TaxTMI Updates e-Newsletter
Jul 10,2026

Scope of review jurisdiction - Error apparent on the face of the record - Patent illegality - New material for review - HELD THAT: - The Court held that, on a bare perusal of the review application, none of the recognised grounds for review had been established. It found that no error apparent on the face of the record, no new material, and no patent illegality had been made out so as to justify reopening the earlier judgment. The contention regarding misinterpretation of judgments and non-consideration of certain prayers was therefore insufficient to invoke review jurisdiction. [Paras 7, 8]

The review application was dismissed as no ground warranting review of the earlier judgment was made out.

Final Conclusion: The Court declined to entertain the review petition, holding that the application disclosed none of the accepted grounds for review, namely error apparent on the face of the record, new material, or patent illegality.

Same subject-matter bar in GST proceedings - Parallel investigation by State and Central GST authorities - reasons to believe - Communication of grounds of arrest in GST offences - Validity of arrest under cognizable GST offences

Same subject-matter bar in GST proceedings - Parallel investigation by State and Central GST authorities - HELD THAT: - Applying ARMOUR SECURITY (INDIA) LIMITED [2025 (8) TMI 991 - SUPREME COURT], the Court held that the statutory bar operates only upon initiation of adjudicatory proceedings through a show-cause notice on the same subject-matter, and not merely because inquiry, search or investigation has commenced. The Supreme Court has also held that, where overlap is noticed, the authorities may decide inter se which authority should continue and the other must transfer the material. In the present case, after the complaint was received, the State GST authorities transferred the pending investigation to the Central GST authorities. Therefore, the contention of impermissible parallel proceedings did not survive. [Paras 8]

The challenge to the complaint and criminal proceedings on the ground of dual or parallel GST proceedings was rejected.

Communication of grounds of arrest in GST offences - Validity of arrest under cognizable GST offences - HELD THAT: - The Court noted the prevailing GST Investigation Wing instruction requiring that grounds of arrest be explained and furnished in writing as an annexure to the arrest memo, with acknowledgment from the arrested person. On the material extracted in the order, the arrest memo and the written grounds of arrest were communicated to the petitioner and acknowledged by him. The Court further held that the arrest was in conformity with the principles stated in RADHIKA AGARWAL [2025 (2) TMI 1162 - SUPREME COURT (LB)] and VIHAAN KUMAR [2025 (2) TMI 1104 - SUPREME COURT]. In that view, the petitioner could not contend that the arrest was vitiated so as to nullify the proceedings. [Paras 9]

The arrest was upheld as lawful and no ground was made out to obliterate the proceedings on that basis.

Final Conclusion: The petition was dismissed. The Court held that the proceedings initiated by the Central GST authorities were not barred as impermissible parallel proceedings, and that the petitioner's arrest complied with the governing legal requirements and did not warrant quashing of the prosecution.

Alternative statutory remedy - Maintainability of writ petition against appellate order - Binding nature of departmental circulars - HELD THAT: - The Court held that the petitioner was in substance seeking adjudication on the effect of the circular and on the applicability of amended Rule 89(5), but such questions could be examined by the GST Appellate Tribunal in an appeal under Section 112. Relying on the principle stated in Ratan Melting and Wire Industries [2008 (10) TMI 5 - SUPREME COURT], the Court observed that circulars merely reflect the executive understanding of the statute and cannot control the declaration of law by courts; therefore, the apprehension that the Tribunal would be unable to examine the statutory position because of the circular was misplaced. Since an efficacious statutory remedy was available against the Order-in-Appeal, the Court declined to exercise its discretionary jurisdiction under Article 226 and left the merits of the appellate order open for consideration in the statutory appeal. [Paras 9, 10, 11, 12, 13]

The writ petition was dismissed as not entertainable, with liberty to the petitioner to avail the appellate remedy under Section 112 within the notified timeline.

Final Conclusion: The Court declined to entertain the writ petition against the Order-in-Appeal on the ground of availability of an efficacious statutory remedy before the GST Appellate Tribunal. It clarified that no opinion was expressed on the merits and granted liberty to the petitioner to pursue the statutory appeal within the notified time.

Alternative statutory remedy under GST appellate mechanism - Maintainability of writ petition after constitution of GST Appellate Tribunal - Statutory pre-deposit for appeal

Alternative statutory remedy under GST appellate mechanism - Maintainability of writ petition after constitution of GST Appellate Tribunal - Statutory pre-deposit for appeal - Exhaustion of Remedies - HELD THAT: - The Court held that a writ petition may be entertained against an appealable order when the statutory appellate forum is non-functional, since a person cannot be left remediless. At the same time, where the statute prescribes conditions for filing such appeal, the writ court cannot permit the party to bypass those statutory requirements. As the GST Appellate Tribunal had by then been constituted and had started functioning, and the notification had specified the period for filing appeals under Section 112, the controversy raised by the petitioner was capable of adjudication by that Tribunal. On that basis, the Court declined to continue with the writ proceeding and directed the petitioner to pursue the statutory remedy in accordance with Section 112 and the notified terms. [Paras 5, 6]

The petitioner was relegated to the remedy of appeal before the GST Appellate Tribunal, subject to compliance with the statutory requirements under Section 112 and the notified filing period.

Final Conclusion: The writ petition was disposed of on the ground that the GST Appellate Tribunal was now functional and the petitioner had an effective statutory appellate remedy. No opinion was expressed on the merits of the first appellate order.

Refund limitation under GST - Exclusion of limitation period by CBIC notification - Rejection of the refund application as time-barred, despite the notified exclusion of the period from 1st March, 2020 to 28th February, 2022 for computing limitation under the refund provisions - HELD THAT: - The Court noted that although the refund application had been filed beyond the ordinary two-year period, a notification issued by the Central Board of Indirect Taxes and Customs directed exclusion of the period from 1st March, 2020 to 28th February, 2022 for computation of limitation under Sections 54 and 55. Since the revenue did not dispute either the issuance of the notification or its applicability to the petitioner's case, the rejection of the refund claim on limitation could not stand. The matter therefore required reconsideration in light of the notification. [Paras 9, 10, 11]

The impugned rejection order was quashed and the competent authority was directed to reconsider the refund claim in light of the notification.

Final Conclusion: The writ petition was allowed. The Court held that the refund claim could not be rejected as barred by limitation once the notified exclusion period was applicable, and directed fresh consideration of the claim accordingly.

IGST refund on exports - Rule 96 refund withholding conditions - Amendment of shipping bills under Section 149 - HELD THAT: - The Court found that the customs authority rejected the claim solely on the footing that amendment from LUT to IGST-paid exports could not be allowed under Section 149 of the Customs Act for want of contemporaneous documentary evidence. However, the refund application contained an independent prayer for grant of refund of IGST already paid on exports, and the authority failed to apply its mind to that prayer. Since the export of goods was not disputed, the export invoices were on record, and the petitioner's case did not fall within any of the three contingencies in Rule 96(4) of the CGST Rules under which refund may be withheld, the claim had to be processed under the statutory refund mechanism in Rule 96.

This position of law is already clarified by this Court in the judgment of Amit Cotton Industries [2019 (7) TMI 472 - GUJARAT HIGH COURT], which is also followed subsequently by the Coordinate Bench of this Court in Special Civil Application decided vide judgment [2025 (8) TMI 1200 - GUJARAT HIGH COURT].

In these circumstances, the Court directed processing of the refund without entering into the question of amendment under Section 149. [Paras 4, 5, 6, 7, 9]

The respondents were directed to process the petitioner's refund claim under Rule 96 of the CGST Rules, and the question of amendment under Section 149 was left open at that stage.

Final Conclusion: The Court held that the refund claim had been wrongly rejected by confining the matter to amendment under Section 149 of the Customs Act and by not examining the claim under Rule 96 of the CGST Rules. As export of goods and payment of IGST were not in dispute, and the case did not fall within Rule 96(4), the respondents were directed to process the refund.

Omission of refund-restricting rule without saving clause - Pending proceedings not constituting transactions past and closed - Lapse of proceedings for denial of refund - Proceedings for denial of refund founded on Rule 89(4B), after omission of that rule without a saving clause where the matter had not attained finality. - HELD THAT: - The Court accepted that the controversy stood covered by M/s. JJ Plastalloy Private Limited[2025 (12) TMI 311 - GUJARAT HIGH COURT], and the subsequent judgment in the allied matters. Adopting the ratio of the earlier group matters dealing with Notification No. 20/2024, the Court proceeded on the basis that omission of Rules 89(4B) and 96(10) without any saving clause renders the omitted provision inapplicable to all pending proceedings, including matters pending before the Court or before the adjudicating authority, and even orders not yet final because they do not amount to transactions past and closed. On that basis, the impugned order-in-original and consequential action, being founded on the omitted rule, could not be sustained. [Paras 4, 5]

The writ petition was allowed, and the impugned order-in-original and subsequent action were quashed in terms of the earlier binding judgment.

Final Conclusion: Following the earlier Gujarat High Court ruling on the effect of omission of Rule 89(4B) without any saving clause, the Court held that the pending refund-denial proceedings could not survive. The impugned order-in-original and consequential action were therefore quashed, and the writ petition was allowed.

Interest on delayed refund - Refund application date for accrual of interest - Illegal refusal of original refund claim - HELD THAT: - The Court held that, once the earlier refusal to process the refund application dated 14.10.2023 had already been found illegal and set aside, the respondent authority was bound to treat that original application as the relevant date for considering accrual of interest. The later application filed after the earlier writ order was only a consequence of the respondents' unlawful action and could not deprive the petitioner of interest otherwise available under Section 56. Accordingly, the claim for interest had to be processed by taking into account the date of the initial refund application and not the subsequent filing. [Paras 6, 7]

The impugned orders were set aside to the extent they denied interest, and the respondents were directed to decide the claim of interest on refund by considering the original refund application date.

