TaxTMI Updates e-Newsletter
Jul 03,2020

Tariff classification - parts of general use - principal use - General Rules for Interpretation - Section Notes and Chapter Notes - HSN Explanatory Notes

Classification under Chapter 73 - parts of general use - Note 2 to Section XV - Section Note 3 to Section XVII - HSN Explanatory Notes - Metal Nuts with metrical threads, Metal Nuts without metrical threads and Metal Spring Nuts are classifiable under Tariff item 7318 16 00. - HELD THAT: - The Authority found that the subject goods are different types of nuts which fall within the scope of Chapter sub heading 7318 as screw, bolts, nuts, washers and similar articles. Note 2 to Section XV defines "parts of general use" to include articles of heading 7318 and Chapter Note/Section Note 3 to Section XVII excludes parts of general use from the expressions "parts" and "parts and accessories" of Chapters 86-88. The applicant also established that the nuts are used across industries (automotive, electronic, energy), confirming they are parts of general use rather than parts suitable solely or principally for motor vehicles. The HSN Explanatory Notes describing the nature and ordinary use of nuts support classification under 7318. Applying the interpretative hierarchy (rules, section and chapter notes, and explanatory notes), the Authority concluded that the goods are barred from classification under Chapter 8708 and must be classed under Tariff item 7318 16 00. [Paras 5]

Classify the described metal nuts under Tariff item 7318 16 00.

Final Conclusion: The Advance Ruling holds that the metal nuts in question are parts of general use and are classifiable under Tariff item 7318 16 00; other products listed in the application were not taken up for adjudication in this order.

Goods Transport Agency (GTA) service - consignment note as qualifying condition for GTA - forward charge option under Notification No. 20/2017-C.T. (Rate) - reverse charge mechanism for GTA - advance ruling jurisdiction under Section 97(2) of the CGST Act

Goods Transport Agency (GTA) service - consignment note as qualifying condition for GTA - Whether the service rendered by the applicant to POSCO as a sub-contractor is classifiable as GTA service (SAC 996791) when POSCO, as main contractor, is already classified as GTA for the same movement of goods. - HELD THAT: - The Authority examined the contractual and factual matrix and found that POSCO holds the contract with the consignor/consignee, issues the e-way bill and consignment note and is responsible for delivery; the applicant supplies vehicles to POSCO and arranges transport at POSCO's behest. Notification No. 11/2017 (explanation) treats issuance of a consignment note as an essential qualification of a GTA. The consignment note contains details (consignor/consignee, place of origin/destination, goods description) known to POSCO and provided by POSCO to the applicant for execution. On these facts the applicant functions as a truck-owner/vehicle supplier to POSCO rather than as a GTA vis-a -vis the consignor/consignee; therefore the applicant cannot be treated as a GTA for that transaction merely by being the performing transporter. Multiple consignment notes for the same movement were held impermissible in the circumstances because the contractual relationship and custody documentation rest with POSCO. [Paras 5]

Answered in the negative; the applicant is not classifiable as GTA for the subject transaction.

Forward charge option under Notification No. 20/2017-C.T. (Rate) - Goods Transport Agency (GTA) service - Whether the applicant can charge GST at 12% under forward charge to POSCO in terms of Notification No. 20/2017 when POSCO is already charging GST at 12% as main contractor. - HELD THAT: - Given the Authority's finding that the applicant is not a GTA for the subject transaction and therefore cannot issue a consignment note as GTA for that movement, the applicant cannot avail the forward-charge option applicable to GTAs under Notification No. 20/2017 for that transaction. The entitlement to charge GST at 12% under the notification is contingent on being a GTA in relation to the supply; having been held not to be a GTA here, the applicant cannot legitimately charge GST at 12% under forward charge for this supply to POSCO. [Paras 5]

Applicant cannot charge GST @12% under forward charge for the subject transaction.

Admissibility of input tax credit - forward charge option under Notification No. 20/2017-C.T. (Rate) - Whether POSCO would be eligible to claim credit of 12% GST charged by the applicant under forward charge. - HELD THAT: - The Authority declined to pronounce on this question because it is a matter that should be raised by POSCO (the recipient) and because the question of charging under forward mechanism by the applicant was decided against the applicant. The Authority refrained from answering the query on POSCO's eligibility to claim input tax credit in the circumstances of this application. [Paras 5]

Not answered by the Authority; question left open for POSCO or appropriate proceedings.

Advance ruling jurisdiction under Section 97(2) of the CGST Act - procedural matters outside scope of advance ruling - Whether it is procedurally correct to have two GTA service providers and two consignment notes for the same movement of goods. - HELD THAT: - The Authority analysed the scope of questions entertainable under Section 97(2) and observed that the advance ruling jurisdiction is confined to matters expressly listed (classification, applicability of notification, time and value, admissibility of ITC, liability to pay tax, registration, and whether an activity amounts to supply). The applicant's query on procedural correctness (existence of two GTAs and two consignment notes) pertains to procedure rather than any of the specified matters for advance ruling. Consequently, the Authority held that it does not have jurisdiction to rule on procedural issues of this nature and declined to answer the procedural question. [Paras 5]

Not answered for lack of jurisdiction; procedural question outside the scope of advance ruling under Section 97(2).

Final Conclusion: The Authority held that, on the facts presented, the applicant cannot be treated as a GTA for the subject transaction and therefore cannot charge GST at 12% under the forward charge option; questions concerning POSCO's entitlement to input tax credit and the procedural correctness of having two GTAs/consignment notes were not answered as they fall outside the Authority's jurisdiction in this advance ruling application.

Provisional attachment of property including bank accounts under Section 83 of the CGST Act - protection of Government revenue - wrongful availment/mis utilisation of Input Tax Credit (ITC) - investigation by Directorate General of Goods and Services Tax Intelligence (DGGI) - parallel investigation - show cause notice on conclusion of investigation

Provisional attachment of property including bank accounts under Section 83 of the CGST Act - protection of Government revenue - wrongful availment/mis utilisation of Input Tax Credit (ITC) - Challenge to the provisional attachment orders dated 05.03.2020 and corrigendum dated 01.06.2020 was considered in view of the ongoing investigation and the material placed on record. - HELD THAT: - The Court recorded the department's findings that prima facie the petitioner had availed ITC on the basis of fake input invoices, that several supplier premises were non existent and that key employee statements disclaimed receipt of services. The Commissioner justified provisional attachment under the statutory power to protect Government revenue while proceedings under the relevant investigative provisions were pending. The Court noted the petitioner's alleged failure to maintain or produce records for the relevant years and lack of cooperation with summons, and observed that the investigation had been entrusted to DGGI. Rather than setting aside the attachment at this stage, the Court directed expedition of the investigative process to protect both revenue interests and the petitioner's rights. [Paras 1, 3, 4, 6]

The writ petition was not allowed to annul the provisional attachments; the Court retained the matter for the investigative process and relied on the departmental justification for provisional attachment while directing timely conclusion of investigation.

Investigation by Directorate General of Goods and Services Tax Intelligence (DGGI) - parallel investigation - show cause notice on conclusion of investigation - The Court directed completion of the pending DGGI investigation within a specified timeframe and left open consequent adjudicatory steps. - HELD THAT: - Having been informed that DGGI and the Commissioner prima facie found wrongful availment of ITC and that DGGI had been investigating since December 2018, the Court considered it appropriate in the interests of justice to order a time bound conclusion of the probe. The Court required the petitioner and its directors to cooperate and recorded that if DGGI, upon completion, is satisfied with the petitioner's stand it shall close proceedings; otherwise it shall issue an appropriate show cause notice in accordance with law. All substantive rights and contentions of the parties were preserved. [Paras 4, 6, 8, 9]

DGGI directed to conclude the investigation within three months; thereafter to either close the proceedings if satisfied or issue a show cause notice; parties' rights reserved.

Final Conclusion: Writ petition disposed by directing DGGI to conclude the investigation into alleged wrongful availment of ITC within three months, with the petitioner and its directors to cooperate; on conclusion DGGI shall either close proceedings if satisfied or issue an appropriate show cause notice, and all rights of the parties remain open.

Creditors' confirmations and proof of credits in books (invocation of credit as cash credit) - preponderance of probabilities in accepting creditor genuineness - admission and consideration of additional evidence under Rule 46A of the Income-tax Rules - reimbursement of Duty Drawback and evidentiary proof of passthrough to supporting manufacturers - reasonableness of director remuneration and onus under the doctrine embodied in section 40A(2)(b)

Creditors' confirmations and proof of credits in books (invocation of credit as cash credit) - preponderance of probabilities in accepting creditor genuineness - Deletion of additions made by the Assessing Officer on account of sundry creditors not confirmed during assessment proceedings. - HELD THAT: - The Tribunal found that the Assessing Officer added the outstanding balances as on 31.03.2004 without appreciating that those balances arose from purchases during the year which were accepted as genuine and were paid in subsequent years. The CIT(A) had considered additional confirmations filed under Rule 46A and, applying the test of preponderance of probabilities, found that a large part of the balances were confirmed and the creditors were genuine. Reliance was placed on the decision of the ITAT (Special Bench) in Manoj Aggarwal (discussed in the order) to the effect that amounts credited in the books must be tested and that once purchases are accepted as genuine, mere outstanding balances cannot be charged as income without adequate justification. Applying these principles and considering the totality of facts, the Tribunal held that the additions were without merit and directed deletion of the entire addition. [Paras 6, 7]

Entire addition in respect of sundry creditors deleted; assessee's appeal allowed and Revenue's corresponding ground dismissed.

