TaxTMI Updates e-Newsletter
Jul 18,2024

Natural justice - remand for reconsideration - opportunity of personal hearing - setting aside of order - payment of late fee as factor in reconsideration

Natural justice - opportunity of personal hearing - setting aside of order - Impugned order imposing late fee and penalty set aside and remanded for fresh consideration because the taxpayer did not participate in proceedings and was unaware of them. - HELD THAT: - The Court found that the taxpayer failed to file objections to the show cause notice and did not participate in the proceedings. Having regard to the asserted reason for non-participation (GST compliances entrusted to a Chartered Accountant who had not noticed the show cause notice and order), and in the interest of justice, the impugned order dated 13.02.2023 was set aside and the matter remanded for reconsideration. The petitioner was permitted to submit a reply to the show cause notice within fifteen days of receipt of this order, and the first respondent was directed to provide a reasonable opportunity, including a personal hearing, before passing a fresh order within three months of receipt of the petitioner's reply. The Court's direction embodies the application of natural justice by ensuring an opportunity of personal hearing prior to adjudication. [Paras 4, 5]

Impugned order set aside; matter remanded for fresh consideration with directions to permit reply within fifteen days and to afford a reasonable opportunity including a personal hearing, and to pass a fresh order within three months.

Payment of late fee as factor in reconsideration - remand for reconsideration - Payment/remission of the late fee by the petitioner taken into account as a factor counselling reconsideration of the impugned order. - HELD THAT: - The Court noted that the entire late fee component had been remitted by the petitioner and treated this fact as a relevant consideration in the exercise of its discretion to order reconsideration. This factual circumstance, combined with the petitioner's non-participation attributed to reliance on a Chartered Accountant, led the Court to remit the matter for fresh adjudication rather than to decide the merits in the writ petition. [Paras 2, 4]

The fact of remission of the late fee was held to warrant reconsideration; the merits were not decided and were remanded for fresh adjudication.

Final Conclusion: Writ petition allowed by setting aside the impugned order dated 13.02.2023; matter remanded for fresh consideration permitting the petitioner to file a reply within fifteen days, directing the respondent to afford a reasonable opportunity including personal hearing, and to pass a fresh order within three months; no costs.

Natural justice / opportunity to be heard - personal hearing - limited scope of rectification under Section 161 - disparity between GSTR-3B and auto-populated GSTR-2A - eligibility of input tax credit claimed - service of show cause notice via GST portal, email and SMS - voluntary deposit for reconsideration - remand on conditions

Natural justice / opportunity to be heard - service of show cause notice via GST portal, email and SMS - Original order dated 13.12.2023 was set aside on grounds of inadequate opportunity to contest the tax proposal and non-participation by the petitioner justified reconsideration. - HELD THAT: - The petitioner contended non-participation because he was unaware of the proceedings culminating in the impugned order and placed on record a supplier declaration under Circular No.183. Though the respondent contended that notices were uploaded on the GST portal and communicated to the registered e-mail and mobile number, the High Court found the petitioner's non-participation and the material placed on record sufficient to justify setting aside the original order to permit fresh consideration. The Court noted that the rectification petition had been rejected by the respondent due to the limited scope of rectification under Section 161, but that circumstance did not preclude granting the petitioner an opportunity to be heard before concluding the tax proposal on merits. The petitioner also offered a voluntary deposit in excess of ten per cent of the disputed demand, which the Court treated as a factor favouring reconsideration.

Order dated 13.12.2023 set aside and the matter directed to be reconsidered after affording the petitioner an opportunity to be heard, subject to conditions.

Voluntary deposit for reconsideration - remand on conditions - personal hearing - Matter remanded to the respondent for fresh adjudication on receipt of the petitioner's reply and deposit, with directions for personal hearing and a time-bound disposal. - HELD THAT: - The Court required the petitioner to remit Rs. 25,000/- towards the disputed tax demand within fifteen days from receipt of the order and permitted the petitioner to submit a reply to the show cause notice within the same period. Upon satisfaction of receipt of the specified sum, the respondent was directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter to pass a fresh order within three months from receipt of the petitioner's reply. The remand was thus conditional and limited to fresh adjudication after compliance with the stated conditions.

Proceedings remanded to the respondent for fresh consideration on receipt of the deposit and the petitioner's reply; respondent to provide personal hearing and pass fresh order within three months.

Final Conclusion: Writ petition allowed by setting aside the original order dated 13.12.2023 and remanding the matter for fresh adjudication on conditions that the petitioner remit the specified sum within fifteen days, submit a reply within the same period, and, upon receipt of the amount, be afforded a personal hearing with a fresh order to be passed within three months; no costs.

Opportunity of personal hearing - principles of natural justice - show cause notice under Section 73(1) of the State GST Act - requirement of personal hearing under section 75(4) - non appearance / failure to file reply to show cause notice - statutory remedy under Section 107 of the Central GST Act

Opportunity of personal hearing - principles of natural justice - show cause notice under Section 73(1) of the State GST Act - non appearance / failure to file reply to show cause notice - Whether the petitioner was denied the opportunity of personal hearing and whether the demand order could be quashed on that ground. - HELD THAT: - The Court examined the service and procedural events: a notice under Section 73(1) was issued and received by the petitioner; the petitioner sought adjournment on the departmental portal and an adjourned hearing date (17.11.2023) was fixed and uploaded; the petitioner did not submit any explanation nor appear in person on the fixed date and did not seek an extension. Reliance was placed on the Court's earlier observation in Eveready Industries that personal hearing is ordinarily necessary, but the Court held that where the assessee receives the show cause notice and thereafter fails to file any reply or take steps to pursue the adjourned date, the plea of denial of hearing cannot be entertained. Thus, even if the formal indication of date/time/place in the notice were absent, the assessee had the duty to file a reply to the show cause notice which was admittedly received and failed to do so; accordingly the contention of violation of natural justice was rejected.

Petition to quash the demand on the ground of denial of personal hearing is dismissed; the plea of violation of principles of natural justice is not countenanced because the petitioner failed to file reply or appear.

Statutory remedy under Section 107 of the Central GST Act - Whether the writ petition is maintainable in view of the availability of statutory remedy. - HELD THAT: - The Court considered the availability of the statutory appellate/remedial route and held that, having regard to the existence of an alternative remedy under Section 107 of the Central GST Act, the writ petition was not an appropriate remedy at this stage. The petition was therefore dismissed in view of the statutory remedy.

Writ petition dismissed on the ground that statutory remedy under Section 107 of the Central GST Act is available.

Final Conclusion: Writ petition seeking quashment of the demand/order is dismissed: the plea of denial of hearing is rejected because the assessee failed to file reply or appear on the adjourned date, and the petition is dismissed in view of the availability of statutory remedy under Section 107 of the Central GST Act.

Validity of unsigned GST orders and notices - Requirement of authentication by digital signature under Rule 26(3) of the CGST Rules - Inapplicability of Section 160 and Section 169 to cure omission of signature - Entitlement of revenue to proceed afresh in accordance with law

Validity of unsigned GST orders and notices - Requirement of authentication by digital signature under Rule 26(3) of the CGST Rules - Inapplicability of Section 160 and Section 169 to cure omission of signature - Unsigned show cause notice and assessment/order uploaded without the officer's signature are invalid and liable to be set aside. - HELD THAT: - The petition challenged the show cause notice and the assessment order on the ground that neither bore the signing authority's digital or physical signature as required under Rule 26(3) of the CGST Rules. The Court, having considered binding and persuasive coordinate-bench decisions of other High Courts, held that omission of the signature goes to the root of validity and cannot be treated as a curable defect under Sections 160 or 169 of the CGST Act. Reliance was placed on earlier decisions which uniformly concluded that an unsigned order is 'no order in the eyes of law' and that mere upload on the common portal without authentication does not satisfy the statutory requirement. In view of this legal position, the impugned unsigned documents lack efficacy and must be quashed. The Court, however, left open the respondents' statutory right to initiate or continue proceedings afresh strictly in accordance with law. [Paras 9, 10]

Impugned unsigned show cause notice and assessment order set aside; respondents permitted to proceed afresh in accordance with law.

Final Conclusion: Writ petition allowed; the unsigned show cause notice and assessment/order were quashed for non-compliance with Rule 26(3) of the CGST Rules, but the revenue is permitted to take further action strictly in accordance with law.

Input Tax Credit - reconsideration on remand - principles of natural justice - information from ICEGATE and Model-2 portal - conditional deposit for reframing order

Input Tax Credit - information from ICEGATE and Model-2 portal - reconsideration on remand - conditional deposit for reframing order - principles of natural justice - Validity of the adjudication order in view of alleged non-consideration of GSTR 2A entries and reliance on ICEGATE/Model 2 information, and whether the matter should be remitted for fresh consideration - HELD THAT: - The Court found that the petitioner produced screenshots of the auto populated GSTR 2A reflecting 11 bills of entry which, if excluded, materially reduce the confirmed demand. The respondent relied on information received from ICEGATE and the Model 2 portal as sources for detecting mismatches and contended that procedural notices (Form ASMT 10) and show cause proceedings complied with the requirements of natural justice. In light of the documented GSTR 2A entries and the dispute as to whether those entries were available to or considered by the adjudicating authority, the Court concluded that the adjudication requires fresh consideration. The Court conditioned the remand on the petitioner making a specified deposit, on receipt of which the respondent must give the petitioner a reasonable opportunity, including personal hearing, and thereafter pass a fresh order within a stipulated timeframe. The Court thereby set aside the impugned order and directed re adjudication subject to the stated terms. [Paras 2, 4, 5]

Impugned order set aside and matter remitted for fresh adjudication; petitioner to deposit the specified sum within four weeks, after which the respondent shall provide hearing and pass a fresh order within three months.

Final Conclusion: Writ petition allowed by setting aside the order dated 07.03.2024 and remitting the matter for fresh consideration on condition of the petitioner making the agreed deposit; respondent to afford a hearing and pass a fresh order within three months of receipt of the deposit. No costs.

Non-filling of Part-B of the e-way bill not prima facie proof of tax evasion - Technical error in statutory documentation - Requirement of intention (mens rea) to sustain penalty for evasion - Penalty under Section 129(3) of the Act - Return of security / refund of deposited amount

Non-filling of Part-B of the e-way bill not prima facie proof of tax evasion - Technical error in statutory documentation - Requirement of intention (mens rea) to sustain penalty for evasion - Penalty under Section 129(3) of the Act - Validity of penalty and confirmation orders impugned on ground that Part-B of the e-way bill was not filled - HELD THAT: - The Court found that the goods were accompanied by required documents including tax invoice, e-way bill and R.R., with no finding of discrepancy in quantity or quality and no material showing evasion of tax. The absence of a duly filled Part-B of the e-way bill, standing alone, did not establish intent to evade tax. The defect was treated as a technical error and, in view of analogous decisions relied upon, no adverse inference supporting levy of penalty under the statute could be drawn. Applying this reasoning, the Court held the seizure/penalty and its confirmation unsustainable and set aside the impugned orders. [Paras 7, 10, 11, 12]

Impugned penalty order dated 20.02.2023 and appellate confirmation dated 19.10.2022 set aside; writ petition allowed.

Return of security / refund of deposited amount - Claim for refund of amount deposited in consequence of the impugned orders - HELD THAT: - The Court directed that any amount deposited earlier by the petitioner shall be refunded. The refund is ordered to be made within one month from production of certified copy of this order; earlier security (if any) to be returned as a consequential relief. [Paras 12]

Deposit refunded to petitioner within one month on production of certified copy; consequential reliefs to follow.

Final Conclusion: The writ petition is allowed: penalty and its confirmation imposed solely on the ground of non-filling of Part-B of the e-way bill are quashed as the omission was a technical defect not establishing intent to evade tax; deposited amounts to be refunded as directed.