Final Conclusion: The Court held that where the original refund application had been wrongly refused and that refusal was subsequently set aside, interest on refund could not be denied by treating the later refiled application as the starting point. The respondents were directed to process the claim for interest by reckoning the original refund application date.

Proper service of show cause notice on GST Portal - Violation of principles of natural justice - Ex Parte Adjudication - Uploading the show cause notice on the GST Portal under "Additional Notices" instead of "Notices and Orders" - HELD THAT: - The Court recorded that it was undisputed that the show cause notice had not been uploaded under the head "Notices and Orders" on the GST Portal, but under "Additional Notices". On that admitted position, the Court held that there was no proper service of the notice upon the petitioner. Since the adjudication order and the recovery notice had been issued in furtherance of a notice that was not properly served, the entire action was held unsustainable for breach of natural justice. Liberty was, however, reserved to the authority to issue a fresh show cause notice and proceed afresh in accordance with law, and the Court clarified that limitation would not obstruct issuance of such fresh notice in substitution of the earlier one. [Paras 5, 6, 7, 8, 9]

The impugned show cause notice, the consequential ex parte order and the recovery notice were quashed, with liberty to issue a fresh notice and complete the proceedings afresh in accordance with law.

Final Conclusion: The writ petition was disposed of by setting aside the impugned show cause notice, adjudication order and recovery notice on the ground of absence of proper service through the GST Portal. The authority was permitted to issue a fresh notice and proceed afresh, with limitation not to stand in the way of such course.

GST reimbursement under works contracts - Statutory limits on directions affecting GST returns, limitation, interest and penalty - Consideration of representation in accordance with law - HELD THAT: - The Court held that, in view of the later Co-ordinate Bench decisions in Unique constructions and others [2026 (7) TMI 519 - KARNATAKA HIGH COURT] and Chandrashekaraiah [2023 (6) TMI 93 - KARNATAKA HIGH COURT], any dispute regarding reimbursement of incremental tax under the contract is a matter between the contractor and the employer, while liability under the GST enactments, including levy, assessment, recovery and enforcement, must be determined strictly under the statute. Consequently, no judicial direction could be issued permitting filing of revised returns contrary to the statutory provisions, or waiving limitation, interest or penalty under the GST laws. On that basis, the learned Single Judge was not justified in directing reimbursement of GST amount and could only direct consideration of the representations in accordance with law. [Paras 6]

The impugned order was modified by substituting the reimbursement direction with a direction to consider the representations in accordance with law.

Final Conclusion: The writ appeal was disposed of by modifying the order of the learned Single Judge. The direction for reimbursement of GST amount was replaced with a direction to the concerned authorities to consider the respondent's representations in accordance with law.

Cancellation of GST registration for non-filing of returns - failed to take note of the show cause notice issued - Restoration of registration - HELD THAT:- Following Motaleb Bhuyan[2025 (3) TMI 670 - GAUHATI HIGH COURT], the Court set aside the cancellation of the petitioners' GST registration, directed filing of returns from 13.05.2024 till date within the stipulated time, and left the petitioners liable to pay arrears of tax, penalty, interest and late fees.

Reopening of assessment on the basis of seized third-party material - Live nexus between seized material and the assessee - Information suggesting escapement of income

Validity of the notice issued u/s148 for Assessment Year 2022-23 on the basis of an entry in a broker's seized inquiry register concerning land at Village Kaneti - HELD THAT: - The Court held that the seized register entry could not furnish valid information suggesting escapement of income in the petitioner's case. The entry was dated 29.11.2018, whereas the petitioner's purchase was effected about twenty-eight months later on 03.04.2021; it therefore represented, at best, a market inquiry or asking rate and not a record of the petitioner's transaction.

The Court further found that the entry pertained to a larger area than what was actually purchased, contained the name of another person, and was unsupported by any inquiry linking that person or the petitioner to any undisclosed consideration.

The searched person's own statement showed that such registers contained details of land available for sale and did not justify a blanket presumption that all entries recorded actual on-money transactions. In these circumstances, the revenue had failed to establish the required live and direct nexus between the seized material and the petitioner, and a document relatable to Assessment Year 2019-20 could not be used, without such nexus, to reopen Assessment Year 2022-23. [Paras 13, 14, 15, 16, 17]

The notice under Section 148 was held to be unsustainable and was quashed.

Final Conclusion: The High Court held that the reassessment notice had been issued on conjectural material lacking any live nexus with the petitioner. As the seized register entry neither related to the petitioner's transaction nor supported reopening for Assessment Year 2022-23, the notice under Section 148 was quashed.

Reopening of assessment beyond four years - Change of opinion - Absence of fresh tangible material - Scrutiny assessment under section 143(3) - Failure to disclose material facts

HELD THAT: - The Court found that, in the original scrutiny assessment, the assessee had produced the relevant books of account, bills, vouchers, ledgers and addresses in relation to the expenditure heads later referred to in the recorded reasons. The reassessment notice was issued on the basis of material already available on record, and the Revenue was unable to point to any new or fresh tangible material coming into the possession of the Assessing Officer after completion of the assessment under section 143(3).

In such circumstances, the reopening was held to be only a change of opinion. Since the notice was issued beyond four years from the end of the relevant assessment year, and no failure to disclose fully and truly all material facts was shown, the assumption of jurisdiction for reopening was without authority of law. [Paras 4, 5, 6]

The notice under section 148 and the consequential proceedings were quashed.

Final Conclusion: The writ petition was allowed. The Court held that the reassessment had been initiated on the very same material already scrutinised in the original assessment, without any fresh tangible material and beyond four years, and therefore the impugned notice and consequential proceedings were set aside.

Validity of assessment order u/ss 147, 144 and 144B -Use of materials from a different assessment year - Non-application of mind in reassessment

HELD THAT: - The Court found from the show-cause notice that, though the proceeding pertained to assessment year 2018-19, the Assessing Officer referred to assessment proceedings for assessment year 2024-25. Since the assessment order was the culmination of that proposed variation and did not reveal that the authority had relied on figures relating to assessment year 2018-19, the Court held that materials, facts and figures of one assessment year cannot be utilized for making assessment of another assessment year. On that defect, the order was set aside and the matter was remitted for fresh adjudication after giving the assessee opportunity of hearing and to produce documents. [Paras 6]

The assessment order was set aside and the matter was remitted to the authority concerned for fresh adjudication in accordance with law after affording opportunity to the assessee.

Final Conclusion: The writ petition was disposed of by setting aside the reassessment order for assessment year 2018-19, as the record showed reference to materials of another assessment year without clarity that the assessment had been confined to the relevant year. The matter was remitted for fresh consideration after opportunity of hearing and production of documents.

Deduction under Section 80P and belated return - Condonation of delay in filing return by co-operative societies - Liberal construction of CBDT Circular No. 13/2023

Rejection of the co-operative society's application for condonation of delay in filing return, thereby denying timely treatment of the return for claiming deduction u/s 80P - HELD THAT: - The Court held that CBDT Circular No. 13/2023 was issued specifically to deal with belated returns filed by co-operative societies seeking deduction under Section 80P for the relevant assessment years, and the application for condonation had to be examined in that background. Since the petitioner had filed its return after the statutory change requiring co-operative societies to furnish returns within time, and was filing such return for the first time for the relevant assessment year, refusal to condone the delay would cause serious hardship by denying deductions otherwise lawfully available. The Court further held that, when substantial justice and technicalities conflict, a liberal approach must prevail, and the lack of full awareness of the amended compliance requirements by a minimally staffed co-operative society constituted a genuine difficulty warranting condonation. [Paras 8, 9, 10, 11]

The impugned order rejecting condonation was set aside, and the return filed by the petitioner was directed to be treated as having been filed within time.

Final Conclusion: The High Court allowed the writ petition and held that the petitioner's delayed return for the relevant assessment year ought to be treated as filed within time. The rejection of condonation was set aside in view of the object of CBDT Circular No. 13/2023 and the need for a liberal approach in such cases.

Charitable purpose under general public utility - Cancellation of registration u/s 12AA of charitable institution - assessee authority denied charitable character, and cancellation of its registration merely because in the course of pursuing its statutory objects it engaged in activities such as sale of plots or other revenue-generating functions -

HELD THAT: - The Court held that the controversy stood concluded by the Supreme Court in the assessee's own case [2022 (10) TMI 948 - SUPREME COURT] which interpreted the concept of charitable purpose under the general public utility limb. Applying that ruling, the Court accepted that a statutory authority engaged in public utility functions does not cease to be charitable merely because, while furthering those objects, it earns receipts or undertakes activities having some commercial attributes. Since the Supreme Court had already decided the issue on merits in favour of the assessee, the challenge to cancellation of registration under Section 12AA failed. [Paras 6]

Question No. 2 was answered in favour of the assessee, and the registration under Section 12AA was held liable to continue.

Final Conclusion: Following the Supreme Court ruling in the assessee's own case, the Court held that the assessee's activities retained the character of charitable purpose under the general public utility category, and cancellation of registration under Section 12AA was not justified. The appeal was accordingly disposed of against the Revenue.

Jurisdiction to initiate reassessment proceedings - Retrospective validating amendment - Challenge to vires before proper Bench - challenge to reassessment proceedings on the ground that the Jurisdictional Assessing Officer lacked authority to act under the reassessment provisions as they stood between 01.04.2021 and 01.04.2024 - HELD THAT: - The Court held that the jurisdictional objection raised in the writ petitions no longer survived. It relied on its earlier view that the Jurisdictional Assessing Officer had such jurisdiction and noted that Parliament had, by inserting Section 147A with retrospective effect from 01.04.2021, altered the foundation on which contrary High Court decisions had proceeded. The Court also took note of the Supreme Court order setting aside judgments that had accepted the objection to the competence of the jurisdictional authority and remitting those matters for fresh consideration, while leaving other questions open. On that basis, the challenge on merits to the impugned notices and consequential proceedings was held to be covered against the petitioners. [Paras 6, 7, 11]

The writ challenges founded on lack of jurisdiction of the Jurisdictional Assessing Officer were dismissed.