Admission and consideration of additional evidence under Rule 46A of the Income-tax Rules - reimbursement of Duty Drawback and evidentiary proof of passthrough to supporting manufacturers - Validity of disallowance of claimed Duty Drawback reimbursement where Assessing Officer received only sample vouchers during assessment but full details and vouchers were later placed before the CIT(A) and on appeal. - HELD THAT: - The Tribunal observed that during assessment the assessee had submitted sample vouchers but the AO did not call for complete details. Before the CIT(A) the assessee furnished voluminous documentary evidence (including a paper book) showing reimbursement to supporting manufacturers through account-payee cheques coincident with electronic duty credits. The AO had also issued notices under section 133(6) to incorrect parties in several instances. The CIT(A) examined the complete evidentiary record and deleted the disallowance. The Tribunal found no infirmity in that conclusion, held that the additional evidence had been transmitted to the AO and considered via remand reports, and declined to interfere with the deletion. [Paras 8, 9, 11]

Addition on account of Duty Drawback disallowance deleted; Revenue's ground challenging admission of additional evidence and disallowance dismissed.

Reasonableness of director remuneration and onus under the doctrine embodied in section 40A(2)(b) - Sustentation of addition by the Assessing Officer treating excess director remuneration as disallowable under section 40A(2)(b). - HELD THAT: - The Tribunal noted that the AO failed to produce any comparable cases or material to demonstrate that the payments to the directors were excessive or unreasonable. The CIT(A) found the payees to be professionally qualified and observed lack of substantiation by the AO. The Tribunal reiterated that the onus lies on the AO to bring comparable evidence to justify disallowance under section 40A(2)(b). It further noted that payees were assessed to tax and that administrative guidance (CBDT Circular) supports non-disallowance where there is no attempt to evade tax. In view of absence of material showing excessiveness, the Tribunal upheld the deletion by the CIT(A). [Paras 18]

Addition on account of alleged excessive payment of salary to directors deleted; Revenue's ground dismissed.

Final Conclusion: For Assessment Year 2004-05 the Tribunal allowed the assessee's appeal by deleting the additions made in respect of sundry creditors and upheld the deletions made by the CIT(A) in respect of Duty Drawback reimbursement and director remuneration; accordingly the assessee's appeal is allowed and the Revenue's appeal is dismissed.

Addition in a concluded assessment must be based on incriminating material seized during search - validity of assessment under section 143(3) when assessment pursuant to search ought to have been made under section 153C - disallowance under section 40A(3) where no deduction has been claimed or amount not charged to profit and loss account - treatment of post-sale additional payments to land vendors as assessable income - recomputation of interest on post-dated cheques commencing after six months from date of issue

Addition in a concluded assessment must be based on incriminating material seized during search - Whether additions made in Assessment Year 2005-06 pursuant to search could be sustained in a concluded assessment in absence of any incriminating material belonging to the assessee seized during the search - HELD THAT: - Search in the group took place on 15.11.2007; for AY 2005-06 the assessment was already concluded on the date of search. The Tribunal applied the settled principle that where an assessment is concluded on the date of search, any addition sought to be made pursuant to that search must be founded on incriminating material attributable to the assessee seized during the search. On perusal of the assessment and appellate orders the Tribunal found no reference to any incriminating material specific to AY 2005-06 to justify the additions confirmed by the lower authorities. The references in the consolidated CIT(A) order to seized material related to other years in the consolidated order and did not establish incriminating material for AY 2005-06. [Paras 8]

Additions confirmed for AY 2005-06 were deleted and the appeal for that year was allowed.

Treatment of post-sale additional payments to land vendors as assessable income - disallowance under section 40A(3) where no deduction has been claimed or amount not charged to profit and loss account - Whether additional payments made to land vendors and the disallowance under section 40A(3) could be sustained for Assessment Year 2006-07 - HELD THAT: - The Tribunal examined the factual matrix of additional payments made to land vendors and the coordinate-bench and High Court precedents relied upon by the assessee. Following the assessee's own earlier coordinate-bench decision and the binding precedent of the Hon'ble Delhi High Court in Vasundhara Promoters Ltd, the Tribunal held that the addition on account of additional payments could not be sustained and directed deletion of the confirmed amount. As to the 40A(3) disallowance, the Tribunal noted that where the assessee had neither debited the sum to profit and loss account nor claimed it as a deduction, the provision could not be applied to disallow the amount; relying on coordinate-bench precedent (Westland Developers Pvt. Ltd.), the Tribunal directed deletion of the disallowance. [Paras 19, 20]

For AY 2006-07 the addition for additional payments was deleted and the disallowance under section 40A(3) was deleted; the appeal was partly allowed.

Validity of assessment under section 143(3) when assessment pursuant to search ought to have been made under section 153C - Whether the assessment for Assessment Year 2009-10, though based on seized material, was validly framed under section 143(3) instead of under section 153C where satisfaction and receipt of seized material relevant to the assessee occurred within the search-linked period - HELD THAT: - The Tribunal recorded that search was on 15.11.2007 and satisfaction in the assessee's case was recorded on 19.08.2009, with notices under section 153C being issued for certain years but not for AY 2009-10; nonetheless the assessment order relied upon seized material and additions were based on search material. Applying the ratio of the Delhi High Court decisions cited (including CIT v. Jasjit Singh) and coordinate-bench treatment, the Tribunal held that where satisfaction and receipt of material relating to the assessee occur within the search-linked timeframe, the assessment pursuant to search must be framed under section 153C and not under section 143(3). The assessment framed under section 143(3) for AY 2009-10 was therefore quashed. [Paras 32, 33]

The assessment order for AY 2009-10 framed under section 143(3) was quashed and the additional jurisdictional ground was allowed.

Validity of assessment under section 143(3) when assessment pursuant to search ought to have been made under section 153C - Whether the assessment for Assessment Year 2008-09 was void because it was framed under section 143(3) without issuance of requisite notice under section 153C despite satisfaction being recorded in respect of seized material - HELD THAT: - The Tribunal noted that search occurred on 15.11.2007; satisfaction in the assessee's file was recorded on 19.08.2009 and section 153C notices were issued for certain assessment years, but no section 153C notice was issued for the impugned year and only a notice under section 143(2) was issued. Relying on the reasoning applied in AY 2009-10 and the authorities cited, the Tribunal held that an assessment that should have been framed under section 153C but was completed under section 143(3) without the requisite section 153C notice is invalid. Accordingly the assessment for AY 2008-09 was quashed. [Paras 38]

Assessment for AY 2008-09 was quashed and the assessee's appeal was allowed; the revenue's cross-appeal was dismissed.

Final Conclusion: The Tribunal disposed of the five consolidated appeals: for AY 2005-06 the additions confirmed by lower authorities were deleted; for AY 2006-07 the additions for additional payments and the 40A(3) disallowance were deleted (appeal partly allowed); for AY 2009-10 and AY 2008-09 the assessments framed under section 143(3) were quashed insofar as they should have been proceedings under section 153C. All appeals were disposed accordingly.

Time-bar and territorial scope of proceedings under section 153C (six-year period reckoning) - effect of satisfaction note and requirement of incriminating material for framing assessment after search - use of documents seized from one person for reopening assessments of another person

Time-bar and territorial scope of proceedings under section 153C (six-year period reckoning) - Assessment framed under section 153A read with section 153C for A.Y. 2009-2010 was beyond jurisdiction as it fell outside the six-year period reckoned from the date on which theAssessing Officer of the assessee received the seized material/assumed the position of AO of the searched person. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that for reckoning the six assessment years under section 153C the relevant date is the date on which the seized documents were handed over to, and thus received by, the AO of the assessee (when the AO "assumes position" as AO of the other person). Applying that rule to the facts, the date on which the assessee's AO received the seized material was in September 2016, which limits the six-year window to A.Ys. 2011-2012 to 2016-2017. Consequently the AO had no jurisdiction to make an assessment for A.Y. 2009-2010 under section 153C and the assessment framed for that year was void ab initio. The Tribunal noted that this view is in conformity with the Delhi High Court decision relied upon by the CIT(A). [Paras 4, 8]

Assessment for A.Y. 2009-2010 under section 153C is beyond jurisdiction and quashed.

