TaxTMI Updates e-Newsletter
Jul 12,2022

Principles of natural justice - appeal under Section 107 of the JGST Act, 2017 - appeal against order contained in FORM GST MOV-09 despite non-uploading of FORM GST DRC-07 - electronic uploading of summary in FORM GST-DRC-07 and portal technical failure - provision of GSTIN credentials to enable online appeal - release of detained vehicle on furnishing bond and bank guarantee equivalent to liability - manual filing of appeal where online submission is not accepted for technical reasons

Appeal under Section 107 of the JGST Act, 2017 - appeal against order contained in FORM GST MOV-09 despite non-uploading of FORM GST DRC-07 - Availability of appellate remedy and appealability of the order in FORM GST MOV-09 where FORM GST DRC-07 was not uploaded on the common portal. - HELD THAT: - The Court granted the petitioner liberty to avail the statutory remedy of appeal under Section 107 of the JGST Act, 2017 against the impugned order contained in FORM GST MOV-09 notwithstanding that the summary in FORM GST DRC-07 had not been uploaded on the common portal. The State submitted that an appeal can be preferred against the order in FORM GST MOV-09 and undertook to provide necessary assistance to enable the petitioner to prefer the appeal. The Court did not adjudicate the merits of the underlying detention or tax liability but confined itself to ensuring the petitioner could access the appellate mechanism despite the technical non-upload of FORM GST DRC-07. [Paras 5, 7]

Petitioner permitted to approach the appellate authority and prefer an appeal under Section 107 against the order in FORM GST MOV-09 despite non-uploading of FORM GST DRC-07.

Provision of GSTIN credentials to enable online appeal - manual filing of appeal where online submission is not accepted for technical reasons - electronic uploading of summary in FORM GST-DRC-07 and portal technical failure - Direction to the State to facilitate the petitioner's appeal by providing GSTIN credentials and permitting manual filing if online submission fails for technical reasons. - HELD THAT: - The Court directed that on the petitioner approaching the Deputy Commissioner, State Taxes, Dumka Circle, Dumka, the office shall provide the GSTIN number together with ID and password so the petitioner can prefer an appeal online. The Court further provided that if the appeal is not accepted online for technical reasons, the petitioner would be at liberty to prefer a manual appeal before the appellate authority. These directions were given to remove technical impediments to the exercise of the appellate remedy and do not resolve the substantive dispute on merits. [Paras 5, 7]

State directed to provide GSTIN credentials to enable online filing; manual appeal permitted if online filing fails.

Release of detained vehicle on furnishing bond and bank guarantee equivalent to liability - principles of natural justice - Condition and procedure for provisional release of the detained vehicle pending appeal. - HELD THAT: - The Court recorded the petitioner's willingness to furnish a bond and a bank guarantee equivalent to the liability fastened under FORM GST MOV-09 and directed that upon filing the appeal and furnishing such bond together with the bank guarantee, the appellate authority would release the vehicle forthwith in accordance with law. The Court emphasised that it was not expressing any view on the merits or on alleged violations of principles of natural justice in the underlying proceedings; the direction was procedural to secure interim relief pending adjudication on appeal. [Paras 8]

On filing the appeal and furnishing bond and bank guarantee equivalent to the liability in FORM GST MOV-09, the appellate authority shall release the vehicle forthwith.

Final Conclusion: Writ petition disposed of by granting the petitioner liberty to prefer an appeal under Section 107 against the order in FORM GST MOV-09; the State directed to provide GSTIN credentials to enable online filing and to accept a manual appeal if online filing fails; on filing the appeal and furnishing a bond and bank guarantee equivalent to the liability specified in FORM GST MOV-09, the appellate authority shall release the detained vehicle. The Court has not gone into the merits of the dispute.

GST on grant of mining rights - levy of GST on royalty / seignorage - tax on tax principle - stay of GST collection pursuant to Supreme Court order - administrative clarification on applicable GST rate for mineral rights - direction to consider representations in accordance with law

GST on grant of mining rights - levy of GST on royalty / seignorage - stay of GST collection pursuant to Supreme Court order - Respondents to consider and dispose of the petitioners' representations regarding insistence on GST registration/collection in accordance with law and the Supreme Court's order. - HELD THAT: - The petitioners sought writ relief restraining respondents from insisting on GST registration and collection in respect of quarrying activity, contending that seignorage/royalty is a privilege tax and that tax on tax cannot be levied; they relied on the Supreme Court's interim order staying payment of GST in a related matter and on High Court decisions following that order. The respondents relied on an administrative circular clarifying the rate and scope of GST for grant of mineral exploration and mining rights for the period 01.07.2017 to 31.12.2018 and the amended rate applicability with effect from 01.01.2019, and submitted that they would consider the petitioners' representations and act depending on the Supreme Court outcome. Having noted the competing contentions and the pendency/operation of the Supreme Court order, the High Court did not grant a blanket restraint but directed the respondents to consider the representations dated 13.06.2022 and 24.06.2022 and to dispose of them in accordance with law, following the Supreme Court judgment relied upon by the petitioners. [Paras 5, 6]

Writ petitions disposed by directing respondents to consider and dispose of the petitioners' representations in accordance with law and by following the Supreme Court judgment; no costs.

Final Conclusion: Writ petitions disposed with a direction to respondents to consider the petitioners' representations dated 13.06.2022 and 24.06.2022 and to dispose of the same in accordance with law, having regard to the Supreme Court's order relied upon; no costs.

Summary of show-cause notice in Form DRC-01 - show-cause notice under Section 74(1) - violation of principles of natural justice - no estoppel against statute - search under Section 67

Summary of show-cause notice in Form DRC-01 - show-cause notice under Section 74(1) - violation of principles of natural justice - Whether issuance of the summary in Form DRC-01 can substitute for the show-cause notice required by Section 74(1) and whether proceedings founded on such summary are sustainable. - HELD THAT: - The Court held that Rule 142(1)(a) requires that the summary in Form DRC-01 be issued "along with" the show-cause notice, and thus the statutory scheme contemplates issuance of both the detailed show-cause notice and its electronic summary. A Form DRC-01 summary cannot substitute for a proper show-cause notice under Section 74(1). Proceedings under Section 74, which allege fraud or willful misstatement or suppression of facts, impose serious consequences and must plead the specific ingredients and charges so that the noticee has a fair and informed opportunity to meet the allegations. The impugned summary lacked the foundational allegations required for a Section 74 notice and therefore amounted to a violation of principles of natural justice; consequently the challenge was maintainable in writ jurisdiction and the orders founded on such defective notice could not be sustained. The Court relied on its earlier reasoning in M/S NKAS Services Pvt. Ltd. and the principles that at the show-cause stage the noticee must be informed of specific charges to enable effective defence. [Paras 7, 8, 11]

Form GST DRC-01 (summary) does not substitute for the mandatory show-cause notice under Section 74(1); proceedings and orders founded on the defective notice are quashed for violation of natural justice.

No estoppel against statute - rectification under Section 161 - Whether the petitioner's filing of a concise reply or subsequent rectification and reduction of liability cures the jurisdictional defect arising from non-issuance of the statutory show-cause notice, or whether estoppel or consent can validate the proceedings. - HELD THAT: - The Court reaffirmed that jurisdiction must flow from statute and cannot be conferred by consent, estoppel, or a bona fide mistake of the assessee. The petitioner's furnishing of a concise reply to the Form DRC-01 and subsequent rectification orders do not cure the fundamental defect that a proper show-cause notice under Section 74(1) was not issued. Reliance on equitable doctrines such as estoppel cannot validate statutory non-compliance; the State cannot derive jurisdiction from the petitioner's reply. The Court noted precedent that statutory powers cannot be ousted by consent and applied that principle to sustain quashing of the impugned orders despite the reply and rectification proceedings. [Paras 9, 10, 11]

The petitioner's reply and rectification cannot cure the jurisdictional defect; estoppel or consent does not validate proceedings where statutory preconditions (issuance of show-cause notice) are absent.

Final Conclusion: Both writ petitions are allowed: the summary show-cause notices in Form GST DRC-01 dated 14.09.2018, the orders dated 25.02.2019 under Section 74(9), and the rectified orders dated 03.03.2021 are quashed and set aside; respondents are at liberty to initiate fresh proceedings in accordance with law.

Violation of principles of natural justice - ex parte order - quashing of order - remand for fresh adjudication - affording opportunity of hearing - speaking order - no coercive action during pendency - deposit as condition for hearing - de-freezing of bank accounts

Violation of principles of natural justice - ex parte order - quashing of order - Impugned orders passed by the assessing officer and the appellate authority which were ex parte and devoid of adequate reasons are legally unsustainable. - HELD THAT: - The High Court found that the appellate order dated 15.07.2021 and the order dated 20.02.2020 were ex parte in nature, afforded no sufficient time or fair opportunity to the petitioner to represent its case, and did not supply decipherable reasons as to how the amount due was determined. The Court held that orders passed in such circumstances entail civil consequences and that authorities had not adjudicated the matter on the attending facts and circumstances. On this short legal ground the Court concluded that the impugned orders were vitiated and liable to be set aside.

Impugned orders dated 15.07.2021 and 20.02.2020 quashed and set aside.

Remand for fresh adjudication - affording opportunity of hearing - speaking order - Matter remitted to the Assessing Authority for fresh decision on merits with directions to comply with principles of natural justice and to pass a speaking order. - HELD THAT: - The Court directed that the Assessing Authority shall decide the case afresh on merits after affording adequate opportunity of hearing to the parties and after allowing them to place on record essential documents and materials. The Court emphasised that the fresh order must be a speaking order assigning reasons and a copy supplied to the parties. The Court expressly refrained from expressing any opinion on the merits and left all factual and legal issues open for adjudication by the Assessing Authority.

Matter remanded to the Assessing Authority to decide afresh on merits after complying with the principles of natural justice and passing a speaking order.

Deposit as condition for hearing - no coercive action during pendency - de-freezing of bank accounts - Interim directions concerning deposits, non-coercion, de-freezing of bank accounts and timeline for proceedings were issued. - HELD THAT: - The Court recorded that ten per cent of the total amount as a condition precedent for hearing stands deposited according to the petitioner; directed that if not already deposited it must be done before the next date and further directed the petitioner to deposit an additional ten per cent within four weeks. The deposit is to be without prejudice to parties' rights and any excess shall be refunded if ultimately found so. The Court directed immediate de-freezing/de-attaching of the petitioner's bank accounts, if attached in relation to the impugned proceedings, and restrained the respondents from taking coercive steps during the pendency of the matter. The Court also directed expeditious disposal preferably within two months of the petitioner's appearance and permitted digital mode of proceedings where possible.

Interim directions issued as to deposits, de-freezing of accounts, restraint on coercive action and an expeditious, merit-based hearing in accordance with the order.

Final Conclusion: The writ petition is allowed inasmuch as the impugned orders dated 20.02.2020 and 15.07.2021 are quashed; the matter is remitted to the Assessing Authority for fresh adjudication on merits after affording opportunity of hearing and passing a speaking order; interim directions regarding deposit, de-freezing of accounts and restraint on coercive action during pendency have been issued, and all substantive issues are left open for fresh decision.

Violation of principles of natural justice - ex parte order - speaking order requirement - remand for fresh adjudication - stay on coercive recovery - deposit as condition for hearing in appeal - right to challenge fresh order - no expression of opinion on merits

Violation of principles of natural justice - ex parte order - speaking order requirement - Impugned assessment and appellate orders were quashed for being ex parte, failing to afford adequate opportunity of hearing and lacking discernible reasons. - HELD THAT: - The Court found that the Assessing Authority and the Appellate Authority passed orders without affording sufficient time or opportunity to the petitioner to represent its case, resulting in orders of an ex parte character. The impugned orders did not assign sufficient reasons from which the determination of amount due could be deciphered. For these reasons the orders were held to be bad in law and liable to be set aside. The Court emphasised that even where proceedings are ex parte, issues of fact and law ought to be adjudicated and reasons returned; absence of such compliance violates the principles of natural justice and entails civil consequences.

Impugned orders dated 02.02.2021 and 25.12.2021 and consequential orders, including attachment, were quashed and set aside on the ground of breach of natural justice and non-speaking ex parte adjudication.

Remand for fresh adjudication - deposit as condition for hearing in appeal - stay on coercive recovery - speaking order requirement - right to challenge fresh order - Matter was remanded to the Assessing Authority for fresh decision on merits with directions regarding deposits, de-freezing of accounts, hearing opportunity, timeline and accountability for a speaking order. - HELD THAT: - The Court accepted the Revenue's consent to remand and directed that the Assessing Authority decide the case afresh on merits after affording adequate opportunity of hearing and permitting parties to place on record essential documents. The petitioner undertook to deposit ten per cent of the amount as condition precedent for hearing and to additionally deposit ten per cent within four weeks; if excess deposit is finally found, it shall be refunded. The Court ordered immediate de-freezing/de-attaching of the petitioner's bank accounts (if attached in connection with these proceedings) and restrained coercive steps during pendency. The Assessing Authority was directed to pass a speaking, reasoned order expeditiously, preferably within two months of the petitioner's appearance. Liberty was reserved to the petitioner to challenge the fresh order and to parties to pursue other remedies as available in law. The Court expressly refrained from expressing any opinion on the merits.

