard the investigation and address the apprehended flight risk.

Limitation for show cause notice under extended period - Invocation of fraud or suppression machinery under GST - Maintainability of writ petition against show cause notice involving disputed facts - Reasonable opportunity of hearing

Limitation for show cause notice under extended period - Validity of notice issued before expiry of limitation - HELD THAT: - The Court held that the question of limitation stood covered against the petitioner by the common and separate orders referred to by it in connected matters. Applying that ratio, it concluded that the impugned show cause notices had been issued long before expiry of the limitation prescribed under Section 74 of the respective GST enactments, and therefore the notices could not be quashed as time-barred. [Paras 19, 20, 21]

The notices were held to be within limitation and the plea of bar of limitation failed.

Invocation of fraud or suppression machinery under GST - Suppression by failure to furnish documents or reply - HELD THAT: - The Court noted that the notices were preceded by intimations in GST DRC-01A and that the petitioner had replied only for one tax period, while no reply had been given for 2018-2019 and 2019-2020. It held that absence of reply for those periods invited the machinery under Section 74 in view of the definition of suppression then contained in Explanation 2. The Court further held that, even assuming Section 74 had been wrongly invoked, the petitioner had to establish its case by filing a reply in Form GST DRC-06, and the Court could not straightaway conclude, without such reply and adjudication, that the invocation of Section 74 was without jurisdiction. [Paras 22, 23, 24, 25, 26]

The challenge to the use of Section 74 was declined, particularly for 2018-2019 and 2019-2020, and the petitioner was relegated to the adjudicatory process.

Maintainability of writ petition against show cause notice involving disputed facts - Each tax year as independent block for GST proceedings - HELD THAT: - The Court held that several disputed factual questions arose which could not be decided in a summary proceeding under Article 226. It further held that proceedings for other assessment years could not defeat the impugned action for the present years, since each tax year is an independent block and, where ingredients exist for invoking the extended period, such proceedings cannot be scuttled at the show cause stage under writ jurisdiction. On that basis, the Court found no merit in the challenge, while granting liberty to the petitioner to submit replies to the notices and directing the authority to pass final orders after notice. [Paras 29, 30, 31, 32, 33]

The writ petitions were dismissed, with liberty to the petitioner to file replies to the show cause notices and with consequential directions for adjudication by the authority.

Final Conclusion: The Court dismissed the writ petitions challenging the GST show cause notices for 2017-2018, 2018-2019 and 2019-2020, holding that the notices were within limitation and that the challenge to invocation of Section 74 could not be accepted at the show cause stage. Liberty was nevertheless granted to the petitioner to file replies, upon which final orders were directed to be passed after notice and hearing.

Invocation of extended limitation for tax short-payment under Section 74 - Inspection-based satisfaction for proceedings on wilful suppression - Erroneous computation of tax liability in show cause notice and order

Invocation of proceedings for short-payment of tax under Section 74 - HELD THAT: - The Court held that the impugned proceedings arose from an inspection in which the records revealed short-payment of tax. The notices expressly stated that they were issued pursuant to the inspection and referred to Section 74, while also using the expression relating to wilful suppression of facts. Since the records before the respondents disclosed short-payment as compared to Form 26AS and GSTR-7, the statutory threshold of where it appears stood satisfied, and the initiation of action under Section 74 could not be assailed on the ground that separate reasons to believe were not communicated. [Paras 16, 17, 20, 21]

The challenge to the very invocation of Section 74 was rejected.

Erroneous tax liability in revenue abstract - Fresh adjudication on merits after personal hearing - HELD THAT: - The Court noticed that, for the tax period 2020-2021, the revenue abstract to the notice had treated the exempted turnover as the tax liability, and the impugned order also inadvertently referred to exempted turnover for another tax period while computing liability. The Court further recorded that the reply filed by the petitioner in the other writ petition was insufficient. In view of the erroneous recording of liability in one matter and the need for proper consideration on merits in both, the cases were remitted for fresh orders after personal hearing and submission of detailed replies and supporting documents. [Paras 22, 23, 24, 25]

Both writ petitions were remitted to the respondent for fresh orders on merits after affording personal hearing.

Final Conclusion: The Court upheld the initiation of proceedings under Section 74 on the basis of inspection and the discrepancies noticed in the petitioner's records. However, since the tax liability for the tax period 2020-2021 had been erroneously recorded and fresh consideration on merits was required, both writ petitions were remitted for de novo orders after personal hearing and filing of detailed replies.

Priority of secured creditor over tax dues - Charge entry in encumbrance record subject to SARFAESI sale -HELD THAT: - The Court held that, in view of the Full Bench decision of this Court in Anna Salai-III, Assessment Circle, “Sire Mansion”, Vs The Indian Overseas Bank [2016 (12) TMI 373 - MADRAS HIGH COURT], insertion of Section 31B gives primacy to the secured creditor over tax authorities, provided particulars of the mortgage are uploaded in the CERSAI portal. On that basis, the petitioner was entitled to proceed against the mortgaged property and bring it to sale notwithstanding the charge created by the tax authority. However, the Court also held that this priority does not prevent the authorities from creating or reflecting the tax charge in the encumbrance records, since any surplus remaining after discharge of the secured debt could still be available towards tax dues. The purchaser at a SARFAESI sale would not be fettered by that charge, and after the auction sale an appropriate endorsement could be sought from the Sub-Registrar with reference to the SARFAESI sale. [Paras 6, 7]

The prayer to quash or delete the charge entry was declined, while liberty was reserved to the secured creditor or auction purchaser to approach the Sub-Registrar after the sale for appropriate endorsement.

Final Conclusion: The writ petition was disposed of by holding that the petitioner's status as a secured creditor gave it priority over the tax charge in enforcement of the mortgaged property, but did not warrant quashing of the existing charge entry. Liberty was given to seek an appropriate endorsement from the Sub-Registrar after the SARFAESI sale.

Reassessment limitation for AY 2017-18 - Exclusion of time for reply u/s 148A(b) - First and fifth provisos to section 149(1) - Jurisdiction to issue notice u/s 148 - HELD THAT:- We are not inclined to interfere with the impugned judgment and order passed by the High Court [2026 (2) TMI 1426 - DELHI HIGH COURT] as held that, since notice under section 148A(b) had been issued within time and the period consumed in granting adjournments sought by the petitioners stood excluded under the fifth proviso to section 149(1), the notice under section 148 was validly issued and suffered from no jurisdictional defect. The Special Leave Petition is, accordingly, dismissed as being devoid of merit.

Unexplained money u/s 69A - Recorded cash sales and unexplained money - Cash deposits entered in books of account - HELD THAT:- The Court accepted the concurrent findings of the Commissioner (Appeals) and the Tribunal that the assessee had recorded the impugned cash deposits as sales in its books of account, that the books had not been rejected, and that no material discrepancy had been found in stock movement, VAT returns or financial statements. On that factual foundation, the Court held that the provision relating to unexplained money could not be invoked against recorded sales transactions. It further noted that the higher gross profit ratio shown by the assessee supported the acceptance of the sales, and that the Assessing Officer could not arbitrarily treat the cash deposits as unexplained income without any reason or discrepancy in the stock records. [Paras 5, 6]

No substantial question of law arose, and the deletion of the addition was allowed to stand.

Final Conclusion: The High Court held that, where the cash deposits were recorded as sales in the books and the books were neither rejected nor shown to contain material discrepancies, they could not be treated as unexplained money. As the Tribunal's decision rested on concurrent findings of fact, no substantial question of law arose and the appeal was dismissed.

House Rent Allowance exemption u/s 10(13A) -Actual expenditure on payment of rent - Employer-paid rent recovered from salary - employer paid rent directly to the landlord but recovered the same amount from the employee's salary for the residential accommodation occupied by the employee - HELD THAT: - The Court held that Section 10(13A) exempts a special allowance granted to meet expenditure actually incurred on payment of rent in respect of the residential accommodation occupied by the assessee. On the admitted facts, the employee was not provided rent-free accommodation, since the full rent paid by the employer to the landlord was recovered from the employee's salary. The determinative test was the fact of actual expenditure on rent, and not the mere mode or channel of payment.

Where the amount otherwise payable by the employee is paid by the employer on his behalf and simultaneously recovered from salary, the legal effect is the same as the employee paying rent himself and receiving reimbursement or allowance. The Court also noticed the CBDT clarification that exemption is unavailable only where the employee resides in his own house or does not actually incur rent expenditure. The Tribunal was therefore wrong in treating the arrangement as rent-free accommodation and in denying the exemption. [Paras 15, 17, 18, 19, 20]

The question was answered in favour of the assessee; the Tribunal's view was reversed, the order of the CIT(A) was restored, and the claim for exemption under Section 10(13A) was directed to be allowed.

Final Conclusion: The appeal was allowed. The Court held that direct payment of rent by the employer to the landlord, coupled with recovery of the same amount from the employee's salary, satisfied the requirement of actual rent expenditure for exemption of House Rent Allowance under Section 10(13A).