Effect of satisfaction note and requirement of incriminating material for framing assessment after search - Assessment framed under section 153A/153C was invalid because the satisfaction note and material did not disclose any incriminating material against the assessee to justify framing of assessment following search. - HELD THAT: - The CIT(A) found on review of the record and the written submissions that no incriminating material was discovered during the search to sustain proceedings against the assessee. Relying on the legal principle that framing of assessment post-search requires presence of incriminating material as recorded in the satisfaction note, the CIT(A) held the assessment invalid. The Tribunal recorded that the Revenue did not challenge these findings and endorsed the conclusion that in absence of incriminating material the assessment was bad in law. [Paras 4, 8]

Assessment is invalid and bad in law for want of incriminating material; relief to the assessee upheld.

Use of documents seized from one person for reopening assessments of another person - Documents relating to other assessment years and/or belonging to another person cannot be used to validly reopen or make assessments for the assessee for years beyond the jurisdictional period; action based on such use is void ab initio. - HELD THAT: - The CIT(A) relied on authority holding that documents seized from one person cannot be used to extend jurisdiction to assess unrelated assessment years of another person where the statutory temporal limits are not satisfied. Applying that principle, the CIT(A) held the AO's action to rely on such documents for the impugned assessment to be legally unsustainable. The Tribunal noted this finding was uncontested by the Revenue and affirmed that the AO's action is void ab initio. [Paras 4, 8]

Use of seized documents in the manner adopted by the AO is legally impermissible; assessment is void ab initio.

Final Conclusion: The departmental appeal is dismissed. The CIT(A)'s order quashing the assessment for A.Y. 2009-2010 for want of jurisdiction under section 153C is upheld, and the additional findings that no incriminating material existed and that reliance on documents seized from others to reopen the assessee's years was impermissible are left undisturbed.

Completed assessment - search and seizure - reopening of completed assessment under section 153A of the Income tax Act - incriminating material - nexus between seized material and assessment additions - additions under section 69C

Completed assessment - reopening of completed assessment under section 153A of the Income tax Act - incriminating material - nexus between seized material and assessment additions - additions under section 69C - Whether a completed assessment for A.Y. 2012-13 could be reopened and additions under section 69C sustained in proceedings under section 153A when no incriminating material relating to that year was found in the search. - HELD THAT: - The Tribunal accepted the findings of the CIT(A) and the factual record that assessment for A.Y. 2012-13 was completed on 25.03.2015 and the search was conducted on 08.07.2015. The Assessing Officer made additions under the head of unexplained purchases (section 69C) without pointing to any incriminating material seized during the search that related to the completed assessment year. Applying the legal precedent of the Hon'ble High Court of Delhi in Kabul Chawla and Meeta Gutgutia, the Tribunal held that a completed assessment can be reopened in a search case under section 153A only on the basis of incriminating material unearthed during the search or post search material which can be connected to such seized evidence; absent such material, invocation of section 153A for the completed year is invalid. On this basis the Tribunal found no factual or legal basis to sustain the addition for A.Y. 2012-13 and dismissed the Revenue's ground of appeal. [Paras 4, 6, 9]

Addition made by the Assessing Officer for A.Y. 2012-13 deleted; Revenue's appeal dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s deletion of the addition for A.Y. 2012-13, holding that a completed assessment could not be reopened under section 153A in the absence of incriminating material relating to that year; the Revenue's appeal and the assessee's cross objections stand dismissed.

Completed assessment - incriminating material - assessment under section 153A - unexplained investment under section 69B - invocation of section 153A requires incriminating material - precedent of Kabul Chawla and Meeta Gutgutia

Completed assessment - incriminating material - assessment under section 153A - unexplained investment under section 69B - precedent of Kabul Chawla and Meeta Gutgutia - Validity of addition under section 69B when assessment for the year was already completed and no incriminating material relating to that year was found during search, and whether invocation of section 153A could sustain the addition. - HELD THAT: - The Tribunal found that the original return for the assessment year was filed and the assessment stood completed prior to the search. No incriminating documents or material relating to the assessment year under appeal were found or produced to justify reopening. Applying the legal principle affirmed by the Hon'ble Delhi High Court in Kabul Chawla and followed in Meeta Gutgutia, completed assessments can be interfered with under section 153A only on the basis of incriminating material unearthed during the search which pertains to the specific assessment year. In the absence of such incriminating material, the AO had no basis to make the addition under section 69B for the AY in question. The Tribunal also noted that the issue was covered by a prior identical decision of the ITAT on related facts and that no infirmity was shown in the CIT(A)'s deletion of the addition. [Paras 7]

Addition under section 69B for A.Y. 2011-2012 deleted; Revenue appeal dismissed.

Cross objection dismissed as not pressed - Assessee's cross objection contesting framing of assessment and approval under section 153D. - HELD THAT: - The assessee informed the Tribunal that the cross objection was not being pressed. Consequently the cross objection was not entertained on merits and was treated as dismissed for non-prosecution. [Paras 8]

Cross objection dismissed as not pressed.

Final Conclusion: The Revenue's appeal is dismissed for lack of incriminating material relating to A.Y. 2011-2012 to justify interference with a completed assessment under section 153A; the assessee's cross objection is dismissed as not pressed.

Penalty under section 271(1)(c) for concealment/furnishing inaccurate particulars - Estimation of income and additions based on assumption - Non-attraction of penalty on estimated additions - Pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period for computing 90 days

Penalty under section 271(1)(c) for concealment/furnishing inaccurate particulars - Estimation of income and additions based on assumption - Non-attraction of penalty on estimated additions - Whether penalty under section 271(1)(c) could be levied where the assessing officer made additions on an assumed/estimated basis. - HELD THAT: - The Tribunal found that the assessing officer computed an addition of Rs. 5,15,899/- by applying an assumed profit rate (8%) on total contract receipts and that the quantification of alleged concealment or inaccurate particulars was thus an estimate. The penalty order did not record any specific satisfaction of deliberate concealment or furnish particulars beyond the estimated addition. Relying on the well-settled principle that penalty under section 271(1)(c) is not attracted where the income is determined merely on an estimated basis and where the penalty order is silent as to the basis for satisfaction of concealment, the Tribunal concluded there was no justification for imposing penalty in the present facts and quashed the penalty order. [Paras 3, 4]

Penalty under section 271(1)(c) quashed as additions were on an estimated/assumed basis and the penalty order did not record requisite satisfaction of concealment.

Pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period for computing 90 days - Extraordinary disruption from Covid-19 pandemic as ground for extending time for pronouncement - Whether the delay in pronouncement of the Tribunal's order beyond ninety days from conclusion of hearing was permissible in view of the Covid-19 lockdown and Rule 34(5). - HELD THAT: - The Tribunal referred to a coordinate-bench decision and relevant judicial and executive measures taken during the Covid-19 pandemic, observing that the nationwide lockdown and related restrictions constituted exceptional and extraordinary circumstances. The expression 'ordinarily' in Rule 34(5) recognises that the 90-day expectation is not absolute. Given the notification of the pandemic as a disaster and the unprecedented disruption to judicial functioning, the Tribunal held that the period during which lockdown was in force should be excluded in computing the 90-day period for pronouncement. Applying that approach, the Tribunal concluded that pronouncement of the order on the date stated fell within the permissible time frame. [Paras 5, 6]

Delay in pronouncement beyond ninety days is excused by excluding the lockdown period under Rule 34(5); order pronounced in open court is within permissible time.

Final Conclusion: The appeal is allowed: the penalty under section 271(1)(c) is quashed because the addition was made on estimated/assumed basis and the penalty order did not record requisite satisfaction of concealment; the Tribunal's pronouncement beyond ninety days is held permissible by excluding the Covid-19 lockdown period for computing the time under Rule 34(5).

Educational activities - Proviso to section 2(15) of the Act - advancement of any other object of general public utility - benefit of sections 11 and 12 - pronunciation/pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period for computing limitation

Educational activities - Proviso to section 2(15) of the Act - advancement of any other object of general public utility - benefit of sections 11 and 12 - Whether providing hostel facilities to needy students by the assessee-trust is an educational activity and therefore does not fall within the proviso to section 2(15) of the Act. - HELD THAT: - The Tribunal, relying on a coordinate bench decision addressing identical facts, held that hostel facilities form an essential and integral part of the educational process: they provide residential opportunities necessary for students to pursue formal education, contribute to character and personality development, and function as a centre of education rather than being merely a commercial activity. The AO's segregation of hostel activity from education and classification of it as advancement of general public utility in the nature of trade, commerce or business was found to be artificial. Prior recognition of the assessee as a charitable institution and the nature of surplus (being applied or accumulated per trust objects) were reasons to treat the hostel activity within the main provision of section 2(15). Consequently the assessee is entitled to relief under sections 11 and 12 and the matter was directed back to the AO for recomputation consistent with this view. [Paras 5]

Providing hostel facilities to students is an educational activity and does not fall under the proviso to section 2(15); the assessee is entitled to benefit under sections 11 and 12 and the AO is directed to give relief.