Proceedings remitted to the Assessing Authority for fresh adjudication on merits with specified interim directions (deposits, de-freezing, opportunity of hearing, speaking order and timeline); coercive action stayed during pendency; parties retain liberty to challenge resultant order.

Final Conclusion: The High Court quashed the assessment order dated 02.02.2021, the appellate order dated 25.12.2021 and consequential orders for breach of natural justice and non-speaking ex parte adjudication, remitted the matter for fresh adjudication on merits with directions for deposits, immediate de-freezing of accounts if attached, a stay on coercive recovery during pendency, and a requirement that the Assessing Authority pass a reasoned order after affording hearing (all issues on merits left open).

Non-speaking order - principles of natural justice - discretion to reject registration under verification provisions - requirement to record reasons in writing - registration under Section 22 r/w Section 25 of the CGST Act and Rule 8 of the CGST Rules

Non-speaking order - principles of natural justice - Validity of the rejection order dated 13.05.2022 as a non-speaking order contrary to principles of natural justice. - HELD THAT: - The Court found that the impugned order consisted of a monosyllabic entry 'rejected' without any reasons or explanation and therefore was indefensible. The authority's failure to record reasons or to deal with the explanation and documents (rental/lease deed) furnished by the applicant rendered the order arbitrary and non-speaking. An order rejecting an application for registration must be reasoned and must reflect consideration of the applicant's response; mere issuance of a one word rejection violates the principles of natural justice and cannot stand. [Paras 6]

Impugned rejection set aside for being non-speaking and contrary to principles of natural justice.

Discretion to reject registration under verification provisions - requirement to record reasons in writing - registration under Section 22 r/w Section 25 of the CGST Act and Rule 8 of the CGST Rules - Scope of the word 'may' in Rule 9(4) and the consequences for further action on the registration application. - HELD THAT: - The Court interpreted Rule 9(4) as conferring discretion to reject an application but made clear that the term 'may' pertains only to the power to reject and does not permit breach of procedural safeguards. Where rejection is pursued, the proper officer must record reasons in writing and follow due process, including affording the applicant opportunity to be heard and considering documents uploaded in response to a notice. Accordingly, the matter was remitted for fresh consideration consistent with these requirements. [Paras 7, 8]

Authority directed to hear the petitioner on the objection and pass a reasoned order on the registration application within four weeks.

Final Conclusion: The one line rejection order dated 13.05.2022 is set aside for being non-speaking; the respondent shall hear the petitioner on the objection and decide the registration application afresh, recording reasons in writing, within four weeks. Writ petition allowed.

Pure agent - Rule 33 of the CGST Rules, 2017 - value of supply - exclusion of reimbursed expenditure - reimbursement vs consideration - statutory obligations under the NEEM Regulations, 2017

Pure agent - Rule 33 of the CGST Rules, 2017 - reimbursement vs consideration - statutory obligations under the NEEM Regulations, 2017 - Whether the appellant qualifies as a 'pure agent' of the industry partner to the extent of reimbursement received towards stipend paid to trainees and whether such reimbursement is excludable from the taxable value under Rule 33. - HELD THAT: - Rule 33 permits exclusion from the value of supply of expenditure incurred by a supplier as a pure agent of the recipient if three conditions are satisfied: (i) payment to the third party is made on authorization by the recipient; (ii) the payment is separately indicated in the invoice; and (iii) the supplies procured by the pure agent from the third party are in addition to the services supplied on his own account. The Explanation to Rule 33 requires, inter alia, that the pure agent must enter into a contractual agreement to act as pure agent, not hold title to the procured supplies, not use them for his own interest, and receive only the actual amount incurred. Applying these tests, the authority found that the NEEM Regulations and the contracts show that the appellant, as NEEM Facilitator, is obligated under the Regulations and its trainee contract to pay stipends and to deploy and monitor trainees, issue completion certificates, furnish reports to AICTE and face penal consequences for non compliance. The contractual clause that the industry partner pays an amount to the appellant for stipend does not establish that the industry partner is legally liable to pay the stipend or that it has authorized the appellant to make payment as its pure agent. The stipend amount is treated in the industry agreement as consideration for dedicated deployment of trainees (i.e. part of the service arrangement) and the appellant's activities in deploying and ensuring training are undertaken in its own interest as NEEM Facilitator. Further, the appellant did not satisfy condition (iii) because the amounts billed (including stipend shown separately) relate to the same supply of deploying trainees under NEEM and are not supplies procured from a third party in addition to services supplied on the appellant's own account. The timing of receipt and disbursement of stipend was held not to be the determinative criterion; nevertheless, on the substantive tests of Rule 33 and in light of the NEEM Regulations, the appellant does not qualify as a pure agent and the stipend reimbursement cannot be excluded from taxable value under Rule 33. [Paras 16, 17, 18, 19]

The appellant does not qualify as a 'pure agent' for the stipend reimbursement and the reimbursement forms part of the taxable value.

Final Conclusion: The order of the Authority for Advance Ruling No. KAR ADRG 07/2022 dated 8th March 2022 is upheld and the appeal is dismissed.

Admissibility of input tax credit - Advance ruling under Section 97(2)(d) - Common input services used for taxable and exempt supplies - Eligibility for ITC under Section 16 read with Rule 36 - Restrictions and reversal under Section 17(2) - Determination of ITC attributable to taxable supplies under Rule 42 - Advance ruling maintainability for past actions - Procedural requirement under Section 98 for admission and ruling

Admissibility of input tax credit - Common input services used for taxable and exempt supplies - Advance ruling under Section 97(2)(d) - Eligibility for ITC under Section 16 read with Rule 36 - Restrictions and reversal under Section 17(2) - Whether ITC can be claimed on common services used by Vamika IMU and the printing press at Mysuru for both taxable and exempt supplies is admissible for advance ruling under Section 97(2)(d). - HELD THAT: - The expression 'admissibility of input tax credit' in Section 97(2)(d) encompasses examination of whether goods or services meet the conditions of Section 16 (read with Rule 36) and are not barred by Section 17(5), and further whether credits must be restricted under Section 17(1)/17(2) with quantification mechanism in Rule 42/43. The question about common input services used by both the ink unit and the printing press necessarily involves these admissibility inquiries and therefore falls within the ambit of clause (d). The lower Authority erred in declining to rule on this question; however, the Appellate Authority in appeal cannot decide the merits afresh but may hold the question to be admissible for advance ruling and remit it for determination in accordance with the statutory procedure. [Paras 11, 12, 13, 14]

The question on admissibility of ITC on common services is within the scope of Section 97(2)(d) and is admissible for advance ruling; the Appellate Authority will not decide the merits in appeal.

Determination of ITC attributable to taxable supplies under Rule 42 - Advance ruling under Section 97(2)(d) - Whether the method followed by the applicant in claiming input tax credit (i.e., correctness of the method of reversal/allocation under Rule 42) is a matter on which an advance ruling can be given. - HELD THAT: - The correctness of the procedural or factual method adopted by the assessee in applying Rule 42 to compute reversal/attribution of credit is a question for the proper assessing authority. Such a factual or methodological determination about how the appellant has computed or complied with Rule 42 does not fall within the statutory matters on which an advance ruling may be sought under Section 97(2). The Appellate Authority concurs with the lower Authority that this question is not maintainable as an advance ruling matter. [Paras 15]

The question on correctness of the method followed in claiming ITC is not a question for advance ruling and no ruling can be given.

Advance ruling maintainability for past actions - Determination of ITC attributable to taxable supplies under Rule 42 - Which financial year's turnover is to be considered under Rule 42 where invoices were accounted in 2019-20 but ITC was claimed in April-September 2020-21 - whether this is a question maintainable for advance ruling. - HELD THAT: - An advance ruling applies to supplies being undertaken or proposed to be undertaken by the applicant and matters specified in Section 97(2). The question relating to computation for a past action - where ITC has already been availed in FY 2020-21 on invoices accounted in FY 2019-20 - concerns past conduct and factual computation and therefore is not within the scope of matters maintainable for an advance ruling. Consequently, the lower Authority was correct in declining to give a ruling on this retrospective question. [Paras 16]

The question regarding which financial year's turnover to consider for Rule 42 in the stated facts is not a matter for advance ruling and no ruling can be given.

Final Conclusion: The Appellate Authority modifies the AAR order to hold that the question on admissibility of ITC for common services used for both taxable and exempt supplies is admissible under Section 97(2)(d); the AAR's refusal to rule on that question is set aside, but the Appellate Authority does not decide the merits in appeal. The AAR's conclusions refusing rulings on the correctness of the applicant's method of claiming ITC and on the retrospective choice of financial year for Rule 42 are upheld. The appeal is disposed accordingly.

Deletion of additions made on account of travel expenses - disallowance of loan interest for lack of nexus with business - wholly and exclusively for business - nexus between borrowed funds and business purpose - concurrent finding of fact - re-appreciation of evidence - deference to findings of appellate authorities - Section 36(1)(iii) of the Income Tax Act, 1961

Deletion of additions made on account of travel expenses - wholly and exclusively for business - concurrent finding of fact - The additions made by the Assessing Officer disallowing travel expenses were rightly deleted by the appellate authorities. - HELD THAT: - Both the Commissioner (Appeals) and the Income Tax Appellate Tribunal recorded concurrent findings of fact that the assessee had produced details of employees and justification/purpose of travel, and that the Assessing Officer had made an arbitrary estimated disallowance of 20% without cogent reasoning or working. The High Court held that these concurrent factual findings on the sufficiency of evidence and the absence of a rational basis for the AO's estimate do not warrant re-appreciation by this Court and are not perverse. [Paras 4]

The deletions of travel expense additions were upheld and interference was declined.

Disallowance of loan interest for lack of nexus with business - nexus between borrowed funds and business purpose - Section 36(1)(iii) of the Income Tax Act, 1961 - concurrent finding of fact - The additions made by the Assessing Officer disallowing interest on borrowed funds for lack of nexus with business were rightly deleted by the appellate authorities. - HELD THAT: - The CIT(A) and ITAT found on concurrent factual examination that the assessee was engaged in real estate and infrastructure development during the year, undertaking multiple projects and holding substantial inventory. They also accepted documentary evidence showing deployment of borrowed funds for business purposes (including bank guarantee, land aggregation, equity contributions in joint ventures, and payments for joint ventures), thereby establishing nexus. The High Court refused to reappraise these concurrent findings of fact and recorded that no cogent basis existed to disturb the appellate conclusions. [Paras 5]

The deletions of interest disallowance were upheld and interference was declined.

Concurrent finding of fact - re-appreciation of evidence - deference to findings of appellate authorities - The High Court will not interfere with concurrent findings of fact recorded by the two authorities below merely to re-appreciate evidence. - HELD THAT: - Relying on the principle that a High Court is not justified in reversing concurrent factual findings of two subordinate fora absent perversity, the Court observed that the appellant sought re-appreciation of evidence rather than raising any substantial question of law. The impugned ITAT order suffered no perversity and contained reasoned factual conclusions which the High Court declined to disturb. [Paras 6, 7]

The appeal was dismissed for want of any substantial question of law and because interference with concurrent findings was unwarranted.

Final Conclusion: The Income Tax Appeal is dismissed; the High Court declines to interfere with the concurrent factual findings of the CIT(A) and ITAT upholding deletion of additions in respect of travel expenses and interest disallowance for Assessment Year 2009-10, and no substantial question of law arises.

Section 68 unexplained cash credit - Section 153A assessment on basis of incriminating material found during search - unabated assessment - onus on assessee to prove identity, genuineness and creditworthiness of creditor - natural justice - right to cross-examination of adverse witnesses

Section 68 unexplained cash credit - Section 153A assessment on basis of incriminating material found during search - unabated assessment - onus on assessee to prove identity, genuineness and creditworthiness of creditor - Deletion of additions made under Section 68 in respect of loans shown as received from M/s. Uniworth Agency Pvt. Ltd. for AY 2012-13 and AY 2013-14 - HELD THAT: - The court endorsed the ITAT's finding that the loans from UAPL were disclosed in the assessee's books and returns and that, for AY 2012-13, the original return had become final (unabated) before the date of search. The ITAT recorded that statements of UAPL's directors taken after the search did not disclose that the cheque/loan constituted accommodation entries nor did they mention the assessee; hence there was no incriminating material unearthed during the search linking the assessee to bogus transactions. In these circumstances, and having regard to the requirement that assessments under Section 153A must be founded on incriminating material discovered in the search (or closely related post-search material), the additions under Section 68 were not justified. The Revenue did not demonstrate that the ITAT's factual findings were perverse or outside the record. [Paras 8, 9, 11, 14]

ITAT's deletion of the additions under Section 68 for AY 2012-13 and AY 2013-14 upheld.

Natural justice - right to cross-examination of adverse witnesses - Section 153A assessment on basis of incriminating material found during search - Effect of failure to allow the assessee to cross-examine the directors of UAPL whose statements were relied upon by the revenue - HELD THAT: - The ITAT found, and this Court agreed, that the assessee was not permitted to cross-examine the two persons of UAPL whose statements were recorded and relied upon by the AO. Reliance was placed on settled authority holding that denial of an opportunity to cross-examine witnesses whose statements form the basis of an order is a breach of natural justice and renders the order vitiated. Given that the statements did not disclose any link showing cash receipt from the assessee and the assessee was deprived of the chance to test those statements, no adverse inference could properly be drawn against the assessee. [Paras 11, 12, 13, 14]

Failure to afford the assessee an opportunity to cross-examine rendered reliance on those statements unsustainable and supported deletion of the additions.