Service of orders and communications via common portal - Interpretation of Section 169 read with Section 146 of the CGST Act - Effect of notification under Section 146 and retrospective amendment - Availability of alternative remedy by appeal under Section 107

Service of orders and communications via common portal - Interpretation of Section 169 read with Section 146 of the CGST Act - Effect of notification under Section 146 and retrospective amendment - Validity of communicating assessment orders by making them available on the notified common portal. - HELD THAT: - The Court held that Section 169 expressly permits service of any decision, order, summons, notice or other communication by making it available on the common portal. This provision must be read together with Section 146 which empowers notification of a common portal for carrying out functions under the Act. Reading both provisions together, once a common portal is notified for purposes under the CGST Act and Rules, communication of notices and orders through that portal is permissible. The Court also relied on the amendment to the notification under Section 146 clarifying that the portal may be for all functions under the CGST Rules, 2017, and observed that the amendment has retrospective effect from 22.06.2017, reinforcing the legality of using the portal for uploading orders. [Paras 5]

Communication of the assessment order by making it available on the notified common portal was valid.

Availability of alternative remedy by appeal under Section 107 - Service of orders and communications via common portal - Whether the writ petition should be entertained despite the availability of statutory appeal after the petitioner accessed the order belatedly on the portal. - HELD THAT: - The Single Judge found that the petitioner had, albeit belatedly, downloaded the assessment order from the portal and that the delay in retrieving the order was attributable to the petitioner. The High Court agreed with this finding and concluded that the petitioner had an alternate statutory remedy by way of appeal under Section 107 of the GST Act. In view of the validity of service through the portal and the availability of an efficacious alternative remedy, the writ was not sustainible. [Paras 3]

Writ petition dismissed and the petitioner relegated to file the appeal under Section 107.

Final Conclusion: The judgment of the Single Judge was upheld: service of orders via the notified common portal is permissible under Sections 146 and 169 read together (with the retrospective amendment), and the writ petition was dismissed with the petitioner directed to pursue the statutory appeal under Section 107.

Validity of show cause notice - Duty to disclose reasons and material in show cause notice - Principles of natural justice - Cancellation of registration under GST - Effect of Section 29(3) of GST Act on reopening cancellation - Communication by email under GST and its evidentiary value

Validity of show cause notice - Duty to disclose reasons and material in show cause notice - Principles of natural justice - Validity of the show cause notice dated 27.12.2023 and the consequent Order-in-Original dated 19.03.2024 - HELD THAT: - The Court examined whether the impugned show cause notice and the Order-in-Original were sustainable where an earlier cancellation of registration dated 08.07.2022 recorded nil liability across all tax heads. The Court found that the material relied upon in the Order-in-Original related to a period anterior to 08.07.2022 but the show cause notice did not disclose that such documents or information had been received by the Department after 08.07.2022. Absent any minimum detail or foundation in the notice to demonstrate that fresh adverse material came to the Department's notice post the cancellation order, the notice was defective. The defect could not be cured merely by asserting communication by email; as framed, the notice did not afford the petitioner the required opportunity to know the case he had to meet, thereby engaging principles of natural justice. On this basis the Court concluded that the show cause notice and the Order-in-Original could not be sustained. [Paras 8]

Show cause notice dated 27.12.2023 and Order-in-Original dated 19.03.2024 set aside for being defective for lack of necessary foundational particulars and breach of principles of natural justice.

Cancellation of registration under GST - Effect of Section 29(3) of GST Act on reopening cancellation - Communication by email under GST and its evidentiary value - Whether respondents may reopen consideration after cancellation of registration and procedure to be followed on remand - HELD THAT: - While noting contentions that Section 29(3) permits the Department to take a different decision post cancellation and that communication by email is recognised under the GST scheme, the Court did not express any opinion on the merits. Instead, having found the existing show cause notice defective, the Court granted liberty to the respondents to issue an appropriate show cause notice that sets out the material, the dates when such material was received, and the precise grounds for revisiting the earlier cancellation decision. If such a fresh notice is issued, the petitioner will be at liberty to raise all available defenses. The Court emphasised that adherence to adequate disclosure and fair opportunity is necessary if the Department elects to reopen the matter. [Paras 8, 9]

Liberty granted to respondents to issue an appropriate show cause notice afresh; petitioner permitted to avail all defenses on such issuance; no opinion expressed on merits.

Final Conclusion: The writ petition is disposed of by setting aside the show cause notice dated 27.12.2023 and the Order-in-Original dated 19.03.2024 for failure to disclose requisite foundational particulars and for breach of natural justice; respondents are permitted to issue a fresh, appropriate show cause notice and the petitioner may contest it, the Court refraining from expressing any opinion on merits.

Cancellation of GST registration - time-bound decision on registration cancellation - acceptance of cancellation applications within 30 days except in specified circumstances - continuing liability despite cancellation - show cause notice and verification of returns/reconciliation - proper officer to pass appropriate order

Cancellation of GST registration - time-bound decision on registration cancellation - proper officer to pass appropriate order - Respondent directed to consider and decide the petitioner's application for cancellation of GST registration and pass an appropriate order within a stipulated period. - HELD THAT: - The petition sought directions for cancellation of the petitioner's GST registration pursuant to its application dated 16.01.2024. Having noted the application's pendency and the respondent's issuance of a show cause notice, the Court exercised its supervisory jurisdiction to direct the respondent to consider the application and to pass an appropriate order. The Court recorded that the application ought to be disposed of within a limited timeframe and ordered the Proper Officer to pass the order on the application within four weeks from the date of this order. The direction is procedural and compels expeditious consideration without determining the substantive merits of the application. [Paras 9, 11, 12]

The respondent shall consider the petitioner's cancellation application and pass an appropriate order within four weeks.

Acceptance of cancellation applications within 30 days except in specified circumstances - show cause notice and verification of returns/reconciliation - Court referred to the administrative expectation that cancellation applications be decided within 30 days except in specified cases, and noted the Proper Officer's call for reconciliation and returns verification. - HELD THAT: - The Court noted the content of the referenced circular which directs that, except where the application is incomplete or in cases of transfer/merger, cancellation applications should be accepted within 30 days and the order issued with effect from the requested date. The show cause notice issued by the Proper Officer sought reconciliation between GSTR-3B and GSTR-1 and reconciliation of ITC claimed with ITC available in GSTR-2A and called for filing of returns up to the application date. The Court did not decide the merits of those contentions but recognised them as the basis on which the Proper Officer sought further information and thereby justified directing a prompt disposal after appropriate verification. [Paras 6, 8, 9]

The Proper Officer may verify returns and reconciliations as sought in the show cause notice but must decide the cancellation application promptly in accordance with the governing administrative expectation.

Continuing liability despite cancellation - Cancellation of GST registration does not absolve the petitioner of tax liabilities or other statutory compliances for the period prior to cancellation. - HELD THAT: - The Court clarified that acceptance of an application for cancellation and issuance of the cancellation order does not extinguish any tax liability or statutory obligations arising from acts or omissions committed before the effective date of cancellation. This principle was applied to ensure the petitioner remains liable for any pre-cancellation obligations even if the registration is cancelled. [Paras 10]

Cancellation, if ordered, will not relieve the petitioner of any tax liability or statutory compliance for the period prior to cancellation.

Final Conclusion: Petition allowed: respondent directed to consider and decide the petitioner's cancellation application within four weeks, subject to the Proper Officer's verification of returns/reconciliations as may be necessary; cancellation, if granted, shall not absolve the petitioner of any prior tax liabilities or statutory compliances.

Quashing and remand for fresh adjudication - interim deposit as condition for grant of relief - opportunity of personal hearing before final order - treatment of an order as addendum to show cause notice

Quashing and remand for fresh adjudication - opportunity of personal hearing before final order - Impugned assessment order dated 28.11.2023 quashed and matter remitted for fresh decision on merits - HELD THAT: - The High Court found that notwithstanding the petitioner s failure to respond to statutory notices and to participate in personal hearings, there existed a triable controversy on the merits warranting fresh consideration. The impugned order is therefore set aside and remitted to the respondent for reconsideration on merits and in accordance with law. Before passing the fresh order the respondent is directed to afford the petitioner an opportunity of hearing. The Court s intervention is limited to quashing the impugned order and directing fresh adjudication rather than deciding the substantive claim of input tax credit. [Paras 8, 10]

Impugned order quashed; matter remitted for fresh adjudication and petitioner to be heard before final order.

Interim deposit as condition for grant of relief - treatment of an order as addendum to show cause notice - Conditions and timeline for fresh adjudication including interim deposit, treatment of impugned order and time for final order - HELD THAT: - The Court imposed a conditional direction: the petitioner must deposit 10% of the disputed tax from its electronic cash register along with the reply to the notice that preceded the impugned order within 30 days of receipt of the order of this Court. The impugned order is to be treated as an addendum to the show cause notice. The respondent is expected to pass the final order within three months thereafter, after hearing the petitioner. These directions fix procedural steps and timelines for the remand and are intended to secure compliance while enabling fresh adjudication on merits. [Paras 9, 10]

Petitioner to deposit 10% of disputed tax within 30 days; impugned order treated as addendum to show cause notice; final order to be passed within three months after affording hearing.

Final Conclusion: Writ petition disposed by quashing the impugned assessment order dated 28.11.2023 and remitting the matter for fresh adjudication on merits, subject to the petitioner s compliance with the interim deposit and procedural directions; final order directed to be passed within three months after hearing the petitioner.

Interest on delayed tax payment - recalculation of interest period - opportunity to submit reply on interest - personal hearing before fresh order - principles of natural justice

Interest on delayed tax payment - recalculation of interest period - Validity of the interest charged by treating the period of delay as 2080 days instead of 700 days and consequent direction for recalculation - HELD THAT: - The Court recorded that the tax liability itself was discharged albeit belatedly and that the sole remaining controversy was the computation of interest. The petitioner contended that interest should be computed for a delay of 700 days rather than 2080 days; the respondent accepted service and maintained that interest liability admitted no discretion. In view of that dispute, the Court set aside the impugned order solely insofar as interest liability is concerned and directed that interest liability be discharged on the basis that the period of delay is 700 days. The Court permitted the petitioner to submit a reply limited to the interest liability and required the respondent, after satisfaction that interest has been discharged to that extent, to afford a reasonable opportunity including a personal hearing and to pass a fresh order within three months of receipt of the reply. [Paras 4, 5]

Impugned order set aside only on interest; interest to be discharged on basis of 700 days' delay and fresh consideration ordered after reply and hearing.

Opportunity to submit reply on interest - personal hearing before fresh order - principles of natural justice - Procedural entitlement to be heard on the question of interest and requirement of a fresh order after hearing - HELD THAT: - The Court noted that intimation, show cause notice and offer of personal hearing had been made, and yet allowed the petitioner a further limited opportunity to file a reply only in respect of the interest liability. The respondent was directed, upon being satisfied that interest as recalculated (on the basis of 700 days) was discharged to that extent, to provide a reasonable opportunity including a personal hearing and thereafter to pass a fresh order within three months from receipt of the petitioner's reply. The directions preserve the petitioner's right to be heard on the specific issue of interest before finalising the assessment on that point. [Paras 3, 5]

Petitioner permitted to file reply on interest; respondent to afford personal hearing and issue fresh order within three months after receipt of reply.

Final Conclusion: The writ petition is disposed of by setting aside the impugned order only insofar as interest is concerned; interest shall be discharged on the basis of a 700-day delay, the petitioner may file a reply limited to interest within 15 days, and the respondent shall, after affording a hearing, pass a fresh order within three months; no costs.