Pronunciation/pronouncement of orders under Rule 34(5) of the Appellate Tribunal Rules - exclusion of lockdown period for computing limitation - Whether the Tribunal could pronounce the order beyond the ordinary 90-day period under Rule 34(5) in light of the Covid-19 lockdown. - HELD THAT: - The Tribunal observed that Rule 34(5) uses the term "ordinarily" for the 90-day pronouncement period and exceptional circumstances allow extension. Given the nationwide lockdown and disruption of judicial functioning caused by Covid-19 (declared a disaster and treated as force majeure), the period of lockdown is to be excluded when computing the 90-day limit for pronouncement. The Tribunal held this interpretation to be pragmatic and in consonance with judicial directions and orders extending limitation during the pandemic; therefore pronouncement after the ordinary 90 days was permissible on the facts and the order was lawfully pronounced after excluding the lockdown period. [Paras 7, 8]

The lockdown period is excluded for computing the 90-day limitation under Rule 34(5); pronouncement of the order after expiry of the ordinary 90 days was permissible in the present circumstances.

Final Conclusion: Assessee's appeal for AY 2013-14 is allowed: provision of hostel facilities is held to be educational activity not covered by the proviso to section 2(15), and the AO is directed to grant relief under sections 11 and 12; separately, the Tribunal excluded the Covid-19 lockdown period when computing the Rule 34(5) 90-day pronouncement limit and lawfully pronounced the order thereafter.

Application of section 50C for adoption of guidance value versus declared sale consideration - relevance of date of agreement/MOU for determination of transaction value - standard for accepting declared sale consideration where valuation difference is small - indexation of cost of acquisition with reference to previous owner for computing long term capital gains

Application of section 50C for adoption of guidance value versus declared sale consideration - relevance of date of agreement/MOU for determination of transaction value - standard for accepting declared sale consideration where valuation difference is small - Whether the AO was justified in invoking the guidance rates under section 50C to adopt a higher value for computing long term capital gains and whether the date of rate revision (2004) could be applied instead of the earlier MOU date (20.09.2002) - HELD THAT: - The Tribunal examined the facts that the assessee entered into an MOU on 20.09.2002, had received substantial payments pursuant to that MOU prior to execution of the formal development agreement in 2004, and had declared sale consideration close to the Government/GLR guidance rate. The AO adopted the later revised guidance rate (2004) and computed an addition under section 50C. The Tribunal held that where the parties had entered into an agreement earlier and substantial consideration was received under that arrangement, the rate applicable on the earlier agreement date is relevant for determining the transaction terms, and the AO erred in adopting the revised 2004 SR value instead of the rate contemporaneous with the MOU. Further, applying precedents of the Tribunal benches, the Tribunal held that when the AO applies the guidance value under section 50C without referring valuation to the DVO, and the difference between the assessee's declared consideration and the guidance value is small (here approximately 2.6% and 0.89% for the two years), there is no merit in displacing the declared sale consideration; the actual consideration declared by the assessee must be accepted. On these bases the additions made by the AO under section 50C were reversed and the assessee's declared long term capital gains accepted. [Paras 20, 21, 22, 23]

Assessee's declared sale consideration accepted; additions made by invoking section 50C set aside and grounds 6-9 for AYs 2008 09 and 2009 10 allowed.

Indexation of cost of acquisition with reference to previous owner for computing long term capital gains - Whether indexation for computing long term capital gains in the hands of the assessee must be computed from the year the previous owner acquired the asset or from the year the assessee inherited the asset - HELD THAT: - The assessee received the property by gift in financial year 2001 02 but the previous owner had acquired the asset earlier (base year 1981). The AO limited indexation from 2001 02, whereas the CIT(A) - following the Special Bench decision in Dy. CIT v. Manjula J. Shah - allowed indexation with reference to the year of acquisition by the previous owner. The Tribunal noted that this view has been upheld by the Bombay High Court in CIT v. Manjula J. Shah, establishing that indexed cost of acquisition is to be computed with reference to the year in which the previous owner held the asset. Applying that authority, the Tribunal found no merit in the Revenue's contention and dismissed the Revenue's appeal. [Paras 14, 25, 26]

Indexation to be allowed from the year of acquisition by the previous owner; Revenue's appeal dismissed.

Summary withdrawal of appeal - Disposition of the assessee's appeal for AY 2007 08 which was withdrawn by the assessee - HELD THAT: - The assessee's counsel requested withdrawal of the appeal for AY 2007 08 and the Revenue had no objection. The Tribunal recorded the request and dismissed the appeal as withdrawn. [Paras 5, 6]

Appeal for Assessment Year 2007 08 dismissed as withdrawn.

Final Conclusion: Appeal for AY 2007 08 dismissed as withdrawn; appeals of the assessee for AYs 2008 09 and 2009 10 allowed in respect of valuation under section 50C (assessee's declared consideration accepted) and the Revenue's appeal on indexation dismissed - indexation to be computed with reference to the previous owner's year of acquisition.

Disallowance on ad hoc basis - land development expenses - requirement of evidentiary proof to substantiate expenditure - restrictive quantification of disallowance - deduction under section 80G - continuity/renewal of approval under section 80G(5) - opportunity to produce evidence and verification by assessing officer

Disallowance on ad hoc basis - land development expenses - restrictive quantification of disallowance - requirement of evidentiary proof to substantiate expenditure - Whether the ad hoc disallowance of 20% of claimed land development expenses was justified and what quantum of disallowance should be sustained. - HELD THAT: - AO disallowed 20% of the claimed land development expenses on account of absence of supporting details, and CIT(A) upheld that disallowance. The Tribunal observed that it was undisputed the assessee is in real estate business and that the Revenue did not assert the expenditures were bogus, as evidenced by AO not disallowing the entire claim. Applying a comparative and proportional editorial scrutiny of the facts, the Tribunal held that a 20% ad hoc disallowance was excessive in the circumstances and that justice would be met by reducing the ad hoc disallowance to 10% of the expenses. The Tribunal therefore modified the quantification of the disallowance while leaving intact the principle that some ad hoc adjustment was permissible in absence of full particulars. [Paras 8]

Disallowance reduced from 20% to 10% of land development expenses; ground partly allowed.

Deduction under section 80G - continuity/renewal of approval under section 80G(5) - requirement of evidentiary proof to substantiate expenditure - opportunity to produce evidence and verification by assessing officer - Whether the assessee is entitled to deduction under section 80G for donations claimed and whether the matter should be remanded for verification of evidence and validity of the donee's approval. - HELD THAT: - AO denied the 80G deduction because the claim was supported largely by journal entries and no receipts, and CIT(A) upheld the denial noting the approval on record was valid only up to 31.03.2010 and relying on CBDT circular. Before the Tribunal, the assessee confined its claim to donations made to a particular donee and undertook to produce bank evidence and receipts; Revenue did not controvert the contention that the donee's approval had not been shown to have been withdrawn. In these circumstances the Tribunal exercised remedial discretion to afford the assessee one opportunity to produce the requisite documentary evidence before the assessing officer. The AO is directed to verify the authenticity and validity of the receipts and the donee's approval and, if found in order, to allow the deduction in accordance with law. The Tribunal accordingly did not decide entitlement on merits but remitted the matter for verification. [Paras 12]

Matter remanded to AO for verification of documentary evidence of donation and validity/continuity of donee's 80G approval; provisionally allowed for statistical purposes.

Final Conclusion: Appeal partly allowed: ad hoc disallowance of land development expenses reduced to 10%; claim for deduction under section 80G remitted to the assessing officer for verification of receipts and validity of the donee's approval, with direction to allow deduction if the claim is substantiated.

Exemption under sections 11 and 12 - corpus donation versus voluntary contribution - direction of the donor - section 11(1)(d) benefit - reassessment notice under section 148 - binding effect of coordinate Bench/ITAT order in assessee s own case

Exemption under sections 11 and 12 - binding effect of coordinate Bench/ITAT order in assessee s own case - Validity of the CIT(A)'s grant of exemption under Sections 11 and 12 in view of the coordinate Bench/ITAT order in the assessee s own case for the same assessment year and allegations of commercialization/absence of AICTE approval. - HELD THAT: - The Tribunal noted that the ld. CIT(A) followed the earlier order of the co-ordinate Bench in the assessee s own case for AY 2009-10 which had held that the assessee was entitled to the benefits of Sections 11 and 12 despite certain disallowances. The Tribunal accepted the reasoning that disallowance of specific expenses (business promotion/entertainment) does not ipso facto destroy the charitable nature of the trust, relying on the co-ordinate Bench s reasoning that profit element does not negate charitable status when the trust deed and other materials establish charitable objects. Having regard to the co-ordinate Bench/ITAT finding, the Tribunal found no error in the CIT(A)'s application of that precedent and dismissed the Revenue s grounds challenging entitlement (including contentions about commercialization and AICTE approval). [Paras 7]

Revenue s appeal dismissed; CIT(A)'s grant of exemption under Sections 11 and 12 was upheld by following the co-ordinate Bench/ITAT finding for AY 2009-10.