Final Conclusion: The appeals by the Revenue are dismissed; the ITAT orders deleting the additions under Section 68 for AY 2012-13 and AY 2013-14 are upheld.

Summary order. Matter adjourned for further hearing to the additional cause list on 14.07.2022 at 02:00 P.M.; earlier interim order, if any, is extended until the next date.

Service of notice - electronic transmission of notices - validity of notice based on e-mail address furnished in ITR - service under Section 282 and Rule 127 - preliminary enquiry and opportunity to be heard under Section 148A(b) - time-line for preliminary enquiry under Section 148A

Service under Section 282 and Rule 127 - validity of notice based on e-mail address furnished in ITR - electronic transmission of notices - Whether the notice under Section 148A(b) and the consequent order under Section 148A(d) were validly served by electronic transmission in accordance with Section 282 read with Rule 127. - HELD THAT: - The Court examined Section 282 and Rule 127 and held that communications may be delivered electronically to the e-mail address available in the income-tax return to which the communication relates, or to any e-mail address made available by the assessee to the income-tax authority. The notice related to assessment year 2018-19 and the petitioner did not place the ITR for that year on record; the departmental record contained the petitioner's e-mail as available in ITR for assessment year 2020-21 and the company master data on the Ministry of Corporate Affairs portal. In view of Rule 127(2)(a) and (b) together, the assessing officer was entitled to transmit the notice to the e-mail address appearing in the relevant records and to the e-mail addresses made available to the Income Tax Authority. The Court further observed that the strict time-line for conducting the preliminary enquiry under Section 148A before issuing a notice under Section 148 precludes requiring repeated service on alternative e-mail addresses when the record shows a valid address. On the material before the Court, the petitioner failed to establish that the notice was sent to an e-mail address not authorised by Rule 127, and the Department also posted the notice on the petitioner's dedicated Income Tax Portal account. Consequently, interference was unwarranted where the facts and documents did not substantiate the petitioner's contention. [Paras 4, 5, 7, 8]

The notice under Section 148A(b) and the order under Section 148A(d) were held to have been validly transmitted in accordance with Section 282 and Rule 127; the petitioner did not make out a case of invalid service.

Preliminary enquiry and opportunity to be heard under Section 148A(b) - time-line for preliminary enquiry under Section 148A - Whether the petitioner was entitled to further opportunity or repeated service on other e-mail addresses in light of the time-line prescribed under Section 148A. - HELD THAT: - The Court noted that Section 148A mandates a preliminary enquiry with a show-cause notice of not less than seven days and prescribes a one-month timeline for passing the order under Section 148A(d) from the relevant month-end. Given these statutory time constraints, the Court found that insisting on repeated service on additional e-mail addresses would render compliance with the statutory timeline impracticable. Accordingly, where the record showed service to an e-mail address available to the Income Tax Authority, the petitioner's demand for further service was unsustainable and did not justify interference with the re-opening process. [Paras 4, 8]

Petitioner was not entitled to require repeated transmission to other e-mail addresses that would frustrate the statutory time-line for the preliminary enquiry under Section 148A.

Final Conclusion: Writ petition dismissed; the High Court held that the notice and order under Section 148A/Section 148 were validly transmitted by electronic means in accordance with Section 282 and Rule 127, and that the petitioner failed to establish invalid service or entitlement to further opportunities that would compromise the statutory time-line for the preliminary enquiry.

True and full disclosure - principles of natural justice - procedural compliance of Chapter XIX-A (Section 245C/245D and Rules) - judicial review of Settlement Commission - institutional and apparent bias - remand for fresh consideration - power of Interim Board to entertain remanded pending applications - provisional attachment and its efficacy

True and full disclosure - procedural compliance of Chapter XIX-A (Section 245C/245D and Rules) - principles of natural justice - Validity of the Settlement Commission's order rejecting the application as not maintainable on ground of non-disclosure and consequent procedural infirmities - HELD THAT: - The Court found that the Settlement Commission reversed its earlier order without affording the appellant further opportunity to meet and rebut reports (including the AO's report) relied upon at the final hearing, despite the report being placed on record at the last hearing. That denial of opportunity, reliance on the AO's report without giving the applicant a chance to reply, and failure to consider materials already on record amounted to breach of the procedure prescribed under Section 245D (4), Section 245G and the Settlement Commission Rules and violated the principles of natural justice. The Court also held that the Commission had improperly travelled beyond the limited scope of enquiry under Chapter XIX-A by acting akin to an assessing authority, and that certain relevant documents and corroboratory material filed by the appellant (including the Company Secretary's statement and RRIPL particulars) were ignored without justification. In these circumstances the order rejecting the application was vitiated. [Paras 20, 21, 22, 26]

Order dated 26.09.2016 rejecting the settlement application was set aside for violation of procedure and natural justice and for failure to consider materials on record.

True and full disclosure - judicial review of Settlement Commission - scope of disclosure - primary facts - Whether the appellant had made full and true disclosure sufficient for the purposes of Chapter XIX-A - HELD THAT: - Applying the scheme of Chapter XIX-A and the principle that the assessees' duty is to disclose fully and truly all primary relevant facts (and not to anticipate every inference), the Court concluded on the material before it that the appellant had disclosed the principal facts of the transactions and produced supporting documents and later corroboratory material. The Court rejected the Commission's casual finding that disclosure must be 'acceptable' to the Department and emphasised that the applicant need not satisfy all inferences drawn by the Department or the Commission. [Paras 21, 25, 26]

The Court held that the appellant had made disclosure of primary facts and that denial of settlement on the basis of alleged non-disclosure was unsustainable.

Remand for fresh consideration - power of Interim Board to entertain remanded pending applications - constitutional primacy of writ remand - Whether, after setting aside the Settlement Commission's order, the matter must be remanded and whether the Interim Board (constituted after abolition of ITSC) can decide the remanded application - HELD THAT: - The Court observed that when a High Court sets aside an earlier administrative/quasi judicial order and remands the matter for fresh consideration, that constitutional exercise cannot be curtailed by subsequent statutory amendments which replaced the ITSC with an Interim Board. The restrictive eligibility for the Interim Board to entertain applications filed after 01.02.2021 applies to fresh filings and pending applications as defined by the amended statute, but does not preclude the Interim Board from adjudicating an application remanded by the High Court. Accordingly, upon remand the application is to be treated as a pending application and decided on merits in accordance with law. [Paras 27, 28, 31, 32]

Matter remanded to the Interim Board to dispose of the application on merits after giving sufficient opportunity; the Interim Board may entertain and decide the remanded pending application.

Provisional attachment and its efficacy - Effect of prior attachment proceedings consequent to the Commission's order and their present status - HELD THAT: - The Court noted that provisional attachment ordered pursuant to the set aside settlement order had become infructuous because the writ petition succeeded and remand restored status quo ante; further, the period for which provisional attachment can remain in force is limited and the particular attachment had been made more than six years earlier and thus was no longer operative for the purposes of relief. [Paras 32]

Attachment proceedings rendered infructuous and cannot be sustained in view of the remand.

Final Conclusion: The order of the Settlement Commission dated 26.09.2016 is set aside for breach of procedural requirements and principles of natural justice; the matter is remanded to the Interim Board to decide the settlement application on merits within six weeks after giving the appellant adequate opportunity and considering all materials on record; consequential provisional attachment is held to be infructuous; no order as to costs.

Valuation of closing stock - recasting of profit and loss account - issue estoppel / double taxation across assessment years - notional interest on interest free advances - disallowance under section 36(1)(iii) of the Income tax Act - limitation for assessment proceedings

Valuation of closing stock - recasting of profit and loss account - issue estoppel / double taxation across assessment years - Whether the addition made by the AO by recasting closing stock and arriving at inflated gross profit for AY 2012-13 should be sustained or requires verification in light of treatment in AY 2011-12. - HELD THAT: - The CIT(A) deleted the addition for AY 2012-13 on the basis that a similar recast and addition had been made for AY 2011-12 and the appellate authority for that year had rejected the AO's recast as legally and accountingly untenable. The Tribunal finds no infirmity in the CIT(A)'s approach but notes the outcome in AY 2011-12 is material: if the addition in AY 2011-12 is ultimately sustained, the same issue for AY 2012-13 must be reconsidered on merits. Consequently, the matter for AY 2012-13 is remanded to the AO to verify whether the alleged addition was already considered in AY 2011-12 (the AO's earlier addition of recasted closing stock) and, if that addition for AY 2011-12 is deleted on merits, to confront the assessee and decide the AY 2012-13 issue afresh. [Paras 6]

Remanded to the AO for verification whether the recasted closing stock addition was already considered in AY 2011-12; if not, decide the issue afresh after confronting the assessee.

Notional interest on interest free advances - disallowance under section 36(1)(iii) of the Income tax Act - Whether the AO was justified in disallowing notional interest by treating borrowed interest bearing funds as diverted interest free for non business purposes. - HELD THAT: - The AO disallowed interest by applying a flat 24% rate on the premise that interest bearing borrowings were diverted as interest free advances to related parties. The CIT(A) examined the reality of the assessee's fund flows, the existence of substantial interest free funds, opening balances, the taking over of a bank loan liability by a third party and the lack of cogent evidence that interest bearing funds were diverted. The Tribunal observed that where interest free funds available to the assessee exceed the interest free advances, the statutory disallowance cannot be sustained. The Revenue did not controvert the factual finding that sufficient interest free funds existed. In these circumstances the Tribunal finds no infirmity in the CIT(A)'s deletion of the notional interest addition. [Paras 10]

Deletion of the notional interest addition is upheld; Revenue's appeal on this issue dismissed.

Limitation for assessment proceedings - Whether the assessment for AY 2012-13 was time barred because it was served after the limitation date though signed within time. - HELD THAT: - The assessment order was signed and framed on 31.03.2015, within the limitation period, though service on the assessee occurred on 13.04.2015. The Tribunal notes that the order was passed within the statutory time limit and therefore is not invalid for being time barred. [Paras 12]

Assessee's challenge on limitation is dismissed; the assessment order is valid.

Final Conclusion: The assessee's appeal on limitation is dismissed. The Revenue appeal is allowed for statistical purposes insofar as the recasted closing stock addition for AY 2012-13 is remanded to the AO for verification against the treatment in AY 2011-12; the Revenue's challenge to deletion of the notional interest addition is rejected and that deletion is upheld.

Exemption under section 11 - proviso to section 2(15) - meaning of 'charitable purpose' and 'education' - cancellation of registration under section 12AA(3) - application of income by way of donation to another charitable trust - finality and rule of consistency in quasi judicial tax proceedings

Exemption under section 11 - proviso to section 2(15) - meaning of 'charitable purpose' and 'education' - Whether the Assessing Officer and the CIT(A) could deny exemption under section 11 by invoking the proviso to section 2(15) in respect of the assessee trust's income from newspaper publishing and printing - HELD THAT: - The Tribunal held that the question was finally answered by the Madras High Court in the assessee's own case, which found that the activities and the use of surplus income fell within charitable purpose and education for the purposes of section 2(15) notwithstanding the business nature of the publishing operation. The Tribunal accepted the High Court's reasoning (including consideration of CBDT instructions and relevant authorities) that the amendment to the proviso could not be used to reopen a matter which had attained finality. On that basis the denial of exemption under section 11 by applying the proviso to section 2(15) could not be sustained. [Paras 7]

Denial of exemption under section 11 by invoking the proviso to section 2(15) set aside; assessee entitled to exemption.

Cancellation of registration under section 12AA(3) - finality and rule of consistency in quasi judicial tax proceedings - Validity of cancellation of the trust's registration and whether Revenue could reopen registration given earlier judicial determinations - HELD THAT: - The Tribunal relied on the Madras High Court's conclusion that the DIT(Exemptions) had not recorded the requisite satisfaction under section 12AA(3) that the trust's activities were not genuine and that cancellation effected with retrospective effect was without jurisdiction for the years in question. The High Court's discussion of CBDT Circulars and the rule of finality/consistency (resisting reopening of settled issues across years unless basis recorded) was treated as determinative. The Tribunal therefore held that the Revenue could not re open the issue of charitable character by relying on the amended proviso to section 2(15) where earlier final decisions had upheld the trust's charitable status. [Paras 7, 8]

Cancellation of registration and retrospective denial were unsustainable; Revenue not entitled to reopen the settled question of registration/exemption.

Application of income by way of donation to another charitable trust - exemption under section 11 - Whether donations made by the assessee trust to another registered educational trust constitute 'application of income' for the purposes of section 11 - HELD THAT: - The Tribunal accepted the High Court's treatment of CBDT instruction and authorities to the effect that payment by one charitable trust to another for utilisation towards the donee's charitable objects can amount to application of income in the hands of the donor trust, and that the donor does not lose exemption merely because the donee did not spend the donation in the year of receipt. Given the factual finding that the surplus from the publishing business was applied to an educational trust running institutions, the Tribunal held that such payments fell within permissible application of income under section 11. [Paras 7]

Donations to the educational trust qualify as application of income for charitable purposes and support the assessee's claim to exemption under section 11.