Double taxation - Escapement of income - Consolidated accounts of partnership firms - two partnership firms with identical partners

Whether additions sustained by the AO were justified when two partnership firms with identical partners, profit-sharing ratio and remuneration maintained separate books but filed a consolidated return? - HELD THAT: - The Court accepted the concurrent factual findings of the CIT(A) and the Tribunal that the profit of the respondent-firm was transferred to the other firm and reflected in the consolidated balance sheet and profit and loss account on which tax was paid. As noted that the partners, their profit-sharing ratio and remuneration in both firms were identical, and that the sales and purchases made in the name of the respondent-firm were reflected in the VAT returns of the other firm.

In these peculiar facts, the Court held that insisting on a separate return showing nil income and sustaining additions in the respondent-firm's hands would amount to taxing the same income again, when no omission or escapement of income was shown. [Paras 6, 7]

No substantial question of law arose, as the additions were rightly deleted on the finding that there was no escapement of income and the impugned additions would result in double taxation in the peculiar facts of the case.

Final Conclusion: The appeal was dismissed. The High Court held that, on the concurrent findings of fact, the income of the respondent-firm had already been accounted for and taxed through the consolidated accounts of the other firm, and therefore no substantial question of law arose.

Deduction under Section 80I on profits of industrial undertaking - Reduction of Section 32AB deduction while computing Section 80I relief - Interplay of deduction u/s 80I and deduction u/s 32AB - whether deduction u/s 80I was held allowable on the profits of the industrial undertaking without reducing the deduction claimed under Section 32AB? - HELD THAT: - The Court held that the controversy stood concluded by Vijay Industries [2019 (3) TMI 652 - SC ORDER] where the Supreme Court explained the distinction between profits and gains and income for the purpose of deductions under Chapter VI-A.

Applying that principle to Section 80I, which the Court treated as pari materia for the present purpose, it held that the deduction is to be computed on the profits and gains of the industrial undertaking and not on the net figure arrived at after reducing the deduction under Section 32AB. The Tribunal was therefore not justified in directing computation of Section 80I relief after such reduction. [Paras 12, 13, 14]

The question was answered in favour of the assessee and against the Revenue.

Final Conclusion: Following Vijay Industries, the Court held that deduction under Section 80I was to be computed on the profits and gains of the industrial undertaking without reducing the deduction under Section 32AB. All the appeals were accordingly allowed in favour of the assessee.

Profit embedded in on-money receipts - Estimation of income from unaccounted business receipts - Substantial question of law in appeal against factual findings - Finding of fact on net profit estimation

HELD THAT: - The Court noted that the assessee had disclosed receipt of on-money and that the Tribunal examined the consolidated profit and loss account, the disclosed gross revenue, and the project cost shown by the assessee. On that material, the Tribunal found that taxing the entire on-money as income would produce an unreasonably high net profit ratio for the real estate business, while also taking into account the possibility of expenses relatable to sales effected outside the books.

Tribunal therefore treated the on-money as containing only the profit element and, on estimate, enhanced the addition from 20 per cent to 40 per cent. The High Court held that this was an appreciation of facts and an estimation exercise by the Tribunal, and no substantial question of law arose either on the Revenue's challenge for full addition or on the assessee's challenge to enhancement from 20 per cent to 40 per cent. [Paras 7, 8, 9]

Both the Revenue's and the assessee's challenges to the Tribunal's estimation were rejected, and the appeals were dismissed for absence of any substantial question of law.

Final Conclusion: The High Court held that the Tribunal's view that only the profit element embedded in the on-money receipts was taxable, and its estimation of that element at 40 per cent, rested on factual appreciation of the material on record. No substantial question of law arose, and all the tax appeals were dismissed.

Additions based solely on diary entries and survey statements - Retraction of survey disclosure - Addition based on impounded diary without corroboration - Telescoping of cash receipts against unexplained investment

Additions based solely on diary entries and survey statements - addition for alleged cash payments founded on diary entries and the disclosure made during survey - HELD THAT: - The Court accepted the concurrent findings of the appellate authorities that the impounded diary was the sole basis of the addition and that the AO had no corroborative material to establish actual cash payment. The registered sale deed for the land transaction had been executed in 2008, and both authorities found it wholly improbable and illogical that cash consideration for that concluded transaction would remain payable and be paid after four years on account of the vendor's family dispute.

Court further noted that the Tribunal had upheld the validity of the retraction and had found the Assessing Officer's inference to be contrary to logic and human probability. On these factual findings, no substantial question of law arose. [Paras 8, 10]

The challenge to deletion of the addition relating to the alleged Vejalpur land cash payments failed.

Telescoping of cash receipts against unexplained investment - Unexplained investment recorded in same diary - Double taxation - HELD THAT: - The Court recorded the Tribunal's finding that the same diary, relied upon by the Assessing Officer, contained not only payments but also receipts marked as cash received, and that the assessee had already offered the unaccounted investment disclosed therein to tax in the return. The Tribunal therefore held that the amount received, as reflected in the same diary, had to be given credit by applying telescoping, so as to avoid taxing both the source and the investment. The Court treated this as a finding of fact and held that no substantial question of law arose from the Tribunal's view. [Paras 9, 10]

The Revenue's challenge to the deletion of the balance unexplained investment addition was rejected.

Final Conclusion: The High Court held that the Tribunal's conclusions on both sets of additions were pure findings of fact resting on absence of corroborative material, improbability of the Revenue's case, and proper telescoping of receipts against investments recorded in the same diary. As no substantial question of law arose, the Revenue's appeals were dismissed.

Penalty for concealment of chargeable interest - penalty levied under section 13 of the Interest Tax Act -Non-filing of return under the Interest Tax Act - Inapplicability of deeming concealment under section 271(1)(c) to Interest Tax penalty - Bona fide belief and absence of mala fide in penalty proceedings

Whether Penalty u/s 13 of the Interest Tax Act could not be sustained merely because the assessee had not filed returns voluntarily before notice, when the assessee acted under a bona fide belief of non-liability and the returns later filed were accepted without any addition? -HELD THAT: - The Court held that section 13 of the Interest Tax Act applies only where there is concealment of particulars of chargeable interest or furnishing of inaccurate particulars. Both the CIT(A) and the Tribunal had concurrently found absence of mala fide intention in the assessee's failure to file returns earlier, and that finding was supported by the fact that the details of interest income were already available on record and the returns filed in response to notice were accepted as returned.

The Court further held, in line with Commissioner of Income Tax vs. Abhishek Finlease Ltd. [2011 (3) TMI 1849 - GUJARAT HIGH COURT], Commissioner of Income Tax vs. Sahara India Mutual Benefit Co. Ltd. [2006 (1) TMI 108 - ALLAHABAD HIGH COURT] and Commissioner of Income Tax vs. M/s. H.P. State Cooperative Bank [2009 (10) TMI 589 - HIMACHAL PRADESH HIGH COURT] that the deeming principle contained in Explanation-3 to section 271(1)(c) of the Income Tax Act cannot be imported into penalty proceedings under section 13 of the Interest Tax Act. In the absence of any addition in assessment and in view of the bona fide explanation accepted on facts, there was no concealment or furnishing of inaccurate particulars so as to attract penalty. [Paras 8, 10, 12, 13, 14]

The Tribunal was right in upholding deletion of the penalty levied under section 13 of the Interest Tax Act.

Final Conclusion: The Revenue's appeals were dismissed. The Court affirmed that, on the concurrent findings of bona fide belief and acceptance of the returned chargeable interest without addition, penalty for concealment under section 13 of the Interest Tax Act was not leviable.

Addition u/s 68 - share capital and share premium received from a non-resident holding company - Ad hoc disallowance of business expenditure

Addition u/s 68 on share capital and share premium received from the non-resident holding company -HELD THAT: - The Court accepted the concurrent findings that the investment transaction, the identity of the investor and the source explained by the assessee were not in doubt, the shares having been issued to the foreign parent company.

It held that the deeming fiction in the proviso to Section 68, in so far as share application money, share capital and share premium are concerned, is confined to credits standing in the name of a resident and does not extend to a non-resident investor.

The Court further held that, in the facts found by the appellate authorities, the assessee had discharged its onus regarding the nature and source of the credit, and therefore no substantial question of law arose. [Paras 10, 11, 12, 13, 14]

The deletion of the addition under Section 68 was upheld and the Revenue's challenge on that issue was rejected.

Ad hoc disallowance of expenditure - Business expenditure without specific defects - HELD THAT: - The Court noted the concurrent finding that the Assessing Officer had neither pointed out any specific failure by the assessee to furnish details nor identified how the expenditure was abnormal. The Tribunal had found that supporting details and justification for the expenditure were furnished, no concrete fault was found in them, and no reason was given for adopting the disallowance rate. On that basis, and following the settled position noticed in PCIT v/s. R.G. Buildwell Engineers Ltd. [2018 (10) TMI 252 - SC ORDER] the Court held that such ad hoc disallowance could not be sustained and no substantial question of law arose. [Paras 14, 15, 16]

The deletion of the ad hoc disallowance of business expenditure was affirmed.

Final Conclusion: The High Court dismissed both tax appeals, holding that the proviso to Section 68 does not apply to share capital and share premium received from a non-resident holding company and that the assessee had, in any event, explained the nature and source of the credits. It further held that the ad hoc disallowance of business expenditure, made without pointing out any specific defect or basis, was rightly deleted.