Corpus donation versus voluntary contribution - direction of the donor - section 11(1)(d) benefit - reassessment notice under section 148 - Whether the sum of Rs. 1.30 crores received and credited to the trust fund is a corpus donation (exempt under section 11(1)(d)) or a voluntary contribution liable to be treated as income applied for charitable purposes. - HELD THAT: - The Tribunal recorded that Section 11(1)(d) excludes from income voluntary contributions made "with a specific direction that they shall form part of the corpus of the trust," and that the determinative factor is the direction of the donor, not the intention of the donee. The assessee had produced its request letter, receipt and bank evidence but did not place on record any communication or confirmation from the donor expressly directing the amount to constitute corpus. On a specific query the assessee s representative acknowledged that no such donor direction had been furnished to the lower authorities. The Department did not contest that production of a donor s direction would be decisive. In these circumstances the Tribunal declined to treat the amount as corpus on the record before it, and directed that the issue be remitted to the Assessing Officer for verification: the assessee was given 60 days to produce a donor s direction; failing which the AO must treat the receipt as a voluntary contribution and proceed accordingly (while the assessee would remain entitled to the benefits of Sections 11 and 12 to the extent applicable). [Paras 9]

Assessee s appeal allowed in part by remanding the corpus-qualification issue to the Assessing Officer for verification; assessee to furnish donor s direction within 60 days, failing which the amount will be treated as voluntary contribution.

Final Conclusion: The Tribunal dismissed the Revenue s appeal and upheld entitlement to exemption under Sections 11 and 12 by following the co-ordinate Bench/ITAT finding for AY 2009-10; the assessee s plea treating Rs. 1.30 crores as corpus was remitted to the Assessing Officer for verification, with the assessee directed to produce the donor s specific direction within 60 days, failing which the sum will be treated as voluntary contribution.

Reason to believe for reopening assessment under section 147 - Application of mind by Assessing Officer in forming belief for reassessment - Investigation report as actionable material for initiation of reassessment - Onus on assessee under section 68 to prove genuineness of share transactions - Requirement of departmental investigation and confrontation before making addition

Reason to believe for reopening assessment under section 147 - Application of mind by Assessing Officer in forming belief for reassessment - Investigation report as actionable material for initiation of reassessment - Validity of reassessment proceedings initiated by issuance of notice under section 148 (reopening of assessment). - HELD THAT: - The Tribunal held that the assessing officer had prima facie reason to believe that income chargeable to tax had escaped assessment on the basis of an exhaustive investigation report from the Directorate of Investigation identifying beneficiaries, PANs, transaction details and the penny-stock modus operandi. The material was not fanciful, speculative or mere rumour and there existed a direct nexus between that material and the assessee's return showing the same long term capital gain claimed as exempt. The AO applied his own mind to the information, examined ITD records and the return and formed a tentative inference of escapement of income; such tentative, honest and reasonable belief suffices at the stage of issuing notice under section 148. The request for supply of the entire investigation report did not invalidate reopening where the AO had furnished to the assessee the specific information relating to him, and there was no evidence that the AO mechanically or blindly acted on the investigation report. Consequently, reopening was held valid. [Paras 23, 24, 25, 26, 27]

Reopening of assessment was valid and the grounds challenging initiation of reassessment were rejected.

Onus on assessee under section 68 to prove genuineness of share transactions - Requirement of departmental investigation and confrontation before making addition - Sustenance of addition of the sale proceeds/claimed LTCG (treated as unexplained income) on merits. - HELD THAT: - Although the AO and CIT(A) concluded that the LTCG was bogus and added the sale proceeds as unexplained income, the Tribunal found that the assessee had produced contemporaneous documentary evidence: contract notes, broker ledger entries, demat account statements showing receipt and holding of shares, bank payments for purchase and receipts on sale, and securities transaction taxes paid. The Tribunal noted that, despite forming a prima facie belief, the AO did not carry out basic investigations available under departmental procedure (for example, obtaining depository and exchange time stamp data, counterparty details, broker examination or depository verification) to verify whether the trades were with identified exit/entry providers. In absence of departmental investigation to controvert the assessee's documentary proof and given that the AO made the addition by rejecting the assessee's explanations without confronting them by available enquiries, the addition of the full sale consideration was not sustainable. The Tribunal relied on the principle that when an assessee furnishes complete particulars and supporting documents, the AO must investigate contradictory material in his possession before making an addition; failure to do so warranted relief to the assessee. [Paras 30, 31, 32, 33, 34]

Addition was deleted; ground challenging the addition was allowed and the appeal was partly allowed on merits.

Final Conclusion: Reassessment notice under section 148 was validly issued and upheld, but the addition treating the claimed long term capital gain/sale proceeds as unexplained income was deleted because the AO failed to verify and confront available documentary material and to undertake basic investigations before making the addition; appeal partly allowed.

Revision under section 263 - computation of book profit under Explanation 1(f) to section 115JB - disallowance under section 14A read with Rule 8D - treatment of foreign exchange fluctuation loss as capital or revenue - application of Accounting Standards for restatement of foreign currency loans

Computation of book profit under Explanation 1(f) to section 115JB - disallowance under section 14A read with Rule 8D - revision under section 263 - Whether the assessment order was erroneous and prejudicial to the interests of revenue for failing to apply clause (f) of Explanation 1 to section 115JB in computing book profit, and whether the Pr. CIT was justified in exercising powers under section 263 on that ground. - HELD THAT: - The assessing officer accepted the assessee's book profit declared under section 115JB without examining applicability of clause (f) of Explanation 1, which requires adding back expenditure relatable to exempt income to net profit for computing book profit. Although a notional disallowance under section 14A read with Rule 8D had been worked out while computing normal income, the Tribunal observed that clause (f) requires computation from the profit and loss account and cannot be mechanically imported from the section 14A computation. Failure to consider clause (f) thus amounted to omission to apply a provision of the Act and rendered the assessment order erroneous within the scope of section 263, but the correct course is to have the assessing officer independently examine and compute any addition under clause (f) from the books of account without reliance on the section 14A quantification.

The assessment order was rendered erroneous for omission to examine clause (f) of Explanation 1 to section 115JB; the Tribunal set aside the Pr. CIT's view that section 14A computation must be adopted and directed the AO to independently examine and compute any addition under clause (f) with opportunity to the assessee.

Treatment of foreign exchange fluctuation loss as capital or revenue - application of Accounting Standards for restatement of foreign currency loans - revision under section 263 - Whether the assessment order was erroneous and prejudicial to revenue for not properly examining the claim of foreign exchange fluctuation loss on restatement of outstanding foreign currency loans and whether that loss is allowable as revenue expenditure or requires different treatment. - HELD THAT: - The assessee had restated outstanding foreign currency loans at year end in accordance with accounting standards, resulting in a marked-to-market loss which was capitalized in the books but claimed as deduction for tax purposes. The AO accepted the assessee's explanations on record but did not examine whether the loss was of capital or revenue nature, or whether section 43A applied. The Pr. CIT treated the marked-to-market loss as notional and disallowed it, but the Tribunal found that the authorities cited do not uniformly support the Pr. CIT's categorical view. Given that the question of classification (capital v. revenue) and the effect of accounting treatment are factual and legal questions that the AO had not addressed, the Tribunal held that the assessment is erroneous for lack of proper examination and remitted the matter to the AO for fresh inquiry and decision on merits, directing the AO to consider relevant accounting treatment and precedents but without being influenced by the Pr. CIT's views.

The Pr. CIT was justified in setting aside the assessment for want of proper examination, but the Tribunal rejected the Pr. CIT's categorical conclusion that the marked-to-market loss is notional and not capitalizable; the matter is remitted to the AO for fresh examination on whether the loss is capital or revenue and for decision in accordance with law.

Final Conclusion: The Tribunal partly allowed the appeal: (i) directed the AO to independently examine and compute any addition under clause (f) of Explanation 1 to section 115JB for assessment year: 2013-14, without importing the section 14A computation; and (ii) upheld restoration of the foreign exchange fluctuation claim to the file of the AO for fresh factual and legal adjudication on whether the loss is capital or revenue, rejecting the Pr. CIT's broad view that the loss is merely notional.

Assessment as capital gains under the head "capital gains" - capital asset - transfer by relinquishment/extinguishment of rights - right to obtain conveyance / right to specific performance - income from other sources - computation of capital gains under Section 48 - deduction under Section 54F - doctrine of part performance / Section 53A

Capital asset - transfer by relinquishment/extinguishment of rights - right to obtain conveyance / right to specific performance - assessment as capital gains under the head "capital gains" - income from other sources - The sum received by the assessee on account of relinquishing his rights under the agreement is taxable as income under the head capital gains and not as income from other sources. - HELD THAT: - The Tribunal accepted that the assessee's right under the agreement to obtain conveyance is a "capital asset" within the wide expression "property of any kind" and that extinguishment or relinquishment of such a right constitutes a "transfer" attracting capital gains treatment. The Tribunal relied on the ratio in H. Anil Kumar and other precedents holding that giving up a right to claim specific performance results in extinguishment of a right in property and hence a transfer of a capital asset; the consideration received in lieu of such relinquishment is exigible to tax as capital gain, subject to computation rules in Section 48. The Tribunal rejected the Revenue's contention that benefit was precluded because the assessee had not instituted specific performance proceedings, observing that a lis is not a precondition for the applicability of the principle. The Tribunal further held that the Registration Act provision invoked by the Revenue (in relation to Section 53A/part performance) was not attracted as there was no part performance or delivery of possession, and therefore the registration arguments did not negate the characterisation of the right as a capital asset. [Paras 10, 11, 12]

The amount received is chargeable to tax as capital gains.