Final Conclusion: Appeals allowed. For the assessment years 2009 10 to 2012 13 the Tribunal set aside the denial of exemption and upheld the assessee's entitlement to exemption under section 11 relying on the Madras High Court's final determinations that the trust's activities and application of surplus income fall within charitable purpose/education and that the Revenue could not validly reopen registration or deny exemption by invoking the amended proviso to section 2(15).

Promotion of sports as charitable purpose - advancement of any other object of general public utility - proviso to Section 2(15) of the Income-tax Act - non-attraction where profit-making is not predominant - registration under Section 12AA of the Income-tax Act - verification of objects, activities and donor particulars before granting registration

Promotion of sports as charitable purpose - proviso to Section 2(15) of the Income-tax Act - non-attraction where profit-making is not predominant - registration under Section 12AA of the Income-tax Act - Activities of the trust for promotion of gymnastics are charitable in nature and the proviso to Section 2(15) does not preclude registration under Section 12AA. - HELD THAT: - The Tribunal held, following the co-ordinate bench and relevant High Court authority, that income derived from promotion of sports constitutes a charitable purpose and that the proviso to Section 2(15) is not attracted where the activity is not carried out with predominant profit-making purpose. It found the objects of the trust directed to promotion and development of gymnastics at various levels and concluded that the CIT(E)'s view rejecting registration on the ground that the activities fell under advancement of 'other object of general public utility' subject to the proviso was incorrect. Consequently, the order of the CIT(E) denying registration insofar as it related to sporting activities was set aside. [Paras 10, 11, 12]

Set aside the CIT(E)'s rejection and hold that the trust's sporting activities are charitable and not hit by the proviso to Section 2(15); registration under Section 12AA is warranted on this ground.

Verification of objects, activities and donor particulars before granting registration - registration under Section 12AA of the Income-tax Act - The application for registration is remitted for verification of activities and submission of donor particulars before final grant of registration. - HELD THAT: - Although the Tribunal found the sporting objects charitable, it observed that the CIT(E) must verify factual aspects at the time of granting registration. The assessee had not furnished addresses of donors for certain receipts and the record must be examined. Accordingly, the Tribunal directed the assessee to supply the requisite details called for by the CIT(E) and directed the CIT(E) to examine the trust's activities and decide the registration application afresh in light of the verification. [Paras 13, 14]

Assessee to furnish requisite details; CIT(E) to verify activities and donor particulars and grant registration after fresh examination.

Final Conclusion: Appeal partly allowed: the Tribunal held that the promotion of gymnastics is a charitable object and that the proviso to Section 2(15) does not bar registration, set aside the CIT(E)'s rejection on that ground, but remitted the matter for verification of activities and donor details and directed the CIT(E) to grant registration after such examination.

Doctrine of mutuality - surplus of common fund not taxable - identity of contributors and beneficiaries - payments made by third party do not negate mutuality - principles of natural justice - ad-hoc disallowance of expenses

Principles of natural justice - Allegation that reassessment and appellate process violated principles of natural justice. - HELD THAT: - The assessee did not challenge the reopening under section 148 and unconditionally participated in the reassessment proceedings. The Tribunal found that the assessee was afforded appropriate opportunities before the CIT(A) and that the allegation of violation of natural justice was not substantiated. The practice of routinely pleading denial of opportunity without cogent material was noted and rejected. [Paras 14]

Ground alleging violation of principles of natural justice dismissed.

Doctrine of mutuality - surplus of common fund not taxable - identity of contributors and beneficiaries - payments made by third party do not negate mutuality - Whether development charges and TDR deposits received by the society constitute taxable income or are exempt under the doctrine of mutuality. - HELD THAT: - The Tribunal applied the doctrine of mutuality, emphasising that mutuality requires identity between contributors to a common fund and the beneficiaries of that fund and that surplus of such a fund does not constitute taxable income. The facts showed the amounts (development charges and TDR premium) were payable by members to defray additional burden on common infrastructure and amenities; the payments having been made by developers on behalf of members did not alter the nature of the liability or the mutual character of the receipts. Reliance was placed on established principles that charges levied by a society from its members for facilities, maintenance or additional utilisation of FSI fall within mutuality where contributors and participants coincide. On these grounds the Tribunal held that the receipts in question were not chargeable to tax for the years under appeal. [Paras 20, 21, 22, 23, 24]

Receipts by way of development charges and TDR deposits/premiums are not taxable as they fall under the doctrine of mutuality.

Ad-hoc disallowance of expenses - doctrine of mutuality - Whether ad-hoc additions made by disallowing 20% of expenses can be sustained where the assessee is entitled to mutuality. - HELD THAT: - The Tribunal held that once an assessee is entitled to benefit under the doctrine of mutuality, ad-hoc disallowance of expenses cannot be treated as income and added back. Applying that principle to the facts, the Tribunal concluded that the ad hoc additions made by the AO (20% of certain expenses) could not be sustained for the assessment years under appeal. [Paras 25, 26]

Ad-hoc additions made by disallowing expenses cannot be added back where mutuality applies; the ad-hoc additions are deleted.

Final Conclusion: Appeals allowed: amounts received as development charges and TDR deposits/premiums for AY 2011-12, AY 2012-13 and AY 2014-15 held not taxable under the doctrine of mutuality; ad-hoc disallowances of expenses deleted; natural justice ground dismissed.

Reopening of assessment beyond four years where reason to believe that income has escaped assessment - addition under section 68 as unexplained cash credit - evidentiary value of statements recorded during survey and subsequent retraction - assessee's discharge of initial onus under section 68 by proving identity, creditworthiness and genuineness of investors - follow-up effect of coordinate bench precedents on identical facts

Reopening of assessment beyond four years where reason to believe that income has escaped assessment - evidentiary value of statements recorded during survey and subsequent retraction - Validity of reopening assessment under Section 147/148 in respect of AY 2009-10 - HELD THAT: - The Tribunal held that the reopening was valid. The assessing officer had tangible material-statement of a group associate recorded during survey and investigative information-indicating that share capital credited in the assessee's books was potentially bogus, thereby furnishing reasons to believe that income had escaped assessment. The Tribunal observed that the original return had been accepted without scrutiny and that the AO was entitled to reopen beyond four years on the available material. Reliance placed on higher court precedents was accepted as supporting the view that such tangible information suffices to form a reason to believe. On these findings the grounds challenging reassessment were dismissed. [Paras 15]

Reopening of assessment was valid and grounds 1-3 dismissed.

Addition under section 68 as unexplained cash credit - assessee's discharge of initial onus under section 68 by proving identity, creditworthiness and genuineness of investors - follow-up effect of coordinate bench precedents on identical facts - Sustainability of addition of Rs.41 lakhs under Section 68 on account of alleged bogus share capital - HELD THAT: - On the merits the Tribunal found that the assessee had produced extensive documentary evidence (share application forms, bank copies, share certificates, board resolutions, audited financial statements, incorporation records and company master data) establishing the identity, creditworthiness and genuineness of the investor companies. The Tribunal compared the facts with earlier coordinate bench decisions involving identical parties and transactions for the same and proximate years, where similar additions had been deleted after analysis of investor net worth and documentary proof. The Tribunal noted that statements recorded during survey, which were relied upon by the revenue, had been retracted and, absent corroboration by independent credible evidence, did not suffice to rebut the assessee's proof. Considering the documentary record and binding coordinate bench precedents on identical facts, the Tribunal set aside the addition and directed deletion. [Paras 16, 17, 18]

Addition under Section 68 deleted; ground 4 allowed.

Consequential dismissal of penalty and miscellaneous grounds - Adjudication of grounds relating to penalty proceedings and consequential relief - HELD THAT: - The Tribunal treated grounds 5-7 as consequential, premature or general in nature. Since the substantive addition was deleted, the Tribunal dismissed these grounds as not requiring separate adjudication at this stage. [Paras 19]

Grounds 5-7 dismissed as consequential or premature.

Final Conclusion: The appeal is partly allowed: reopening of assessment upheld, but the addition of Rs.41 lakhs under Section 68 is deleted following documentary proof by the assessee and binding coordinate bench precedents; consequential penalty and related grounds dismissed.

Maintainability of direct appeal to ITAT against penalty under Chapter XXI - first appeal lies with CIT(A) under Section 246A(1)(q) - penalty under Section 271FA - statement of financial transactions under Section 285BA - direction to condone delay

Maintainability of direct appeal to ITAT against penalty under Chapter XXI - penalty under Section 271FA - statement of financial transactions under Section 285BA - first appeal lies with CIT(A) under Section 246A(1)(q) - Appeal filed directly before the Tribunal against penalty under Section 271FA for non-compliance of Section 285BA(1) is not maintainable before the Tribunal. - HELD THAT: - The Tribunal held that the appellant wrongly filed the appeal directly before the ITAT against the penalty order dated 17.12.2019 levied under Section 271FA for alleged non-compliance of Section 285BA(1). Having regard to the statutory scheme, in particular Section 246A(1)(q), first appeal against an order imposing penalty under Chapter XXI lies with the CIT(A) and not with the Tribunal. The Tribunal followed its earlier view in similar matters and concluded that the correct designated first appellate authority for a penalty under Section 271FA is the CIT(A); accordingly the appeal before the Tribunal is non-est and not maintainable. [Paras 6]

Appeal dismissed as not maintainable before the Tribunal.

Direction to condone delay - first appeal lies with CIT(A) under Section 246A(1)(q) - Appellant permitted to file first appeal before the CIT(A) and CIT(A) directed to condone any delay and adjudicate the appeal afresh. - HELD THAT: - Recognising that there may have been a bona fide belief on the part of the appellant in filing directly before the Tribunal, the Tribunal nonetheless directed that the appellant, if so advised, may file the first appeal before the Learned CIT(A) against the penalty order immediately on receipt/service of the Tribunal's order. The Tribunal further directed that the Learned CIT(A) shall condone the delay in filing the appeal and proceed to adjudicate the appeal de novo, giving proper opportunity of hearing and passing a reasoned and speaking order on the merits. [Paras 6, 7]

Appellant may file first appeal before the CIT(A); CIT(A) to condone delay and adjudicate the appeal afresh.

Final Conclusion: The appeal to the Tribunal for AY 2018-19 is dismissed as not maintainable; the appellant is permitted to file first appeal before the CIT(A), who is directed to condone any delay and to adjudicate the appeal afresh.

Section 79 - change in shareholding and carry forward of losses - carry forward and set off of current year losses - company not being a company in which the public are substantially interested

Section 79 - change in shareholding and carry forward of losses - carry forward and set off of current year losses - Whether a change in shareholding during the previous year 2013-14 under section 79 of the Act disentitles the assessee from carrying forward and setting off the loss declared for AY.2014-15 (the current year loss). - HELD THAT: - The Tribunal found as an admitted fact that the change in shareholding occurred pursuant to a share purchase agreement dated 30/07/2013 and that the holding company had acquired 100% stake as on 31/03/2014. Section 79 provides that where a change in shareholding has taken place in any previous year in the case of a closely held company, no loss incurred in any year prior to that previous year shall be carried forward and set off against the income of the previous year, subject to conditions. The court construed this provision to mean that losses incurred in years prior to the previous year (i.e., brought forward losses antecedent to 2013 14) are hit by section 79 and cannot be set off against income of the previous year; however, losses incurred in the previous year itself (the current year loss for AY.2014 15 arising in financial year 2013 14) are not barred from being carried forward by the operation of section 79. The Tribunal held that the authorities below erred in treating the assessee's current year loss as disallowable under section 79, and accordingly directed deletion of the disallowance. [Paras 6, 7]

Section 79 disallows only losses incurred in years prior to the previous year in which change of shareholding occurred and does not preclude carry forward of the loss of the previous year (the current year loss for AY.2014 15); the disallowance under section 79 is deleted.

Final Conclusion: Appeal allowed; the disallowance made under section 79 is set aside and the Assessing Officer is directed to delete the addition relating to the loss for AY.2014 15.

Computation of book profits under section 115JB - Requirement that profit & loss account be prepared in accordance with the Companies Act and follow the same Accounting Policies and Accounting Standards - AGM approved annual accounts as the operative financial statements for book profit computation - Prohibition on adopting a separate set of annual accounts for Income tax purposes which departs from AGM approved accounts - Legal fiction created by section 115JB - Principle of consistency - Res judicata in income tax proceedings

Computation of book profits under section 115JB - Requirement that profit & loss account be prepared in accordance with the Companies Act and follow the same Accounting Policies and Accounting Standards - AGM approved annual accounts as the operative financial statements for book profit computation - Prohibition on adopting a separate set of annual accounts for Income tax purposes which departs from AGM approved accounts - Whether the assessee could adopt a re cast profit & loss account and balance sheet incorporating provision for additional cane price for computation of book profit under section 115JB when the AGM approved annual accounts did not contain such provision. - HELD THAT: - The Tribunal held that section 115JB is a self contained code prescribing the manner of computing book profits and that sub section (2) requires the Profit & Loss Account for the relevant period to be prepared in accordance with the Companies Act and to follow the same Accounting Policies and Accounting Standards as the annual accounts laid before the AGM. In the present case the annual accounts placed before and approved by the AGM did not contain any provision for additional cane price and carried no auditor's qualification; the alleged liability had not accrued as on the date of AGM approval. The second set of accounts prepared by the assessee for income tax purposes (re cast to include the additional cane price) were neither approved by the AGM nor filed with the Registrar, and the fact that the assessee re cast accounts demonstrated that identical accounting policies and standards were not followed. Consequently the re cast accounts could not be treated as the profit & loss account prepared in accordance with the Companies Act for the purposes of section 115JB, and the Assessing Officer was justified in rejecting the second set of accounts and bringing the difference into tax under section 115JB. [Paras 10, 11]

The re cast profit & loss account and balance sheet prepared by the assessee incorporating the additional cane price cannot be adopted for computing book profits under section 115JB; the Assessing Officer's rejection is sustained and the appeal on this ground is dismissed.