Faceless assessment procedure - Draft assessment order for eligible assessee - Limitation for completion of assessment - Personal hearing in faceless assessment - Alternate statutory remedy

Limitation for assessment under amended statutory timeline - The assessment for the assessment year 2020-2021 - HELD THAT: - The Court held that, by virtue of the substitution of the second proviso to Section 153(1) by the Finance Act, 2022, the time for passing an order of assessment u/s 143(3) for the assessment year 2020-2021 stood extended up to 30.09.2022. Since the impugned assessment order was passed on 28.09.2022, it was within the statutorily extended period. In the absence of any challenge to the validity of the amended provision, the contention seeking to read it down was not entertained. [Paras 8]

The challenge to the assessment on the ground of limitation was rejected.

Draft assessment order for eligible assessee - Ordinary assessee in faceless assessment - Non-issuance of a draft assessment order in faceless assessment - HELD THAT: - On a reading of Section 144B(1), the Court found that service of a draft assessment order is mandated only in the case of an eligible assessee as defined in Section 144C(15)(b). The petitioner had no case that it fell within that definition. For an ordinary assessee, the statutory scheme requires communication of the proposed variation through a show cause notice, and not service of the internal draft assessment order. The Court held that this position prevailed both under the amended and unamended provisions. The decisions relied on by the petitioner were held inapplicable because they did not address the statutory distinction between an eligible assessee and other assessees. The Court instead relied on Joint Commissioner of Income Tax v. Sujatha Revikumar [2025 (3) TMI 1842 - KERALA HIGH COURT] which recognized that the draft assessment order need not be furnished to an ordinary assessee. Since the show cause notice specifically disclosed the proposed variations, the statutory requirement was satisfied. [Paras 11, 12, 13, 14, 15]

The Court held that failure to serve a draft assessment order did not render the assessment invalid.

Personal hearing in faceless assessment - breach of natural justice as no personal hearing was granted - HELD THAT: - The Court noted that the show cause notice itself informed the petitioner that a personal hearing could be sought through video conferencing. As the petitioner did not request such hearing while replying to the notice, it could not complain of denial of hearing. The decision in Chander Arjandas Manwani v. National Faceless Assessment Centre [2021 (9) TMI 1108 - BOMBAY HIGH COURT] was distinguished because, in that case, interference was on account of refusal of a hearing despite a specific request. [Paras 16]

The objection based on denial of personal hearing was rejected.

Statutory appellate remedy against assessment - Factual disputes in writ jurisdiction - challenge to the merits of the assessment and rectification orders - HELD THAT: - The Court held that the sustainability of the assessment on its merits depended on examination of documents and resolution of disputed factual matters, including the question whether adequate opportunity had been granted. Such matters were held to fall within the province of the appellate authority under the Act rather than writ jurisdiction. The writ petitions were therefore not entertained on the merits of the additions or rectification, without prejudice to the petitioner's right to pursue the statutory appeals. [Paras 17, 18]

The writ petitions were dismissed, leaving the petitioner free to pursue statutory appeals, with exclusion of the pendency period for computing limitation.

Final Conclusion: The Court upheld the assessment as having been completed within the extended statutory period and held that an ordinary assessee is not entitled to service of a draft assessment order under the faceless assessment procedure. Finding no denial of personal hearing and leaving factual objections on the merits to the appellate forum, the writ petitions were dismissed, with protection as to limitation for filing appeals.

Deduction on interest from co-operative banks - Scope of deduction for co-operative societies - Favourable view in conflicting non-jurisdictional precedents - Interest from investments with co-operative societies -

HELD THAT: - The Tribunal held that the question was already settled in favour of co-operative societies by the decisions noticed before it, including the earlier Mumbai Bench view in the case of M/s. Solitaire CHS Ltd. [2019 (12) TMI 80 - ITAT MUMBAI]. It accepted the position that interest earned by a co-operative society from investments with a co-operative bank qualifies for deduction u/s 80P(2)(d).

The Tribunal also adopted the principle that where conflicting views of non-jurisdictional High Courts exist, the view favourable to the assessee is to be preferred. The reliance placed by the authorities below on Totgars [2010 (2) TMI 3 - SUPREME COURT] was not accepted for denying the claim in the present context, as the Tribunal proceeded on the settled line of decisions allowing such deduction. Since the entitlement depended upon the actual nature of the interest received, the matter was sent to the AO only for limited factual verification. [Paras 5, 6, 7]

The disallowance was deleted in principle, and the Assessing Officer was directed to verify the factual aspect of the interest earned and allow the deduction accordingly.

Final Conclusion: The Tribunal allowed the assessee's claim in principle by holding that interest earned by a co-operative society from investments with co-operative banks is eligible for deduction under section 80P(2)(d). The matter was restored to the Assessing Officer only for limited verification of the factual nature of the interest and for granting consequential relief.

Depreciation on computer software - Disallowance under section 14A read with Rule 8D - Book profit adjustment under section 115JB

Depreciation on computer software - Computers including computer software - Computer software purchased by the assessee eligible for depreciation at the rate applicable to computers including computer software OR at the rate applicable to intangible assets - HELD THAT: - The Tribunal found that the software acquired by the assessee fell within the block of assets described in Appendix-I as computers including computer software. AO and the first appellate authority were held to be in error in treating such software as a business or commercial right under section 32(1)(ii) merely because it was capitalised under intangible assets in the books. Following the decisions cited before it like Arkema Chemicals [2022 (4) TMI 1182 - ITAT MUMBAI], I-Flex Solutions Ltd [2014 (3) TMI 1162 - BOMBAY HIGH COURT] Owens-Corning (India) (P.) Ltd. [2018 (3) TMI 1761 - ITAT MUMBAI], Piramal Healthcare Limited [2019 (5) TMI 689 - ITAT MUMBAI] PRL Developers (P.) Ltd. [2024 (7) TMI 886 - ITAT MUMBAI], Times Internet Ltd [2023 (11) TMI 45 - DELHI HIGH COURT] and Computer Age Management Services (P.) Ltd. [2019 (7) TMI 1153 - MADRAS HIGH COURT] the Tribunal held that expenditure on software or on upgradation of existing software was covered by the depreciation entry relating to computers including computer software. [Paras 13]

The Assessing Officer was directed to allow depreciation on the software at the rate prescribed under Appendix-I for computers including computer software, and the disallowance was deleted.

Disallowance under section 14A read with Rule 8D - Suo motu disallowance - Investment in shares and LLPs - HELD THAT: - The Tribunal noted that no dividend income had been earned from the equity investments and that the assessee had earned only a nominal exempt share of profit from one LLP, while it had already made a suo motu disallowance. Without adjudicating each of the alternative propositions advanced, the Tribunal considered it appropriate, on the facts of the case, to settle the controversy by permitting the assessee to continue with its own computation. The excessive disallowance made by the Assessing Officer was therefore not sustained. [Paras 21]

The Assessing Officer was directed to restrict the disallowance under section 14A read with Rule 8D to the suo motu disallowance made by the assessee.

Book profit adjustment under section 115JB - Section 14A disallowance and MAT computation - HELD THAT: - The Tribunal held that the issue stood squarely covered by ACIT vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI] On that basis, it held that a disallowance worked out under Rule 8D does not form part of the adjustment to be made to book profit under section 115JB. The addition made by the Assessing Officer in the MAT computation was therefore unsustainable. [Paras 23]

The addition made to book profit under section 115JB on account of the section 14A disallowance was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal. It held that depreciation on the software was allowable at the higher rate applicable to computer software, restricted the disallowance under section 14A to the assessee's own disallowance, deleted the corresponding addition to book profit under section 115JB, and left the levy of interest to be recomputed consequentially.

Application of income by charitable institution - Mismatch between return of income and Form No.10B - Computational inconsistency in assessment

Application of income out of current year's income and accumulated funds - Return of income and Form No.10B reconciliation - Fresh claim in appellate proceedings - Disallowance of the assessee's disclosed application of income on the footing of mismatch between the return of income and Form No.10B - HELD THAT: - The Tribunal found that the assessee had separately disclosed application out of current year's income and application out of earlier accumulated funds in both the return of income and Form No.10B, and those disclosures were specifically examined in scrutiny. After such verification, the AO had himself recorded that there was no difference between the return and Form No.10B and that the statutory reporting was in order. Once that finding was recorded, the additions originating from the earlier prima facie adjustment under section 143(1) had no surviving basis. The Tribunal further held that the assessee was not raising any new claim in appeal, since the application of income had already been disclosed in the return and audit report; accordingly, reliance on Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] was inapposite. [Paras 8, 9, 11, 12, 15]

The claim of application of income was directed to be allowed in full and the income was ordered to be recomputed accordingly.

Double inclusion of income in computation - Taxability under section 115BBI - Consequential recomputation of interest - HELD THAT: - The Tribunal held that, despite accepting the assessee's disclosures on merits, the Assessing Officer drew up the final computation by carrying forward figures arising from the earlier section 143(1) adjustment and including the same components again. This resulted in artificial inflation of the taxable base by double inclusion. The computation could not prevail where it was inconsistent with the findings recorded in the body of the assessment order, and the final determination had to conform to those substantive findings. Since the taxable income itself required correction, the computation of tax under section 115BBI and the levy of interest under sections 234B and 234C were held to be purely consequential. [Paras 10, 11, 13, 14, 15]

The duplicated computation was directed to be corrected, and the tax liability and consequential interest were ordered to be recomputed in accordance with law.