Computation of capital gains under Section 48 - deduction under Section 54F - Computation of the capital gain and claim for deduction under Section 54F were not decided on merits and are remanded to the Assessing Officer for fresh determination after affording the assessee an opportunity of being heard. - HELD THAT: - Although the Tribunal held that the receipt is taxable as capital gains, it noted that the Assessing Officer and the CIT(A) did not examine the claim in accordance with Section 48 nor adjudicate the assessee's claim for deduction under Section 54F. The Tribunal therefore directed remand to enable the AO to compute the capital gains in conformity with Section 48 and to consider the assessee's deduction claim under Section 54F, following principles of natural justice. [Paras 13]

Remanded to the AO for computation of capital gains under Section 48 and for consideration of the deduction claimed under Section 54F after giving the assessee opportunity of being heard.

Final Conclusion: The Tribunal treated the appeal as allowed for statistical purposes, holding that the sum received on relinquishment of the agreement-right is taxable as capital gains; computation of the capital gain and the assessee's claim under Section 54F are remanded to the Assessing Officer for fresh adjudication after hearing the assessee.

Supervisory jurisdiction under Section 263 of the Income Tax Act - specified domestic transaction (SDT) under Section 92BA of the Income Tax Act - requirement to refer to Transfer Pricing Officer (TPO) - Form No. 3CEB filing does not ipso facto attract SDT provisions

Supervisory jurisdiction under Section 263 of the Income Tax Act - specified domestic transaction (SDT) under Section 92BA of the Income Tax Act - requirement to refer to Transfer Pricing Officer (TPO) - Form No. 3CEB filing does not ipso facto attract SDT provisions - Whether the Pr. Commissioner of Income Tax was justified in exercising powers under Section 263 to set aside the assessment on the ground that the Assessing Officer failed to refer the case to the TPO in respect of alleged specified domestic transactions. - HELD THAT: - The Tribunal found as an admitted fact that the transactions under scrutiny were sales made by the assessee to a sister concern. Clause (i) of Section 92BA, as it stood at the relevant time, deals with expenditure in respect of payments made to specified persons and thus does not encompass sales by the assessee to an associate enterprise. The assessee also did not claim benefits under Section 80IA or trigger any other heads of Section 92BA(ii)-(vi). Filing of Form No.3CEB, in itself, does not convert otherwise inapplicable transactions into specified domestic transactions; where the assessee demonstrates that the statutory definition of SDT is not met, mere procedural non-referral to the TPO does not render the assessment order erroneous or prejudicial to revenue. The Revisional Commissioner could and should have satisfied himself of these prima facie assertions before invoking revisionary powers. Because the ingredients of Section 263 were not fulfilled on the facts - there being no applicability of Section 92BA to the transactions in question - the exercise of revisionary jurisdiction to set aside the assessment was held unjustified.

Revisional order under Section 263 quashed; assessment order passed under Section 143(3) restored as Section 263 requirements were not satisfied.

Final Conclusion: The appeal is allowed. The revisional order under Section 263 setting aside the assessment is quashed and the assessment framed under Section 143(3) is restored for AY 2014-15.

Levy of late fee under Section 234E - mandatory nature of Section 234E - processing of TDS statements under Section 200A - duty to furnish quarterly TDS statements under Section 200(3) - no discretion to waive late fee

Levy of late fee under Section 234E - mandatory nature of Section 234E - processing of TDS statements under Section 200A - duty to furnish quarterly TDS statements under Section 200(3) - Levy of late fee under Section 234E for delayed filing of the quarterly TDS statement is mandatory and not removable on the ground of reasonable cause; adjustment of such fee by the Assessing Officer while processing the TDS statement under Section 200A is lawful. - HELD THAT: - The assessee admitted delay of 315 days in filing the quarterly TDS statement for Quarter No.1 of F.Y. 2017-18. Section 200(3) imposes the duty to deliver prescribed statements and Section 200A(1)(c) expressly requires that the fee, if any, shall be computed in accordance with Section 234E while processing TDS statements. Consequently, where there is a default in furnishing statements, the levy under Section 234E is consequential on processing and mandatory in nature; the Assessing Officer has no discretion to waive or delete the fee for reasons of 'reasonable cause'. The Court further observed that an intimation under Section 200A can be challenged only insofar as the A.O. has not complied with the statutory provisions in computing or adjusting amounts; no such violation was alleged. In the absence of any contention that the A.O. contravened the statutory scheme of Sections 200(3), 200A or 234E, the adjustment of the late fee by the A.O. was held to be in accordance with law and therefore sustainable. [Paras 6, 7]

The adjustment of late filing fee under Section 234E by the A.O. while processing the TDS statement under Section 200A is upheld and cannot be deleted on the ground of reasonable cause.

Final Conclusion: The appeal is dismissed; the levy of late fee under Section 234E for the delayed filing of the Quarter No.1 TDS statement of F.Y. 2017-18, as adjusted in the intimation under Section 200A, is sustained.

Revocation of customs broker licence - principles of natural justice - requirement of providing relied-upon documents (RUDs) and opportunity of cross-examination - reliance on confession and electronic records - verification of certificate of origin by competent foreign authority - right to livelihood - de novo adjudication and remand - compliance with Regulation 10(a), 10(d), 10(e) and 10(n) of CBLR

Revocation of customs broker licence - principles of natural justice - reliance on confession and electronic records - verification of certificate of origin by competent foreign authority - Validity of the adjudicating authority's revocation of the appellant's customs broker licence and imposition of penalty in the light of procedural fairness and evidentiary sufficiency. - HELD THAT: - The Tribunal found that the adjudicating authority passed the impugned revocation and penalty order without examining the relied-upon evidence and without providing copies of such evidence to the appellant, thereby denying opportunity to meet the allegations. The Commissioner had placed reliance on the suspension order and show-cause materials without ensuring that the adjudicating file contained and made available the documentary and electronic records said to support the charges. The only apparent evidence against the appellant was the statement of the authorised person and certain electronic communications; there was no verification from the competent Sri Lankan authority disputing the certificates of origin. The Tribunal concluded that the procedure adopted violated principles of natural justice and statutory safeguards (including the need for appropriate certification and availability of electronic records relied upon), and that reliance on unexamined material vitiated the impugned order. [Paras 17, 18, 19, 21]

Impugned revocation and penalty set aside for want of compliance with principles of natural justice and for lack of evidentiary examination.

Requirement of providing relied-upon documents (RUDs) and opportunity of cross-examination - de novo adjudication and remand - right to livelihood - compliance with Regulation 10(a), 10(d), 10(e) and 10(n) of CBLR - Relief to be granted and further procedure to be followed in adjudication upon setting aside the impugned order. - HELD THAT: - Having found procedural infirmity, the Tribunal directed that the matter be remitted to the Respondent Commissioner for fresh adjudication. The Commissioner is required to provide the appellant with the relied-upon documents (RUDs), to permit cross-examination of Revenue witnesses, and to undertake adjudication afresh in accordance with law. The Tribunal noted the serious effect of revocation on the appellant's right to livelihood and emphasised that pending proceedings elsewhere or subsequent show-cause notices could not substitute for the procedural requirements in the present adjudication. The re-adjudication was directed to be completed expeditiously. [Paras 22, 23]

Matter remitted for de novo adjudication after providing RUDs and opportunity for cross-examination; re-adjudication to be completed preferably within four months.

Final Conclusion: The appeal is allowed by setting aside the impugned order of revocation and penalty and remitting the matter to the Respondent Commissioner for de novo adjudication after supply of relied-upon documents and provision for cross-examination, to be completed expeditiously.

Confiscation of imported goods for concealment and misdeclaration - penalty under Section 112 and Section 114AA of the Customs Act - status of goods as prohibited by manner of import versus statutory prohibition list - green channel declaration and false declaration in arrival form - intention, mala fide and mens rea for imposition of customs penalties

Confiscation of imported goods for concealment and misdeclaration - green channel declaration and false declaration in arrival form - Whether the two gold bars concealed by the appellant are liable to absolute confiscation. - HELD THAT: - The Tribunal found as a fact that the appellant concealed the gold bars under his sock and crossed the green channel without informing Customs, although the arrival declaration form falsely indicated he was not carrying gold/bullion. Those facts demonstrate intention to avoid declaration and evade duty. The adjudicating authority's exercise of discretion to order absolute confiscation of the gold bars was upheld on the basis that concealment and false declaration rendered the import illegal and liable to confiscation. The Tribunal rejected the appellant's contention that he intended to declare the goods or that the retracted statement negated smuggling, holding that the act of concealment and the wrong declaration in the immigration/customs form established the offence irrespective of retraction. [Paras 9, 10]

Confiscation of the two gold bars upheld.