Challenge to vires of retrospective amendment - Maintainability before Division Bench - whether challenge to the validity of Section 147A as inserted retrospectively could be pursued before the Single Judge and had to be placed before the Division Bench in accordance with the High Court Writ Rules? - HELD THAT: - The Court noted that the Supreme Court in Tej Partap Singh [2026 (5) TMI 54 - SC ORDER (LB)] had expressly left open the validity, scope, effect, retrospectivity and applicability of the amended provision and had granted liberty to assessees to amend their pleadings to challenge it. However, under Rule 17(1)(iii) of the Madras High Court Writ Rules, 2021, a vires challenge in such circumstances was required to be made before the Division Bench. The Court therefore did not examine the constitutional challenge, but granted a limited protective direction by keeping recovery in abeyance for a short period to enable the petitioners to seek appropriate relief before the Division Bench. [Paras 9, 10, 11]

The vires issue was left open for challenge before the Division Bench, and recovery was directed to remain in abeyance for 30 days to enable the petitioners to seek such relief.

Final Conclusion: The writ petitions were dismissed, the Court holding that the objection to the jurisdiction of the Jurisdictional Assessing Officer stood concluded against the petitioners in view of the earlier decision of the Court and the retrospective insertion of Section 147A. The validity of that amendment was left open to be agitated before the Division Bench, and recovery was kept in abeyance for 30 days to enable the petitioners to seek appropriate relief.

Section 80GGC deduction - bogus political donation - preponderance of probabilities - Accommodation entries through political party - Human probabilities and surrounding circumstances -HELD THAT: - The Tribunal held that the assessee had to establish satisfaction of the statutory conditions for deduction and that mere payment through banking channels, production of donation receipts, or the political party's registration under the Representation of the People Act did not by themselves prove genuineness.

Revenue had placed on record search material, statements recorded under section 132(4), bank trail analysis and findings showing that the recipient political party functioned as a conduit, with donated funds layered through shell entities and converted into cash. In such matters, direct evidence of return of cash is not indispensable; the authorities may examine surrounding circumstances, human probabilities and the preponderance of probabilities to ascertain the real nature of the transaction.

Once the Revenue established a cogent chain indicating an accommodation entry operation, the burden shifted to the assessee to rebut it with credible material, which was not done.

It is now well settled by the Hon'ble Supreme Court in the cases of CIT v. Durga Prasad More [1995 (3) TMI 3 - SUPREME COURT] and Sumati Dayal [1971 (8) TMI 17 - SUPREME COURT] that the taxing authorities are not required to put on blinkers while examining a transaction merely because it is supported by documentary evidence. They are entitled to look beyond the apparent, examine the surrounding circumstances, apply the test of human probabilities and ascertain the real nature of the transaction. [Paras 8]

The disallowance of the claimed deduction under section 80GGC was upheld and the assessee's appeal was dismissed.

Final Conclusion: The Tribunal upheld the disallowance of deduction claimed for the donation to the political party, holding that the transaction was not a genuine contribution but formed part of an accommodation entry arrangement established by the investigation material. The appeal was accordingly dismissed.

Exemption for BSNL VRS-2019 compensation - Retrenchment compensation under voluntary retirement scheme - Appellate claim not made in return

HELD THAT: - The Tribunal held that the controversy stood covered by the co-ordinate Bench decisions referred to before it Harish Kumar. [2025 (6) TMI 1622 - ITAT CHANDIGARH], Jayeshkumar Tulsidas Sutaria [2026 (2) TMI 930 - ITAT AHMEDABAD] and Suman Nandlal Raval [2026 (3) TMI 539 - ITAT AHMEDABAD]

Following those decisions, it accepted that compensation received under BSNL VRS-2019 was in the nature of retrenchment compensation and that the assessee was entitled to exemption under section 10(10B) on the entire amount, notwithstanding that the amount had originally been offered to tax and the exemption had not been claimed in the return. On the same footing, relief was also directed in respect of leave encashment, if any. [Paras 7, 8]

The issue was decided in favour of the assessee, and the Assessing Officer was directed to grant exemption on the entire retrenchment compensation under BSNL VRS-2019 and consequential relief.

Final Conclusion: The Tribunal allowed the appeal and held that the assessee was entitled to exemption under section 10(10B) on the entire compensation received under BSNL VRS-2019, treated as retrenchment compensation, along with consequential relief in respect of leave encashment, if any.

Penalty u/s 271E - repayment of loan otherwise than through prescribed banking channels - Recording of satisfaction for initiation of penalty proceedings

HELD THAT: - The Tribunal found that the assessment completed u/s 143(3) had accepted the returned income and did not record any satisfaction for initiating penalty u/s 271E, nor any finding that the assessee had violated Section 269T.

Applying the principle laid down in CIT vs. Jai Laxmi Rice Mills, Ambala City [2015 (11) TMI 1453 - SUPREME COURT] that penalty proceedings cannot survive in the absence of such satisfaction in the assessment order, the Tribunal held the initiation itself to be unsustainable in law. [Paras 6, 7]

The penalty imposed under Section 271E was directed to be deleted.

Final Conclusion: The Tribunal allowed the appeal and held that, in the absence of any satisfaction recorded in the assessment order regarding initiation of penalty proceedings or any finding of violation of Section 269T, the penalty under Section 271E was not sustainable.

Estimation of taxable income from alleged on-money payment - Taxability of profit element instead of gross receipt - Profit element embedded in alleged unexplained investment -

HELD THAT: - The Tribunal did not adjudicate the challenge to reopening or the grievance regarding cross-examination. It proceeded on the common stand taken by both sides that, considering the smallness of the amount, a suitable estimated addition could be made. Accepting that basis, the Tribunal held that what could be brought to tax was only the profit element embedded in the alleged on-money amount and not the entire gross amount. To meet the ends of justice, it therefore directed an ad hoc estimated addition at 10% of the alleged on-money and further directed that such addition be taxed at the normal rate of income-tax and not under section 115BBE. [Paras 7]

The addition was restricted to 10% of the alleged on-money amount, taxable at the normal rate, and the appeal was partly allowed to that extent.

Final Conclusion: The Tribunal partly allowed the appeal by restricting the addition on the alleged on-money payment to an estimated 10% thereof and directing taxation at the normal rate. The grounds relating to reopening and cross-examination were not adjudicated on merits.

Beneficiary's claim of trust loss - Determination of trust income or loss - Direct assessment of beneficiary under representative assessee provisions

Whether beneficiary of a determinate trust be allowed a proportionate share of the trust's alleged losses in the individual assessment unless the trust's income or loss has first been examined and determined in accordance with the Act? - HELD THAT: - The Tribunal held that, since the trust was created by a duly executed instrument, its trustees were representative assessees and the statutory scheme contemplated assessment of the trust income or loss in that representative capacity. Section 166 preserves the Revenue's power to make a direct assessment on the beneficiary, but it does not dispense with the prior requirement that the income or loss relatable to the trust be determined in accordance with law.

As no return had been filed by the trust and the alleged losses had not been examined, verified or quantified under the Act, the beneficiary's claim could not be accepted merely on the basis of the computation furnished.

The appellate authority had allowed the claim on the legal footing that beneficiaries of a determinate trust may be directly assessed, but had recorded no finding on the correctness or quantification of the trust losses and had not obtained any remand verification. The matter therefore required restoration to the AO to first determine the trust's income or loss and thereafter examine the extent to which any share of loss, if admissible, could be claimed by the assessee. [Paras 8, 9, 10]

The order allowing the assessee's claim was set aside, and the matter was remanded to the Assessing Officer to first determine the trust's income or loss and then decide afresh the assessee's entitlement to any proportionate share thereof.

Final Conclusion: The Tribunal held that direct assessment of a beneficiary of a determinate trust does not obviate the need to first determine the trust's income or loss in accordance with law. Since the trust had not filed a return and the claimed losses were not verified, the beneficiary's loss claim was remanded for fresh examination after determination of the trust's income or loss.

Penalty u/s 270A - misreporting of income - Defective penalty notice - Bona fide explanation- non Specification of charge in penalty notice - Bona fide technical default

Levy of penalty u/s 270A for non-claim of deduction u/s 80P(2)(d), where the assessee attributed the default to incorrect PAN status and the notice referred only to under-reporting - HELD THAT: - The Tribunal held that penalty proceedings are distinct from assessment proceedings and penalty for misreporting of income cannot follow merely because a deduction claim was not accepted. For such penalty, the Assessing Officer had to establish that the case fell within one of the specific categories under section 270A(9).

On the material on record, the assessee, a co-operative credit society, had disclosed the interest income and the dispute was only as to allowability of deduction under section 80P(2)(d). There was no material to show furnishing of false particulars, suppression of income, or any other mode of misreporting specified in section 270A(9). The explanation that the incorrect PAN status created technical difficulty in filing the return and claiming the deduction was not found to be false. The Tribunal also found that the show cause notice referred only to under-reporting of income, whereas the penalty was finally imposed for under-reporting in consequence of misreporting, without specifying the particular clause of section 270A(9). The mandatory requirement for imposing enhanced penalty for misreporting was therefore not satisfied. [Paras 4]

The penalty levied under section 270A was deleted, the Tribunal holding that the assessee's explanation was bona fide and that the case did not fall within misreporting of income.

Final Conclusion: The Tribunal allowed the appeal and held that the penalty under section 270A could not be sustained. The assessee's default was treated as supported by a bona fide explanation, and the charge of misreporting failed for want of material and for absence of a specific statutory charge in the notice.