Final Conclusion: The appeal was allowed. The Tribunal held that, once scrutiny had established that there was no mismatch between the return of income and Form No.10B and that the disclosures had been duly verified, the disallowance of application of income and the inflated computation based on duplication could not be sustained; the Assessing Officer was directed to recompute the income, tax and consequential interest accordingly.

Deduction u/s 80P(2)(d) - interest from co-operative banks - Scope of income from investments with co-operative societies - Distinction from interest on deposits with commercial banks - HELD THAT:- The Tribunal held that the undisputed position was that the impugned interest had been earned from deposits placed with co-operative banks.

It accepted the principle that a co-operative bank is, for the purpose of section 80P(2)(d), to be treated as a co-operative society, and therefore interest received from such entity qualifies for deduction.

Revenue's reliance on Totgar's Co-operative Sale Society Ltd [2010 (2) TMI 3 - SUPREME COURT] was rejected as misplaced, since that decision was treated as distinguishable on facts where the deposits were not with a co-operative society. On that reasoning, disallowance sustained by the first appellate authority could not stand. [Paras 10, 11, 12, 13]

The assessee was held entitled to deduction u/s 80P(2)(d), and the same view was applied to the other two assessment years as the facts were identical.

Final Conclusion: Tribunal allowed all three appeals and held that the assessee was entitled to deduction under section 80P(2)(d) on interest earned from deposits with co-operative banks. The view taken for A.Y. 2017-18 was applied mutatis mutandis to the appeals for 2018-19 and 2020-21.

Assessment u/s 153A - Completed search assessment and incriminating material - Unexplained investment in immovable property - Grossing up of receipts under presumptive taxation

Completed search assessment and incriminating material - Unexplained investment in immovable property - Sale deed as public document - Addition for unexplained investment in acquisition of immovable property, made in assessment under section 153A on the basis of a copy of sale deed found during search - HELD THAT: - The Tribunal affirmed the deletion of the addition on the ground that the assessee had placed on record documents relating to purchase of the property together with confirmations from lenders and supporting bank details, and the Assessing Officer did not controvert those confirmations or bring any corroborative material to dislodge them. It further accepted the position that, in a completed assessment, addition under section 153A cannot be made in the absence of incriminating material; a copy of a registered sale deed, being a public document, did not justify the impugned addition in the facts noticed by the appellate authority. [Paras 5]

The deletion of the addition for unexplained investment based on the copy of sale deed was upheld.

Completed search assessment and incriminating material - Unexplained investment in property - Third-party seized documents - Addition for unexplained investment in property, made on the basis of agreements to sell found from the possession and control of a third person sustainaibility in assessment under section 153A - HELD THAT: - The Tribunal upheld the appellate finding that the impugned agreements to sell were not found from the possession or control of the assessee but from a third person. On that basis, it held that no addition could be made in the assessee's assessment under section 153A on the strength of such documents. The deletion was therefore sustained. [Paras 5]

The deletion of the addition based on the agreements to sell seized from a third person was upheld.

Completed search assessment and incriminating material - Grossing up of receipts under presumptive taxation - Search assessment and rejection of section 44AD claim - HELD THAT: - The Tribunal noted that the assessment order contained no reference to any seized material on the basis of which the grossing up of receipts was made. Since the impugned addition in the completed assessment was not based on seized material, the essential condition for making such addition in proceedings under section 153A was absent. Applying the settled law noticed by the appellate authority, the Tribunal held that the Assessing Officer was not justified in making the addition. [Paras 5]

The deletion of the addition arising from grossing up of receipts after rejecting the section 44AD claim was upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the order of the Commissioner (Appeals). All the impugned additions were held unsustainable in the completed assessment under section 153A as they were not founded on incriminating material, and the additions relating to property transactions were also unsupported on the material noticed.

Tax Effect - Threshold limit - Reversal of Cenvat credit before use counts as non-availment - HELD THAT:- The appeal was disposed of as the tax effect was below the monetary threshold prescribed in the departmental circular, and the pending applications were also disposed of.

Smuggling - Reasonable belief for seizure of unmarked town-seized gold - Burden to prove foreign origin before invoking statutory presumption - Evidentiary value of co-accused statements and compliance with Section 138B - Penalty under Section 112(b)(i) requiring confiscable goods and mens rea - presence of a "diamond marking"

Whether the officers of the Department had entertained the requisite "reasonable belief" in terms of Section 110 of the Customs Act, 1962 for effecting seizure of the impugned gold bars ? - HELD THAT: - The Tribunal held that reasonable belief under the seizure provision must rest on objective material and cannot be founded on mere suspicion. The seized gold bars did not bear identifiable foreign markings, inscriptions or serial numbers, and the purity indicated in the test report was not by itself determinative of foreign origin, particularly when gold of comparable purity was available in the domestic market. Once such foundational material was absent, the statutory presumption could not be shifted to the person from whose possession the gold was recovered.

The Department has failed to establish the foreign origin or smuggled character of the six gold bars by any cogent or positive evidence. Though it has been recorded in the Inventorycum-Seizure List that the seized gold bars were "with diamond marking of foreign origin (foreign inscription deliberately defaced, however a diamond marking is visible)", this court find that no foreign markings, serial numbers or inscriptions have been brought on record or shown to exist on the seized gold bars. The mere presence of a "diamond marking", by itself, cannot be equated with proof of foreign origin, particularly when the alleged foreign inscriptions are stated to have been defaced and no further evidence has been adduced by the Department in support thereof. Significantly, the Test Report reveals the purity of the gold to be ranging between 995.9 and 996.5, which, is by no means determinative of the foreign origin of the gold.

The Revenue had relied substantially on the statements of a co-noticee recorded during investigation, but those statements were found to be uncorroborated by any independent evidence, recorded in circumstances requiring caution, and not shown to have been brought on record in compliance with the mandate of Section 138B. In the absence of cogent and legally admissible evidence establishing foreign origin or smuggling, confiscation under the confiscatory provisions could not be sustained. [Paras 12, 13, 14]

The order of absolute confiscation of the six gold bars was held unsustainable and was set aside.

Penalty for dealing with alleged smuggled gold - Mens rea under Section 112(b)(i) - Penalty on persons not shown to have dealt with confiscable goods - HELD THAT: - The Tribunal held that penalty under Section 112(b)(i) requires, first, that the goods must be liable to confiscation and, secondly, that the person proceeded against must have dealt with such goods with knowledge or reason to believe that they were liable to confiscation. Since the six gold bars were held not liable to confiscation, the foundation for penalty against the first appellant failed. Apart from the infirm statements already found unreliable, there was no independent material to establish conscious involvement or guilty knowledge on the part of any appellant. As regards the other two appellants, there was also no evidence that they had acquired possession of or otherwise dealt with the impugned gold in the manner contemplated by the provision. [Paras 15]

The penalties imposed on all the appellants under Section 112(b)(i) were set aside.

Final Conclusion: The Tribunal held that the Revenue failed to establish, by cogent and legally admissible evidence, that the six gold bars seized from the first appellant were of foreign origin or smuggled, and that the statutory presumption could not be invoked in the absence of reasonable belief at the time of seizure. The confiscation of those gold bars and the penalties imposed on all the appellants under Section 112(b)(i) were therefore set aside.

Rejection of declared transaction value - Sequential application of customs valuation rules - Residual valuation and prohibition of arbitrary loading - Penalty under multiple provisions - re-determination under Rule 8 based on an average undervaluation percentage and reliance on domestic sale prices or non-comparable materials - Reasonable doubt

Whether the Commissioner has correctly rejected the transaction values under Rule 10A ?-HELD THAT: - The Tribunal held that, under section 14 and the valuation rules, transaction value can be accepted only where the buyer and seller are not related and the price is the sole consideration. It found that the importer and the Hong Kong suppliers were owned or controlled by the same set of persons, which by itself furnished sufficient reason to entertain a reasonable doubt about the truth or accuracy of the declared value. On that basis, rejection of the declared transaction value under Rule 10A was upheld, even without treating the allegation of cash payment to suppliers as indispensable. [Paras 18, 19]

The rejection of the declared transaction values was sustained.

Sequential application of customs valuation rules - Residual valuation and prohibition of arbitrary loading - Re-determination of value for imported watch parts and movements - HELD THAT: - It is a well settled legal principle that the above Rules have to be followed sequentially, i.e., before adopting the method prescribed under one Rule, all the preceding Rules have to be ruled out. Within a Bill of Entry, if there are several goods, one Rule may apply to some goods (say, because there are contemporaneous imports of identical or similar goods) and may not apply to some other goods. Further, the same goods may be valued under one Rule (say, based on value of identical goods) in one Bill of Entry and under some other Rule in another Bill of Entry (say, if there were no contemporaneous imports during the relevant period). Neither the operative part of the order nor the Annexures I,II,III& IV of the SCN which it refers to give any indication as to which Rule was adopted for which good imported under which Bill of Entry and why.