Penalty under Section 112 and Section 114AA of the Customs Act - intention, mala fide and mens rea for imposition of customs penalties - Whether the penalties imposed under Section 112 and Section 114AA of the Customs Act on the appellant were maintainable. - HELD THAT: - The Tribunal upheld the penalties imposed by the adjudicating authority, reasoning that the appellant's concealment and false declaration evidenced mala fide and intention to evade duty, thereby justifying imposition of penalties. The Tribunal observed that when goods are liable for confiscation on account of concealment and misdeclaration, corresponding penalties need not be interfered with. The appellant's submissions regarding absence of mens rea, retracted statement and reliance on other decisions were rejected as the facts varied and the record established culpability. [Paras 10]

Penalties under Section 112 and Section 114AA affirmed.

Status of goods as prohibited by manner of import versus statutory prohibition list - release on payment of fine and applicability of Foreign Trade / FEMA instructions - Whether the goods became "prohibited" by reason of the manner of import and whether the appellant was entitled to relief (release on payment of redemption fine) or immunity under Foreign Trade Policy/FEMA/RBI instructions. - HELD THAT: - The Tribunal rejected the appellant's argument that gold bars are not "prohibited goods" merely because they are not listed as prohibited under statute and that the adjudicating authority exceeded the show cause notice. It held the adjudicating authority permissibly treated the goods as liable to confiscation because of the manner of concealment and misdeclaration showing illegal import; the question whether statutory lists label the goods as prohibited did not negate the illegality arising from concealment. The request for release on payment of redemption fine and contentions based on Foreign Trade (Development and Regulation) Act, FEMA or RBI instructions were not accepted because import by concealment and misdeclaration cannot be regularised by invoking those provisions or Circulars in the facts of this case. [Paras 3, 9, 10]

Goods treated as liable to confiscation for manner of illegal import; reliefs under Foreign Trade/FEMA/RBI not available.

Final Conclusion: The Tribunal dismissed the appeal, upholding the order of absolute confiscation of the concealed gold bars and affirming the penalties imposed, on the factual findings of concealment, false arrival declaration and intention to evade customs duty.

Natural justice and fair hearing - interim restraint orders in public interest - prima facie satisfaction based on suspicion - vicarious liability of MD/CEO for corporate fraud - reliance on preliminary/forensic reports and subsequent evidence - quashing of confirmatory orders with liberty to issue fresh show cause notice

Natural justice and fair hearing - prima facie satisfaction based on suspicion - interim restraint orders in public interest - Validity of the confirmatory order upholding interim directions restraining the appellants from accessing/dealing in the securities market. - HELD THAT: - The Tribunal found that the confirmatory order primarily rested on suspicion and on non-crystallised findings regarding individual roles of the appellants (paras 28-29 as quoted). Although the interim order and the PwC report and SEBI's investigation indicated large-scale irregularities in Ricoh's accounts, the impugned order did not meaningfully deal with the appellants' detailed submissions and evidence and proceeded to confirm the interim directions without crystallised findings against them. Given the prolonged operation of the restraint (about 21 months at the hearing) and the fact that Ricoh was under liquidation and the appellants were not in a position to influence the company, the Tribunal held that sustaining such restraints on the basis of mere suspicion and by attributing vicarious liability to the appellants as former senior officers was not tenable. Applying these considerations, the Tribunal concluded that the impugned order could not be sustained qua the appellants. [Paras 17, 18, 19]

Impugned confirmatory order quashed insofar as it restrains the appellants; the interim directions cannot be sustained on the present record.

Reliance on preliminary/forensic reports and subsequent evidence - quashing of confirmatory orders with liberty to issue fresh show cause notice - Whether SEBI may proceed further against the appellants after the Tribunal quashed the confirmatory order. - HELD THAT: - The Tribunal made clear that its decision to quash the impugned order does not preclude SEBI from continuing its investigation or from relying on additional materials. SEBI was expressly left at liberty to issue a fresh show cause notice and proceed in accordance with law if evidence against the appellants emerges from the forensic audit report or SEBI's own investigation. The Tribunal therefore removed the interim restraint but permitted fresh adjudicatory steps based on any material that may properly be placed on record and after giving the appellants an opportunity to be heard. [Paras 19]

SEBI permitted to issue fresh show cause notice and proceed if requisite evidence is available; no order as to costs.

Final Conclusion: The Tribunal allowed the appeals, quashed the confirmatory order insofar as it restrained the appellants, and granted SEBI liberty to issue a fresh show cause notice and proceed afresh on the basis of any admissible evidence including the forensic audit report.

Maintainability of application by the Resolution Professional for restitution and penal action - violation of moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - fraudulent conduct attracting liability under section 66(1) of the Insolvency and Bankruptcy Code, 2016 - penal liability for willful contravention under section 74(1) of the Insolvency and Bankruptcy Code, 2016 - consequences of contumacious non compliance and contempt of appellate orders - remedial direction for restoration of funds and imposition of fine

Maintainability of application by the Resolution Professional for restitution and penal action - The application filed by the Resolution Professional under the Code seeking directions for restitution of funds and proceedings against directors is maintainable. - HELD THAT: - The Adjudicating Authority examined the scope of Sections relied upon by the Resolution Professional and the context of the NCLAT directions. The Tribunal found that the allegations that directors withdrew money during the Corporate Insolvency Resolution Process (CIRP) without RP's approval and in breach of moratorium and undertakings fall within the ambit of the remedies available to the RP under the Code, and that the petition is not barred for want of proper parties. The contention of non joinder of certain suppliers was not supported by evidence and was held unsustainable; consequently the challenge to maintainability was rejected. [Paras 15, 16]

Application by the Resolution Professional is maintainable and the preliminary objection on non joinder is dismissed.

Violation of moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 - consequences of contumacious non compliance and contempt of appellate orders - Directors withdrew monies during the moratorium and repeatedly disobeyed the NCLAT directions and undertakings, constituting willful non compliance. - HELD THAT: - The Tribunal relied on the NCLAT's findings and the material on record to conclude that withdrawals made after the moratorium and without the RP's approval were established. The NCLAT had earlier recorded that the acts were 'wholly illegal', noted repeated undertakings by the directors which were not honoured, and observed prima facie grounds for contempt and for treating the withdrawals as actionable misconduct. The present Tribunal found the explanations by the directors uncorroborated and unacceptable, and that their conduct evidenced deliberate disobedience of appellate orders and undertakings. [Paras 11, 12, 13, 14, 18]

The directors are held to have violated the moratorium and disobeyed NCLAT directions; their conduct amounts to willful non compliance warranting remedial action.

Fraudulent conduct attracting liability under section 66(1) of the Insolvency and Bankruptcy Code, 2016 - penal liability for willful contravention under section 74(1) of the Insolvency and Bankruptcy Code, 2016 - remedial direction for restoration of funds and imposition of fine - Directors' actions satisfy the ingredients for proceedings under section 66(1) and section 74(1) of the Code, and monetary restitution plus a fine are ordered by the Adjudicating Authority. - HELD THAT: - Applying the statutory framework, the Tribunal observed that withdrawals during CIRP without RP's consent and in breach of moratorium and undertakings fall within fraudulent or improper conduct for which the Adjudicating Authority may pass orders under section 66(1). Further, the ingredients of willful contravention under section 74(1) were found proved by the directors' deliberate disobedience of the moratorium and appellate orders. While imprisonment is a statutory consequence, the Adjudicating Authority noted it lacks power to order imprisonment and indicated recourse to other authorities for criminal prosecution. Exercising its power to impose monetary sanction, the Tribunal directed restoration of the balance sum to the corporate debtor's account within a specified time and prescribed a penal fine in default. [Paras 15, 18, 19]

Directors are liable under section 66(1) and section 74(1); the Adjudicating Authority orders restitution of the remaining withdrawn funds to the corporate debtor within two weeks and prescribes a monetary fine in default.

Final Conclusion: The Tribunal dismissed preliminary objections, held that the directors unlawfully withdrew funds during the moratorium and breached undertakings, concluded that the conduct attracts liability under the Code, directed repayment of the remaining withdrawn amount to the corporate debtor within two weeks and ordered a specified monetary penalty in default; criminal prosecution was left to appropriate fora.

Operational Creditor - Secured Creditor - Restoration of applications - Condonation of delay - Government dues as operational debt - Futility of restoration where claim lacks merit

Operational Creditor - Secured Creditor - Government dues as operational debt - Characterisation of the State Tax Officer's claim as an operational creditor and the legal consequence for the restoration applications. - HELD THAT: - The Tribunal, applying the legal position laid down by the Hon'ble Supreme Court in Swiss Ribbons Pvt. Ltd. and in Committee of Creditors of Essar Steel India Ltd., held that dues payable to the Government arising under any law fall within the category of an operational creditor and not a secured creditor. Consequently, the principal relief sought in the original application - to treat the State Tax Officer as a secured creditor - lacks merit as a matter of settled law. Given that the substantive claim could not succeed even if procedural irregularities (such as non-prosecution or delay) were condoned, restoration of the earlier applications for condonation and restoration would be a futile exercise. The Tribunal therefore addressed the restoration application in light of the settled classification of government dues as operational debts and disposed of the IA accordingly.