Revision under section 263 - Unexplained cash deposits -Invocation of section 68 read with section 115BBE - Erroneous and prejudicial assessment order - Exemption for educational institution substantially financed by Government

HELD THAT: - The Tribunal found that the assessee was running educational institutions, was maintaining regular books of account, and had produced complete bank account details before the AO. The addition in reassessment had been made only because details of fees collected from some students were not furnished to the Assessing Officer, and not because the source or nature of the receipts was unknown.

The assessee had also placed the student details before the Commissioner as well as the Tribunal. In these circumstances, the source of the cash generated from the educational activity was known and accepted by the Assessing Officer, who had consciously chosen not to invoke section 68 read with section 115BBE. The Tribunal further noted that the assessee's claim of exemption under section 10(23C)(iiiab) had been allowed, and relied on Vijay Anandbhai Chavada [2025 (7) TMI 1820 - SC ORDER] to hold that where the nature and source of the impugned amount stand explained, failure to invoke section 68 does not render the assessment order erroneous and prejudicial to the interests of the Revenue. [Paras 5, 6, 7]

The assumption of revisional jurisdiction under section 263 was held unsustainable, and the order passed thereunder was quashed.

Final Conclusion: The Tribunal held that the reassessment order was neither erroneous nor prejudicial to the interests of the Revenue merely because the Assessing Officer had not invoked section 68 read with section 115BBE. The revisional order under section 263 was therefore quashed and the assessee's appeal was allowed.

Assessment on non-existent amalgamating company - Jurisdictional defect after amalgamation - HELD THAT: - The Tribunal found it undisputed that the company assessed had already amalgamated before the assessment order was passed and that this fact had also been brought to the notice of the appellate authority.

Applying the legal position stated in New Age Buildtech (P.) Ltd. vs. National Faceless Assessment Centre [2023 (5) TMI 368 - BOMBAY HIGH COURT] and Reliance Industries Ltd. vs. P.L. Roongta [2025 (2) TMI 612 - BOMBAY HIGH COURT] it held that once amalgamation takes effect, the amalgamating company ceases to exist in law, and an assessment thereafter made in its name is not a mere procedural defect but a substantive jurisdictional invalidity. Participation by the amalgamated entity does not cure that defect. On that basis, the assessment order, and consequently the appellate order passed in the name of the non-existent entity, could not survive. [Paras 19, 20, 21, 22, 23]

The assessment order was held void ab initio and quashed; the challenge to the addition under section 56(2)(viib) was left unexamined as academic.

Final Conclusion: The Tribunal admitted the additional legal ground and held that the assessment, having been passed after amalgamation in the name of a non-existent company, was void ab initio. The assessment and consequential appellate order were quashed, and the challenge to the share premium addition was not examined as it had become academic.

Unexplained cash credit on unsecured loan - Creditworthiness and genuineness of lender transaction - Source of source under section 68 prior to 01.04.2023 - Addition u/s 68 in respect of unsecured loan received from the promoter-director - HELD THAT: - The Tribunal found that the assessee had placed on record the lender's confirmation, PAN, Form 16 showing salary paid by the assessee to the lender, the bank statement of the assessee reflecting salary payment and receipt of the loan, the lender's bank statement reflecting the advance, and the lender's reply to notice under section 133(6) explaining the credits appearing before the advance.

Since the Revenue brought no contrary material to dislodge that explanation, there was no basis to hold that the amount received by the assessee was not sourced from the lender. On that factual material, the assessee was held to have established the three requirements of section 68, namely identity of the source, creditworthiness of the source and genuineness of the transaction.

Tribunal further noticed the legal position stated in the co-ordinate Bench decisions following Sheela Overseas (P.) Ltd. [2025 (5) TMI 2158 - DELHI HIGH COURT] that prior to 01.04.2023 section 68 did not require an assessee, in the case of unsecured loans, to explain the source of source. The addition was therefore unsustainable both on facts and in law. [Paras 8, 9, 10, 11]

The addition made under section 68 was deleted and the effective grounds of the assessee were allowed.

Final Conclusion: The Tribunal held that the assessee had discharged the onus under section 68 in respect of the unsecured loan from its promoter-director and that the addition could not be sustained. The appeal was accordingly allowed; the MAT credit and interest grounds were treated as consequential, and the challenge to penalty initiation was held to be premature.

Beneficial ownership in benami transaction - Genuineness of business transaction for sale of gold bars - Use of banking channels to convert demonetised cash - Delivery of gold through the broker - Denial of cross-examination -

Beneficial ownership in benami transaction - Genuineness of business transaction for sale of gold bars - HELD THAT: - The Tribunal held that cash is property within the meaning of the Act and, where demonetised cash is routed through another person's bank account and returned through banking channels in the guise of a business transaction, the arrangement falls within the concept of a benami transaction if the asserted business dealing is not genuine. On appraisal of the stock register, ledger confirmation, purchase invoices, bank statement and sale invoices, the Tribunal found material inconsistencies in the appellant's version regarding availability of stock, purchases from M/s Ekdant Commercial Pvt. Ltd., outstanding liability to that concern, and the alleged sale of one kilogram of gold through a broker. The sale invoices in favour of M/s Abhishek Enterprises were found unsupported by purchaser KYC, PAN or authority in favour of the alleged broker, and the broker's affidavit was treated as a procured document insufficient to establish delivery or genuineness. On that documentary and circumstantial evidence, the Tribunal concluded that the transfer to the appellant represented a device to convert demonetised currency into banking entries and not a genuine business transaction. [Paras 6, 7, 8, 9, 10]

Issues relating to beneficial ownership, genuineness of the gold sale, proof of delivery through the broker, and reliance on the broker's affidavit were decided against the appellant.

Non-examination of alleged operator of bank account - HELD THAT: - The Tribunal found that opportunity had been given to produce Jagdish Khandelwal for verification of his identity and role, but he could not be located or produced and even his present address was not available. In those circumstances, the contention that no effort was made to examine him was rejected. The Tribunal held that, when the person was not traceable during investigation and his very existence was doubtful, no adverse consequence could follow from his non-examination. [Paras 11]

The challenge based on non-examination of Jagdish Khandelwal was rejected.

Cross-examination and prejudice - HELD THAT: - The Tribunal noted that Mumtaz Ali Mohd. Shaikh had taken the stand that he was unaware of the business transactions of M/s Abhishek Enterprises and that the account had been operated by Jagdish Khandelwal after obtaining his signatures. On that basis, the Tribunal held that no useful purpose would be served by permitting cross-examination of a person who disclaimed knowledge of the transactions. It further held that no prejudice to the appellant was shown, and observed that, in any case, cross-examination does not arise in the absence of examination-in-chief or evidence tendered by affidavit by the witness concerned. [Paras 12]

The objection based on absence of cross-examination of Mumtaz Ali Mohd. Shaikh was decided against the appellant.

Final Conclusion: The Tribunal upheld the attachment of the appellant's bank account to the extent in question, holding that the impugned transfer was not a genuine gold-sale transaction but a benami arrangement for converting demonetised cash into banking entries. The order was modified only to clarify that M/s Abhishek Enterprises, through its proprietor and operator, was the benamidar, and the appeal was dismissed.

Provisional Attachment Order - Benami transaction - Consideration provided by another person - Beneficial ownership of shares - Sham off-market share transfer - Transfer and holding of shares of Responsive Industries Ltd. under the MoU and Share Purchase Agreement - Genuineness of transaction - Control and enjoyment of property - Suspicious circumstances - Commercial prudence - Burden of proof - HELD THAT: - The Tribunal held that the arrangement could not be treated as an ordinary credit sale or hire-purchase type transaction. The shares were transferred for only a negligible upfront payment, while the substantial balance was contingent on a future sale to prospective investors, failing which the shares were to return to the transferor. Since the transferor had itself already paid full consideration for acquisition of the shares, and the transferee had paid only an insignificant amount while continuing to hold the shares, the inference was clear that the consideration for the transferred shares had effectively been provided by the transferor. The Tribunal further found that the lien/pledge clause kept effective control with the transferor, and that mere transfer of the shares with voting and dividend rights did not displace the beneficial interest of the transferor. The arrangement was also viewed in the light of the surrounding sequence of events, the lack of independent financial capacity of the transferee, the use of dividend from the very shares for making payment, and the subsequent retransfer of the shares on failure of the projected arrangement. On that basis, both ingredients of Section 2(9)(A) stood satisfied: the property was held in the name of one entity while consideration was provided by another, and the holding was for the immediate or future benefit of that other entity. The Adjudicating Authority was therefore wrong in treating the transaction as a genuine arm's length commercial arrangement. [Paras 19, 20, 21, 22, 23]

The impugned shares were held to be benami property; the order of the Adjudicating Authority was set aside and the Provisional Attachment Order was restored.

Final Conclusion: The Tribunal allowed the appeal and held that the share transfer arrangement satisfied both statutory limbs of a benami transaction. The Adjudicating Authority's order was set aside and the provisional attachment was restored.

Benami attachment of property already attached under PMLA - Non-disclosure of prior attachment - Concealment - Alternative provisional attachment where no prior attachment under section 24(3) is warranted- Alternate statutory procedure - Effect of Prior attachment of the same properties under the Prevention of Money Laundering Act and the attachment proceedings under the Prohibition of Benami Property Transactions Act in the facts of the case - HELD THAT: - The Tribunal held that the appellants, having appeared in response to the notice, were bound to disclose the earlier attachment under PMLA. Had that fact been disclosed, the Initiating Officer could have revoked the earlier provisional attachment under section 24(3) of the PBPT Act and proceeded under the separate statutory route permitting attachment under section 24(4)(b)(i). In the absence of any material showing that the Initiating Officer was aware of the prior PMLA attachment, the appellants could not, after withholding that fact, seek to invalidate the entire proceedings on the ground that there was no apprehension of alienation. The Tribunal further held that where the statute itself provides an alternate mode of provisional attachment, the confirmed attachment could not be set aside on such a hyper-technical objection. The decision in M/s Maple Destination & Dream Build Pvt. Ltd. [2025 (7) TMI 1727 - APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI] was held inapplicable, since the provision relating to attachment under section 24(4)(b)(i) had not been considered there and the factual setting was also different. [Paras 7, 8]

The challenge to the attachment on the ground of prior subsisting attachment under PMLA was rejected, and the confirmation of attachment under the PBPT Act was upheld.