Principle of consistency - Res judicata in income tax proceedings - Whether the assessee's reliance on prior acceptance of similar treatment in earlier assessments or subsequent years invokes the principle of consistency or res judicata to sustain the re cast accounts for section 115JB computation. - HELD THAT: - The Tribunal observed that res judicata has no application in income tax proceedings. The principle of consistency applies only where two legally tenable views are available and the Assessing Officer has adopted one of those legally sustainable views. In this case the Assessing Officer's approach-requiring adherence to AGM approved accounts and uniform accounting policies-conformed with settled law and statutory prescription under section 115JB; therefore the plea of consistency could not be invoked to validate a contrary treatment. [Paras 10]

The contention based on consistency and alleged prior acceptance is rejected; neither res judicata nor principle of consistency supports overturning the Assessing Officer's finding.

Final Conclusion: All three appeals for A.Y. 2012-13, 2013-14 and 2014-15 are dismissed; the Assessing Officer's rejection of the re cast accounts for computation of book profits under section 115JB is upheld and the pleas of consistency and res judicata are not accepted.

Invalidity of reassessment if notice under section 148 is issued before expiry of time available for issuance of notice under section 143(2)(ii) - reassessment proceedings under section 147 read with section 148 - notice under section 143(2)(ii)

Invalidity of reassessment if notice under section 148 is issued before expiry of time available for issuance of notice under section 143(2)(ii) - reassessment proceedings under section 147 read with section 148 - notice under section 143(2)(ii) - Validity of reassessment proceedings where notice under section 148 was issued before expiry of time for issuance of notice under section 143(2)(ii). - HELD THAT: - The Tribunal found that the assessee filed the return on 22.10.2003 and the Assessing Officer had time available up to 31.10.2004 to issue notice under section 143(2)(ii). Despite that, the AO issued notice under section 148 dated 03.06.2004. Relying on the decisions of the Jurisdictional High Court in CIT vs. Qatalys Software Technology and CIT vs. TCP Limited , the Tribunal applied the principle that where the time limit for issuing notice under section 143(2)(ii) has not expired, initiation of proceedings under section 147 by issuing notice under section 148 is impermissible and renders the reassessment invalid. The facts here were undisputed that the notice under section 148 was issued before the expiry of the period available for section 143(2)(ii); accordingly, the reassessment proceedings under section 147 read with section 148 were quashed. [Paras 7]

Reassessment proceedings under section 147 read with section 148 quashed as invalid; cross-objection of the assessee allowed.

Final Conclusion: The Tribunal quashed the reassessment proceedings as invalid because the notice under section 148 was issued before the expiry of the period available for issuing notice under section 143(2)(ii); the Revenue's appeal was rendered infructuous and dismissed.

Unexplained cash deposits under section 69A - income shown in Form 26AS treated as other income - admission of additional evidence by appellate authority - Rule 46A of the Income Tax Rules, 1962 - best judgment assessment under section 144

Unexplained cash deposits under section 69A - Deletion of addition made by AO treating cash deposits as unexplained income under section 69A - HELD THAT: - The Tribunal accepted the assessee's case that the cash deposits during the demonetisation period were proceeds of cash sales recorded in the books and reflected in the profit and loss account. Amounts collected from customers as reimbursements for registration, insurance and allied charges were held not to constitute the assessee's income. A typographical error in the bank account number in the balance sheet note did not negate proper disclosure of the bank balance in the books and ITR V. On these facts the Tribunal found no infirmity in the CIT(A)'s deletion of the addition made by the AO treating the deposits as unexplained money under section 69A. [Paras 9]

Addition treating the cash deposits as unexplained under section 69A deleted; CIT(A) order upheld.

Income shown in Form 26AS treated as other income - Whether amounts reflected in Form 26AS under PAN ACVFS5183P constituted income assessable as 'other income' - HELD THAT: - The Tribunal noted that the receipts appearing in Form 26AS with the old PAN had been disclosed by the assessee in the profit and loss account under the head 'other income' in the return. The appellate authority rightly took the disclosure in the books and return into account. On the material before it the Tribunal found no basis to sustain the AO's addition and endorsed the deletion by the CIT(A). [Paras 9]

Addition on account of amounts in Form 26AS held not exigible; CIT(A) order deleting the addition sustained.

Admission of additional evidence by appellate authority - Rule 46A of the Income Tax Rules, 1962 - best judgment assessment under section 144 - Validity of CIT(A)'s consideration of additional evidence without remanding to AO under Rule 46A - HELD THAT: - Revenue contended that the CIT(A) erred in admitting fresh documents without obtaining a remand report as envisaged by Rule 46A. The Tribunal examined the record, including the AO's own contradictory statements about the assessee's responses, and the nature of the evidence (books, reconciliation and disclosure in return). Having considered the materials and the fact that the evidence demonstrated disclosure in the books and return, the Tribunal found no prejudice to the Revenue and no need for remand. The appellate authority's reception of the evidence and consequent decision were therefore upheld. [Paras 9]

CIT(A)'s admission and consideration of the additional evidence sustained; no remand required.

Final Conclusion: The Revenue's appeal is dismissed and the CIT(A)'s order deleting the additions and accepting the assessee's disclosures is upheld; the assessee's cross objection is disposed of as supportive.

Relevancy of statements under Section 138B of the Customs Act - Principles of natural justice and right to cross-examination - Confiscation and penalties under the Customs Act for mis declaration - Transfer of property in exports upon let export order - Jurisdiction for alleged violations of Foreign Trade Policy and foreign exchange regulations vested with FEMA/FTDR enforcement authorities - Admissibility and probative value of documentary evidence for transshipment/re export - Burden of proof on revenue to establish non delivery to declared consignee

Relevancy of statements under Section 138B of the Customs Act - Principles of natural justice and right to cross-examination - Admissibility of departmental statements and denial of cross examination under Section 138B and principles of natural justice. - HELD THAT: - The Tribunal found that the revenue relied upon statements of directors, CHAs and shipping line officials which were not produced for examination or cross examination in the adjudication proceedings. Section 138B requires that a statement made in course of inquiry is admissible in proceedings only in the circumstances specified and, where relied upon in non court proceedings, the person should be examined and, if evidence is held admissible, afforded opportunity of cross examination. The denial of cross examination and reliance on such untested statements amounted to violation of natural justice and rendered those statements inadmissible as evidence for adjudication. [Paras 5]

Statements relied upon by revenue, not produced for examination/cross examination, are inadmissible and the rejection of cross examination violated principles of natural justice; such reliance cannot sustain the impugned orders.

Admissibility and probative value of documentary evidence for transshipment/re export - Burden of proof on revenue to establish non delivery to declared consignee - Evidentiary weight of export documents, phytosanitary certificates, Dubai Customs and bank documents relied on by the appellants to show ultimate delivery to Iran. - HELD THAT: - The appellants placed before the authorities export documentation in the name of Iranian buyers, phytosanitary certificates issued by the competent authority, Dubai Customs documents and freight/bank records indicating movement from Jebel Ali to Iranian ports and receipt of remittances from the declared buyers. The revenue produced no documentary evidence showing amendment of export documents or falsity of the papers tendered by appellants. In these circumstances and absent verification by the department, mere statements to the contrary could not displace the documentary proof tendered by the appellants; the burden shifted to the revenue to prove that goods were cleared for home consumption in UAE, which was not discharged. [Paras 5]

Documentary evidence produced by appellants showing re export/transshipment and remittance to declared buyers was not controverted by admissible evidence; revenue failed to prove non delivery to Iran, and findings otherwise cannot be sustained.

Transfer of property in exports upon let export order - Legal effect of let export order and timing of transfer of property/ownership in exported goods. - HELD THAT: - The Tribunal accepted that issuance of let export order effects transfer of property in goods to the foreign buyer and, thereafter, control over the cargo rests with shipping lines/buyers. Reliance was placed on CBEC guidance and precedent recognizing that title passes once the ship crosses territorial waters; consequently, changes in port of discharge ordered by the foreign buyer after let export order lie outside the exporter's control. [Paras 5]

Once let export order is issued, exporter loses ownership and cannot be held responsible for post export change of discharge port effected by consignee or carrier.

Jurisdiction for alleged violations of Foreign Trade Policy and foreign exchange regulations vested with FEMA/FTDR enforcement authorities - Whether customs adjudication and invocation of confiscation/penalty under Customs Act was competent where the alleged contravention related to FTP/FEMA post export conditions and receipt of remittances. - HELD THAT: - The Tribunal held that the dispute principally concerned alleged violations of Foreign Trade Policy and foreign exchange regulations (receipt of remittance in Indian rupees), which are enforceable under FEMA and by authorities notified under the Foreign Trade (Development & Regulation) Act. Precedents were cited establishing that alleged contraventions of foreign exchange/Exim policy are to be dealt with by the enforcement/FTDR authorities and RBI, not by customs exercising confiscation powers under the Customs Act where there was no violation of customs law (description, quantity, value correct; exports not prohibited). The show cause notice invoked customs provisions only by alleging FTP/FEMA breach; that did not confer jurisdiction on customs. [Paras 5]

Alleged violations of FTP/FEMA are within the jurisdiction of FEMA/FTDR enforcement authorities and not for adjudication by the Customs authority under the Customs Act; therefore confiscation/penalties imposed under customs in this case were not sustainable.

Confiscation and penalties under the Customs Act for mis declaration - Liability and penalty of the CHA (M/s V. Arjoon) for alleged diversion of goods when shipping bills were filed on documents supplied by exporter. - HELD THAT: - The Tribunal examined the role of the CHA who filed shipping bills based on documents provided by the exporter and found no mens rea or material to show bonafide mis declaration. Given the Tribunal's concurrent findings that the goods ultimately reached the declared buyers in Iran and that customs lacked jurisdiction to adjudicate FTP/FEMA contraventions, there was no justification for imposing penalties on the CHA. [Paras 5]

Penalty imposed on the CHA was set aside; the CHA acted bona fide in filing shipping bills on exporter provided documents and cannot be held liable in the circumstances.

Final Conclusion: Impugned orders of confiscation and penalties were set aside: the revenue relied on inadmissible untested statements and failed to displace documentary proof of transshipment and receipt by declared buyers; after let export order the exporter lost title and could not be held responsible for post export change of discharge; alleged FTP/FEMA breaches fall within remit of FEMA/FTDR enforcement authorities and not for Customs confiscation; consequentially all appeals are allowed and penalties set aside.

Use of transshipment/port of discharge and evidentiary burden to prove sale abroad - admissibility of statements recorded under section 108 and requirement of Section 138B safeguards - transfer of ownership upon let export order and loss of exporter control - treatment of post-export foreign exchange violations as matters for FEMA/FTDR authorities - penal liability for mis-declaration and suppression under the Customs Act - requirement of overseas inquiries to substantiate diversion and local sale

Use of transshipment/port of discharge and evidentiary burden to prove sale abroad - requirement of overseas inquiries to substantiate diversion and local sale - Whether the 50 consignments were sold in UAE or ultimately reached Iran after being off loaded at Jebel Ali - HELD THAT: - The Tribunal examined the documentary record (Bills of Lading, Phytosanitary Certificates and related export documents) and the oral statements relied upon by DRI. A significant number of Bills of Lading showed Iran importers notifying UAE parties as second parties and the Phytosanitary Certificates and other export documents remained in the name of Iranian buyers. The FEMA authority's independent inquiry concluded that 49 of the 50 consignments ultimately reached Iran, with discrepancy only in one transaction. The DRI did not pursue independent overseas inquiries from UAE authorities to establish clearance and local sale in UAE. Further, statements recorded under section 108 were not tested under Section 138B safeguards. On the totality of evidence the Tribunal held that the material did not prove beyond reasonable doubt that the consignments were sold in UAE rather than being transshipped to Iran. [Paras 6]

Findings of sale in UAE are not sustained; the consignments were held to have ultimately reached Iran through Jebel Ali and the Department failed to establish local sale in UAE.

Admissibility of statements recorded under section 108 and requirement of Section 138B safeguards - penal liability for mis-declaration and suppression under the Customs Act - Whether penalties under the Customs Act (for mis declaration/suppression) could be sustained against M/s. SSIGPL and its Director - HELD THAT: - The adjudicating authorities relied heavily on statements recorded during investigation but did not follow the procedure under Section 138B before admitting those statements in adjudication. Independently, the Tribunal found no material to show suppression or mis declaration because export documents remained in the name of Iranian buyers and the consignments were found to have reached Iran. The Tribunal also observed that after let export order the exporter had lost control over the goods, and shipping lines/importers could direct transshipment. Given the absence of proof of sale in UAE and procedural gaps in admitting statements, the imposition of penalties under the Customs Act was not justified. [Paras 6]

Penalties imposed on M/s. SSIGPL and its Director are set aside.