Right to be heard - pre-decisional opportunity rendered meaningless - penalty for evasion of tax - appellate authority's duty to act judicially and even-handedly - remand for fresh consideration

Right to be heard - pre-decisional opportunity rendered meaningless - penalty for evasion of tax - Validity of imposition of penalty when penalty order was passed simultaneously with granting time to submit explanation - HELD THAT: - The Court found it objectionable that the Assessing Authority, while purporting to grant the petitioner time to submit an explanation by 17.03.2023, had on the same date imposed the penalty. That course rendered the opportunity to explain meaningless and undermined the petitioner's right to be heard. The Court noted the requirement that imposition of penalty must follow a proper hearing and that procedural fairness cannot be circumvented by passing the punitive order before the expiry of the period allowed for explanation. The absence of any contemporaneous finding regarding the petitioner's intention to evade tax further underscored the infirmity in the impugned action. [Paras 3, 4, 6]

The imposition of penalty on 10.03.2023 while simultaneously granting time to explain was procedurally impermissible; the order is vulnerable on grounds of denial of effective hearing.

Appellate authority's duty to act judicially and even-handedly - remand for fresh consideration - Whether the appellate order affirming the penalty could stand and the appropriate remedy - HELD THAT: - The Court observed that the Appellate Authority rejected the petitioner's factual contention for want of evidence but nonetheless affirmed the department's case despite absence of findings or evidence establishing intent to evade tax. This inconsistent approach was criticised as not judicial; the Appellate Authority is required to apply the same standard to contentions of the assessee and the department. In view of the procedural defects and the absence of adjudication on the essential factual question of intent, the Court concluded that the appellate order could not be sustained and that the matter should be reconsidered afresh. The Court directed that the Appellate Authority decide the appeal anew after granting due opportunity of hearing and dealing with the petitioner's submissions. [Paras 7, 8, 9]

The appellate order dated 06.12.2023 is quashed and the matter is remanded to the Appellate Authority for fresh decision after hearing, to be completed expeditiously.

Final Conclusion: Writ petition allowed; the appellate order dated 06.12.2023 is quashed and the matter is remanded to the Appellate Authority for fresh consideration in accordance with law after giving the petitioner a proper hearing, to be decided within three months from production of certified copy of this order.

Mandatory personal hearing under Section 75(4) of the U.P. GST Act, 2017 - opportunity for oral hearing independent of written reply - rules of natural justice - show cause notice procedure - remand for fresh adjudication where mandatory procedure not followed

Mandatory personal hearing under Section 75(4) of the U.P. GST Act, 2017 - opportunity for oral hearing independent of written reply - rules of natural justice - show cause notice procedure - Omission to grant a personal (oral) hearing in the notice under Section 74/75 framework and its effect on the validity of the impugned order - HELD THAT: - The Court held that Section 75(4) mandates that a registered person must be afforded an opportunity of personal hearing before any adverse decision is taken. The notice issued to the petitioner recorded 'NA' against the column for date/time/venue of personal hearing and thus did not afford any opportunity of oral hearing. The statutory scheme contemplates two independent opportunities: submission of a written reply and participation in an oral hearing; failure to avail one does not extinguish the right to the other. Because the assessing authority proceeded without granting the mandated opportunity of personal hearing, the impugned order was passed contrary to the mandatory procedure and in breach of the rules of natural justice, a defect that is self-apparent and critical to the outcome of the proceedings. [Paras 2, 3, 4, 5, 7]

The impugned order was vitiated for failure to afford the required personal hearing and was set aside.

Remand for fresh adjudication where mandatory procedure not followed - show cause notice procedure - Remedial relief and directions following setting aside of the impugned order - HELD THAT: - Having found the procedure mandatory and breached, the Court declined to keep the petition pending or to call further affidavits and instead remitted the matter to the assessing authority for fresh consideration. The petitioner was directed to file its final reply to the show cause notice within two weeks and was granted an opportunity to appear before the assessing authority on the specified date, after which the authority is to pass an appropriate reasoned order. The remand is for fresh adjudication in compliance with the statutory requirement of personal hearing and for decision on merits thereafter. [Paras 7, 8, 9]

Matter remitted to respondent No.2 for fresh adjudication after giving the petitioner the opportunity to file a final reply and to appear for personal hearing; writ petition allowed.

Final Conclusion: The impugned order dated 30.06.2023 was set aside for failure to afford the mandatory personal hearing; the matter is remitted to the assessing authority to permit filing of a final reply, to afford oral hearing, and thereafter to pass a reasoned fresh order in accordance with law.

Disallowance u/s 14A - Disallowance u/s 36(1)(iii) - Disallowance under rule 8D(2) and foreign exchange fluctuations u/s 115JB

HELD THAT:- The judgment which is relied upon in the impugned order [2023 (10) TMI 1407 - BOMBAY HIGH COURT] has not been interfered with by this Court. It is not disputed that the questions involved therein were the same. Hence, in the facts of the case, no interference is called for. The Special Leave Petition is accordingly dismissed.

However, the question of law, if any, is kept open.

Penalty u/s 271(1)(c) - sundry credits as claimed by the assessee has not been substantiated before the AO - as decided by HC [2024 (1) TMI 1302 - PATNA HIGH COURT] mere disclosure of the name and address of the sundry creditors cannot lead to substantiation of the credits especially when there was no evidence produced regarding the transactions which led to the credit - HELD THAT:- After having heard the learned counsel appearing for the petitioner, we find no error in the view taken by the High Court. The Special Leave Petition is accordingly dismissed.

Faceless assessment scheme under Section 151A - jurisdiction of the Jurisdictional Assessing Officer to issue notices outside the faceless regime - validity of notices under Section 148A(b) and order under Section 148A(d) in light of the faceless scheme - notice under Section 148 issued outside faceless assessment

Faceless assessment scheme under Section 151A - jurisdiction of the Jurisdictional Assessing Officer to issue notices outside the faceless regime - validity of notices under Section 148A(b) and order under Section 148A(d) in light of the faceless scheme - notice under Section 148 issued outside faceless assessment - Impugned notice under Section 148A(b), consequent order under Section 148A(d), and notice under Section 148 issued by the Jurisdictional Assessing Officer were invalid as having been issued outside the faceless assessment scheme. - HELD THAT: - The Court accepted the petitioner's submission that, following the faceless assessment regime notified under Section 151A, the Jurisdictional Assessing Officer ceased to have jurisdiction to issue the notice under Section 148A(b) or to pass consequential orders under Section 148A(d) or to issue notices under Section 148 outside the faceless assessment process. The Division Bench decision in Hexaware Technologies Limited was treated as determinative on this question. On that short ground the Court held that the impugned notices and order issued by the JAO were not in accordance with the faceless scheme and therefore invalid, without addressing the other grounds urged by the petitioner. [Paras 3, 4, 5]

Writ petition allowed; impugned Notice under Section 148 dated April 12, 2024, Order under Section 148A(d) dated April 12, 2024, and Notice under Section 148A(b) dated March 21, 2024, are quashed.

Final Conclusion: The writ petition is allowed on the sole ground that the Jurisdictional Assessing Officer lacked jurisdiction to issue the impugned notices and order outside the faceless assessment scheme; the specified notices and order are quashed and the rule is made absolute, with no order as to costs.

Validity of demand notice issued under Section 156 - Faceless assessment unit's acceptance of return - Assessment under Section 147 read with Section 144B - Mechanical issuance of demand due to technical glitch

Validity of demand notice issued under Section 156 - Faceless assessment unit's acceptance of return - Assessment under Section 147 read with Section 144B - Demand notice dated 19th March 2024 issued under Section 156 for assessment year 2015-16 is unsustainable where the faceless assessment unit had accepted the return and recomputed income as Nil under Section 147 read with Section 144B. - HELD THAT: - The Faceless Assessment Unit, after considering the explanations furnished by the petitioner, concluded that no adverse inference could be drawn and accepted the return by recomputing total income as Nil. Despite that assessment, a demand notice under Section 156 was issued which on the face of it was contrary to the assessment order. The respondents conceded that the notice arose from technical glitches and that no demand can be raised contrary to the assessment order. The demand notice and its appended computation sheet were therefore issued mechanically without regard to the assessment outcome and cannot stand. [Paras 7, 8]

The demand notice dated 19th March 2024 for AY 2015-16 is quashed.

Final Conclusion: Writ petition disposed of by quashing the Section 156 demand notice dated 19th March 2024 for assessment year 2015-16; no order as to costs.

Deductibility under Section 37 - Wholly and exclusively for the purposes of business - Separate legal entity-holding and subsidiary - Revenue expenditure versus capital expenditure - Commencement of business/readiness to receive clients

Deductibility under Section 37 - Wholly and exclusively for the purposes of business - Separate legal entity-holding and subsidiary - Revenue expenditure versus capital expenditure - Commencement of business/readiness to receive clients - Whether expenditures incurred by the appellant subsidiary in the assessment year 1999-2000 for overseeing and executing contracts of its holding company qualify as deductible business expenditure of the appellant under Section 37. - HELD THAT: - The Court examined whether the losses and expenses claimed by the appellant were incurred "wholly and exclusively" for the appellant's own business as required by Section 37. Although earlier authorities recognise that expenditure incurred to be in readiness to receive clients may mark commencement of business, the court found the present facts distinguishable. The record shows the appellant deputed engineers and incurred salaries, travel and administrative costs to fulfil contractual obligations of the holding company; the appellant did not undertake business on its own or derive profit therefrom in the assessment year. Reliance on the principle that an expense may still be deductible even if a third party benefits was considered, but the decisive factual and legal conclusion was that the expenditure was occasioned for the holding company's projects and not laid out in connection with or incidental to the appellant's own trade. The Court applied the established prerequisites for deduction under Section 37-expense must relate to a business carried on by the assessee, not be capital in nature, and be wholly and exclusively for that business-and concluded these were not satisfied. Consequently, the impugned Tribunal order setting aside the assessing officer's disallowance was not interfered with. [Paras 31, 32, 34, 35, 36]

Expenses incurred by the appellant in 1999-2000 to support the holding company's contracts are not deductible as business expenditure of the appellant under Section 37 and the Tribunal's order is upheld; the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal, holding that the appellant's expenditures were incurred for the holding company's projects and not "wholly and exclusively" for the appellant's own business; hence the claimed deduction under Section 37 for AY 1999-2000 was not allowable.

Section 69A - unexplained money and evidentiary burden to show source - Section 56(2)(x)(b)(B) / Section 56(2)(vii)(b) - taxation on difference between market value and consideration - Validity of show cause notice where a different but substantially similar provision is cited - Stamp duty valuation - market value versus guideline value for levy of stamp duty - Remand for verification and opportunity to produce additional evidence with procedural directions

Section 69A - unexplained money and evidentiary burden to show source - Remand for verification and opportunity to produce additional evidence with procedural directions - Addition of Rs. 1,56,96,000 under Section 69A set aside and matter remanded for verification subject to conditions - HELD THAT: - Section 69A targets unexplained money and applies where an assessee is found to be owner of money or other valuable articles not recorded in books of account, whether or not the assessee is required to maintain books, as indicated by the phrase "books of account, if any". The petitioner furnished bank statements showing payments by her husband and the sale deed; the assessing officer's Section 148A(d) order recorded that the explanation that the purchase was made from husband's funds and accounted in his books was prima facie in order. However, the petitioner did not produce the husband's return or ledger/accounts to demonstrate that the amount was declared and taxed in his hands. Absent such proof, there is a real risk of double taxation if the husband had in fact declared the amount; conversely, the assessing officer is entitled to draw an adverse inference where material documents called for were not produced despite opportunities. In light of these competing considerations the Court found that the addition under Section 69A required fresh consideration: the assessment is set aside insofar as it relates to the addition under Section 69A and remanded for reassessment after the petitioner is afforded a reasonable opportunity to file additional documents and be heard. The remand is conditioned on the petitioner paying costs and the respondent providing portal access, allowing filing within specified time, granting video-conference hearing, and completing a fresh order within three months thereafter. [Paras 8, 9, 10, 11, 14]

Impugned order set aside insofar as the addition under Section 69A (Rs. 1,56,96,000) is concerned; matter remanded for verification and fresh consideration on the petitioner filing additional documents and on payment of specified costs, with directions for hearing and timelines.