The Tribunal held that, once transaction value is rejected, valuation must proceed strictly in sequence under the prescribed rules, and the authority cannot redetermine value by invoking several rules together or by leaving unspecified which rule applied to which goods and bill of entry. It found that, for most categories, the impugned order either gave no clear basis for the rule adopted or resorted to Rule 8 on untenable assumptions that identical or similar goods were not imported, sold, or manufactured, despite the record itself showing otherwise. The Tribunal further held that loading values on the basis of an average undervaluation of 60% was an arbitrary method expressly impermissible under Rule 8. Re-determination was therefore set aside for those categories. It was, however, upheld for the consignments where the actual invoice recovered during investigation established the true transaction value and for the undeclared goods valued on the basis of contemporaneous imports, resulting in survival of duty only to that limited extent. [Paras 34, 35, 36, 37, 38]

Only the limited duty demand referable to paragraphs 188.1, 188.2, 188.14 and 188.15 of the impugned order was upheld; the remainder of the redetermined value and consequential demand was set aside.

Confiscation and redemption fine - Penalty for undervaluation - Penalty under multiple provisions -HELD THAT: - Having held against the Revenue on most of the re-determination of value and consequential demand, the Tribunal found no sufficient basis to uphold confiscation under section 111, redemption fine under section 125, or penalties under section 112. It further held that the Act does not provide for imposition of a penalty under several sections combined, and therefore the penalty imposed on the importer under sections 112(a) and (b) and 114A deserved to be set aside. On the same reasoning, the personal penalties imposed on the other appellants were also set aside. [Paras 40, 41, 42, 43, 44]

The confiscation, redemption fine and all penalties were set aside.

Final Conclusion: The Tribunal upheld rejection of the declared transaction value, but held that the subsequent re-determination was largely contrary to the sequential valuation scheme and impermissibly based on arbitrary loading under Rule 8. The importer's appeal was partly allowed by sustaining only the limited duty demand with interest, while confiscation, redemption fine and all penalties, including the personal penalties, were set aside.

Rejection of transaction value in related party imports - Sequential application of customs valuation methods - Residual valuation and prohibition of arbitrary values - reasonable doubt as to truth and accuracy - re-determination of value under Rule 8 for several categories of imported goods - contemporaneous imports - burden of proof

Reasonable doubt as to declared value - Related buyer-seller imports - Rejection of transaction value - HELD THAT: - The Tribunal held that, under the valuation scheme, transaction value can be accepted only where the buyer and seller are not related and the price is the sole consideration. Once the material on record showed that the importing firms and the supplier firms were controlled by the same family, that circumstance by itself furnished a reasonable basis to doubt the truth and accuracy of the declared value. On that footing, rejection of the transaction value under Rule 10A was sustainable, even without sufficient proof that additional amounts had been paid in cash to the suppliers.

Rejection of the declared transaction values was upheld.

Sequential customs valuation - Residual method - Arbitrary enhancement of value - HELD THAT: - It is a well settled legal principle that the above Rules have to be followed sequentially, i.e., before adopting the method prescribed under one Rule, all the preceding Rules have to be ruled out. Within a Bill of Entry, if there are several goods, one Rule may apply to some goods (say, because there are contemporaneous imports of identical or similar goods) and may not apply to some other goods. Further, the same goods may be valued under one Rule (say, based on value of identical goods) in one Bill of Entry and under some other Rule in another Bill of Entry (say, if there were no contemporaneous imports during the relevant period). Neither the operative part of the order nor the Annexures to the SCN which it refers to give any indication as to which Rule was adopted for which good imported under which Bill of Entry or parcel and why.

The Tribunal held that, once transaction value is rejected, value must be determined only by following the prescribed methods sequentially, and it is not open to the authority to re-determine value simultaneously under multiple rules. The impugned order and the annexures referred to in it did not disclose which rule was applied to which goods or consignment. For several categories such as leather straps, watch dials, watch cases, watch cases with straps or metal bands, metal straps or bands, O-rings, plastic cases with straps, winding knobs, hands, plastic straps PU, watch movements, abrasive wheels, UV glue bottles, polishing liquids and miscellaneous items, Rule 8 was invoked after asserting absence of comparable imports, sales or manufacturing data, but the order itself relied on invoices, domestic sales material, cost sheets, association letters, and average undervaluation. The Tribunal found these reasons self-contradictory, since the relied upon material itself showed availability of data relevant to earlier rules. It further held that prices in the exporting country, sale prices of domestically manufactured goods, and an assumed average undervaluation of 60% could not lawfully form the basis of residual valuation, the last being an arbitrary value expressly impermissible under Rule 8. As the re-determined values were legally unsustainable, the consequential duty demand, confiscation, redemption fine, interest and penalties also could not survive.

The re-determination of value was set aside, and with it the consequential demand, confiscation, fine, interest and penalties.

Final Conclusion: The Tribunal held that the declared transaction values were rightly rejected because the imports were from related supplier entities, creating reasonable doubt about the truth and accuracy of the declared prices. However, the subsequent re-determination of value was contrary to the sequential valuation scheme and rested on prohibited and arbitrary bases under the residual method; accordingly, the impugned order was set aside and all the appeals were allowed with consequential relief.

Classification of indoor and outdoor units of VRF air-conditioning system - Parts of air conditioners - General Rules for Interpretation - Classifiable as parts under Heading 8415 9000 Or as split system air conditioners under Heading 8415 1010 - HELD THAT: - The Tribunal found that the purchase orders established that the imported models were based on VRF Technology and that the appellant had imported only indoor and outdoor units. It held that the absence of other crucial components essential for installation of the system meant that the goods could not be treated as complete split air conditioners merely because the invoice did not mention VRF technology or because the units were imported under a single invoice. Following the decision in M/s. One Care Medical Centre [2025 (4) TMI 1295 - CESTAT CHENNAI], the Tribunal held that such imported units were only parts of air conditioners. [Paras 4, 5, 6]

The goods were held classifiable under CTH 8415 9000, and the denial of the claimed notification benefit on the basis of classification was not sustained.

Final Conclusion: The Tribunal held that the imported indoor and outdoor units of the VRF system, in the absence of other essential components, were only parts of air conditioners classifiable under CTH 8415 9000. The appeal was accordingly allowed with consequential relief.

Claim of the ex-director and his sister concern as subrogees - Secured creditor in winding up - Subrogation rights of guarantor - Proof of payment - Assignment of debt with underlying security - Entitlement to the assignee bank for entire assigned debt and decree amount or only to the value of the security - Rights of surety - Co-extensive liability - Pari passu charge

Whether Essence Finance and Investment Ltd. and Mr. Apurva Parekh are entitled to the claim of the erstwhile secured creditors i.e. Bank of India, State Bank of India, GIIC and GSFC whose debts have been discharged by them or to the extent of amount paid by Essence Finance and Investment Ltd. and Mr. Apurva Parekh to the secured creditors? - HELD THAT: - It is clear from the record that in absence of definition of “secured creditor” under the Companies Act,1956, the Hon’ble Apex Court has referred to definition of “secured creditor” given as per provisions of the Insolvency Act in case of Jitendra Nath Singh [2012 (11) TMI 529 - SUPREME COURT] and accordingly, the same would be applicable while considering the provisions of section 529(1)(c) of the Companies Act. Therefore, to ascertain as to who is secured creditor under the provisions of the Companies Act for disbursement of the amount realised on sale of assets of the company in liquidation as per the provisions of section 529 and 529A of the Companies Act, the “secured creditor” would mean a person who holds a mortgage, charge or lien on the property of the company or any part thereof as a security for a debt due to him from the company. Therefore, Essence Finance and Investment Ltd. and Mr. Apurva Parekh have to show and prove by documentary evidence that by paying the outstanding dues of the secured creditors namely Bank of India, State Bank of India, GIIC and GSFC, it has entered into the shoes of the secured creditors for the secured debt of the company in liquidation. However, the learned Company Judge has rightly held that there is no documentary evidence on record to suggest that entire debts have been cleared by Essence Finance and Investment Ltd. and therefore, as per the provisions of section 140 of the Indian Contract Act, the claim of Essence Finance and Investment Ltd. and Mr. Apurva Parekh as subrogee on the premise that amount of debt is discharged in capacity of guarantor of the company in liquidation, would be applicable only to the extent of debts discharged by Essence Finance and Investment Ltd. and Mr. Apurva Parekh.

In case of State of Madhya Pradesh vs. Kaluram [1966 (9) TMI 170 - SUPREME COURT], would be squarely applicable in facts of the case, as the guaranteed debt has become due on account of the default of the principal debtor i.e. company in liquidation to perform its duty and therefore Essence Finance and Investment Ltd. and Mr. Apurva Parekh are rightly held to be entitled to the claim made by them as secured creditors as per the provisions of the Companies Act on the principle of subrogation.

The allegation that the assignment transactions were fraudulent was not accepted merely because recovery proceedings were not continued after the deeds of assignment. [Paras 66, 67, 68, 69]

The finding that the guarantor and the assignee could claim as subrogees only to the extent of the debts discharged by them, subject to proof, was affirmed, and no interference with the direction for a fresh Chartered Accountant's report was warranted.