Treatment of post-export foreign exchange violations as matters for FEMA/FTDR authorities - penal liability for mis-declaration and suppression under the Customs Act - Whether the Customs authorities had jurisdiction to adjudicate alleged violations of Foreign Trade Policy / FEMA in the present facts - HELD THAT: - The Tribunal held that the core allegations related to post export foreign exchange realisation and compliance with Foreign Trade Policy/FEMA. Established precedent, and the Tribunal's reasoning, indicate that violations concerning foreign exchange realisation and EXIM policy enforcement fall within the competence of FEMA/FTDR enforcement and adjudicatory authorities. The FEMA authority had separately investigated and penalised one transaction while clearing the remainder, reinforcing that the subject matter was within FEMA/FTDR domain and not for parallel Customs adjudication under the Customs Act. [Paras 6]

Customs authorities lacked jurisdiction to sustain the impugned penalties insofar as they arose from alleged FTP/FEMA violations; such matters are for FEMA/FTDR authorities.

Transfer of ownership upon let export order and loss of exporter control - penal liability for mis-declaration and suppression under the Customs Act - Whether the CHA, M/s. V. Arjoon, is liable to penalty for the alleged mis declaration/change of port - HELD THAT: - The CHA filed shipping bills on the basis of documents provided by the exporter. The adjudicating authority had found that the CHA acted on exporter documents and that the exporter knew of any change in destination but did not intimate the CHA or seek amendment. The Tribunal accepted the Additional Commissioner's factual finding that the CHA was not aware of any unlawful diversion and that the CHA prepared documents per exporter-provided paperwork. Given the Tribunal's conclusion that consignments ultimately reached Iran and the absence of material showing CHA's knowledge of sale in UAE, there was no justification to impose penalty on the CHA. The Commissioner (Appeals) erred in upsetting those factual findings. [Paras 2, 6, 7]

Order of the Commissioner (Appeals) imposing penalty on M/s. V. Arjoon is set aside; the Additional Commissioner's order (which had dropped proceedings against the CHA) is restored.

Final Conclusion: The Tribunal allowed the appeals: set aside the penalties imposed on M/s. Shiv Shakti Inter Globe Exports Pvt Ltd and its Director, restored the Additional Commissioner's order in favour of M/s. V. Arjoon (CHA), and held that the consignments were transshipped to Iran via Jebel Ali with the subject matter of foreign exchange/FTP compliance being within FEMA/FTDR authority, not for fresh Customs penal adjudication.

Constitution of Committee of Creditors - Interim Resolution Professional duties - continuation of Corporate Insolvency Resolution Process - status quo directions - effect of appellate stay on CIRP proceedings - misreading of higher court orders

Constitution of Committee of Creditors - Interim Resolution Professional duties - continuation of Corporate Insolvency Resolution Process - IRP was directed to constitute the Committee of Creditors and proceed with the CIRP in accordance with the IBC. - HELD THAT: - The Tribunal examined the sequence of orders of this Adjudicating Authority and the Hon'ble NCLAT, noting that the Hon'ble NCLAT's initial direction not to constitute the CoC was limited in time and was subsequently not extended after the hearing on 24.08.2021. The NCLAT's order of 12.07.2021 restored status quo ante but preserved the scope for further orders; thereafter the NCLAT on 24.08.2021 made it clear that the Resolution Professional may continue CIRP. Consequently the earlier limited prohibition on constituting the CoC no longer subsisted. The IRP, who has been in control for an extended period, could not legitimately refuse to constitute the CoC indefinitely. The Tribunal held that the IRP misread the higher court orders and is obliged to take forward the CIRP and perform duties under the IBC, including constitution of the CoC and carrying out proceedings under sections 18 to 21. [Paras 16, 18, 20]

IA/374(AHM)2022 is allowed; the IRP is directed to proceed with the CIRP and constitute the CoC forthwith and carry out proceedings as per sections 18 to 21 of the IBC.

Status quo directions - effect of appellate stay on CIRP proceedings - misreading of higher court orders - Application by the Suspended Management to reject the application for constitution of the CoC was rejected. - HELD THAT: - The Suspended Management contended that they were necessary parties and that the NCLAT's earlier directions continued to prohibit constitution of the CoC; the Tribunal found these contentions unsustainable because the specific NCLAT prohibition had not been extended after 24.08.2021 and subsequent NCLAT orders permitted the RP to continue CIRP. Given that conclusion, the challenge to IA/374 seeking constitution of the CoC could not be maintained and was rejected. [Paras 21]

IA/413(AHM)2022 in IA/374(AHM)2022 is rejected; IA/474(AHM)2022 stands disposed of.

Final Conclusion: The Tribunal directed the Interim Resolution Professional to proceed with the CIRP and to constitute the Committee of Creditors forthwith in accordance with the IBC; the Suspended Management's application to reject the request to constitute the CoC was dismissed and related interlocutory application disposed.

Liquidation of corporate debtor - cessation of moratorium upon liquidation - appointment of liquidator under Section 34 of the IBC - vesting of corporate powers in the liquidator and cessation of board powers - sale of corporate debtor as a going concern - liquidator's fees payable from the liquidation estate under Section 53 - bar on suits during liquidation subject to Section 52 - liquidator's liberty to institute proceedings with prior approval of the Adjudicating Authority

Liquidation of corporate debtor - Order for liquidation of the Corporate Debtor M/s. Greendiamz Biotech Ltd. was passed. - HELD THAT: - Two resolution plans were received during CIRP but were not approved by the Committee of Creditors (which consisted of the Financial Creditor as sole member), and the CoC passed a resolution for liquidation. On the material placed before the Tribunal, including CoC minutes, the Tribunal allowed the application under the IBC and ordered liquidation of the Corporate Debtor effective from the date of the order. [Paras 9]

Liquidation of M/s. Greendiamz Biotech Ltd. ordered.

Cessation of moratorium upon liquidation - The moratorium earlier declared in the CIRP ceases upon the liquidation order. - HELD THAT: - The Tribunal recorded that the moratorium declared by its earlier admission order ceases to exist consequent to the order of liquidation, thereby terminating the protection previously available under the CIRP moratorium. [Paras 9]

Earlier moratorium stands terminated with the liquidation order.

Appointment of liquidator under Section 34 of the IBC - Appointment of a liquidator where the Resolution Professional is unwilling and no proposer was made by the applicant. - HELD THAT: - The RP expressed unwillingness to act as liquidator and no candidate was proposed by the applicant. In exercise of power under the Code, the Tribunal appointed an Insolvency Professional as Liquidator to complete the liquidation process in accordance with the Code and relevant IBBI Regulations. [Paras 9]

An Insolvency Professional is appointed as Liquidator to conduct the liquidation.

Sale of corporate debtor as a going concern - Liquidator directed to first explore sale of the Corporate Debtor as a going concern. - HELD THAT: - The Tribunal directed that the Liquidator shall, in compliance with the relevant IBBI regulation, first explore the possibility of selling the Corporate Debtor as a going concern before proceeding with other modes of liquidation. [Paras 9]

Liquidator to first explore sale as a going concern in accordance with applicable regulations.

Vesting of corporate powers in the liquidator and cessation of board powers - Powers of the Board of Directors and key managerial personnel cease and vest in the Liquidator upon liquidation. - HELD THAT: - On commencement of liquidation, the Tribunal declared that the corporate governance powers hitherto exercised by the board and KMPs shall cease and such powers shall henceforth vest in the appointed Liquidator for the purposes of liquidation. [Paras 9]

Powers of board and KMPs cease and vest in the Liquidator.

Bar on suits during liquidation subject to Section 52 - liquidator's liberty to institute proceedings with prior approval of the Adjudicating Authority - Restrictions on institution of suits during liquidation and the Liquidator's ability to institute proceedings with Tribunal approval. - HELD THAT: - The Tribunal reiterated that, subject to the Code's provision for pending suits, once liquidation is initiated no suit or other legal proceeding shall be instituted by or against the Corporate Debtor; however, the Liquidator is granted liberty to institute suit or other legal proceedings on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority as provided in the statute. [Paras 9]

Suits by or against the Corporate Debtor are barred during liquidation, while the Liquidator may initiate proceedings with prior AA approval.

Liquidator's fees payable from the liquidation estate under Section 53 - Liquidator to charge fees as specified by IBBI and be paid from the liquidation estate. - HELD THAT: - The Tribunal directed that the Liquidator shall charge fees for conducting the liquidation proceedings in accordance with IBBI norms and that such fees shall be paid out of the proceeds of the liquidation estate in terms of the statutory priority provisions. [Paras 9]

Liquidator's fees to be charged as per IBBI and paid from the liquidation estate.

Notice of discharge to officers, employees and workmen upon liquidation - Liquidation order treated as notice of discharge to officers, employees and workmen, save for continued business. - HELD THAT: - The Tribunal declared that the liquidation order shall operate as a deemed notice of discharge to the officers, employees and workmen of the Corporate Debtor, except to the extent that their employment is retained in the course of any business continued by the Liquidator during the liquidation process. [Paras 9]

Order deemed notice of discharge to employees, subject to exceptions for continued business.

Administrative directions regarding record communication and website upload - Directions to Registry to upload the order and send authenticated copies to concerned parties. - HELD THAT: - The Tribunal directed the Registry to upload the order on the official website within two working days and to send authenticated copies by speed post to the Financial Creditor, Corporate Debtor, Registrar of Companies and the Liquidator within one week, as a procedural step to communicate the liquidation order. [Paras 9, 10]

Registry directed to upload the order and dispatch authenticated copies to specified parties.

Final Conclusion: Application for liquidation allowed; the Corporate Debtor M/s. Greendiamz Biotech Ltd. is ordered to be liquidated with the earlier moratorium ceasing, an Insolvency Professional appointed as Liquidator, powers of the board vesting in the Liquidator, directions to explore sale as a going concern, adherence to IBBI fee and payment provisions from the liquidation estate, bar on suits subject to statutory exceptions and prior approval for Liquidator-initiated proceedings, and administrative directions for communication of the order.

Treatment of wrongly availed CENVAT credit - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 rebate application - scope of Designated Committee's powers under SVLDRS - Rule 14 of the CENVAT Credit Rules, 2004 as recovery provision - rectification under Section 128 of the Finance Act, 2019 - discharge certificate under Section 127 of the Finance Act, 2019

Treatment of wrongly availed CENVAT credit - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 rebate application - scope of Designated Committee's powers under SVLDRS - Rule 14 of the CENVAT Credit Rules, 2004 as recovery provision - Whether the disallowed CENVAT credit must be added separately to the service-tax demand for purposes of computing the amount payable under the Scheme or is embedded in the demand confirmed by the adjudicating authority. - HELD THAT: - The Court held that the Designated Committee could not exceed the contours of the original show-cause notice and the operative directions of the order-in-original. The order-in-original confirmed the service-tax demand at the specified figure and separately recorded disallowance of CENVAT credit under Rule 14; it did not treat the disallowed CENVAT credit as an independent additional demand subject to interest/penalty under Rule 14 in the operative computation. Rule 14 is a separate recovery provision, but the existence of that provision does not permit the Designated Committee, when implementing the Scheme, to add the disallowed CENVAT credit over and above the demand as confirmed by the adjudicating authority where the adjudicating authority's operative directions demonstrate that the confirmed demand already embeds the effect of the disallowance (evidenced by the assessment of interest and penalty on the confirmed demand alone). A mistake by the petitioner in filling the declaration under the Scheme does not estop it from claiming benefits under the Scheme when the correct legal construction of the order-in-original limits the taxable demand to the confirmed figure. [Paras 8, 9]

The Court held that the disallowed CENVAT credit was embedded in the confirmed demand and could not be separately added by the Designated Committee; the petitioner's calculation of the payable amount under the Scheme was correct.

Rectification under Section 128 of the Finance Act, 2019 - discharge certificate under Section 127 of the Finance Act, 2019 - scope of Designated Committee's powers under SVLDRS - Remedial direction whether the impugned statement and the order rejecting rectification should be set aside and a fresh statement/discharge certificate issued. - HELD THAT: - Having held that the Designated Committee erred in treating the disallowed CENVAT credit as an addition outside the confirmed demand, the Court set aside the impugned statement and the rectification order. The matter was directed back to the Designated Committee to issue a fresh statement in the prescribed form and to grant a discharge certificate in terms of the Scheme and Section 127 of the Finance Act, 2019, after recalculating the payable amount in accordance with the legal conclusions reached by the Court. This constitutes a remand for fresh computation and formal issuance of the statement/discharge certificate consistent with the judgment. [Paras 11, 12]

Impugned statement dated 24.12.2019 and rectification order dated 23.01.2020 set aside; Designated Committee directed to issue fresh statement and discharge certificate after recomputation in accordance with the Court's findings.

Final Conclusion: Writ petition allowed; impugned statement and rectification order set aside and matter remitted to the Designated Committee to issue a fresh statement and discharge certificate under the Scheme and Section 127 of the Finance Act, 2019, after recalculating the payable amount consistent with the judgment.