Section 56(2)(x)(b)(B) / Section 56(2)(vii)(b) - taxation on difference between market value and consideration - Validity of show cause notice where a different but substantially similar provision is cited - Stamp duty valuation - market value versus guideline value for levy of stamp duty - Addition of Rs. 26,16,000 on account of difference between market value and consideration upheld; discrepancy in citation of sub clause in show cause notice not fatal - HELD THAT: - The Sub Registrar fixed the market value at Rs. 1,83,12,000, producing a differential in value. Although the show cause notice mentioned Section 56(2)(vii)(b) (applicable to transactions on or before 01.04.2017) and the assessment invoked Section 56(2)(x)(b)(B) (applicable thereafter), the Court held the provisions to be substantially similar for the purposes of the present transaction and that the taxpayer had sufficient opportunity to answer the proposed addition. Stamp duty in Tamil Nadu is levied on conveyances at a percentage of market value (Article 23 of the Schedule to the Indian Stamp Act) and not on a separate guideline value; the petitioner's explanation that she had not objected to the registrar's fixation for personal reasons and was seeking a refund of excess stamp duty did not displace the assessing officer's conclusion. The differential exceeded the statutory thresholds, and therefore no interference was warranted with the addition under Section 56(2). [Paras 12, 13, 14]

Addition under Section 56(2) (Rs. 26,16,000) sustained; discrepancy in the provision cited in the show cause notice does not vitiate the assessment and no interference is made on this aspect.

Final Conclusion: Writ petition disposed: assessment order dated 13.03.2024 is set aside only insofar as the addition under Section 69A (Rs. 1,56,96,000) is concerned and remitted for fresh consideration on stipulated terms (payment of costs, opportunity to file documents, portal access, and hearing with timelines); the addition under Section 56(2) (Rs. 26,16,000) is upheld and not interfered with.

Taxability of loan waiver - taxability under section 41(1) of the Act - taxability under section 28(iv) of the Act - remission or cessation of liability - perquisites received in the course of business - reassessment / fresh consideration of facts

Taxability of loan waiver - taxability under section 41(1) of the Act - taxability under section 28(iv) of the Act - reassessment / fresh consideration of facts - Whether the benefit arising from waiver of loan under One Time Settlement scheme is taxable and under which provision it is to be adjudicated - HELD THAT: - The Tribunal found that the Assessing Officer ignored the assessee's contention based on section 41(1) of the Act and proceeded to treat the waived loan as taxable under section 28(iv) of the Act relying on the decision of the Apex Court. The Tribunal observed that section 41(1) (remission or cessation of liability) and section 28(iv) (perquisites in the course of business) have overlapping operation and that several judicial decisions have considered waiver of loans under section 41(1). Because the AO did not examine taxability in terms of section 41(1) or record the factual matrix relevant to determine whether the loan waiver amounted to cessation/remission of liability, the matter could not be finally adjudicated. The Tribunal therefore directed that the matter be restored to the AO for fresh consideration, with directions to elicit and record all facts material to the issue, decide the taxability in accordance with law (including consideration of section 41(1)), and afford the assessee opportunity of hearing.

Matter restored to the Assessing Officer for fresh adjudication on the taxability of the waived loan, with directions to record all relevant facts and decide in accordance with law; assessee to be heard.

Final Conclusion: The appeal is allowed for statistical purposes and the issue of taxability of the waiver under the One Time Settlement is remitted to the Assessing Officer for reconsideration and decision in accordance with law.

Reopening of assessment under section 147/148 - Borrowed satisfaction and independent application of mind - Notice under section 148 invalid if based on incorrect or factually wrong information - Disallowance of expenditure or loss as fictitious transaction - Limitation on AO making additions on grounds other than those on which reopening was initiated

Reopening of assessment under section 147/148 - Borrowed satisfaction and independent application of mind - Notice under section 148 invalid if based on incorrect or factually wrong information - Validity of notice issued under section 148 where notice was founded on information from the Investigation Wing without independent verification by the Assessing Officer - HELD THAT: - The Tribunal examined the reasons recorded by the AO for issuance of notice under section 148 and found that the AO had relied on information from the Investigation Wing (Project Falcon 2) and adopted figures of alleged fictitious profits without undertaking independent verification or applying his own mind to how those figures related to the assessee's trading. The Bench noted settled principles that the AO must have reasons to believe based on material available to him and that issuance of notice cannot be a mere mechanical adoption of another unit's satisfaction (borrowed satisfaction). Where the reasons recorded are factually incorrect or where the AO has not shown any exercise of independent enquiry, the reopening is vulnerable. Applying these principles to the facts, the Tribunal concluded that the reasons recorded were incorrect and the AO had not verified the figure alleged to be fictitious profit; hence the issuance of notice was unjustified and liable to be quashed. [Paras 4]

Notice issued under section 148 was quashed as it was based on incorrect facts and amounted to borrowed satisfaction without independent application of mind.

Disallowance of expenditure or loss as fictitious transaction - Limitation on AO making additions on grounds other than those on which reopening was initiated - Validity of the addition made by disallowing claimed loss on account of alleged fictitious share/derivative transactions when the basis for reopening (alleged fictitious profits) did not subsist in assessment proceedings - HELD THAT: - The Tribunal noted that the AO had initiated proceedings on the basis of alleged fictitious profits but during the assessment accepted the profits shown by the assessee and did not make any addition on the original ground. Instead, the AO disallowed losses claimed in respect of trades through a particular broker treating them as fictitious. The Bench observed that where the basis on which reopening was initiated does not survive at the assessment stage, the AO cannot, without adequate justification, make additions on a different ground not recorded in the reasons for reopening. Further, the AO failed to place material on record linking the assessee to manipulative/reversal trades alleged in the Investigation Wing report and the assessee's name did not appear in that report. In these circumstances the disallowance of the loss was not justified and was deleted. [Paras 4]

Addition by disallowing the claimed loss as fictitious was deleted; the disallowance was held not justified.

Reopening of assessment under section 147/148 - Mutatis mutandis application of precedent reasoning - Applicability of the Tribunal's decision in the lead appeal to the other two appeals for the same assessee and identical facts/holdings - HELD THAT: - The Tribunal found that the orders under challenge in the other two appeals were identical in reasoning and factual matrix to the lead appeal (save for the amounts involved). Given the parity of facts and the reasoning adopted in the lead matter, the Bench applied the findings and relief granted in the lead appeal mutatis mutandis to the remaining appeals for the assessment years indicated. [Paras 6, 10]

The decision in the lead appeal was applied mutatis mutandis to the other two appeals; those appeals were allowed.

Final Conclusion: All three appeals filed by the assessee were allowed: notices under section 148 were found to be issued on incorrect facts and in some cases on borrowed satisfaction without independent application of mind, and additions disallowing claimed losses as fictitious were deleted; the lead decision was applied mutatis mutandis to the remaining appeals.

Power of revision under section 263 of the Income tax Act - rectification under section 154 of the Income tax Act - requirement of making such enquiry as the Commissioner deems necessary before invoking section 263 - erroneous and prejudicial to the interests of Revenue test - application of income and exemption under section 11(1) - prohibition on using revisionary power as a substitute for reassessment or detailed verification - faceless assessment procedure and system generated compliance replies

Rectification under section 154 of the Income tax Act - power of revision under section 263 of the Income tax Act - Validity of invoking section 263 against an assessment order which had been rectified under section 154 - HELD THAT: - The Tribunal held that where the assessing officer has already rectified the original assessment order under section 154, the Commissioner cannot validly invoke his suo motu powers under section 263 against the original order; instead, if any objection is alleged, section 263 could only be directed against the rectified order. The bench relied on the principle that a rectified order loses its original identity to the extent of the rectification and therefore an attempt to revise the original order post rectification is unsustainable. Applying that principle, the order passed under section 263 impugning the assessment (which had earlier been rectified) was held to be untenable and accordingly quashed on this ground. [Paras 9]

Order under section 263 quashed insofar as it seeks to revise an assessment already rectified under section 154.

Requirement of making such enquiry as the Commissioner deems necessary before invoking section 263 - erroneous and prejudicial to the interests of Revenue test - prohibition on using revisionary power as a substitute for reassessment or detailed verification - faceless assessment procedure and system generated compliance replies - application of income and exemption under section 11(1) - Whether the section 263 order was sustainable on merits where the Commissioner did not point out specific errors and did not conduct or identify requisite enquiries - HELD THAT: - The Tribunal found that the Commissioner, in his section 263 order, did not identify any specific error in the assessing officer's examination nor indicate what additional 'correct enquiries' were required; he merely stated that the assessment was erroneous and prejudicial. The assessee had responded to system generated notices under the faceless scheme and had placed calculations showing application of income (including capital expenditure) which, if considered, would yield a loss. The Tribunal observed that section 263 cannot be used to dislodge an AO's opinion by directing a re examination or reassessment or by ordering a fishing enquiry; the Commissioner must arrive at a subjective view based on inquiries he deems necessary and point out how the AO's conclusion is legally erroneous or perverse. In the absence of any such enquiry or demonstration of error, the revisionary order was unsustainable and liable to be quashed. [Paras 8]

Order under section 263 quashed for want of requisite enquiry and failure to demonstrate that the AO's order was erroneous and prejudicial to Revenue.

Final Conclusion: The appeal is allowed: the order passed by the Commissioner under section 263 for AY 2018 2019 is quashed both because the assessment had been rectified under section 154 and because the revisionary order lacked the requisite enquiry and demonstration of error.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - Disallowance under section 40A(3) and exceptions including Rule 6DD / business expediency - Ad-hoc / lump-sum disallowance (non-verifiable expenses) and its insufficiency to attract penalty - Disclosure in Tax Audit Report under section 44AB - Requirement of actual concealment or inaccurate particulars as prerequisite for levy of penalty

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - Disallowance under section 40A(3) and exceptions including Rule 6DD / business expediency - Disclosure in Tax Audit Report under section 44AB - Requirement of actual concealment or inaccurate particulars as prerequisite for levy of penalty - Levy of penalty under section 271(1)(c) in respect of disallowance made under section 40A(3) - HELD THAT: - The Tribunal found that all particulars relating to payments in breach of section 40A(3) were disclosed in the tax audit report filed under section 44AB and in the return of income, and that the assessee bona fide believed such cash payments were covered by exceptions (including business expediency) carved out in Rule 6DD. The Revenue did not show that the assessee's explanations were false. In these circumstances a mere disallowance under section 40A(3), when the payments and the reasons for them were disclosed and bona fide, does not satisfy the requirement of actual concealment or furnishing of inaccurate particulars necessary to sustain penalty under section 271(1)(c). The Tribunal relied on the principle that undeclared or notional disallowances, or disallowances where the assessee has disclosed particulars and advanced bona fide explanations, are not a ground for imposition of penalty. [Paras 13, 14, 15, 16]

Penalty levied under section 271(1)(c) on account of the disallowance under section 40A(3) is deleted.

Penalty under section 271(1)(c) for concealment or furnishing inaccurate particulars of income - Ad-hoc / lump-sum disallowance (non-verifiable expenses) and its insufficiency to attract penalty - Levy of penalty under section 271(1)(c) in respect of disallowance of loading and unloading expenses (ad-hoc/lump-sum) - HELD THAT: - The Tribunal observed that the disallowance of loading and unloading expenses was an ad-hoc, lump-sum disallowance made because such small cash payments on self-made vouchers were difficult to verify; there was no specific finding that the expenses were bogus or that the assessee had concealed particulars. Courts have repeatedly held that estimated or non-verifiable disallowances do not amount to concealment or furnishing of inaccurate particulars for the purpose of section 271(1)(c). Applying that principle to the facts-where appellate authorities reduced the AO's disallowance on a reasonable lump-sum basis-the Tribunal held that the penalty could not be sustained. [Paras 17, 18]

Penalty levied under section 271(1)(c) on account of the ad-hoc disallowance of loading and unloading expenses is deleted.

Final Conclusion: The penalty of Rs. 22,78,213/- imposed under section 271(1)(c) (for AY 2009-10) is deleted; the assessee's appeal is allowed.