Final Conclusion: The Tribunal dismissed the appeals and upheld the attachment of the properties under the PBPT Act. It held that the appellants could not rely on the prior PMLA attachment, which they had failed to disclose, particularly when the statute provided an alternate mechanism for provisional attachment.

Alternative statutory remedy under Section 9C - Maintainability of writ against anti-dumping final findings - Judicial review of anti-dumping methodology - Natural justice in anti-dumping investigation - Challenged to anti-dumping final findings and the consequential notification - HELD THAT: - It is a settled legal precedent that if there is gross violation of principles of natural justice or violation of statutory provisions governing the process of law, or lack of jurisdiction, the High Court, while exercising its extraordinary powers conferred under Article of the 226 Constitution can always interfere with such action even if there exists an alternative efficacious remedy.

The Court held that Section 9C provides an efficacious appeal against the determination relating to dumping and that the appellate forum is competent to examine the legality and validity of the disclosure statement, final findings and the notification. While the existence of an alternate remedy does not bar writ jurisdiction where there is gross violation of natural justice, breach of mandatory statutory provisions, or lack of jurisdiction, the record did not disclose such exceptional circumstances. On examining the disclosure statement, the Court found that the designated authority had considered the submissions of stakeholders, supplied the non-confidential material required under the Anti-Dumping Rules, preserved confidentiality where claimed, and afforded sufficient opportunity of hearing. The grievance regarding dumping margin, injury margin, landed value, non-injurious price, methodology, valuation, and treatment of confidential information was held to pertain to the merits of the expert determination, which the High Court would not scrutinize in writ jurisdiction and which could appropriately be examined by the Tribunal. The pendency of a challenge to the same final findings before CESTAT was also treated as an additional reason not to exercise extraordinary jurisdiction. [Paras 29, 30, 31, 32, 33]

The writ petition was dismissed, leaving it open to the petitioner to pursue the statutory appeal before CESTAT against the final findings and the notification.

Final Conclusion: The High Court declined to entertain the writ petition against the anti-dumping final findings and the consequential notification, holding that the petitioner had an efficacious statutory appeal and that no exceptional ground warranting interference under Article 226 was established. The petitioner was left to avail the appellate remedy before CESTAT.

Reference to Larger Bench - Conflicting precedents on transferee liability under DEPB scrips - Judicial discipline and propriety - liability of a transferee-importer who used DEPB scrips later found to have been obtained through fraudulent documents - HELD THAT: - After going through the referred decisions of Friends Trading Co.[2023 (7) TMI 1481 - CESTAT KOLKATA], that was carried upto Hon’ble Supreme Court [2009 (4) TMI 912 - SC ORDER] by the assessee unsuccessfully, in which all precedent decisions on the issue cited by the appellant, namely in the case of East India Commercial Co. Ltd.[1962 (5) TMI 23 - SUPREME COURT], Vallabh Design Products [2007 (4) TMI 274 - PUNJAB & HARYANA HIGH COURT], Hon’ble Supreme Court [2017 (1) TMI 402 - SC ORDER] had upheld the Hon’ble Punjab & Haryana High Court’s decision, Sampat Raj Dugar [1992 (1) TMI 103 - SUPREME COURT], Taparia Overseas Pvt. Ltd.[2003 (1) TMI 127 - BOMBAY HIGH COURT], it can very well be said that in Friends Trading Co.’s case (supra), scrips were not forged but were obtained through fraudulent documents and, therefore, the findings of this Tribunal in Borax Morarji Ltd. [2026 (2) TMI 342 - CESTAT MUMBAI], and Apar Industries Ltd.’s [2025 (5) TMI 2183 - CESTAT MUMBAI] decision including its rectification order, on which the appellant is placing heavy reliance, can never be considered to have settled the issue since in both the decisions, may be because of erroneous representation, finding was given by parallel benches of this Tribunal that Friends Trading Co.(supra) is one of the cases in which forged DEPB scrips were used and not genuine scrips obtained through fraudulent documents. This conclusion might have arisen for the reason that precedent decision of Munjal Showa [2008 (9) TMI 391 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH], in which forged DEPB scrips were used, was being referred with reproduction of para no. 12, 19, 20 and 24 of the said decision, that might have been taken as if in Friends Trading Co. also, forged DEPB scrips were used but it was not so, though they applied the same principle to genuine scrips obtained through fraudulent means. Further, in final decision of Borax Morarji Ltd.(supra) at para 30, there is also reference to the decision of Mercedes Benz India Pvt. Ltd.[2020 (2) TMI 437 - CESTAT NEW DELHI], in which also scrips to be used at a particular port was not forged one but the Telephonic Release Advice (TRA), through which it was supposed to be transmitted to another port from where clearance was made was forged with the help of Department of Telegraph, as revealed from para 24 of the said order and, therefore, that dispute is unrelated to the present issue.

Since there were consistent but conflicting lines of precedent, including decisions of co-ordinate Benches and High Courts said to have received affirmation at the apex level, the Tribunal held that judicial discipline and propriety required the matter to be referred for authoritative resolution by a Larger Bench on the scope of transferee liability. [Paras 10, 11]

The matter was directed to be placed before the President for constitution of a Larger Bench to decide the stated question; the merits were left open.

Final Conclusion: The Tribunal did not adjudicate the substantive liability of the appellants on the impugned DEPB scrips. Finding a direct conflict in precedent on the liability of transferees using DEPB scrips obtained through fraudulent documents, it referred the matter to the President for constitution of a Larger Bench.

Revocation of custodianship under HCCAR - Proportionality of regulatory penalty - Vicarious liability for employee's misconduct - Doctrine of proportionality - illegal removal of the seized container containing Red Sanders logs - Clandestinely removed from the CFS customs area through forged gate passes and an empty container brought from outside got substituted - guilty of violation of HCCAR and supervisory lapses

Revocation of custodianship under HCCAR- Whether the Respondent committed violations of HCCAR, 2009 warranting revocation of custodianship approval? - HELD THAT: - It is important to note that the police investigation resulted in arrest of the persons allegedly involved and recovery of the container along with the seized good intact. More importantly, the Interim Report dated 27.01.2015 submitted by the Inspector of Police specifically recorded that no material or evidence was available to suggest complicity of management of M/s. Chandra CFS & Terminal Operators Pvt. Ltd., except the employees who had been arrested and later on removed from the service.

The Tribunal held that the illegal removal of the seized container through forged gate passes and substitution of another container disclosed serious deficiencies in supervision, security and compliance with prescribed procedures, and therefore the breach could not be treated as a mere procedural lapse. At the same time, revocation under the HCCAR framework was held not to be an automatic consequence of every violation. Since revocation is the severest civil consequence, its exercise must be guided by the nature of the breach, the conduct of the custodian and the surrounding circumstances, including whether continuation of custodianship would be inconsistent with protection of revenue, security of goods and proper customs administration. The adjudicating authority had taken into account the recovery of the goods, the police investigation, absence of evidence against the management and the corrective measures adopted thereafter. Applying the doctrine of proportionality, the Tribunal upheld the view that penalty was justified, but the extreme consequence of revocation was not. [Paras 14, 15, 16, 17, 18]

The respondent was rightly held to have violated HCCAR, 2009 and to be liable to penalty, but the Department failed to establish circumstances justifying revocation of custodianship.

Vicarious liability for employee's misconduct - Whether the Respondent can be held vicariously liable for the illegal removal of the seized container and whether the impugned order warrants appellate interference? - Employee misconduct and supervisory lapses, without evidence of knowledge, connivance or conscious facilitation by the management - HELD THAT: - The Respondent cooperated with the investigation, the container and seized red sander wood logs were recovered and corrective measures were subsequently implemented.

While the Respondent remains responsible for the supervisory failures that enabled the illegal removal of the container, the Department has failed to establish any material showing deliberate involvement, connivance or conscious facilitation on the part of its management. The doctrine of vicarious liability cannot be stretched to convert every act of employee’s misconduct into a ground for revocation of custodianship irrespective of the surrounding facts.

The Tribunal drew a clear distinction between negligence in preventing an offence and active involvement in its commission. While HCCAR imposes strict responsibility on a custodian for safeguarding goods in the customs area, the severest consequence of revocation could not be sustained merely because rogue employees committed the criminal act, in the absence of evidence showing authorization, knowledge, connivance or conscious facilitation by the management. The respondent's immediate complaint to the police, furnishing of CCTV footage and records, cooperation with investigation, recovery of the container and absence of material implicating management were treated as relevant circumstances. The Tribunal held that the doctrine of vicarious liability could not be stretched to convert every act of employee misconduct into a ground for revocation irrespective of surrounding facts. It further held that the HCCAR scheme contemplates graded consequences such as suspension, revocation, forfeiture of security and monetary penalty, and a reasoned discretionary order imposing a lesser consequence could not be interfered with merely because the Department sought a harsher outcome. [Paras 30, 31, 32, 33, 34]

The illegal removal of the container was not attributable to the respondent in a manner warranting revocation, and no legal or factual infirmity was shown in the impugned order so as to justify appellate interference.

Final Conclusion: The Tribunal dismissed the Department's appeal and upheld the order declining revocation of the respondent's custodianship. While the security breach established violations of HCCAR, 2009 and justified the penalty already imposed, the absence of evidence of deliberate involvement or institutional complicity on the part of the management made revocation disproportionate and unwarranted.