Entry Tax levy under Section 9C of the Odisha Entry Tax Act, 1999 - Requirement of notice in Form E-30 and audit visit report in Form E27 under Rule 15B - Validity of assessment in absence of prescribed statutory notice - Liability to produce evidence of goods received from karigars when statutory notice and basic material are furnished - Penalty under Section 9C(5) of the Odisha Entry Tax Act, 1999

Entry Tax levy under Section 9C of the Odisha Entry Tax Act, 1999 - Liability to produce evidence of goods received from karigars when statutory notice and basic material are furnished - Whether the Tribunal erred in restoring the assessment which shifted the point of levy to the dealer and upheld demand and penalty under Section 9C. - HELD THAT: - The Court examined the assessment and the Tribunal's reasoning and found that the Tribunal restored the assessment despite the assessing authority having failed to furnish the basic material and statutory notice required to initiate proceedings under Section 9C. The Tribunal relied on absence of evidence that the business was confined to local area and on the STO's view regarding karigars and payment of entry tax, but the Dealer could not have been expected to produce particulars of quantum of old gold/old silver received when no statutory notice or audit report forming the basis of the demand had been served. Having regard to the absence of the mandatory procedural foundation, the Tribunal's restoration of the assessment was in error and could not be sustained. [Paras 11, 12]

Tribunal erred in restoring the assessment; the impugned order of the STO and the Tribunal are set aside and the order of the DCST is restored.

Requirement of notice in Form E-30 and audit visit report in Form E27 under Rule 15B - Validity of assessment in absence of prescribed statutory notice - Penalty under Section 9C(5) of the Odisha Entry Tax Act, 1999 - Whether the assessment framed under Section 9C is valid in absence of service of notice in Form E-30 accompanied by the AVR in Form E27. - HELD THAT: - The Court accepted the factual finding recorded by the DCST that no notice in the statutory form under Section 9C accompanied by the Audit Visit Report was issued to the assessee. The absence of those mandatory procedural steps meant the assessment proceedings under Section 9C were initiated without the requisite basis and the assessee was deprived of opportunity to meet the case against it. Consequently, neither the levy of entry tax nor the consequential penalty under Section 9C(5) is sustainable in law in the absence of service of Form E-30 with the AVR in Form E27 as required by Rule 15B. [Paras 6, 9, 10, 11]

Assessment under Section 9C is invalid for want of service of Form E-30 accompanied by AVR in Form E27; the demand and penalty are not sustainable.

Final Conclusion: Revision petition allowed; the orders of the Sales Tax Officer and the Tribunal are set aside and the DCST's order allowing the assessee's appeal is restored.

Option to pay tax by way of composition and ineligibility due to inter-State purchase under Rule 135 - inter State purchase not disqualifying composition where goods are not 'goods held in stock' - goods used as capital equipment or consumables for carrying on business are not 'goods in stock' - treatment of goods affixed or applied in business as not forming part of stock - precedential reliance on Anantha Padmanabha Bhat regarding goods used in restaurant premises

Inter State purchase not disqualifying composition where goods are not 'goods held in stock' - goods used as capital equipment or consumables for carrying on business are not 'goods in stock' - option to pay tax by way of composition and ineligibility due to inter-State purchase under Rule 135 - Whether the assessee's inter State purchases of sealing machines and PP cups precluded eligibility for the composition scheme by constituting 'goods in stock'. - HELD THAT: - The Court recorded that the respondent is a restaurant business which purchased sealing machines and PP cups as equipment and consumables for running its business and is not a dealer in those goods. Applying the principle in Anantha Padmanabha Bhat, goods procured for use in the business (which are not sold in the ordinary course) are not 'goods in stock' and do not disqualify a dealer from opting for the composition scheme. The Tribunal's acceptance of the respondent's position was found to be consistent with that reasoning; the mere fact of inter State purchase does not automatically attract the bar in Rule 135 where the purchases do not constitute stock in trade. [Paras 9, 10, 11, 12]

The inter State purchases in question did not amount to 'goods held in stock' and therefore did not disentitle the respondent from paying tax under the composition scheme; the question was answered in favour of the assessee.

Final Conclusion: The revision petition is dismissed; the Tribunal's order allowing the assessee to remain on the composition scheme was upheld and the Revenue's challenge (that inter State purchases of the specified items precluded composition) was rejected.

Composition scheme - inter-State purchase - goods held in stock - use of goods in business (not stock) - part of immovable property

Composition scheme - inter-State purchase - goods held in stock - use of goods in business (not stock) - part of immovable property - Respondent's entitlement to pay tax under the composition scheme despite having made inter State purchases of bakery machinery and allied items. - HELD THAT: - The Court accepted the factual finding that the respondent is engaged in the sale of bakery products and had purchased bakery machinery, parts and trays from outside the State but is not in the business of selling machinery. Relying on the principle in Shri. Anantha Padmanabha Bhat (where materials fixed to premises for use in a restaurant were held not to be 'goods in stock' but part of immovable property), the Court held that items acquired for use in preparing bakery products cannot be treated as goods held in stock or as items dealt with in the regular course of business. Because the purchases were for use in the respondent's business (and not stock-in-trade), the disqualifying effect attributed to inter State purchase under the composition rule did not apply in the facts of this case. Applying that reasoning, the Court answered the Revenue's challenge in favour of the respondent and upheld the Karnataka Appellate Tribunal's conclusion allowing the assessee's appeals. [Paras 9, 10, 11, 12]

Benefit of the composition scheme granted to the respondent; inter State purchase of machinery and allied items used in the business does not convert them into 'goods held in stock' so as to deny composition benefit.

Final Conclusion: Revision petition dismissed; questions framed by the Revenue answered in favour of the assessee and the impugned order allowing the assessee's appeals is upheld.

Legislative competence of State post 101st Constitutional Amendment - Article 246A and simultaneous levy under GST - effect of amendment of Entry 54 of List II (Seventh Schedule) - transitional provision (Section 19) versus source of legislative power - repeal and saving clause in State GST Act (Section 174) - validity of retrospective extension of limitation for assessment/revision - Ordinance promulgation under Article 213 and continuity with subsequent Act - effect of repeal on ability to amend repealed enactment

Legislative competence of State post 101st Constitutional Amendment - effect of amendment of Entry 54 of List II (Seventh Schedule) - Article 246A and simultaneous levy under GST - Validity of the Telangana Value Added Tax (Second Amendment) Act, 2017 insofar as it extended limitation for assessments, reassessments and revisions for general goods - HELD THAT: - The Court held that after the Constitution (One Hundred and First Amendment) Act, 2016 (the 101st Amendment) and substitution of Entry 54 in List II, the State Legislature's competence to legislate on taxes on sale or purchase of goods was truncated to the limited categories retained in the amended Entry 54. The Second Amendment Act, which extended limitation from four to six years for assessments, applied to all goods and was not confined to the limited categories in substituted Entry 54. That amendment therefore could not be sustained as a valid exercise of legislative power under Article 246 read with Entry 54. Nor could it be upheld as an independent State enactment under Article 246A in the absence of a simultaneous central law addressing the same field; Article 246A contemplates a scheme of simultaneous/ harmonised legislation for GST and does not confer an unfettered solo competence to States to enact VAT-type provisions for all goods. For these reasons the Second Amendment Act was held to be beyond the legislative competence of the State and unconstitutional. [Paras 89, 95, 105, 140]

Second Amendment Act is unconstitutional and void for lack of legislative competence.

Transitional provision (Section 19) versus source of legislative power - repeal and saving clause in State GST Act (Section 174) - effect of repeal on ability to amend repealed enactment - Ordinance promulgation under Article 213 and continuity with subsequent Act - Whether Section 19 of the 101st Amendment, the TGST Act's Section 174, or the Governor's Ordinance validated the Second Amendment Act or conferred competence to extend limitation for all goods - HELD THAT: - The Court analysed Section 19 and concluded it is a transitional/sunset provision that suspends the invalidity of inconsistent State tax laws for a limited window (one year) to enable amendment or repeal; it is not a source of legislative power to make new or inconsistent laws beyond that transitional object. Section 174 of the TGST Act operates as a repeal-with-savings provision and preserves certain past transactions and proceedings but does not empower the State to enlarge the legislative field after the 101st Amendment; repeal of an Act generally obliterates it save for saved past rights. Reliance on the promulgated Ordinance (Telangana Ordinance No.2 of 2017) cannot supply constitutional competence to the subsequent Second Amendment Act: legislative competence must derive from the Constitution and cannot be rooted in an earlier Ordinance where the State no longer possessed the requisite power post-amendment. Consequently Section 19, Section 174 and the Ordinance do not validate the Second Amendment Act insofar as it sought to extend limitation across the board for goods outside the limited Entry 54 carve-out. [Paras 106, 109, 117, 122, 137]

Section 19 is only transitional and not a source of power; Section 174 and the Ordinance do not cure the lack of legislative competence of the Second Amendment Act.

Validity of retrospective extension of limitation for assessment/revision - effect of repeal on ability to amend repealed enactment - Consequences for assessment, revision and show-cause notices issued relying on the extended six-year limitation under the Second Amendment Act - HELD THAT: - Because the Second Amendment Act was held unconstitutional for want of legislative competence, the retrospective extension of limitation from four to six years could not be relied upon to sustain revision proceedings or notices that were otherwise time-barred under the pre-amendment four-year rule. The Court therefore set aside and quashed the impugned notices and revision orders issued under Section 32(3) of the VAT Act that were challenged in these petitions as having been taken relying on the extended six-year limitation. [Paras 145, 146]

Notices and revision orders impugned in the batch of petitions are set aside and quashed.

Final Conclusion: The Telangana Value Added Tax (Second Amendment) Act, 2017 is unconstitutional for want of legislative competence and cannot be sustained; Section 19 is a transitional provision not a source of power, and neither Section 174 of the TGST Act nor the Governor's Ordinance validates the impugned amendment. Consequent upon this finding, the challenged revision notices and orders issued relying on the extended six year limitation are quashed and the writ petitions are allowed.

Composition scheme - prohibition on inter State purchases for composition dealers - capital goods not to be treated as 'goods held in stock' - use as part of immovable property

Composition scheme - prohibition on inter State purchases for composition dealers - capital goods not to be treated as 'goods held in stock' - use as part of immovable property - Whether purchase of refrigerators, freezers and similar items from outside the State disentitles a restaurant owner composition benefit by treating those items as 'goods held in stock'. - HELD THAT: - The Court found as an undisputed factual position that the respondent operates a restaurant and purchased refrigerators, freezers and similar items from outside the State as capital equipment for use in the business, and that the respondent's main business was not dealing in those goods. Applying the reasoning in Anantha Padmanabha Bhat (where tiling used for flooring was held to become part of immovable property and not goods in stock), the Court held that items acquired as capital equipment for running the restaurant could not be characterised as 'goods held in stock' or goods dealt with in the regular course of business. Consequently, the prohibition that disqualifies a dealer from the composition scheme on account of inter State purchases does not apply where the purchases are of capital goods used in the business and not goods held for sale. The Court therefore agreed with the Karnataka Appellate Tribunal's conclusion and answered the Revenue's questions in favour of the assessee. [Paras 7, 8, 9, 10]

Purchases of refrigerators, freezers and similar capital equipment from outside the State are not to be treated as 'goods held in stock'; the prohibition on inter State purchases does not disentitle the respondent from the composition scheme in these circumstances.

Final Conclusion: The revenue's revision petition is dismissed; the questions raised by the Revenue are answered in favour of the assessee and the impugned order of the Karnataka Appellate Tribunal is upheld.

Eligibility to pay tax by way of composition under Section 15(1)(d) of the KVAT Act - inter State purchase as a disqualification for composition under the KVAT Rules - capital equipment used in the business does not constitute 'goods in stock' - distinction between capital goods fixed in business premises and marketable stock

Eligibility to pay tax by way of composition under Section 15(1)(d) of the KVAT Act - inter State purchase as a disqualification for composition under the KVAT Rules - capital equipment used in the business does not constitute 'goods in stock' - Whether the respondent, having purchased stone crushing machinery from outside the State, was nevertheless eligible to pay tax under the composition scheme provided by Section 15(1)(d) of the KVAT Act - HELD THAT: - The undisputed facts show the respondent operates a stone crushing unit and purchased stone crushing machinery from outside the State by using C Form; the respondent's primary business is not dealing in such machinery. The Tribunal relied on this Court's earlier decision holding that goods affixed for use in the business (vitrified tiles used for flooring) became part of immovable property and were not goods in the regular course of sale. Applying the same principle, machinery acquired for use in the respondent's stone crushing operations is capital equipment and cannot be treated as 'goods in stock' dealt with or sold in the regular course of business. The disqualification for composition that attaches to a dealer who makes inter State purchases applies to dealers who import stock for resale; it does not extend to purchases of capital equipment used in the business and not held as inventory. On that basis the Tribunal correctly allowed the appeals and held the respondent entitled to the composition scheme under Section 15(1)(d).

Tribunal's allowance of the respondent's appeals and the conclusion that the respondent was eligible for composition tax under Section 15(1)(d) are upheld.

Final Conclusion: The question of law is answered in favour of the assessee and against the Revenue; the revision petition is dismissed and the Tribunal's order allowing the appeals is sustained.

Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Rebuttal of statutory presumption by preponderance of probabilities - Presumption under Section 118 of the Negotiable Instruments Act, 1881 - Requirement to prove existence of legally enforceable debt for conviction under Section 138 of the Negotiable Instruments Act, 1881 - Effect of non-reply to statutory demand notice in a Section 138 prosecution - Appellate reappreciation and concurrent finding on evidence

Presumption under Section 139 of the Negotiable Instruments Act, 1881 - Rebuttal of statutory presumption by preponderance of probabilities - Requirement to prove existence of legally enforceable debt for conviction under Section 138 of the Negotiable Instruments Act, 1881 - Effect of non-reply to statutory demand notice in a Section 138 prosecution - Appellate reappreciation and concurrent finding on evidence - Whether the conviction under Section 138 of the Negotiable Instruments Act could be sustained where the complainant failed to prove advancement of the alleged loan, date and mode of advance, and the drawer produced cogent evidence of loss/theft of signed cheques thereby rebutting statutory presumptions. - HELD THAT: - The trial court convicted the accused after relying on the statutory presumption that a cheque is issued for discharge of debt. On reappreciation, the Appellate Court found that the complainant did not plead or prove when or how the alleged friendly loan of Rs.5,00,000/- was advanced (no date, no mode of payment, no written agreement or receipt), and that the complainant's own evidence was silent on material particulars of the alleged loan. The accused had produced documentary evidence and police complaints showing intimation to the bank about loss/theft of signed cheques and closure of the account prior to the date of the cheque; these documents bore the seals of the authorities. In view of such evidence, the presumptions under Sections 118 and 139 were held to have been rebutted on the basis of probabilities and cogent circumstances, following the principle that an accused in a Section 138 trial need only make the non-existence of consideration or debt probable so as to shift the burden back on the complainant. Given the absence of proof of advancement of the loan and the presence of convincing evidence of loss/theft and account closure, the Appellate Court's conclusion that the cheque was not shown to have been issued for discharge of a legally enforceable liability was sustainable. The Appellate Court's concurrent appraisal of evidence was not shown to be perverse or illegal. [Paras 9, 10, 11]

The Appellate Court correctly concluded that the statutory presumptions were rebutted and that the complainant failed to prove existence of a legally enforceable debt; the conviction could not be sustained.

Final Conclusion: The appeal is dismissed. The Appellate Court rightly set aside the trial court's conviction after reappreciation of evidence and finding that the statutory presumptions under the Negotiable Instruments Act were rebutted and the complainant failed to prove the alleged debt and issuance of the cheque to discharge a legally enforceable liability.

Power to direct interim compensation under Section 143-A of the Negotiable Instruments Act - mandatory or directory nature of statutory provision - exercise of judicial discretion - recording of reasons for exercise of discretion - interim compensation not exceeding twenty per cent of the cheque amount - recovery of interim compensation as if it were a fine under Section 421 Cr.P.C.

Power to direct interim compensation under Section 143-A of the Negotiable Instruments Act - mandatory or directory nature of statutory provision - interim compensation not exceeding twenty per cent of the cheque amount - Section 143-A of the Negotiable Instruments Act is directory and confers a discretion upon the Court to direct interim compensation and is not mandatory in all cases. - HELD THAT: - The Court analysed the language, object and scheme of the 2018 amendment inserting Section 143-A and contrasted it with Section 148. Section 143-A operates at the trial stage (pre-conviction) and creates a new interim liability only if the Court, on the facts of each case, chooses to exercise the power. The use of the word 'may' in Section 143-A(1), read with 'shall not exceed twenty per cent' in Section 143-A(2), indicates a capped discretion exercisable by the trial Court (range 0%-20%) rather than a mandatory duty to order deposit in every case. The Court observed that the presumption under Section 139 N.I. Act is rebuttable and various factual deficiencies may render a complaint unsuitable for directing interim compensation. Comparative analysis with Section 148 (post conviction/appellate stage) and analogy to Order XXXVIII Rule 5 CPC supported the conclusion that Section 143-A is discretionary. Consequently, prior authorities holding the provision to be directory were followed, and decisions holding it mandatory were not accepted. The exercise of the discretion must be fact sensitive and may result in either grant or refusal of interim compensation. [Paras 9, 10]

Section 143-A is directory; the Court trying the offence has discretion whether to order interim compensation up to 20% of the cheque amount.

Exercise of judicial discretion - recording of reasons for exercise of discretion - When the Court exercises its discretion under Section 143-A to award interim compensation it must record reasons, including reasons determining the quantum awarded. - HELD THAT: - The Court held that any judicial discretion must reflect application of mind and be accompanied by reasons so that the parties and any appellate forum can understand the basis of the order. Orders either granting or refusing interim compensation under Section 143-A must therefore set out reasons for the decision and, where compensation is awarded, the reasons for fixing the particular quantum (up to the statutory ceiling). This requirement is rooted in settled principles that reasons are the heart of an order and are necessary to enable meaningful challenge and review. [Paras 11, 12]

The trial Court must record reasons when it decides to grant (or refuse) interim compensation under Section 143-A, and must state reasons for the quantum if compensation is awarded.

Remand for fresh consideration - The impugned orders directing payment of interim compensation were quashed and the matters remanded for fresh consideration in light of the principles laid down. - HELD THAT: - Finding that the trial Court had not addressed the exercise of discretion with adequate application of mind and reasons, the High Court set aside the two orders directing 20% interim compensation and remanded the matters to the Special Court to decide the Section 143-A applications afresh applying the legal principles stated in the judgment (i.e., discretion to be exercised, factors to be considered, and reasons to be recorded). [Paras 13]

Impugned orders quashed; matters remanded to the Special Court to decide the Section 143-A applications afresh in accordance with the judgment.

Final Conclusion: The High Court held that Section 143-A of the Negotiable Instruments Act is directory and confers a discretion on the trial Court to award interim compensation up to twenty per cent of the cheque amount; the trial Court must record reasons when exercising that discretion and for the quantum awarded. The impugned orders granting interim compensation were quashed and the matters remanded for fresh consideration in accordance with these principles.

Bail pending trial - Quashing of order under Section 482 of the Code of Criminal Procedure, 1973 - Parity in grant of bail - Non-obstante clause and twin conditions under Section 212(6) of the Companies Act - Interim protection from superior court - Regular attendance before investigating agency and trial court as a factor for bail

Bail pending trial - Quashing of order under Section 482 of the Code of Criminal Procedure, 1973 - Interim protection from superior court - Regular attendance before investigating agency and trial court as a factor for bail - Parity in grant of bail - Impugned order of 01.06.2022 taking the petitioner into judicial custody was quashed and bail granted. - HELD THAT: - The petitioner, who was a signatory as Company Secretary to the financial statements, had not been arrested during investigation or after filing of the charge-sheet and had regularly attended the investigation and court hearings for about three years. The trial court had adjourned the hearing of his bail application from 01.06.2022 to 02.06.2022 due to paucity of time, but directed that he be taken into custody on 01.06.2022 despite no request by the investigating agency for custody or any change in circumstances warranting arrest. The court noted that the petitioner cooperated with the investigation, had his statements recorded, and there was no material suggesting custody was necessary for investigation or that he was a flight risk. The petitioner relied on parity with the principal accused who had been granted interim bail. In these circumstances the High Court exercised its powers under Section 482 CrPC to quash the order directing custody and admitted the petitioner to bail, observing that the trial court remained competent to decide ancillary matters and that sudden incarceration after prolonged attendance without prior custody requirement was unwarranted. [Paras 18, 20, 21, 22, 23]

Impugned order of 01.06.2022 directing judicial custody quashed; petitioner admitted to bail on furnishing bail bond and a surety bond to the satisfaction of the trial court/Special Judge in the specified sum.

Final Conclusion: The petition under Section 482 CrPC is allowed: the order dated 01.06.2022 directing that the petitioner be taken into judicial custody is quashed and the petitioner is admitted to bail on furnishing the prescribed bail and surety bonds to the satisfaction of the trial court/Special Judge.

Bail under Section 439, Code of Criminal Procedure, 1973 - parity in grant of bail - non-obstante clause and twin conditions under Section 212(6) of the Companies Act, 2013 - professional negligence of stock auditor versus collusion - cooperation with investigation and attendance before trial court as mitigating factor for bail

Bail under Section 439, Code of Criminal Procedure, 1973 - parity in grant of bail - cooperation with investigation and attendance before trial court as mitigating factor for bail - Grant of bail to the petitioner despite allegations of negligence in stock audits - HELD THAT: - The Court considered the nature of the allegations against the petitioner as a stock auditor, his role described as a data-aggregator, and the factual background that he consistently cooperated with the investigation by attending summons and appearing before the trial court. The Court noted the prolonged period during which the petitioner remained out of custody despite the investigation and filing of the chargesheet, and observed that custody was not sought by the investigating agency during that time. The Court treated the fact that primary accused had been granted interim bail and the absence of any suggestion that custodial interrogation was required as significant. Balancing the allegations of negligent audit work against the petitioner's continuous cooperation, attendance, family responsibilities and absence of flight risk or tampering with evidence, the Court exercised its discretion under Section 439 CrPC and admitted the petitioner to bail subject to furnishing bail bond and surety to the satisfaction of the trial court/Special Judge (observations leading to the order appear in paras 25-31). [Paras 27, 28, 29, 30, 31]

Petitioner admitted to bail on furnishing bail bond and surety to the satisfaction of the trial court/Special Judge.

Non-obstante clause and twin conditions under Section 212(6) of the Companies Act, 2013 - professional negligence of stock auditor versus collusion - Whether the mandatory twin conditions in Section 212(6) Companies Act precluded grant of bail because of petitioner's alleged admissions - HELD THAT: - The respondent relied on the non-obstante clause in Section 212(6) and contended that the petitioner's own statements admitted his role, thereby failing the mandatory conditions (opportunity to Public Prosecutor and court satisfaction that accused is not guilty and not likely to commit offence on bail). The Court recorded the respondent's contention and authorities cited on custody and white-collar economic offences, but proceeded to evaluate the factual matrix - including the petitioner's stated limited role, his cooperation, absence of custodial necessity during investigation, and parity with other accused who received interim bail. On that assessment the Court did not treat the respondent's submission under Section 212(6) as an absolute bar to bail in the circumstances before it and granted bail while leaving substantive culpability for trial resolution. [Paras 21, 22, 30]

Respondent's reliance on Section 212(6) did not preclude grant of bail in the facts and circumstances; substantive guilt to be determined at trial.

Final Conclusion: Bail application allowed; petitioner admitted to bail on furnishing bond and surety to the satisfaction of the trial court/Special Judge, while questions of culpability and the statutory conditions under Section 212(6) remain for trial adjudication.

Concurrent running of sentences - Single transaction principle - Discretion under Section 427 Cr.P.C. to direct concurrent sentences - Obligation to specify whether multiple sentences run concurrently or consecutively - Compensation under Section 357(3) Cr.P.C. and imposition of default sentence - Totality principle in sentencing

Concurrent running of sentences - Single transaction principle - Discretion under Section 427 Cr.P.C. to direct concurrent sentences - Sentences in the three remaining convictions are ordered to run concurrently. - HELD THAT: - The Court held that the three complaints (filed within a few days of each other) and the evidence relied upon by the complainant disclose a single consolidated liability satisfied by issuance of multiple cheques in quick succession. Applying the single transaction tests-proximity of time, unity of purpose, continuity of action, common evidence and the fact that the same magistrate tried all matters on the same date-the Court concluded the offences fall within a single transaction. In view of the settled law that Section 427 empowers the sentencing court to exercise discretion for concurrent sentences where prosecutions arise from a single transaction and having balanced reformatory, retributive and deterrent considerations, the Court exercised its revisionary power to direct concurrent running of the substantive sentences in the three petitions. [Paras 30, 31, 32, 33, 40]

Sentences in CRR Nos. 3406-2019, 3411-2019 and 3415-2019 are directed to run concurrently.

Concurrent running of sentences - Relevance of actual incarceration - Revision in respect of CRR No. 3403-2019 is dismissed as infructuous because the sentence has already been undergone. - HELD THAT: - The custody certificate established that the petitioner had already undergone the entire substantive sentence in the conviction arising out of Criminal Appeal No.47. Since concurrent running of sentence is operative only while a person is undergoing imprisonment, the petition seeking directions for concurrency in respect of that conviction was rendered infructuous and dismissed. [Paras 29, 42]

CRR No. 3403-2019 dismissed as having been rendered infructuous.

Compensation under Section 357(3) Cr.P.C. and imposition of default sentence - High Court's revisional power under Section 401(2) Cr.P.C. read with Section 482 Cr.P.C. - Totality principle in sentencing - The High Court modified the appellate order to provide for a default sentence in case of non-payment of compensation and specified that the default sentence shall run consecutively to the substantive sentence; compensation remains recoverable. - HELD THAT: - Noting that the appellate court had awarded compensation under Section 357(3) without prescribing a default sentence, the High Court examined its revisional powers under Section 401(2) read with Section 357(4) and the authorities permitting imposition of a default sentence in aid of compensation. The Court held it could, after hearing the parties, modify the award to prescribe a default imprisonment to ensure efficacy of the compensation order. The High Court fixed the default sentence at six months (consistent with the ceiling derived from the substantive maximum and principles limiting default to a fraction of maximum punishment) and directed that such default sentence shall run consecutively and that the complainant remains entitled to pursue recovery of the compensation as provided by law. [Paras 36, 37, 42]

Order awarding compensation modified to provide that failure to pay compensation will attract a default sentence of six months' simple imprisonment (to run consecutively); compensation remains recoverable.

Final Conclusion: The petition in CRR No.3403-2019 is dismissed as infructuous having regard to completed sentence; the substantive sentences in the three remaining revisions are directed to run concurrently as the offences arise from a single transaction; the appellate compensation order is modified to provide for a six month default imprisonment (to run consecutively) in case of non payment, and the complainant retains the right to recover the compensation.