Whether the Kotak Mahindra Bank Ltd. is entitled to the value of the security only or the entire debt assigned to it by ICICI bank and decree passed by Debts Recovery Tribunal amounting to Rs. 9,82,16,530/- together with simple interest at the rate of 6% per annum from 12.03.2001 till realisation ?- HELD THAT: - The Court noted that the debt assigned by ICICI Bank in favour of Kotak Mahindra Bank had been recognized in a decree of the Debts Recovery Tribunal, and that the charge for the foreign currency loan had been registered with the Registrar of Companies. On that basis, the learned Company Judge had rightly rejected the contention that the bank's secured claim should be confined to the value of three machines. The Court further held that the question of conversion rate and related computation was rightly left to examination by the Chartered Accountant while preparing the fresh report. [Paras 70, 71]

The challenge to Kotak Mahindra Bank's status and extent of secured claim failed, and the order rejecting restriction of its claim to the value of the machinery was upheld.

Final Conclusion: The Division Bench declined to interfere with the Company Judge's approach directing a fresh Chartered Accountant's report. It upheld that the guarantor and the assignee could claim in liquidation on subrogation only to the extent of debts actually discharged by them, and also rejected the attempt to confine Kotak Mahindra Bank's secured claim merely to the value of the hypothecated machinery. Both appeals and the cross-objection were dismissed.

Rejection of plaint under Order VII Rule 11 CPC - barred by limitation under Article 58 -Limitation as mixed question of law and fact - Civil court jurisdiction in inheritance dispute involving company shareholding and assets - Cause of action in partition and declaration suit - Meaningful reading of the plaint - Plaint read as a whole - Right to sue first accrues - Oppression and mismanagement

Rejection of plaint on limitation - Limitation as mixed question of law and fact - HELD THAT: - The plaintiff has given the details that after the death of the father, the plaintiff, the defendant nos. 1 and 2 continue to expand the joint businesses and the entire earning and profit out of the joint businesses are enjoyed jointly by the plaintiff and defendant nos. 1 and 2. It is also mentioned in the plaint that the defendant nos.1 and his wife were also looking after the business of the companies at Jharkhand and Bihar and the defendant no.2 and his wife were looking after the business and companies having head offices at West Bengal and Bangalore.

It is the specific case of the plaintiff that the mediator has not acted impartially and even after the death of the mother on 9th May, 2021, the share of the mother has been grabbed by the defendants. The mother died on 9th May, 2021. The plaintiff had issued notice on 13th May, 2022. The defendants have filed the present application harping upon the settlement of November, 2012. It is the specific case that the settlement was not impartially and several properties were not considered by the mediator.

It is settled law that the defendants cannot pick up a few sentences here and there from the plaint and say that the plaint filed by the plaintiff is barred by limitation. The Court has to examine whether there was any terms of settlement between the parties and whether all parties agreed for the said settlement and have acted upon.

The Court held that, for the purpose of Order VII Rule 11, the plaint has to be read as a whole and the defendants cannot rely on isolated sentences to contend that the right to sue first accrued in 2012. The alleged family arrangement was itself disputed by the plaintiff as not binding and as not having dealt with all properties impartially, and the plaintiff also pleaded later acts of denial of his asserted share after the mother's death. In these circumstances, the plea of limitation depended on facts requiring adjudication at trial and did not appear ex facie from the plaint. [Paras 24, 25]

The objection that the suit was barred by limitation was rejected.

Bar of civil court jurisdiction under Section 430 of the Companies Act - Inheritance dispute involving company shareholding and assets - Plaint cannot be rejected in part - HELD THAT: - The Court held that the plaintiff's case was not confined to a complaint of oppression, mismanagement, or corporate control, but was founded on a claim of civil right over the properties and assets of the deceased father and the plaintiff's asserted share therein. The suit, therefore, involved a civil inheritance and partition dispute, and the plaintiff could pursue appropriate remedies before the Tribunal if necessary after declaration of his share. Since all the prayers were not shown to be outside the civil court's competence, and a plaint under Order VII Rule 11 must be rejected as a whole or not at all, partial rejection on the footing that some matters may fall within the Tribunal's domain was impermissible. [Paras 28, 29]

The plea of bar of jurisdiction under Section 430 did not warrant rejection of the plaint.

Disclosure of cause of action - Meaningful reading of plaint - HELD THAT: - The Court found that the plaint specifically alleged denial of the plaintiff's asserted share in the joint companies, properties, businesses and assets, refusal to render accounts, and reliance by the defendants on a mediator's advice which the plaintiff denied to be binding. On a meaningful reading, these averments disclosed a real cause of action and could not be treated as illusory or vexatious so as to justify rejection under Order VII Rule 11. [Paras 30, 31, 32]

The ground that the plaint disclosed no cause of action was rejected.

Final Conclusion: The application for rejection of the plaint was dismissed. The Court held that limitation could not be decided against the plaintiff at the threshold, that the suit disclosed a cause of action, and that the plaint could not be rejected on the ground of bar under the Companies Act when the suit substantially raised a civil inheritance and partition dispute.

Interim stay against admission into CIRP of an electricity distribution licensee - Primacy of IBC over the Electricity Act -Corporate guarantee executed without regulatory approval - Reference on difference of opinion - The interim stay applications in appeals against admission of an electricity distribution licensee into CIRP gave rise to divergent views on the effect of the Electricity Act and the alleged invalidity of the corporate guarantee, resulting in a reference to the Chairperson. - HELD THAT: - The Member (Judicial) held, at the interim stage, that the appellants' contention founded on the overriding provisions of the Electricity Act could not be accepted in view of the Supreme Court decision in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat (P) Ltd. [2023 (7) TMI 831 - SUPREME COURT], read with the discussion drawn from ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs and Duncans Industries Ltd. v. AJ Agrochem [2019 (10) TMI 301 - SUPREME COURT], and further observed that a different legal opinion on the requirement of prior regulatory approval under the WBERC Regulations did not by itself render the corporate guarantee fraudulent, coercive, or otherwise void so as to justify interim protection. On that reasoning, no case for stay was found out.

The Member (Technical), however, distinguished the Supreme Court ruling on the ground that it dealt with priority of electricity dues in insolvency and not with the admission of a distribution licensee itself into CIRP on the basis of a corporate guarantee allegedly executed in breach of the Electricity Act and confined to non-regulated assets and surplus from regulated assets. He held that the effect of CIRP on the licensed distribution business and consumers had not been examined in detail and that, pending such scrutiny, the less injurious course to the public should be preferred. As the two Members differed on the stay applications, no common ratio or final determination on interim relief emerged from the Bench, and the matter was directed to be placed before the Chairperson for appropriate reference.

In view of the difference of opinion on the grant of interim stay, the stay applications were not finally decided by the Bench and the matter was referred to the Chairperson for an appropriate reference.

Final Conclusion: The order does not finally decide either the maintainability of the appeals or the prayer for interim stay. Owing to the divergence between the Member (Judicial), who declined interim relief, and the Member (Technical), who favoured keeping the impugned order in abeyance, the matter was directed to be placed before the Chairperson for an appropriate reference.

CENVAT credit on input services - Availment of credit vis-a-vis invoice date - Service tax paid prior to invoice issuance - HELD THAT: - The Tribunal confined the dispute to the three invoices relied upon by the Revenue and examined the invoices themselves. On such examination, it found that the remittances relating to those invoices had been made prior to issuance of the invoices and that the respondent had already paid the entire service tax component before taking credit. On that basis, the Tribunal held that, since the service tax had been paid and the credit was thereafter availed, the allegation that the credit was wrongly taken merely because the invoice dates were later could not be accepted. [Paras 8, 9]

The adjudicating authority had rightly dropped the demand in respect of the three invoices, and the Revenue's challenge was rejected.

Final Conclusion: The Tribunal upheld the order dropping the demand and dismissed the Revenue's appeal, holding that the credit in dispute could not be denied where the service tax had been remitted prior to issuance of the invoices and the credit was availed thereafter.

Extended period of limitation - Suppression of facts - Time-barred show cause notice - Demand on legal services received under reverse charge for the disputed period - Burden of proof - Deliberate non-disclosure - HELD THAT: - The decision of hon’ble Supreme Court in the case of Pushpam Pharmaceutical Co. [1995 (3) TMI 100 - SUPREME COURT]. The Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the hon’ble Court observed that since “suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.

The Tribunal held that the portion of demand up to September 2015 was beyond even the extended period of five years and was therefore unsustainable outright. For the remaining period from October 2015 to June 2017, though within five years, the demand was beyond the normal period and could survive only if the conditions for invoking the extended period were established. The show cause notice merely alleged that non-payment would have gone unnoticed but for audit, which was held insufficient. Relying on the settled principle that suppression of facts must be deliberate and accompanied by intent to evade tax, the Tribunal found no evidence of any positive act of fraud, wilful misstatement or suppression by the appellant. The appellant was admittedly registered, was discharging output service tax in cash on its taxable services, and the Department failed to produce material showing deliberate concealment. On that basis, the extended period was held inapplicable and, once limitation disposed of the matter, no finding on merits was required. [Paras 5, 6]

The show cause notice was held time-barred and the order confirming the demand, interest and penalties was set aside; the appeal was allowed without examining the merits.