Continuing guarantee- Resignation from the corporate debtor - Revocation of guarantee by notice - subsequent renewal or alteration of the credit facilities​​​​​​​ - Novation and variance of contract - Liability of personal guarantor - Variance in Terms of Contract - Discharge of Surety - Mutual Consent - Natural Justice

Continuing guarantee- Revocation of guarantee by notice - Resignation of director and guarantor liability - HELD THAT: - The Appellant claims that in this case there has been variance, as there has been an increase in the overall limits of almost ₹ 168 crores, which materially impacts the liability of the sureties. Therefore, such variance would necessarily be considered as material, warranting a complete discharge of the guarantor.

Clause 8 clearly states that “the guarantee herein contained is a continuing one for all amounts advanced by the lead bank to the borrower in respect of or under the above-mentioned credit facilities, as also of all interest, commission and other money which may from time to time become due and remain unpaid to the lead bank thereunder….”. Court noted that the guarantee, as in the present Deed of Guarantee, is a continuing one and cannot be discharged by the resignation of the director from the Corporate Debtor and the argument of the Appellant that the adjudicating authority has incorrectly interpreted Clause 8 of the Deed of Guarantee is not sustainable. Therefore, the argument of the Appellant that, in terms of the Deed of Guarantee which contemplates revisions and modifications within the first facility limit of ₹ 907/- crores, is entitled to a discharge of his personal guarantee is not tenable. Thus, No infirmity in the order of the adjudicating authority that if there is any increase in the sanction limit without the consent of the guarantor, then also he shall still be liable for the debt which existed prior to its variance.

The Tribunal held that the deed of guarantee expressly made the guarantee continuing, irrevocable and enforceable on demand, and further provided that the guarantor would remain bound notwithstanding disputes between the borrower and the bank, future variation of contractual terms, and acknowledgments or admissions made by the principal debtor. On that construction, resignation from directorship did not revoke the guarantee. The Tribunal further held that under Section 130 of the Contract Act, revocation of a continuing guarantee operates only for future transactions and requires notice to the creditor; no such notice was issued to the respondent bank. The appellant, therefore, could not claim discharge merely on the basis of resignation or communications addressed to other consortium members. [Paras 53, 54, 60, 61, 62]

The plea that the guarantee stood revoked or discharged on the appellant's resignation was rejected.

Novation and variance of contract - Renewal of credit facilities - Discharge of surety - HELD THAT: - The Tribunal found that, so far as the respondent bank was concerned, there was no further variation or enhancement beyond the facility already granted under the original loan documents, and that renewal of facilities would not by itself amount to variation. It also held that the renewal terms were not accepted by the borrower or the guarantor and therefore were never put into effect. On that basis, the appellant's reliance on Sections 62 and 133 of the Contract Act was held to be misplaced. The Tribunal further held that, even otherwise, a surety is discharged under Section 133 only as regards transactions subsequent to the variance, while liability continues for transactions already covered by the original arrangement. The debt claimed by the bank was treated as emanating from the loan and guarantee documents executed on 17.10.2017 and not from any fresh, unguaranteed debt. [Paras 55, 57, 58, 63, 64]

The Tribunal rejected the contention that there had been novation or such variance in the respondent bank's facility as would discharge the appellant from the original guarantee.

Independent consideration of guarantor's objections - Report under Section 99 of the Insolvency and Bankruptcy Code - HELD THAT: - The Tribunal declined to accept the appellant's reliance on Dilip B Jiwrajka [2024 (1) TMI 33 - SUPREME COURT]. It held that the objections raised by the personal guarantor had been noted and considered by the adjudicating authority, and that commencement of personal insolvency proceedings was not liable to be interfered with on the ground of absence of independent assessment. [Paras 65]

The challenge founded on alleged mechanical acceptance of the resolution professional's report was rejected.

Final Conclusion: The Tribunal held that the appellant remained bound by the continuing personal guarantee and that neither resignation from directorship nor the pleaded renewal of facilities discharged him from liability to the respondent bank. Finding no novation, no effective revocation, and no failure of independent consideration by the adjudicating authority, the appeal was dismissed.

Maintainability of application Under Section 9 - Pre-existing dispute - Operational debt arising from refund of advance under supply contract - non-service of demand notice and violation of natural justice - Service of demand notice under Section 8 - Sufficient opportunity of Hearing - Natural justice in ex parte admission

Service of demand notice under Section 8 - Natural justice in ex parte admission - HELD THAT: - The Appellate Tribunal found that the statutory demand notice dated 17.01.2023 had been duly delivered on 19.01.2023 and that proof of service formed part of the record before the Adjudicating Authority. The objection regarding absence of demand notice and affidavit was therefore rejected. On the plea of breach of natural justice, the Tribunal held that the Corporate Debtor had in fact filed its reply and written statement but chose not to participate at the hearing stage. Since sufficient opportunities had been given and not availed, the ex parte disposal could not be faulted. [Paras 48, 49]

The objections based on non-service of demand notice and violation of natural justice were rejected.

Pre-existing dispute - Admission of liability in correspondence - HELD THAT: - The Appellate Tribunal examined the email correspondence relied on by the appellant and found that it did not disclose any genuine dispute existing before the demand notice. On the contrary, the email expressly stated that the account would be settled by returning the pending amount and sought time up to the end of the financial year. The Tribunal held that these communications amounted to acknowledgment of liability and not evidence of a real dispute requiring further investigation. The contention of pre-existing dispute was therefore held to be baseless. [Paras 50, 51, 52, 58, 59]

The appellant failed to establish any pre-existing dispute.

Operational debt arising from refund of advance under supply contract - Debt and default under Section 9 - HELD THAT: - The Appellate Tribunal held that the appellant's objection that the claim did not constitute operational debt was contrary to the record. The advance had been paid for supply of goods, the full quantity was not supplied, and when refund was sought the amount was not repaid. The appellant's own correspondence admitted the liability and sought time to clear the dues. In those circumstances, the Operational Creditor had a claim against the Corporate Debtor and initiation of proceedings under Section 9 was held to be proper. The further plea that CIRP would not maximise value, or that financial institutions had not filed claims, was held to be irrelevant once debt, default and absence of pre-existing dispute stood established. [Paras 54, 55, 56, 58, 59]

The Section 9 application was maintainable and the admission of CIRP disclosed no infirmity.

Final Conclusion: The Appellate Tribunal upheld the admission of CIRP and dismissed the appeal. It held that the statutory demand notice had been duly served, no breach of natural justice was made out, the appellant's own correspondence acknowledged the liability, and no pre-existing dispute existed to defeat the Section 9 proceedings.

Liquidation of corporate debtor on failure of resolution process - Commercial wisdom of Committee of Creditors in approving liquidation - Appellant contends and claims to be the chief promoter of the Corporate Debtor - His grievance is that the process of liquidation has been resorted to without venturing into or exploring the possibility of a resolution, which should have been done in the first instance before putting the Corporate Debtor to liquidation - HELD THAT: - The Appellate Tribunal held that the application seeking liquidation under Section 33(1)(a) was not controverted before the Adjudicating Authority, that the attempt to revive the corporate debtor during the CIRP failed, and that no resolution plan was received within the extended CIRP period. It further noticed that repeated extensions and opportunities granted on the appellant's own settlement proposals were not honoured. In these circumstances, once the Committee of Creditors, in its commercial wisdom, approved liquidation with 100% voting share, the direction for liquidation was in consonance with law and did not call for appellate interference. [Paras 12, 13, 14, 15]

The order directing liquidation was upheld, and the appeal was dismissed.

Final Conclusion: The Appellate Tribunal found no error in the order placing the corporate debtor in liquidation. Since the resolution process had failed and the Committee of Creditors had unanimously approved liquidation, the appeal was dismissed.

Expungement of adverse remarks against Resolution Professional - Bona fide statutory misunderstanding - Bar on resolution applicant voting on its own resolution plan - Tribunal decided whether the personal strictures and consequential direction against the erstwhile Resolution Professional should be retained after the earlier findings on the illegality of the resolution process had attained finality - HELD THAT: - The Tribunal held that the earlier judgment on the validity of the Corporate Insolvency Resolution Process, including the finding that the sole Operational Creditor could not vote on its own Resolution Plan because of the statutory bar under Section 30(5), was not open to review in the present proceeding. At the same time, it found that the explanation of the erstwhile Resolution Professional deserved acceptance. The Committee of Creditors had been validly constituted under Regulation 16 in a case where there were no Financial Creditors, and the applicant had proceeded on an erroneous understanding that the sole Operational Creditor, having the same rights and powers as a Financial Creditor, could also vote on its own plan. The Tribunal further noted that the record did not disclose any personal gain, dishonest motive or deliberate attempt to circumvent the Code, and that the applicant had himself pointed out the higher value in the competing plan. On that basis, the omission was treated as arising from an incorrect understanding of the statutory scheme, including the conflict between the powers conferred under Regulation 16 and the prohibition contained in Section 30(5), rather than from mala fide conduct. The legal findings in the earlier judgment were therefore maintained, but the personal remarks and consequential direction were found unnecessary. [Paras 36, 37, 38, 39, 40]

The personal observations and consequential directions against the erstwhile Resolution Professional were expunged, while the earlier findings on the legal irregularities in the resolution process were left undisturbed.

Final Conclusion: The Tribunal confined itself to the expungement application and declined to reopen the earlier legal findings on the insolvency process. It held, however, that the erstwhile Resolution Professional's lapse arose from a bona fide but incorrect understanding of the statutory scheme and not from mala fide conduct, and therefore expunged the personal strictures and consequential direction against him.