Penalty under section 271(1)(c) for concealment of income - Levy of penalty where additions are made on estimated basis - Furnishing of inaccurate particulars of income - Validity of show-cause notice for penalty - requirement to specify charge

Levy of penalty where additions are made on estimated basis - Penalty under section 271(1)(c) for concealment of income - Furnishing of inaccurate particulars of income - Sustainability of penalty where the income additions sustained are estimated additions - HELD THAT: - The Tribunal found that the additions ultimately sustained for the three assessment years were purely on an estimated basis - the Tribunal adopted a net profit rate of 18.40% and the assessee had not maintained books of account. Applying the ratio of CIT vs. P Rojes and the principles in Reliance Petroproducts, the Bench held that penalty under section 271(1)(c) cannot be sustained where the impugned additions are estimations and there is no finding of concealment of particulars or furnishing of inaccurate particulars of income beyond an initial, incorrect estimation. The Tribunal noted that substantial quantum was deleted on appeal and that the initial additions were made on estimated basis; accordingly, the circumstances did not attract the strict requirements for invoking the penalty provision and deletion of the penalty was warranted. [Paras 4, 5, 6]

Penalty levied under section 271(1)(c) deleted in all three assessment years as additions sustained were estimated additions

Validity of show-cause notice for penalty - requirement to specify charge - Credibility of legal challenge that the show-cause notices did not specify whether penalty was for concealment or for furnishing inaccurate particulars - HELD THAT: - The Tribunal considered the contention that the show-cause notices were defective for not specifying the precise charge but rejected this ground. It observed that multiple notices had been issued after assessment and after the first appellate order, and the assessee failed to make any effective representation or to raise objections during those proceedings. In view of the procedural history and the absence of timely objection by the assessee, the Tribunal was not persuaded to sustain this legal ground at the penalty stage. [Paras 7]

Objection to show-cause notices for lack of specification rejected; legal ground not accepted

Final Conclusion: Penalties under section 271(1)(c) deleted for AY 2010-11, AY 2011-12 and AY 2012-13 on the ground that the additions sustained were estimated additions; challenge to the sufficiency of show-cause notices was rejected. Appeals partly allowed.

Long term capital gain - cost of acquisition - indexation benefit - evidence of payment as basis for cost - carry forward of capital loss

Long term capital gain - cost of acquisition - indexation benefit - evidence of payment as basis for cost - Assessee's liability for long term capital gain on sale of commercial property and correct cost of acquisition for computation of capital gain. - HELD THAT: - The Tribunal examined the documentary record - agreement to sale between the assessee and the allottee, payments by cheques evidencing payment of Rs. 45 lakhs to the allottee, the allottee's nomination/undertaking to the developer and the conveyance deed executed by the developer in favour of the assessee showing stamp duty valuation in excess of the amount paid. On this direct evidence that the assessee actually paid Rs. 45 lakhs for the property, the Tribunal held that the assessee's cost of acquisition for capital gains computation must be taken at Rs. 45 lakhs and that indexation benefit is to be allowed on that cost. The Assessing Officer's reliance on the original allottee's lower acquisition cost as recorded in the developer's allotment was rejected insofar as it did not reflect the amount actually paid by the assessee, and the addition of long term capital gain computed on the lesser cost was deleted. [Paras 7, 8, 9]

Addition of long term capital gain of Rs. 33,73,120/- deleted; cost of acquisition to be taken at Rs. 45 lakhs and indexation allowed.

Carry forward of capital loss - long term capital loss - Entitlement to set off and carry forward of long term capital loss claimed by the assessee. - HELD THAT: - The assessee had claimed long term capital losses on two properties and the Assessing Officer failed to allow carry forward of the remaining long term capital loss after set off. The Dispute Resolution Panel had directed the Assessing Officer to pass a speaking order allowing set off/carry forward as per law. The Tribunal held that the assessee is entitled to the benefit of carry forward of long term capital loss and directed the Assessing Officer to verify the relevant facts and allow carry forward in accordance with law. [Paras 11, 13]

Assessee entitled to carry forward long term capital loss; matter remitted to Assessing Officer for factual verification and to allow carry forward as per law.

Final Conclusion: The appeal is allowed: the addition of long term capital gain is deleted by treating the assessee's cost of acquisition as Rs. 45 lakhs with indexation; the assessee is entitled to carry forward the remaining long term capital loss, subject to factual verification by the Assessing Officer.

Rejection of books of account under section 145(3) for incorrectness or incompleteness - Computation of income by applying preceding year gross profit ratio when current year books are rejected - Evidentiary value of statements recorded during survey under section 133A - Telescoping of entries / peak credit to avoid double taxation - Admissibility of additional evidence before the Tribunal under Rule 29 - Requirement to follow procedure under section 144 when accounts are rejected under section 145(3)

Rejection of books of account under section 145(3) for incorrectness or incompleteness - Requirement to follow procedure under section 144 when accounts are rejected under section 145(3) - Whether the Assessing Officer properly rejected the assessee's books of account under section 145(3) - HELD THAT: - The Tribunal examined the AO's reasons for invoking section 145(3) and found that the AO and CIT(A) based rejection on absence of day-to-day quantitative stock records and that valuation of stock was on estimate basis, but did not point out any specific defect in the books after the assessee completed and produced audited accounts. The Bench held that the statutory conditions for invoking section 145(3) were not shown to be satisfied and that the mandatory procedure (assessment in manner provided in section 144) and opportunity to point out defects were not followed. Given that the books were subsequently completed, audited and supporting vouchers were placed on record and not controverted, the Tribunal held that blanket rejection was not sustainable. [Paras 19]

Rejection of books under section 145(3) set aside; ground allowed.

Computation of income by applying preceding year gross profit ratio when current year books are rejected - Trading addition on account of excess stock - Evidentiary value of inventory taken during survey - Whether addition for excess stock and re computed trading addition confirmed by CIT(A) (by applying a preceding year GP rate and adding excess stock) was justified - HELD THAT: - The Tribunal accepted that physical stock and the survey's computation of excess stock were not disputed as to quantity/valuation, but the assessee produced documentary evidence of purchases and other vouchers (amounting to purchases and related entries subsequently incorporated) showing that much of the stock difference was due to invoices not entered in books on the survey date. The Bench admitted and considered additional evidence (affidavit and CA certificate) demonstrating that purchases of Rs. 82,40,125 and related entries had been incorporated post-survey and that Rs. 53,17,973 of the survey excess was included in closing stock and offered to tax. On that basis, and in view of the finding that the AO/CIT(A) had not followed the procedure for rejecting books, the Tribunal held no separate addition was called for beyond the amount actually reflected in the completed books; the recomputation by applying preceding year GP and adding full survey excess was not sustained. [Paras 20]

Addition for excess stock/trading recomputation confirmed by CIT(A) deleted to the extent shown incorporated in completed books; ground allowed.

Telescoping of entries / peak credit to avoid double taxation - Requirement of factual foundation to claim telescoping/peak credit - Whether the assessee was entitled to telescope alleged bogus expenses against advances (i.e., avoid double taxation) and whether the addition of Rs.10,77,000 was sustainable - HELD THAT: - The Tribunal analysed the material and accepted the assessee's contention that the amounts alleged as bogus expenses resulted in cash that was available and were utilized as advances; the assessee produced evidentiary material and the claim was not controverted by Revenue. The Bench distinguished peak credit cases where different proof is required and observed that here the cash was of the assessee's own; accordingly, denial of telescoping solely for absence of a formal cash flow trail was not justified. On this basis the Tribunal allowed the assessee the benefit of telescoping and held that no separate addition was warranted. [Paras 21]

Addition of Rs.10,77,000 disallowed by way of telescoping; grounds allowed.

Evidentiary value of statements recorded during survey under section 133A - Admissibility of additional evidence before the Tribunal under Rule 29 - Extent to which statements recorded during survey under section 133A can be the sole basis for addition and the Tribunal's power to admit additional evidence under Rule 29 - HELD THAT: - The Tribunal reiterated that statements recorded under section 133A are not conclusive and cannot by themselves be the sole basis for making additions; the burden lies on the assessee to prove retraction or inaccuracy. However, the Tribunal also observed that where the assessee produces contemporaneous documentary material and the Revenue does not controvert it, the statement's evidentiary weight may be reduced. The Bench invoked Rule 29 to admit the assessee's affidavit and CA certificate as additional evidence called for to determine whether excess stock was incorporated in the completed books; having admitted and considered that material, the Tribunal gave it decisive weight in resolving the disputes. [Paras 16, 20]

Statements under section 133A cannot alone sustain additions; additional evidence under Rule 29 admitted and relied upon to decide the appeal.

Final Conclusion: The Tribunal allowed the appeal. It set aside the rejection of books under section 145(3) for lack of proper satisfaction and procedure, admitted additional evidence under Rule 29, held that the portion of excess stock incorporated in the completed audited books (Rs. 53,17,973) had been offered and no separate trading addition was warranted, and allowed telescoping of the alleged bogus expenses against disclosed advances; accordingly the additions confirmed below were withdrawn in the respects stated and the appeal was allowed.

Revision under jurisdiction u/s. 263 of the Income Tax Act - Twin conditions of jurisdiction: order being erroneous and prejudicial to the interest of Revenue - Assessment under section 153C r.w.s. 143(3) of the Income tax Act - On money payments treated as unexplained investment / addition u/s. 69 - Attribution of unexplained investment to spouse

Revision under jurisdiction u/s. 263 of the Income Tax Act - Twin conditions of jurisdiction: order being erroneous and prejudicial to the interest of Revenue - Assessment under section 153C r.w.s. 143(3) of the Income tax Act - Whether the Principal Commissioner of Income Tax was justified in invoking jurisdiction under section 263 to set aside the assessment order for not adding a reported on money payment of Rs. 25 lakhs. - HELD THAT: - The Tribunal found that the Assessing Officer had conducted enquiries and called for explanations in the scrutiny assessment carried out under section 153C r.w.s. 143(3), and had passed a speaking order after verification. The record in the assessment of the assessee's spouse showed that shop Nos.11-13 were treated as purchased by the spouse and additions were made in her assessment on the basis of seized documents and corroborative statements. Given the Assessing Officer's inquiries and the view taken on the facts (including that the relevant shops were reflected in the spouse's records), the Tribunal held that the PCIT's conclusion that the AO's order was erroneous was unsustainable. As the jurisdiction under section 263 requires both error and prejudice to Revenue to co exist, and the Tribunal found no error in the AO's exercise of jurisdiction and fact finding, the PCIT was not justified in invoking revisionary powers. [Paras 12, 14]

Order of the PCIT invoking jurisdiction u/s. 263 is set aside; the AO's assessment order is not erroneous so as to warrant revision.

On money payments treated as unexplained investment / addition u/s. 69 - Attribution of unexplained investment to spouse - Whether the alleged on money payment of Rs. 25 lakhs should have been treated as unexplained investment and added to the assessee's income rather than to the spouse's income. - HELD THAT: - The Tribunal relied on the Assessing Officer's findings in the spouse's assessment, which recorded seized entries and corroborative material indicating that the purchases (and corresponding on money) related to the spouse. The AO in the spouse's case had made additions u/s. 69 after concluding that on money payments were made by that taxpayer. In the assessee's assessment the AO had examined the material and taken a view consistent with that factual matrix. Since the material supported attribution to the spouse and the AO had made due inquiry, the Tribunal held that any addition on account of the on money payment could not be shifted to the assessee when the evidence placed the transaction in the spouse's assessment. [Paras 12, 14]

Addition on account of the on money payments, if exigible, was correctly addressed in the spouse's assessment; it could not be imposed on the assessee in the absence of contrary material.

Final Conclusion: The Tribunal allowed the appeal, set aside the PCIT's order under section 263, and held that the Assessing Officer's assessment (made after due verification and attributing the on money to the spouse) was not erroneous so as to warrant revision.