Final Conclusion: The Tribunal allowed the appeal on limitation alone, holding that the show cause notice for the entire disputed period was time-barred. As the extended period was not invocable in the absence of any deliberate suppression or intent to evade tax, the demand and consequential liabilities were set aside without entering into the merits.

Validity of show cause notice - lack of specificity - Taxability based on accounting mismatch - Hybrid seeds as agricultural produce - Reverse charge on freight and loading-unloading charges - Extended period of limitation - processing of hybrid seeds for preservation, grading, treatment, and germination

Specificity of show cause notice - Taxability based on accounting mismatch - differences between the profit and loss account and ST-3 returns - absence of a specific and legally structured show cause notice - HELD THAT: - The Tribunal held that the notice proceeded substantially on numerical differences in accounts without clearly identifying the precise taxable service, the charging provision, the classification of service, or the basis of computation. It reiterated that a demand cannot rest merely on an accounting mismatch unless the taxable event is established, and that the burden of proving taxability lies on the revenue. Since the foundational pleading itself lacked specificity, the demand could not be sustained on that basis. [Paras 14, 15]

The demand based merely on accounting differences, without a specific identification of the taxable service and legal basis, was set aside.

Whether hybrid seeds continue to remain agricultural product after processing ? - HELD THAT: - The Tribunal distinguished Apeejay Tea Ltd, and others [2019 (1) TMI 767 - GAUHATI HIGH COURT] on the ground that tea, after processing, becomes a marketable finished product for consumption, whereas hybrid seeds remain intended exclusively for sowing and cultivation. Processing for preservation, grading, treatment and germination quality was held not to convert the seeds into a new commercial commodity distinct from agricultural produce. The Tribunal further found that the Department had indiscriminately treated all freight-related expenses as taxable, though the record showed that substantial components comprised provisions, cess, reimbursements, and loading-unloading charges paid to non-GTA vendors. It held that reverse charge liability cannot arise merely because an expense is booked under the freight head; taxability depends on the nature of the service provider and the statutory incidence of liability, which the adjudicating authority had failed to examine. [Paras 16, 17, 18, 19]

Hybrid seeds were held to qualify as agricultural produce, and the freight and related charges were held not taxable in the manner assumed by the Department.

Extended period of limitation - Penalty in interpretational dispute - HELD THAT: - The Tribunal held that invocation of the extended period requires proof of fraud, suppression, wilful misstatement, or deliberate intent to evade tax, none of which was established on the record. The controversy was found to concern interpretation of the exemption notification, the scope of agricultural produce, and the classification of freight-related services. Mere accounting differences were held insufficient to establish suppression. Since the demand itself failed, the penalties could not survive; independently also, absence of mala fide intent disentitled the revenue from sustaining penalties. [Paras 20, 21, 22]

The extended period was held unavailable, and the penalties and interest consequential to the unsustainable demand were set aside.

Final Conclusion: The Tribunal held that the revenue had failed to establish the taxable service with the requisite specificity and could not sustain the demand merely on accounting differences. It further held that hybrid seeds remain agricultural produce, the freight-related demand was unsustainable on the facts and law, and consequently the extended period, interest and penalties also failed.

Exemption for road construction services provided to Government and local authorities - Works contract services - Service tax demand based solely on Form 26AS without examination of taxability - Penalty for suppression of facts

Exemption for construction of roads - Demand on receipts from road and drainage construction for Government departments and local authorities - authorities proceeded only on Form 26AS figures without examining whether the services were taxable or exempt - HELD THAT: - The Tribunal held that the proceedings had been initiated solely on the basis of receipts reflected in Form 26AS for the Financial Year 2016-17, without proper examination of the nature of the services. It recorded that the authorities themselves had admitted that the appellant provided works contract services in respect of roads and drainage adjacent to roads for Government departments and local authorities, and that such services were covered by the exemption under Serial No. 13(a) of Notification No. 25/2012-ST. The demand had nevertheless been confirmed merely on the basis of gross receipts and tax deduction under section 194-C, without substantiating taxability or examining the exemption claim. Following Sharma Fabricators & Erectors Pvt. Ltd. V/s CCE, Allahabad [2017 (7) TMI 168 - CESTAT ALLAHABAD], the Tribunal reiterated that a show cause notice and resulting demand cannot rest merely on such figures without scrutiny of the assessee's records and admissible evidence. [Paras 11, 12, 13, 14, 15]

The impugned order and the order-in-original were set aside, and the consequential service tax demand with interest was also set aside.

Penalty for suppression of facts - Consequential penalty where tax demand fails - HELD THAT: - The Tribunal held that the penalties under sections 77(1)(a) and 77(1)(c) and under section 70 were unjustified once the very demand of service tax and interest had failed. It further found no material showing suppression or wilful misstatement with intent to evade payment of service tax, and therefore the penalty under section 78 was also liable to be set aside. [Paras 16, 17]

All penalties, including the penalty for alleged suppression, were set aside.

Final Conclusion: The Tribunal allowed the appeal and held that the service tax demand, founded only on Form 26AS receipts without examining the exempt nature of the road construction services, was unsustainable. Interest and all penalties were consequently set aside, with the penalty under section 78 also failing for want of suppression or wilful misstatement.

Limitation - Adjustment of excess service tax - barred by Rule 6(4B) - Non-taxable works contract service -HELD THAT: - The assessee suo motu adjusted the excess amount paid during the period April, 2010 to September, 2010 against the service tax liability in June 2011, which was allegedly in contravention of Rule 6(4B)(i) of the said Rule in as much as the excess amount paid was on account of reasons involving tax liability and in contravention of Rule 6(4B)(iii) in as much as the adjustment was in force for more than Rs.2,00,000/- for a month. However, the adjudicating authority has examined the taxability of the service and on the basis of the findings that the service provided by the assessee is exempt from service tax with a conclusion that the show-cause notice is not sustainable on merit, but the taxability of service was not a question to be decided in this case. The ld. Adjudicating Authority has failed to recognize the main issue involved in this case. Therefore, the impugned order is to be set aside.

The Tribunal held that the respondent's letter informing the Department of the revised returns and the adjustment of the excess tax paid was already within the Revenue's knowledge. In that situation, the later show-cause notice could not be sustained as it was barred by limitation. The Tribunal also recorded that the service provided by the respondent was admittedly not taxable, and that the excess amount had been adjusted in support of the respondent's claim for refund. [Paras 6, 7]

The demand based on alleged irregular adjustment was not sustainable, and the order dropping the proceedings was upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, holding that the show-cause notice was barred by limitation in view of the Department's prior knowledge of the revised returns and adjustment, and finding no infirmity in the order under challenge.

Curable defects in appeal filing - Principles of natural justice in appellate proceedings - Opportunity to rectify defects - Dismissal of the statutory appeal for defects in the appeal papers, without granting adequate opportunity to cure them or examining the matter on merits - HELD THAT: - The Tribunal held that the defects noted by the Commissioner (Appeals), including deficiencies in contact particulars, authorisation, signatures and mistakes in the appeal papers, were curable in nature. Such defects could not validly be made the sole basis for rejecting the appeal itself without first granting the appellant an opportunity to rectify them. The Tribunal further found that fixation of three personal hearings within a span of seven days was also contrary to the principles of natural justice. Applying the view taken in A R Thermosets Pvt Ltd. [2023 (11) TMI 841 - CESTAT AHMEDABAD] and Bajaj Hindustan Ltd. [2001 (10) TMI 227 - CEGAT, COURT NO. IV, NEW DELHI] the Tribunal held that rejection of an appeal on technical and curable defects, without affording an opportunity to remove them, was not proper in law. [Paras 6]

The impugned order was set aside and the matter was remanded to the Commissioner (Appeals) to permit rectification of the defects and thereafter decide the appeal afresh in accordance with natural justice.

Final Conclusion: The Tribunal held that the appeal had been rejected by the Commissioner (Appeals) on curable technical defects without adequate opportunity for rectification and in breach of natural justice. The matter was therefore remanded for fresh decision after permitting the appellant to cure the defects.

Suppression of facts - Extended period of limitation - Substantial question of law - HELD THAT: - The Court noted that the Tribunal had founded its conclusion on the assessee's letters informing the Department about the change of classification and subsequent availment of exemption. On that factual basis, the Tribunal held that there was no suppression of facts with intent to evade duty and, consequently, the extended period could not be invoked. The High Court accepted that this was a finding of fact arising from the material on record and held that no substantial question of law arose from the Tribunal's order. [Paras 4, 5]

The Revenue's appeal was dismissed as no substantial question of law arose against the Tribunal's conclusion on absence of suppression and inapplicability of the extended period.

Final Conclusion: The High Court held that the Tribunal's conclusion on absence of suppression of facts, based on the assessee's prior disclosures to the Department, was a factual determination. Since no substantial question of law arose, the Revenue's appeal was dismissed.

Applicability of Notification No. 20/98-CE to clearances made by a 100% EOU -Penalty for wrong availment of exemption on interpretational dispute - Remand limited to verification of notification conditions - Intent to evade duty under penalty provisions - HELD THAT: - On perusal of the above Notification and the Rule 25 read with Section 11AC of the Act, it appears that the question before the Tribunal was with regard to the applicability of the Notification to the availment of the exemption, as provided in the Notification, by the respondent-assessee for clearance of the goods.