Resolution Professional's right to seek information - Cooperation with Resolution Professional by related and connected entities - Disclosure of records distinguished from adjudication of substantive rights - Fraudulent Transaction - Related Party - Value Maximisation - Separate Legal Personality - Preliminary Inquiry - Distinction between disclosure of information and determination of rights

Disclosure of mall revenue records - Statutory cooperation during CIRP - Related party and connected entity disclosure obligation - Appellant could be directed to furnish details of rent and parking income from Avani Riverside Mall to the Resolution Professional, notwithstanding its plea that it was an independent third party and that ownership, entitlement to revenue, and validity of the 2018 agreements - HELD THAT: - The information sought in the present case pertains to rental income and parking collections generated from a mall admittedly developed by the Corporate Debtor and managed by the Appellant pursuant to arrangements entered into with the Corporate Debtor. The request for such information is therefore directly connected with the discharge of statutory duties and cannot be treated as a fishing or roving inquiry.

The Appellant's own case establishes a continuing nexus with the affairs of the mall. The Appellant is not a complete stranger having no connection whatsoever with the Corporate Debtor. The Appellant admits that it was appointed under agreements executed with the Corporate Debtor for management and maintenance functions relating to the mall. The rights now claimed by the Appellant are themselves traced to agreements entered into with the Corporate Debtor. Once such relationship is admitted, it becomes difficult to accept the contention that information relating to revenues generated through those arrangements is wholly beyond the reach of the Resolution Professional.

It is necessary to draw a distinction between disclosure of information and determination of rights. The Appellant appears to equate the two. However, furnishing information does not amount to an admission that the revenues belong to the Corporate Debtor. Nor does it result in a declaration that the Appellant has acted improperly. Production of records merely enables the Resolution Professional and the Adjudicating Authority to ascertain the true factual position. The question whether any revenue ultimately belongs to the Corporate Debtor, whether the agreements of 2018 are valid and enforceable, or whether any avoidance transaction has occurred, are matters that can be examined only after the relevant facts and financial records are available on record. Therefore, disclosure is a preliminary step towards adjudication and not an adjudication in itself.

The Appellate Tribunal held that the impugned order was limited to disclosure of information and did not determine ownership of the mall, adjudicate contractual rights, declare any amount payable to the Corporate Debtor, or finally decide entitlement to the revenues. Since the request arose in the course of CIRP and was connected with earlier directions for cooperation and verification of the mall's ownership and revenue streams, the Resolution Professional was entitled to seek the information for discharge of statutory duties of collecting, collating and verifying information concerning the affairs of the Corporate Debtor. The Appellant's reliance on the 2018 agreements could not defeat the request at the threshold, because the effect and validity of those agreements, particularly in the background of winding-up proceedings and pending avoidance applications, were themselves matters requiring scrutiny. The Tribunal further held that the Appellant was not a complete stranger to the Corporate Debtor's affairs, its relationship with the mall admittedly flowed from agreements with the Corporate Debtor, and its group connection brought it within the obligation to cooperate. Furnishing records was treated as only a preliminary disclosure measure and not an adjudication of substantive rights; therefore, disputed claims of ownership or entitlement could not be used to withhold relevant records. [Paras 42, 43, 44, 46, 47]

The direction to furnish complete details of rent and parking income was upheld and the appeal was dismissed.

Scope of appeal without cross-objection - Distinction of precedent on enlargement of relief - HELD THAT: - The Tribunal held that the principle in Banarsi & Ors. v. Ram Phal [2003 (2) TMI 493 - SUPREME COURT], invoked by the Appellant, did not assist it. No fresh or larger relief was being sought by the Respondent in appeal; the surrounding facts were referred to only to sustain the correctness of the existing direction requiring disclosure. The controversy before the Appellate Tribunal remained confined to the validity of the disclosure direction and not to any enlargement of the relief granted by the Adjudicating Authority. [Paras 45]

The objection founded on absence of cross-appeal or cross-objection was rejected.

Final Conclusion: The Appellate Tribunal affirmed the order directing the Appellant to disclose details of rent and parking income from the mall for the stated financial years. It held that the direction was only to secure information necessary for CIRP and did not adjudicate the parties' substantive rights, with the result that the appeal failed.

Finality of prior insolvency orders - Implementation of approved resolution plan - Liquidation for prolonged non-implementation - Belated post-reservation application - Corporate Insolvency Resolution Process - Appeal barred by finality and res judicata in view of the earlier orders declining interference and directing expeditious consideration of liquidation - Commercial Wisdom - Value Maximisation - Time-bound Resolution - Natural Justice - Collateral Attack - Going Concern - Diligent Implementation

Res judicata - Collateral attack on final orders - HELD THAT: - The Appellate Tribunal held that the present challenge substantially repeated issues already decided against the successful resolution applicant in the earlier appeal concerning implementation of the approved plan. Those findings, including that the plan remained unimplemented for over three years for want of requisite clearances, had attained finality after dismissal of the further challenge. The liquidation order merely carried forward the earlier direction to bring the matter to closure in accordance with the Code's time-bound framework; hence the present proceedings constituted an impermissible collateral attack on concluded inter partes orders. [Paras 72, 73, 74, 75]

The appeal was held barred by finality and principles of res judicata.

Natural justice - Post-reservation interlocutory application - Unapproved payment proposal - HELD THAT: - The Appellate Tribunal held that an application filed after conclusion of arguments and reservation of orders did not confer any right of rehearing. The one-time payment proposal was treated as a belated afterthought, lacking approval of the lenders and competent stakeholders, and therefore incapable of curing admitted default under the approved resolution plan. The Tribunal further held that the adjudicating authority could not entertain a unilateral, post facto restructuring of payment mechanics through such collateral application, and that the application was rightly rejected as a dilatory attempt to derail liquidation. [Paras 76, 82]

The plea of violation of natural justice failed, and rejection of the belated application was upheld.

Regulatory approvals under approved resolution plan - Successful resolution applicant's obligation - Section 31(4) compliance - Liquidation to prevent value erosion - HELD THAT: - The Appellate Tribunal held that the requirement of regulatory approvals, including approval from the Reserve Bank of India, was embedded in the appellant's own plan and the obligation to obtain them lay exclusively on the successful resolution applicant. Mere pendency of an application for approval did not satisfy the obligation under Section 31(4), nor could it justify indefinite postponement of implementation. The appellant had also failed to comply with earlier directions to deposit the required funds and continued to advance proposals unsupported by actual remittance. In these circumstances, the Tribunal held that prolonged non-implementation, repeated delay and absence of credible performance had frustrated the Code's objective of time-bound value maximisation; where implementation had become illusory and value erosion was continuing, liquidation was not only permissible but necessary. [Paras 79, 80, 81, 83, 84]

The liquidation order was upheld as a valid consequence of prolonged and unjustified non-implementation of the approved plan.

Final Conclusion: The Appellate Tribunal dismissed the appeal and upheld liquidation of the corporate debtor. It held that the appellant's repeated defaults, failure to secure approvals and belated payment proposals could not be permitted to prolong an already unimplemented resolution, and imposed costs for misuse of the process.

Taxability of Royalty paid under the Technical License Contract Agreement for use of technical documentation and know-how - Scope of intellectual property service - Whether the appellant is liable to pay service tax considering the royalty payments made by the appellant to be considered as services received under the category of Intellectual Property Rights Services ? -HELD THAT: - The Tribunal examined the agreement and found that the licence was granted to enable manufacture of the licensed products by use of technical documentation and know-how. The agreement itself stated that, apart from the rights expressly granted, the appellant acquired no right or claim in trademarks, trade names, utility model rights, design rights, patents or copyrights. On that reading, the royalty was held to be consideration for technical know-how and not for transfer or permitted use of any intellectual property right as defined in the statute. The Tribunal also noted that, in the appellant's own case, the earlier order had held that no such IPR was shown to exist in the transaction. Further, the Board circular clarified that only IPRs covered under Indian law are chargeable, and no material was shown to establish that the alleged right was so registered or protected under Indian law. The demand therefore lacked legal basis. [Paras 7, 8, 9, 10]

The service tax demand, with consequential interest and penalties founded on classification of the royalty as intellectual property service, was set aside.

Final Conclusion: The Tribunal held that the royalty under the Technical License Contract Agreement was paid for technical know-how and technical documentation, not for any taxable intellectual property right service. In the absence of material showing any IPR covered by Indian law, the impugned demand was set aside and the appeal was allowed.

Denial of Cenvat credit on the imported aluminium panels - goods assessed at the time of import as aluminium panels under Chapter Heading 7610, while moulds fall under Chapter Heading 8480 -Use-based classification under eo nomine tariff entry - Common or trade parlance test

Imported aluminium panels - Moulds as capital goods - As imported principle - Chapter Heading 7610 - HELD THAT: - The Tribunal held that the goods had to be examined in the condition in which they were imported. The respondent had imported and cleared the goods as aluminium panels classifiable under Chapter Heading 7610 9090, and the classification was never in dispute. The material on record, including the respondent's own explanation, showed that only after assembly at the premises did the panels take the form of a hollow container used for pouring concrete, thereby becoming a mould-like structure. Since the definition of capital goods did not cover goods classifiable under Chapter Heading 7610, and the imported goods were not moulds under the separate tariff heading for moulds at the time of import, the Commissioner could not allow credit by applying a functional test based on post-import use. Relying on the principle stated in M/s. Welkin Foods [2026 (1) TMI 348 - SUPREME COURT] and Pioneer Embroideries Ltd. [2015 (8) TMI 1048 - SUPREME COURT], the Tribunal reiterated that classification must rest on the objective characteristics of the goods as imported, and actual or subsequent use cannot displace an eo nomine tariff entry that does not itself make use a relevant criterion. [Paras 5, 6, 7]

Cenvat credit was not admissible on the imported aluminium panels, and the Commissioner's order allowing such credit was set aside.