Admission of additional evidence under Rule 46A(1)(c) - best judgment assessment / estimation of income under section 144 - estimation of net profit rate - treatment of interest, commission and rent in assessment - application of past years' profit rate as basis for estimation

Admission of additional evidence under Rule 46A(1)(c) - Admission of the audited financial statements, tax-audit report and related documents as additional evidence - HELD THAT: - The Tribunal observed that the assessee had placed audited accounts, tax-audit report and e-filing receipts on record before the lower authorities and had explained non-filing of the return by reason of financial hardship and illness of the directors. Considering the second round of litigation, the pendency of earlier proceedings and the material placed before this Bench, the Tribunal found it appropriate to allow the additional evidence and directed the Assessing Officer to verify the disclosures in the audited accounts. The Tribunal therefore permitted admission of the additional evidence for verification and further proceedings. [Paras 6, 13, 14]

Additional evidence admitted and Assessing Officer directed to verify the disclosures in the audited accounts.

Best judgment assessment / estimation of income under section 144 - estimation of net profit rate - application of past years' profit rate as basis for estimation - Correct net profit rate to be adopted for estimation of business income for AY 2013-14 (and applied mutatis mutandis to AY 2014-15) - HELD THAT: - The Tribunal reviewed the assessing officer's estimate of net profit @ 8% and the Commissioner (Appeals)'s reduction to 5%. Having regard to the assessee's audited accounts for earlier years, accepted profit rates declared in earlier assessments (1.33% for AY 2011-12 and 1.10% for AY 2012-13), and the nature of the business, the Tribunal concluded that the profit rate adopted by the lower authorities was on the higher side. On the basis of past years' profits and the certified record, the Tribunal held that the disclosed higher past-year profit rate should be used as the basis and accordingly reduced the estimated net profit for AY 2013-14; the same reasoning was applied mutatis mutandis to AY 2014-15. [Paras 6, 13, 15]

Net profit estimated on the basis of past years' profit (accepting the lower disclosed rate) - reduction granted; same approach applied to the subsequent year.

Treatment of interest, commission and rent in assessment - Whether interest, commission and rent should be treated as separate additions over and above estimated business profits - HELD THAT: - The Tribunal noted that interest, commission and rent had been identified in the material available and that the assessee had filed audited accounts which could evidence disclosure of such receipts. The Tribunal allowed the additional evidence for verification and directed the Assessing Officer to verify whether the assessee had disclosed the amounts in the audited accounts; if so, no separate addition would be warranted. Consequently, the earlier separate additions were not sustained without verification. [Paras 6, 14]

Directed verification of disclosure of interest, commission and rent in the audited accounts; no separate addition if the amounts are found disclosed.

Final Conclusion: Both appeals are partly allowed: additional evidence admitted for verification; the estimated net profit for AY 2013-14 reduced by reference to past years' disclosed profit rate (applied mutatis mutandis to AY 2014-15); interest, commission and rent to be verified by the Assessing Officer and not to be added separately if disclosed in the audited accounts.

Personal effects - Baggage Rules, 1998 - Rule 7 and Appendix-E - confiscation under Section 111 of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - re-export and redemption fine under Section 125 of the Customs Act, 1962 - green channel declaration - valuation and procedure for seizure (use of valuers / panchnama) - applicability of Rule 6, Rule 3 and Rule 4 of the Baggage Rules, 1998

Personal effects - Baggage Rules, 1998 - Rule 7 and Appendix-E - applicability of Rule 6, Rule 3 and Rule 4 of the Baggage Rules, 1998 - green channel declaration - valuation and procedure for seizure (use of valuers / panchnama) - confiscation under Section 111 of the Customs Act, 1962 - penalty under Section 112 of the Customs Act, 1962 - re-export and redemption fine under Section 125 of the Customs Act, 1962 - Whether the gold chain with diamond pendant worn by the petitioner on arrival was eligible for duty free clearance as used "personal effects" under Rule 7 read with Appendix E of the Baggage Rules, 1998 and whether the confiscation, penalty and redemption fine imposed by the customs authorities were sustainable. - HELD THAT: - The Court found the orders of the original, appellate and revisional authorities to be legally infirm for multiple reasons and held that the pendant was eligible for duty free clearance under Rule 7 read with Appendix E. The Tribunal's earlier conclusion that Rule 6 was inapplicable to the petitioner had attained finality and the original show cause notice did not invoke Rule 7; the authorities could not, in remand proceedings, travel beyond the scope of the original notice without issuing a fresh notice. Rules 3 and 4 do not apply because the petitioner was neither an Indian resident nor a foreigner residing in India, and therefore Appendix A (and any cap thereunder) is inapplicable. Appendix E expressly includes "used personal effects" (including personal jewellery) where the goods are for personal use and re exported on departure; Appendix E(a)(i) contains no monetary cap and so permits duty free clearance of used personal jewellery irrespective of value, subject to its being bona fide personal effects. The Court also held that the investigative and valuation process by customs was defective: material inconsistencies in the panchnama (including impossible timings), failure to call or identify proper government valuers, non production of the trade valuers for cross examination as directed, and the unjustified rejection of the petitioner's 1989 invoice solely because it lacked the seller's signature. These procedural and evidentiary failures vitiated the basis for valuation, seizure and the conclusion of smuggling. Reliance on Rule 6, Rule 3 or Appendix A to negate applicability of Appendix E was unsustainable on the facts; circulars and precedent (including the Supreme Court decision in Directorate of Revenue Intelligence v. Pushpa Lekhumal Tolani and relevant High Court authority) support allowing used personal jewellery imported by tourists to be treated as personal effects when the statutory conditions are met. For these reasons confiscation under Section 111 and penalty under Section 112 could not be sustained and the re export with payment of redemption fine and penalty as confirmed by the revisional order was quashed. [Paras 6, 8, 9]

Impugned revisional order set aside; the pendant held eligible for duty free clearance under Rule 7 read with Appendix E, confiscation and penalty under Sections 111 and 112 quashed, and the amounts paid by the petitioner directed to be refunded.

Final Conclusion: The Rule issued is made absolute: the Revisional Authority's order of 21 February 2012 is quashed; the pendant is held eligible for duty free clearance under Rule 7/Appendix E of the Baggage Rules, 1998; confiscation and penalty are set aside; and the respondents are directed to refund the sum deposited by the petitioner within four weeks.

Preventive detention - Section 3(1) of COFEPOSA Act - disjunctive 'or' vs conjunctive 'and' - subjective satisfaction - non-application of mind - right to make representation - Article 21 and Article 22 safeguards

Section 3(1) of COFEPOSA Act - disjunctive 'or' vs conjunctive 'and' - non-application of mind - subjective satisfaction - right to make representation - Article 21 and Article 22 safeguards - Validity of the detention order challenged on the ground that the detaining authority used disjunctive language and failed to specify which distinct activity under Section 3(1) was sought to be prevented, resulting in non-application of mind. - HELD THAT: - The Court examined Section 3(1) of the COFEPOSA Act, noting that the statute enumerates distinct contingencies (for example, smuggling, abetting, engaging in transporting or concealing or keeping smuggled goods) separated by the disjunctive 'or'. Where the clause itself groups separate alternatives (and sub-clause (iii) itself lists three distinct acts), a detaining authority must indicate which specific activity or activities the detention seeks to prevent so that the detenu can understand the grounds and make effective representation. Reliance was placed on the principle in Kishori Mohan Bera that equivocal or disjunctive recitals which leave uncertainty as to the ground of detention may indicate casualness or lack of application of mind and impair the detenu's ability to challenge the order or to make representation to the Advisory Board. The Court rejected the State's submission that related or overlapping activities always justify use of disjunctive language; instead, it held that where distinct acts are separately enumerated, clarity is required. Applying these principles to the impugned order (which directed detention 'with a view to prevent him from smuggling of goods, abetting the smuggling of goods and engaging in transporting or concealing or keeping smuggled goods in future'), the Court concluded that the detenu was not told which specific act was sought to be prevented, thereby vitiating the subjective satisfaction recorded by the detaining authority and impairing the detenu's Article 22 safeguard of making representation. [Paras 13, 16, 17, 21, 22]

Detention order quashed for non-application of mind and failure to specify which distinct activity under Section 3(1) was intended to be prevented; detenu to be set at liberty.

Final Conclusion: The detention order dated 03.10.2023 under the COFEPOSA Act was set aside because it was couched in equivocal disjunctive terms without specifying the particular activity sought to be prevented under Section 3(1), thereby demonstrating non-application of mind and frustrating the detenu's right to make effective representation; rule made absolute and detenu ordered to be released.

Penalty under Section 117 of the Customs Act, 1962 for contravention/failure to exercise due diligence - Due diligence obligation of Customs House Agent (CHA) - Requirement of active facilitation/connivance as basis for punitive liability - Validity of valuation evidence - expert certificate versus lay report - Applicability of CBLR, 2018 / KYC regime as distinct regulatory measure from penal action under Section 117

Penalty under Section 117 of the Customs Act, 1962 for contravention/failure to exercise due diligence - Due diligence obligation of Customs House Agent (CHA) - Requirement of active facilitation/connivance as basis for punitive liability - Sustainability of penalties imposed on CHAs under Section 117 for alleged failure to verify antecedents of exporters where there is no evidence of active facilitation or connivance in over-invoicing. - HELD THAT: - The Tribunal examined whether omission by a CHA to verify exporter antecedents, without any evidence that the CHA actively assisted or connived in over-valuation of exports, can attract punitive liability under Section 117. The shipping bills were prepared on exporter's declared values and there is no material showing the CHA participated in deciding or manipulating those values. Absent proof of active facilitation or mens rea on the part of the CHA or its employee, imposition of penalty under Section 117 is unsustainable. The Tribunal relied on the principle that punitive measures under Section 117 require more than mere lack of diligence and that no presumption of culpability can be drawn solely from the fraudulent act of the exporter when the CHA's role is limited to filing documents as instructed. [Paras 8, 11]

Penalty imposed under Section 117 on the appellants is set aside for want of evidence of active facilitation or connivance.

Validity of valuation evidence - expert certificate versus lay report - Applicability of CBLR, 2018 / KYC regime as distinct regulatory measure from penal action under Section 117 - Whether the Department's reliance on a valuation report by a non-approved lay person suffices to conclude over-valuation and support penal action, and whether failure to perform KYC/verify antecedents should be dealt with under CBLR, 2018 rather than Section 117. - HELD THAT: - The Tribunal held that the Department based its finding of over-valuation on a report by Shri V. Murugan, a proprietor of a garment unit who is not an approved expert; acceptance of such a lay report cannot validly underpin a finding of over-valuation that leads to penal consequences against the CHA. Separately, the Tribunal observed that omission to exercise due diligence in verifying exporter antecedents falls within the regulatory regime of KYC/CBLR, 2018 and is not by itself a ground for imposing a penalty under Section 117. Therefore, reliance on the lay valuation report and treating KYC lapses as justification for penal action under Section 117 was held to be unfounded. [Paras 9, 10]

The valuation conclusion based on the lay report is inadequate to sustain penalty; KYC/CBLR deficiencies cannot be converted into penal liability under Section 117.

Final Conclusion: The appeals are allowed and the penalties imposed on the appellants under Section 117 of the Customs Act, 1962 are set aside; consequential relief, if any, to follow as per law.

Summary order. [Civil Appeal dismissed; impugned order dated 3 May 2023 passed by the National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No 134 of 2024 is affirmed]

Amendment of pleadings by rejoinder affidavit - Invocation of personal guarantee - Relevance of date of default for limitation - Right to oppose amendment and preservation of defenses

Amendment of pleadings by rejoinder affidavit - Invocation of personal guarantee - Permissibility of permitting the Financial Creditor to amend the date of default in the Section 95 petition by relying on materials filed with the rejoinder affidavit - HELD THAT: - The Tribunal held that the Adjudicating Authority did not err in allowing the Financial Creditor to amend the date of default as pleaded in the rejoinder affidavit. The rejoinder brought on record the Demand Notice dated 22.12.2021, relied upon as the date on which the personal guarantee was invoked, and the earlier date of default (01.12.2015) in the petition related to the corporate guarantor. Parties are entitled to place additional material on record by way of rejoinder; where the invocation of the personal guarantee was specifically raised in the reply, the Financial Creditor was entitled to clarify and plead the correct date of invocation. The Adjudicating Authority granted the amendment subject to the Personal Guarantor's liberty to oppose the amended pleading, thereby treating the amendment as permissible for adjudication without foreclosing contest on merits. [Paras 11, 12, 13]

No interference with the Adjudicating Authority's order permitting amendment of the date of default; amendment allowed as rejoinder raised and proved relevant material.