The Court held that, after the Larger Bench in case of Juned Bilal Memon [2007 (8) TMI 157 - CESTAT, MUMBAI] had settled in favour of the assessee the applicability of the notification to the relevant DTA clearances, the surviving enquiry before the adjudicating authority was only whether the other conditions of the notification stood fulfilled. The controversy before the Tribunal was thus one of interpretation of the exemption notification and not a case involving fraud, suppression, or contravention with intent to evade duty. Since the ingredients required for penalty under Section 11AC read with Rule 25 were absent, the Tribunal was justified in setting aside the penalties and in not keeping the question of penalty open merely because duty liability was remanded for limited verification. [Paras 10, 11, 12, 13]

Both questions were answered in favour of the assessee; the penalties remained set aside and the remand stood confined to ascertainment of duty liability with reference to fulfillment of the notification conditions.

Final Conclusion: The High Court upheld the Tribunal's view that penalty was not leviable where the dispute concerned interpretation of Notification No. 20/98-CE and no intent to evade duty was established. The appeal was dismissed, with the remand remaining confined to verification of fulfillment of the notification conditions and consequential duty liability.

CENVAT credit on goods transport agency services - Proof of service tax payment by supplier - Service provider had paid service tax and issued supporting certificate and challan evidence - HELD THAT: - The Tribunal found that the denial of credit was founded on non-production of copies of challans for service tax allegedly paid by the supplier on the goods transport agency service. It held that the supplier's certificate specifically certifying payment of service tax on the transportation charges for the relevant period, coupled with the sample copy of the service tax challan placed on record, sufficiently established payment of tax. On that basis, the appellant was held to have correctly availed the credit on the goods transport agency services. [Paras 6, 8]

The CENVAT credit was allowed, and the consequential demand, interest and penalty were held unsustainable.

Final Conclusion: The Tribunal held that the appellant was entitled to CENVAT credit on the goods transport agency services, as service tax payment by the supplier stood established by the certificate and challan on record. The impugned order was therefore set aside and the appeal was allowed with consequential relief.

Computation of short-paid tax for penalty - Quantum of penalty for deemed failure to pay tax - Interest on late payment of tax - Effect of reducing the penalty under section 45(6) and deleting the penalty under section 45(4) and the composition fee under Rule 78 - Tax payable versus tax paid - Penalty on differential tax

Penalty for deemed failure to pay tax - Actual tax paid vis-a-vis tax shown in return - Discretion in quantum of penalty - HELD THAT: - The Court held that, on a plain reading of section 45(5), the relevant comparison for penalty is between the tax payable and the tax paid. The Assessing Officer erred in ignoring the actual tax paid by the assessee and in proceeding only on the amount shown in the return. The Court also noted that the Assessing Officer had assigned no reason for levying penalty at 90%, and that the Tribunal too had not furnished reasons for fixing it at 10%. In that situation, the Court declined to substitute its own view for the discretion exercised by the authorities and maintained the Tribunal's order reducing the penalty. [Paras 9, 12, 13]

The Revenue's challenge to the reduction of penalty under section 45(6) failed.

Penalty for failure to furnish declaration or return - Absence of reasons in penalty order - HELD THAT: - The Tribunal had deleted the penalty on the ground that the orders of the authorities below contained no details or discussion supporting such levy. The appeals were dismissed and the question challenging that deletion was answered in favour of the assessee. [Paras 13]

The deletion of penalty under section 45(4) was sustained.

Interest on late payment of tax - Cross-objections against levy of interest - HELD THAT: - The Court held that the Tribunal had not interfered with the levy of interest and that the assessee had admittedly made late payment of tax. On that admitted position, the Court found no ground to interfere with the levy of interest while dealing with the cross-objections. [Paras 11, 13]

The cross-objections on liability to interest were dismissed.

Final Conclusion: The appeals filed by the Revenue were dismissed, the Tribunal's reduction of penalty under section 45(6) and deletion of penalty under section 45(4) being left undisturbed. The assessee's cross-objections against levy of interest were also dismissed.

Condonation of delay - Sufficient cause - Administrative delay in filing appeal - Substantial justice - delay of 496 days - explained the delay by giving the Chronology of dates - HELD THAT: - The Court found that the delay had been explained in detail in the application as well as the further affidavit, and that digital records regarding the proposal for preferring the tax appeal were also placed on record. It accepted that time had been taken at different departmental levels for grant of approval, and held that, in the facts of the case, the delay could not be treated as deliberate. Since refusal to condone the delay would deny consideration of the appeal on a core classification issue and thereby defeat substantial justice, the explanation was held sufficient. [Paras 7, 8, 9]

The delay of 496 days in preferring the tax appeal was condoned.

Final Conclusion: The Court condoned the delay of 496 days in filing the tax appeal, holding that the State had sufficiently explained the departmental approval process and that refusal to condone the delay would result in denial of substantial justice.

Civil court jurisdiction under SARFAESI - Rejection of plaint under Order VII Rule 11 CPC - Challenge to secured creditor's measures - Partition and declaration suit in mortgaged property - Registered owner creating equitable mortgage - Cause of action - Suit seeking partition, declaration that the equitable mortgage was void qua the plaintiff's share, and injunction against enforcement under the Act of 2002 - HELD THAT: - The Court held that, while examining an application under Order VII Rule 11 CPC, the plaint averments, the true nature of the relief, and undisputed facts could be considered. On the plaint itself, the property stood in the name of the deceased mother as registered owner; the sale deed in her favour had never been challenged; and the loan had been obtained by her with respondent Nos. 2 and 3 as co-borrowers by creating an equitable mortgage over that property. The plaint also admitted an earlier partition, yet claimed a one-third share in the entire property, rendering the pleaded case self-contradictory. In these circumstances, once proceedings under the Act of 2002 had been initiated, objections to the secured creditor's measures were required to be raised before the DRT/DRAT. The Court distinguished Central Bank of India & Anr. Vs. Prabha Jain & Ors. [2025 (1) TMI 1669 - SUPREME COURT] on facts, noting that the present case did not involve any challenge to the registered title of the mortgagor and that the plaintiff could not derive benefit from that decision. Applying Jagdish Singh Vs. Heeralal & Ors. [2014 (3) TMI 73 - SUPREME COURT], the Court held that the civil court's jurisdiction stood barred in respect of the measures taken under the Act of 2002. [Paras 11, 17, 19]

The rejection of the plaint was upheld, with liberty to the appellant to raise all available objections before the DRT/DRAT under the Act of 2002.

Final Conclusion: The appeal was dismissed. The High Court upheld the order rejecting the plaint on the ground that the suit, in substance, sought to obstruct measures taken under the Act of 2002 in respect of a property mortgaged by its unchallenged registered owner, for which the statutory remedy lay before the DRT/DRAT.

Application seeking striking out pleadings and reliefs - residue sale proceeds after auction - Bar of civil court jurisdiction under SARFAESI Act - Alternative and allegedly inconsistent pleadings - Abuse of process of court - Entitlement to receive the residue amount and the issue in respect of HUF

Liability to be struck out under Order VI Rule 16 of the CPC - HELD THAT: - The Court held that power to strike out pleadings can be exercised only where the matter is unnecessary, scandalous, frivolous, vexatious, prejudicial to fair trial, or an abuse of process. On a bare reading of the plaint, the averments regarding the suit properties, the claim that they were acquired from the nucleus of the HUF, and the consequential reliefs sought were relevant to the declaration and injunction suit. The Court further held that the reliefs were not self-contradictory and that a plaintiff is entitled even to claim reliefs in the alternative. In those circumstances, the trial Court rightly refused to direct deletion of the pleaded paragraphs or relief clauses. [Paras 13, 14, 17, 18]

The challenge to dismissal of the application under Order VI Rule 16 failed.

Bar of civil court jurisdiction under SARFAESI Act - Residue sale proceeds after secured asset auction - HUF claim to surplus amount - HELD THAT: - The Court held that the plaintiff had not challenged any measure taken by the bank under the SARFAESI Act. The claim was confined to the alleged entitlement of the HUF to any residue amount remaining after auction, on the assertion that the property had been acquired from the HUF nucleus though standing in the mortgagor's name. Such a dispute concerning entitlement to the surplus amount and the HUF character of the property was held not to be one that the Debts Recovery Tribunal could decide under the Act. The statutory bar under Section 34 applies where the matter is one which the Tribunal is empowered to determine, or where injunction is sought against action under the Act; that condition was not attracted on the plaint as framed. The decision in Central Bank of India and another vs. Prabha Jain and others [2025 (1) TMI 1669 - SUPREME COURT] was distinguished as turning on a different factual situation and not dealing with a claim of this nature. [Paras 14, 15, 16, 17]

The relief relating to the residue amount was held maintainable before the civil court, and could not be struck out at the threshold.

Final Conclusion: The High Court declined interference under Article 227 and upheld the trial Court's refusal to strike out the plaint averments and reliefs. It held that the pleadings were relevant to the suit and that the claim to the residue amount after auction was not barred by Section 34 of the SARFAESI Act.