Limitation of demand - Remand for fresh consideration - HELD THAT: - The Tribunal recorded that the Commissioner had set aside the demand on merits and, for that reason, had no occasion to examine limitation. As the Revenue succeeded on merits before the Tribunal, the limitation plea raised by the respondent remained undecided and was remanded to the original authority for decision only on that aspect. No finding on the merits of the limitation defence was returned. [Paras 8]

The issue of limitation alone was remanded to the original authority for fresh decision.

Final Conclusion: The Tribunal held that the imported goods were aluminium panels classifiable under Chapter Heading 7610 9090 as imported and could not be treated as moulds for availment of cenvat credit on the basis of their post-import assembly and use. The Revenue's appeal was allowed on merits, while the question of limitation alone was remanded to the original authority.

Limitation for appeal - Service tax demand based on Form 26AS - Extended period of limitation - Corroborative evidence - Taxable service - Delay condonation

Limitation for appeal - Communication of order - HELD THAT: - The Tribunal found that the order-in-original had been passed during the Covid period and that the appellant had consistently pursued a copy of that order by addressing the departmental authorities, approaching the High Court, and thereafter seeking the order through an RTI application. These steps showed that the appellant had not earlier received the order and had made genuine efforts to obtain it. Since the copy of the order was supplied only in response to the RTI request and the appeal was filed within one month thereafter, the filing before the Commissioner (Appeals) could not be treated as barred by limitation. [Paras 16, 17]

The dismissal of the appeal as time-barred was set aside.

Service tax demand based on Form 26AS - Extended period of limitation - Lack of corroborative verification - HELD THAT: - The Tribunal held that the show cause notice had been issued purely on the basis of Form 26AS data, without any further enquiry as to the nature of the services allegedly rendered to the entities reflected therein. The record also showed that the department had earlier raised a query regarding the appellant's turnover and thereafter remained inactive for about three years before issuing the notice. Applying the principle emerging from the cited decisions of High Court of Gujarat, in re Nimeshbhai Gunvant bhai Patel [2024 (11) TMI 669 - GUJARAT HIGH COURT]; Tabassum Enterprises [2025 (9) TMI 1275 - CESTAT KOLKATA]; that mere discrepancy or information drawn from income-tax records or Form 26AS, without corroborative evidence and proper investigation, cannot sustain a service tax demand or justify invocation of the extended period, the Tribunal concluded that the confirmed demand was barred by limitation. [Paras 25, 26, 27, 28]

The confirmed demand was set aside on the ground of limitation.

Final Conclusion: The Tribunal held that the appellant's appeal before the Commissioner (Appeals) had been filed within time from the date of actual receipt of the order-in-original. On the merits of the notice's validity, it further held that a service tax demand founded solely on Form 26AS data, without proper verification and yet invoking the extended period, could not survive; the appeal was accordingly allowed with consequential relief as per law.

Exemption for Government construction works under pre-1 March 2015 contract condition - Benefit of exemption under Notification No. 25/2012-Service - Extended limitation and bona fide belief as to taxability - Bonafide belief - Suppression or wilful intent to evade tax - non-payment of Service Tax under the category of Works Contract Service

Exemption for Government construction works under pre-1 March 2015 contract condition - Harmonious consideration of tender and contract documents -HELD THAT: - The fact that the appellant was carrying bonafide belief that no Service Tax is payable gets clarified by the letters submitted to the Dept. stating that they are claiming the benefit under Sl.12(a) and under Sl NO.13(b).

The Tribunal examined the tender chronology and held that, although the formal award was made later, the quotation had been submitted before 1 March 2015 and was accepted as such by the Government. In the absence of any evidence from Revenue that the quotation finally awarded was different from the one submitted before that date, the contract had to be treated, on an overall and harmonious reading of the documents, as one entered into prior to 1 March 2015 for purposes of the exemption condition. The denial of exemption by the lower authorities on the sole basis of the later formal award date was therefore held to be unduly narrow. [Paras 22]

The confirmed demand was set aside on merits on the ground that the appellant satisfied the pre-1 March 2015 contract condition for exemption.

Extended limitation and bona fide belief as to taxability - Suppression of facts and intent to evade -HELD THAT: - The Tribunal found that the show cause notice itself recorded the appellant's earlier communication claiming exemption, and that the appellant, being a registered assessee, had filed returns showing no service tax payment while responding to departmental queries by asserting exemption under the notification. These facts established a bona fide belief as to non-taxability and disclosed the material basis of that belief to the Department. As there was nothing in the investigation to show deliberate suppression or intent to evade tax, the requirement for invoking the extended period was not satisfied, in line with the principles stated in Padmini Products [1989 (8) TMI 80 - SUPREME COURT], Anand Nishikawa Company Ltd.[2005 (9) TMI 331 - SUPREME COURT], and Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay . [Paras 25, 26, 27]

The demand for the extended period was set aside as time-barred.

Final Conclusion: The appeal was allowed both on merits and on limitation. The Tribunal held that the Government works contract satisfied the exemption condition applicable to contracts entered into prior to 1 March 2015, and in any event the extended period was unavailable since the case of suppression was not made out.

Exclusion of separately billed study material from taxable value of commercial coaching service - Fee waiver and scholarship as non-includible discount in valuation of coaching service - Benefit of Notification No. 12/2003-ST - Commercial Training or Coaching Services

Separate sale of study material - Whether Service Tax is payable in course material sold by the appellant separately to students including students not enrolled with its coaching classes ? - HELD THAT: - Following M/s. Cerebral Learning Solutions Pvt. Ltd.[2013 (4) TMI 527 - CESTAT NEW DELHI] and its affirmance by the Apex Court in M/s. Cerebral Learning Solutions Pvt.Ltd. [2022 (12) TMI 475 - SC ORDER], the Tribunal held that where documentary evidence exists of separate billing and separate value of study material, the transaction is a sale of goods and its value cannot be added to the gross value of taxable coaching service. The Tribunal also noted the finding in the appellant's case that separate receipts were issued for books and study material and that such material was sold even to non-registered students. On that basis, inclusion of the value of course material in assessable value was held impermissible. [Paras 5, 9]

The demand of service tax on separately billed course material was set aside.

Scholarship and fee waiver as discount - Whether Service Tax is payable on fee-waiver/scholarships provided to students of the coaching centre even when such amount was not charged/collected from the students? - HELD THAT: - Relying on Resonance Eduventures Private Limited [2017 (11) TMI 1276 - CESTAT NEW DELHI] and Carrier Point Infosystems Limited [2017 (4) TMI 1338 - CESTAT NEW DELHI], the Tribunal held that scholarship or fee waiver granted to meritorious or economically backward students is in the nature of discount or rebate and is not includible in taxable value. It rejected the Department's approach of adopting the fee charged to non-scholarship students as the benchmark merely because identical classes, faculty and study material were provided. The determinative principle applied was that service tax is payable on the gross amount actually collected from students, and fee concessions do not become additional consideration merely because they may also serve business promotion. [Paras 6, 7, 8, 9]

The demand of service tax on fee waiver and scholarships was set aside.

Final Conclusion: The Tribunal allowed the appeal and held that neither the value of separately billed study material nor the amount represented by fee waiver or scholarship could be included in the taxable value of commercial training or coaching service.

Recovery on the promissory note - Legally enforceable debt - Presumption as to consideration under promissory note - Blank signed promissory note as inchoate instrument - source of funds and non-disclosure in income tax returns - Enforceability of loan transaction despite non-disclosure in income tax returns - Admission as best evidence - Burden of proof - Adverse inference - Admission as best evidence

Presumption as to consideration under promissory note - Blank signed promissory note as inchoate instrument - Forgery defence - Admission as best evidence -HELD THAT: - The Court found that the first defendant had not denied his signatures in the promissory note, voucher and cheque, and had also admitted the handwritten reply sent after receipt of the pre-suit notice. That reply was treated as a clear admission of the liability and of the undertaking to repay, and the Court held that such admission was the best evidence. Once execution and signature on the promissory note stood proved, the statutory presumption under Section 118 of the Negotiable Instruments Act arose as to consideration. The plea that blank signed documents had been given did not assist the defendant, since an admitted blank signed promissory note was treated as an inchoate instrument authorising completion, unless rebutted. The plaintiff further supported execution and passing of consideration through the evidence of an attesting witness, while the defendant led no expert or other rebuttal evidence to establish forgery or fabrication. The objection founded on the photocopy ledger was not treated as displacing the direct documentary admissions and oral proof of execution and consideration. [Paras 19, 21, 22, 23, 27]

The promissory note was held genuine, the presumption of consideration remained unrebutted, and the decree founded on it was sustained.

Enforceability of loan transaction despite non-disclosure in income tax returns - Unpleaded defence - Source of funds -HELD THAT: - The Hon'ble Supreme Court in the decision in Bharat Barrel & Drum Manufacturing Company [1999 (2) TMI 627 - SUPREME COURT], it is held that the faith of the business community dealing in mercantile and trade cannot be permitted to be shaken by resorting to technicalities of law and the procedural wrangles as appears to have been done in this instant case.

The Court held that the contention based on absence of the transaction in the plaintiff's income tax returns had not been specifically pleaded in the written statement and therefore could not form a valid ground to defeat the suit. It further accepted the principle that even if a money transaction is not reflected in the books of account or income tax returns, that by itself does not make the debt legally unenforceable as between the parties. Any violation of the income tax law may expose the lender to separate proceedings by the competent authority, but the borrower cannot avoid repayment on that basis. In the present case, the defendant had also failed to rebut the statutory presumption arising from the proved promissory note, and the evidence was held sufficient to show that the plaintiff had the means to lend. [Paras 24, 25, 26, 27]

The challenge based on source of funds and non-disclosure in income tax returns was rejected and did not affect the maintainability or enforceability of the suit claim.

Final Conclusion: The appeal was dismissed and the trial court decree for recovery on the promissory note was affirmed. The Court held that execution and consideration stood proved, the statutory presumption remained unrebutted, and the objection based on non-disclosure of the transaction in income tax records did not defeat the claim.