Relevance of date of default for limitation - Right to oppose amendment and preservation of defenses - Whether permitting the amendment prejudiced the Personal Guarantor's rights as regards limitation and other defenses - HELD THAT: - The Tribunal emphasised that the date of default is material for computing limitation for a Section 95 application. The Adjudicating Authority expressly allowed the amendment without prejudice to the Personal Guarantor's rights, and granted liberty to file a reply and oppose the newly pleaded date of default. The question of the correct date of invocation and the applicability of limitation is to be adjudicated by the Adjudicating Authority on the merits. Because the order preserves the Personal Guarantor's opportunity to raise all contentions, including limitation, there was no ground for appellate interference. [Paras 12, 13]

The amendment does not prejudice the Personal Guarantor; the Adjudicating Authority's order safeguarding the right to oppose and decide limitation on merits is upheld.

Final Conclusion: Appeal dismissed; the Adjudicating Authority rightly permitted amendment of the date of default based on materials in the rejoinder while preserving the Personal Guarantor's right to oppose the amended pleading and raise limitation and other defenses.

Contravention of section 18(2) and 18(3) read with section 64(2) of FERA, 1973 - presumption under section 18(3) - role of Custom House Agent and collusion in export realisation - penalty proportionality and reduction of penalty for disproportionality - pre-deposit condition

Contravention of section 18(2) and 18(3) read with section 64(2) of FERA, 1973 - presumption under section 18(3) - role of Custom House Agent and collusion in export realisation - Findings of contravention of section 18(2) and 18(3) of FERA, 1973 against the appellant - HELD THAT: - The Tribunal found that the appellant, though primarily acting as a Custom House Agent and admitting preparation of documents for one shipment, was implicated in the failure to recover export proceeds and in obtaining drawback incentives. The appellant's statements and the material on record established that two shipments were effected by M/s Sai International and that the appellant and another person colluded and were instrumental in making the exports and receiving incentives. Under section 18(3), where the prescribed period has expired and payment has not been made, a presumption arises that the person who sold the goods did not take all reasonable steps to recover payment; the Tribunal treated the appellant's admissions and the surrounding circumstances as satisfying that presumption and accordingly upheld contravention of section 18(2) and 18(3) read with section 64(2).

Contravention of section 18(2) and 18(3) of FERA, 1973 established against the appellant.

Penalty proportionality and reduction of penalty for disproportionality - pre-deposit condition - Appropriateness and quantum of penalty originally imposed - HELD THAT: - Although contravention was found, the Tribunal concluded that the penalty of Rs. 50 lacs imposed on the appellant was disproportionate, particularly when compared with the penalty of Rs. 45 lacs imposed on the principal defaulting firm. Considering the appellant's limited role (attendance in relation to one consignment and disputed receipt of amounts), the Tribunal exercised its remedial power to make the penalty rational and reduced the penalty to Rs. 14 lacs. The Tribunal noted that Rs. 6 lacs had already been deposited to satisfy the condition of pre-deposit, and adjusted the final liability accordingly.

Penalty reduced from Rs. 50 lacs to Rs. 14 lacs; Rs. 6 lacs already deposited towards pre-deposit.

Final Conclusion: The appeal is partly allowed: contravention of section 18(2) and 18(3) of FERA, 1973 is upheld against the appellant, but the penalty is reduced to Rs. 14 lacs (with Rs. 6 lacs already deposited), and the appeal is disposed of accordingly.

Search and seizure under PMLA and retention under Section 17 - adjudication and confirmation of retention under Section 8 of PMLA - disposal of movable property liable to speedy and natural decay under Rule 4(2) of PMLA Rules 2013 - relationship between Section 8(6) (release on acquittal) and Rule 4(2) procedure

Search and seizure under PMLA and retention under Section 17 - adjudication and confirmation of retention under Section 8 of PMLA - Lawfulness of the procedure followed by the Directorate of Enforcement for seizure, confirmation of retention by the Adjudicating Authority and seeking possession/disposal of the seized vehicles. - HELD THAT: - The Directorate of Enforcement conducted searches under the authority of Section 17 of PMLA and, within the statutory scheme, filed applications under Section 17(4) which were adjudicated by the Adjudicating Authority under Section 8. The Adjudicating Authority granted retention of the vehicles and those orders were not challenged by the petitioner. Once retention was confirmed, the format and manner for taking possession and dealing with the movable properties is governed by Rules framed under Section 73, namely the PMLA (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013. The authorised officer therefore acted in accordance with the statutory scheme by moving the trial court under Rule 4(2) for leave to deal with movable properties liable to decay. No infirmity in the process or validity of the relevant rules has been pointed out by the petitioner. Consequently, the proceedings carried out by the Directorate of Enforcement for possession and disposal of the vehicles conform to the PMLA and the Rules of 2013. [Paras 35, 36, 38, 39, 59]

The procedure followed by the Directorate of Enforcement in relation to seizure, confirmation of retention and seeking disposal of the vehicles was lawful and in accordance with PMLA and the Rules of 2013.

Disposal of movable property liable to speedy and natural decay under Rule 4(2) of PMLA Rules 2013 - principle of conversion of decaying movable property into fixed deposit to preserve value - Whether the seized luxury vehicles are subject to speedy or natural decay such that Rule 4(2) authorises their sale with leave of the court. - HELD THAT: - Rule 4(2) authorises sale of attached movable property where it is liable to speedy or natural decay or where maintenance expense is likely to exceed its value. The court accepted that vehicles inherently depreciate and, when stored long-term (particularly high-end vehicles in container warehouses), are susceptible to rust, mechanical deterioration and expensive upkeep, thereby leading to loss of value. The coordinate bench authority cited in the judgment supports speedy disposal of vehicles to prevent deterioration. Rule 4(2)'s mechanism of depositing sale proceeds in fixed deposit preserves the monetary value for the accused if later entitled to it. The petitioner did not contest that vehicles are subject to decay nor invoke the proviso to Rule 4(2) by tendering a fixed deposit receipt as security to prevent sale. [Paras 46, 48, 49, 50, 51]

The vehicles are subject to natural decay or maintenance burdens within the meaning of Rule 4(2), and the learned ASJ correctly permitted disposal under that rule.

Relationship between Section 8(6) (release on acquittal) and Rule 4(2) procedure - protection of accused's monetary interest where property is sold pending adjudication - Whether sale of the vehicles while prosecution/adjudication is pending is inconsistent with Section 8(6) of PMLA which contemplates return of property on acquittal. - HELD THAT: - Section 8(6) provides for release of property if the Special Court finds money laundering has not taken place on conclusion of trial. That provision must be read in the context of Section 8(4) which mandates that possession be taken in the manner prescribed by rules. Rule 4(2) permits sale of movables liable to decay and requires deposit of sale proceeds in a government repository or fixed deposit. Accordingly, sale under Rule 4(2) does not negate the entitlement under Section 8(6); if accused are later found entitled to the property, they receive the sale proceeds (kept in fixed deposit) rather than deteriorated goods. The petitioner did not invoke the proviso to Rule 4(2) by offering a fixed deposit receipt to avoid sale. The court therefore found no conflict between Rule 4(2) disposal and Section 8(6). [Paras 46, 48, 50, 51]

Sale of the vehicles under Rule 4(2), with proceeds to be preserved, is not contrary to Section 8(6); on acquittal the accused would be entitled to the monetary proceeds deposited as required by the Rules.

Final Conclusion: Writ petition dismissed; the Court found the seizure, retention and sale procedure complied with PMLA and the Rules of 2013, the vehicles were liable to decay permitting disposal under Rule 4(2), and sale is not inconsistent with Section 8(6) provided sale proceeds are preserved; the Directorate of Enforcement directed to deposit the entire proceeds in an interest-bearing fixed deposit.

Construction of Complex Services - Construction of Residential Complex Services - Works Contract Services - indivisible composite contract - service tax levy on composite contracts - no service to oneself

Construction of Complex Services - Construction of Residential Complex Services - Works Contract Services - indivisible composite contract - Sustainability of service tax demand raised under Construction of Complex Services and Construction of Residential Complex Services for composite/indivisible contracts for the period April 2005 to December 2009. - HELD THAT: - On examination of the agreements it is found that the appellant was entrusted with construction of flats/complexes under composite contracts involving supply of materials and rendition of services. The Tribunal relied on its earlier decision in Real Value Promoters Pvt. Ltd. and the Supreme Court's decision in Commissioner of Central Excise v. Larsen & Toubro Ltd. to hold that for indivisible composite contracts the levy of service tax prior to 01.07.2012 lies under the rubric of Works Contract Services and not under Construction of Complex Services or Construction of Residential Complex Services. The reasoning in the earlier Tribunal decisions, which was sustained by the Apex Court (the Department's appeal having been dismissed), was followed. Applying that principle to the facts, the demand framed under Construction of Complex/Construction of Residential Complex services cannot be sustained in respect of the appellant's composite contracts for the period in question. The appellant's submission regarding completion certificate and sale of the commercial building (including the contention that there cannot be a service to oneself) was considered within the broader conclusion that the contracts are composite and therefore not taxable under the construction-specific service heads invoked by the Department.

Demand of service tax confirmed under Construction of Complex Services and Construction of Residential Complex Services for the period April 2005 to December 2009 is unsustainable; impugned order set aside.

Final Conclusion: The Tribunal allowed the appeal, set aside the order confirming demand, interest and penalties to the extent the demand was levied under Construction of Complex Services and Construction of Residential Complex Services for composite/indivisible contracts for the period April 2005 to December 2009, and granted consequential reliefs as per law.

Failure to participate in proceedings - imposition of costs for non-participation - direction to file affidavit explaining departmental stand - treatment of prior judicial decision by silence or non-challenge

Direction to file affidavit explaining departmental stand - treatment of prior judicial decision by silence or non-challenge - Principal Commissioner to file an affidavit explaining why the Revenue is taking a differing stand despite the Gujarat High Court having quashed a show cause notice and the Revenue deciding not to challenge that order. - HELD THAT: - The court recorded that the Petitioners relied upon a Division Bench judgment of the Gujarat High Court which had quashed a show cause notice arising from the same investigation; the Revenue had not challenged that Gujarat High Court order. Noting that the present petition concerns the same facts though under a different levy-head, the court found it prima facie surprising that the Revenue wished to contest the petition despite not having challenged the earlier order. In view of this apparent divergence between the departmental position and the prior decision (and the stated decision not to challenge), the court directed the Principal Commissioner of GST & Central Excise to file a personal affidavit explaining why the Revenue is taking a differing stand and whether such conduct is justified with reference to statutory provisions, internal circulars or other material. The court emphasised that this affidavit must be filed personally by the Principal Commissioner and not delegated. [Paras 3]

Principal Commissioner directed to file an affidavit, personally, explaining the departmental rationale for contesting the petition despite the Gujarat High Court decision and the Revenue's stated non-challenge.

Failure to participate in proceedings - imposition of costs for non-participation - Respondent no. 2 to be penalised for prolonged non-participation by payment of costs to the High Court Legal Aid Fund. - HELD THAT: - The court found that respondent no. 2 had not meaningfully participated in the proceedings for over five years despite having been served. Having considered the service affidavit and noting that respondent no.2 was absent from representation (only some respondents were represented on earlier dates), the court concluded that a stiff cost was necessary to put respondent no.2 to terms for its prolonged non-participation. The court directed payment of a specified sum as costs to the High Court Legal Aid Fund and required respondent no.2 to furnish proof of payment to the High Court Legal Services Committee. [Paras 4, 6, 7]

Respondent no. 2 directed to pay costs to the High Court Legal Aid Fund and to furnish proof of payment before the next date.