IA disposed of with observation that government dues are operational debts and the State Tax Officer cannot be treated as a secured creditor; restoration of the earlier IAs would be futile in view of settled law.

Final Conclusion: The application for restoration is disposed of: the Tribunal refused to effect restoration for the purpose of treating State tax dues as secured claims because government dues are held to be operational debts and the principal claim lacks merit under settled Supreme Court authority.

Composite works contract - Works Contract Service - Commercial or Industrial Construction Service - Construction of Complex Service - 67% abatement - gross amount charged - composition scheme (WCS) - extended period of limitation - option/intimation for composition scheme

Composite works contract - Works Contract Service - Commercial or Industrial Construction Service - Construction of Complex Service - gross amount charged - Whether services forming part of composite contracts are exigible to service tax under CICS/CCS after introduction of Works Contract Service and whether composite contracts must be classified as WCS - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in CCE v. Larsen & Toubro Ltd. and subsequent Tribunal decisions to hold that composite contracts involving transfer of property in goods cannot be sustained under CICS/CCS. With effect from 01/06/2007, such composite contracts fall within the statutory definition of Works Contract Service and, therefore, a composite contract that is indivisible is exigible only under WCS (and not under CICS/CCS) for the post-01/06/2007 period. The Tribunal noted CBIC circular No.128/10/2010 which directs that ongoing contracts be reclassified as WCS after 01/06/2007 (though composition benefits may not apply to ongoing contracts), and relied on earlier Tribunal precedents to the same effect. Applying these principles to the facts, the demand framed under CICS/CCS for composite contracts was found unsustainable and the impugned order was set aside on this ground. [Paras 6, 9]

Composite contracts involving transfer of property in goods are exigible as Works Contract Service post 01/06/2007 and cannot be demanded under CICS/CCS; the impugned demands under CICS/CCS are set aside on this ground.

67% abatement - composite works contract - Whether the assessee was wrongly denied the benefit of 67% abatement under CICS/CCS on the ground that materials supplied by customers were not included in the gross amount charged - HELD THAT: - The Tribunal observed that the Larger Bench decision in Bhayana Builders (upheld by the Supreme Court) establishes that while claiming the 67% abatement under CICS/CCS the value of materials supplied by the service recipient need not be included. Moreover, insofar as composite contracts are to be treated as WCS (post-01/06/2007), the question of abatement under CICS/CCS becomes largely irrelevant for such contracts. The Tribunal accordingly held that denial of abatement on the ground that customer-supplied materials were not included in the gross amount charged was not sustainable. [Paras 6]

Denial of 67% abatement on the stated ground is not sustainable; in any event composite contracts classified as WCS do not call for abatement under CICS/CCS.

Composition scheme (WCS) - option/intimation for composition scheme - Whether failure to intimate exercise of option for payment under the WCS composition scheme defeats the assessee's classification and composition payment - HELD THAT: - Relying on Tribunal precedents (including Vaishno Associates, Bridge & Roof, ABL Infrastructure, Mehta Plast), the Tribunal held that mere non-filing of a formal intimation does not justify denying the substantial benefit of the composition scheme where the assessee has paid tax and filed returns under WCS. The Tribunal recorded that denial of benefit solely for procedural deficiency of not filing a separate intimation is impermissible. [Paras 7]

The demand cannot be sustained merely because the assessee did not file a formal intimation to opt for the WCS composition scheme.

Extended period of limitation - service tax leviable on gross amount - Whether invocation of the extended period of limitation for the demand covering December 2005 to March 2009 was justified - HELD THAT: - The Tribunal noted that the assessee had been regularly paying service tax (albeit under categories later held inapplicable) and that the law and administrative position regarding levy on construction services underwent material changes and litigation, as reflected in CBIC circulars. In these circumstances the Tribunal found no satisfactory material to justify invocation of the extended period for alleged suppression and held that the demand for December 2005 to March 2009 was time-barred. [Paras 8]

The demand for the period December 2005 to March 2009 is barred by limitation; extended period invocation is not justified.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order in its entirety: composite contracts were to be treated as Works Contract Service (not CICS/CCS) post 01/06/2007; denial of 67% abatement was unsustainable; failure to file a formal intimation did not defeat WCS composition treatment; and the demand for December 2005 to March 2009 was time barred.

Wilful defaulter identification under RBI Master Circular - Natural justice in administrative/committee proceedings - Availability of alternate remedy by review committee and writ jurisdiction - Validity of show-cause notice and authority of issuing officer - Corporate veil and imputation of notice to directors

Validity of show-cause notice and authority of issuing officer - The show-cause notice dated April 6, 2019 and the identification process initiated thereunder were valid and not vitiated by being issued by an officer who was not a member of the WDIC. - HELD THAT: - The Court read the show-cause notice and the provings as a whole and held that the genesis of the identification process was in consonance with the RBI Master Circular dated July 1, 2015. Technical infirmity in the identity of the officer issuing the notice was not sufficient to nullify the proceeding where the identification committee (WDIC) itself properly considered the matter. The Court emphasised that a notice ought not to be picked for technical faults if, read as a whole, it conveys the grounds the borrower has to meet. No jurisdictional usurpation or patent illegality was found that would justify writ intervention on this ground.

Challenge to the validity of the show-cause notice rejected; notice and identification process held legally tenable.

Natural justice in administrative/committee proceedings - Consideration of belated replies and personal hearing - There was no violation of the principles of natural justice in respect of non-consideration of the petitioners' belated reply or in respect of the conduct of the personal hearing. - HELD THAT: - The Court found that multiple opportunities, including inspection of documents, extensions of time and an offered personal hearing, were afforded to the petitioners. Although the petitioners' reply was filed late, the WDIC considered its salient objections in the impugned order. Given the commercial exigencies and time-sensitive character of wilful-defaulter proceedings, the identification committee was entitled to regulate time and to treat dilatory conduct adversely. The Court held that alleged factual disputes (e.g., situs of visit, invoices) were technical and required document re-appreciation beyond the writ court's scope and suited to the review committee.

No breach of natural justice or denial of meaningful hearing established; contention rejected.

Availability of alternate remedy by review committee and writ jurisdiction - The writ petition was not maintainable as no rare or exceptional circumstance was shown to bypass the alternate statutory remedy of representation before the Wilful Defaulter Review Committee (WDRC). - HELD THAT: - Relying on the scheme of the RBI Master Circular (2015) and the law as interpreted in Jah Developers, the Court observed that the WDIC's decision is subject to review by a separately constituted review committee. The Court held that review before the co-ordinate review committee is the appropriate remedy for legal and factual grievances and that the identification committee's order must be justiciable at the first instance to permit immediate writ intervention. No jurisdictional error, mala fides or patent illegality of a kind to warrant exercise of extraordinary writ jurisdiction was made out. Consequently, the High Court declined to entertain the petition at this stage, while leaving the remedy of representation to the review committee open to the petitioners.

Writ petition dismissed for lack of exceptional grounds; petitioners directed to seek representation before the WDRC.

Corporate veil and imputation of notice to directors - Service of the show-cause notice on the borrower-company was held sufficient to impute notice to its directors; declaration against directors as well as the company was not invalid for want of separate service. - HELD THAT: - The Court held that the declaration of wilful defaulter against petitioner directors arose from acts committed as directors of the borrower-company and, therefore, service upon the company sufficed. The principle that directors cannot feign ignorance under the corporate veil in the circumstances was applied; the declaration concerned conduct attributable to the corporate entity and its responsible individuals. The Court found no ground to quash the declaration on the basis that some petitioners were not individually served with the initial notice.

Challenge based on non-service upon individual directors rejected; service on the company held adequate.

Review by Wilful Defaulter Review Committee - The matter is to be considered afresh by the Wilful Defaulter Review Committee upon representation by the petitioners; the review is the proper forum for re-examination of factual and legal objections. - HELD THAT: - Although the High Court dismissed the writ petition, it expressly granted the petitioners liberty to submit a representation before the WDRC, taking all objections on facts and law (including those raised in the writ), within a specified timeframe and subject to payment of costs. The Court clarified that the review committee, constituted in consonance with the RBI Master Circular (2015), shall proceed to review the WDIC's order upon receipt of representation and, if necessary, give personal hearing and re-examine documents and disputes of fact. This direction represents the Court's channeling of the dispute to the statutorily envisaged review mechanism rather than remitting specific factual issues for determination by the writ court.

Review committee to consider petitioners' representation and, if appropriate, rehear and re-decide the identification order in accordance with the Master Circular.

Final Conclusion: Writ petition dismissed. The High Court found the WDIC's show-cause and identification process to be legally tenable, recorded no breach of natural justice or jurisdictional infirmity warranting writ interference, and directed the petitioners to pursue representation before the Wilful Defaulter Review Committee within the time and conditions stipulated by the Court; costs were awarded against the petitioners.