Final Conclusion: The Court directed the Principal Commissioner to file a personal affidavit explaining the departmental justification for contesting the petition despite the Gujarat High Court ruling, and imposed costs on respondent no.2 for prolonged non-participation, directing payment to the High Court Legal Aid Fund with proof to be furnished.

Time-barred extended period for demand - interpretation of exemption notification Entry No. 144 - whether goods are covered by an exemption notification - appeal to the Supreme Court under Section 35L read with Section 35G

Appeal to the Supreme Court under Section 35L read with Section 35G - jurisdictional forum for challenge to applicability of exemption notification - Proper forum for the appeal against the Tribunal's order interpreting the exemption notification. - HELD THAT: - The High Court examined whether the appeals against the Tribunal's common order would lie before this Court or must be entertained by the Hon'ble Supreme Court. The Tribunal not only held the show cause notice to be time barred but also interpreted Notification No. 12/2016-CE (Entry No. 144) as to the applicability of the exemption claimed by the assessee. A question whether goods are covered by an exemption notification is a question that relates directly and proximately to the rate of duty for purposes of assessment. In view of the statutory scheme and the authoritative exposition in Navin Chemicals MFG & Trading Co. Ltd., such a determination falls within the class of questions for which an appeal lies to the Supreme Court under Section 35L read with Section 35G. Consequently, the High Court held that the proper forum for challenging the Tribunal's determination on the applicability of the exemption is the Hon'ble Supreme Court. [Paras 13]

Appeal against the Tribunal's interpretation of Notification No. 12/2016-CE (Entry No. 144) lies to the Hon'ble Supreme Court and not to this High Court.

Interpretation of exemption notification Entry No. 144 - time-barred extended period for demand - whether goods are covered by an exemption notification - Characterisation of the Tribunal's decision as one on applicability of the exemption (coverage) and limitation. - HELD THAT: - The Court recorded that the Tribunal dealt with two aspects: (a) limitation - holding the show cause notice/time extended demand to be time barred for specified periods; and (b) merit - interpreting the Explanation inserted by Notification No. 12/2016-CE to conclude that Ready Mix Concrete (RMC) used at the construction site fell within Entry No. 144 and that the assessee had paid duty on quantities cleared outside the site. The High Court observed that the Tribunal's ruling on applicability of the exemption was a determination whether the goods were covered by the exemption notification - a question directly and proximately affecting the rate of duty for assessment - and therefore engages the special appellate route to the Supreme Court. [Paras 6, 12, 13]

The Tribunal's findings included both a limitation-based time bar decision and a substantive determination on the applicability of the exemption; such substantive determination brings the matter within the jurisdiction of the Supreme Court.

Final Conclusion: The High Court held that the Tribunal's order involved a determination on the applicability of an exemption notification (Entry No. 144) and time bar issues, and accordingly directed that the papers be handed over to the appellant for presentation of the appeal before the Hon'ble Supreme Court in accordance with Order VII Rule 10 CPC.

Refund adjustment under MVAT Rules - settlement of arrears scheme - adjustment of refund against earlier year demand - defect notice under the Settlement Scheme - bar on refund of amounts paid under a settlement scheme - prohibition on unauthorized retention of tax collections under Article 265 - administrative approval for refund and competence of officer

Refund adjustment under MVAT Rules - adjustment of refund against earlier year demand - administrative approval for refund and competence of officer - prohibition on unauthorized retention of tax collections under Article 265 - Legality of the adjustment of the 2011-2012 refund against the 2010-2011 demand and entitlement to refund - HELD THAT: - The Court found that the petitioner had paid the amount due under the Settlement Scheme for 2010-2011 on 13th May 2019 and that consequently no outstanding liability existed as on that date against which the refund for 2011-2012 could lawfully be adjusted. The records obtained under RTI showed that the refund for 2011-2012 had been approved by competent authorities on 10th and 14th May 2019 and forwarded for completion of refund formalities, and therefore an officer below the approving authority had no competence to thereafter effect an adjustment on 23rd May 2019. The adjustment thus resulted in an excess collection which the State cannot lawfully retain; such retention would be contrary to the constitutional mandate embodied in Article 265. For these reasons the refund adjustment order was held illegal and the petitioner was held entitled to recovery of the excess sum with interest. [Paras 14, 15, 16, 19]

Refund adjustment of Rs. 10,69,89,606/- made on 23rd May 2019 set aside; petitioner entitled to refund of that amount with interest.

Defect notice under the Settlement Scheme - settlement of arrears scheme - Validity of the defect notice issued under the Settlement Scheme dated 14th May 2019 - HELD THAT: - The defect notice recorded an outstanding amount computed after purportedly adjusting the 2011-2012 refund even though the adjustment order post-dated the defect notice. The defect notice, by treating the petitioner as having a shortfall when in fact the petitioner had paid the requisite settlement amount, was found to be contrary to the purpose and requirements of Section 11 of the Settlement Scheme which contemplates issuance of a defect notice only where there is shortfall in payment. Consequently the defect notice was held to be defective and not in accordance with law. [Paras 17]

Defect notice dated 14th May 2019 is defective and invalid.

Bar on refund of amounts paid under a settlement scheme - refund adjustment under MVAT Rules - Whether the provision barring refund of amounts paid under the Settlement Scheme precludes the petitioner's claim to the 2011-2012 refund - HELD THAT: - The Court distinguished the statutory provision relied upon by the State, noting that the provision precludes refund of amounts paid under the Settlement Scheme itself. The present claim, however, related to a refund arising from the appellate order for 2011-2012 and not to any amount paid under the Settlement Scheme for 2010-2011. Since the claimed sum was not an amount 'paid under the Settlement Scheme', the statutory bar relied upon by the State did not apply to defeat the petitioner's claim to the independently arising refund. [Paras 18]

Sectional bar relied upon by Respondents does not operate to withhold the 2011-2012 refund which is not an amount paid under the Settlement Scheme.

Final Conclusion: Writ petition allowed. The refund of Rs. 10,69,89,606/- for 2011-2012 (plus interest at 6% p.a. from 1st June 2019 until payment) is to be paid to the petitioner; the defect notice and the adjustment order are set aside; petitioner to provide bank details and respondents to effect payment within the timelines directed by the Court.

Exemption from market fee - exemption from rural development fee - interpretation of State Industrial Policy (2003) - distinct statutory levies under separate enactments - binding effect of departmental notes and administrative communications

Exemption from market fee - exemption from rural development fee - interpretation of State Industrial Policy (2003) - distinct statutory levies under separate enactments - Whether the exemption from payment of Market fee under Clause (i) of 11.4.2 of the 2003 Policy includes exemption from Rural Development fee. - HELD THAT: - The Court held that Market fee (levied under the Punjab Agricultural Produce Markets Act, 1961) and Rural Development fee (levied under the Punjab Rural Development Act, 1987) are distinct statutory levies enacted for different objects. Convergence or overlap between the two statutes does not permit a presumption that an exemption granted under one statute or under a State policy automatically extends to the other. The 2003 Policy does not expressly exempt Rural Development fee; construing the term "Market fees" in the Policy to subsume Rural Development fee would amount to an impermissible enlargement of the Policy's incentives and would be contrary to the statutory schemes and objects of the two Acts. Accordingly, exemption under the 2003 Policy is confined to Market fee as levied under the 1961 Act and does not include exemption from Rural Development fee. [Paras 21, 22, 23, 24, 29]

Exemption under the 2003 Policy applies only to Market fee and does not include exemption from Rural Development fee.

Binding effect of departmental notes and administrative communications - interpretation of State Industrial Policy (2003) - Whether the departmental notes/letters of 2001 relied upon by the Respondent oblige the State to treat Market fee exemption as including Rural Development fee exemption. - HELD THAT: - The Court examined the letters dated 28.08.2001, 09.10.2001 and 10.09.2001 relied upon by the Respondent and noted that the 09.10.2001 memo was withdrawn by a subsequent communication dated 02.11.2010. The 09.10.2001 memo itself had referred to the earlier note of 28.08.2001; withdrawal of the later memo operates ipso facto on the earlier referenced material. Further clarification in the Department's memo dated 21.02.2011 expressly states that exemption from Market fee will not automatically apply to Rural Development fee unless a specific order/notification so provides. Consequently, the earlier impugned notes/letters do not operate to create a binding entitlement to exemption from Rural Development fee in favour of the Respondent. [Paras 16, 18, 25, 26, 27]

The departmental notes/letters of 2001 do not establish a binding entitlement to exemption from Rural Development fee, and subsequent communications withdraw or clarify those notes to the contrary.

Exemption from rural development fee - Mega Projects scheme - interpretation of State Industrial Policy (2003) - Whether the Respondent, not being approved as a Mega Project, is eligible for exemption from Rural Development fee absent an explicit provision. - HELD THAT: - The Court observed that, on the material before it, units not approved as Mega Projects have not been granted exemption from Rural Development fee unless expressly provided by competent authority. The Respondent admitted it was not approved as a Mega Project. In view of the distinct statutory framework and absence of any specific exemption for Rural Development fee in the 2003 Policy or by specific notification in favour of the Respondent, it is not eligible for exemption from Rural Development fee. [Paras 3, 17, 28]

Because the Respondent is not approved as a Mega Project and no specific exemption for Rural Development fee has been granted, it is not entitled to such exemption.

Final Conclusion: The appeals are allowed; the High Court orders are set aside. The Court concluded that the 2003 Policy's exemption from Market fee does not extend to Rural Development fee, the departmental notes relied upon do not create a binding entitlement, and the Respondent-being not a Mega Project-is not entitled to exemption from Rural Development fee. Civil W.P. No. 14847 of 2009 is dismissed for lack of merits.

Bona fide mistake in bid - rectification of mistaken bid - equitable relief for mistake in public tender - judicial review of e-auction/tender process - doctrine of proportionality in administrative action - finality of e-auction

Bona fide mistake in bid - equitable relief for mistake in public tender - judicial review of e-auction/tender process - Whether the appellant's bid of 140.10% could be treated as a bona fide inadvertent mistake and, on that basis, relieved from the consequences of the bid despite the e-auction having closed. - HELD THAT: - The Court applied the equitable principles enunciated in W. B. State Electricity Board v. Patel Engineering Co. Ltd., observing that relief for a mistaken bid is available where the mistake is material, inadvertent, the bidder acts promptly on discovery and the offeree has no knowledge of the mistake. On the facts, the Court found that (i) the appellant had a consistent bidding pattern of small incremental increases up to 104.05% and the sudden entry of 140.10% was inconsistent with commercial rationale; (ii) the e-auction platform did not permit rectification or withdrawal once a bid was authenticated, leaving the bidder with no practical remedy on the portal; (iii) the appellant made immediate efforts (telephone calls) and sent an email within two hours of conclusion seeking rectification; and (iv) there was no affirmative denial of those attempts by respondents (doctrine of non-traverse). Applying the Patel Engineering tests to these circumstances, the Court concluded the bid was an inadvertent error and that the appellant had acted promptly to seek rectification. The Court balanced the competing interests and held that enforcing the evidently extravagant erroneous bid would be unconscionable. [Paras 21, 22]

The appellant's bid was a bona fide inadvertent mistake and, having acted promptly, the appellant is entitled to equitable relief.

Rectification of mistaken bid - finality of e-auction - doctrine of proportionality in administrative action - Relief to be granted and the manner of doing justice between the State and the appellant while preserving sanctity of the tender process. - HELD THAT: - Recognising both the competitive nature of the e-auction and the appellant's remiss in care, the Court invoked the doctrine of proportionality to craft an equitable remedy that avoids unjust enrichment and does not unduly prejudice the State or other bidders. The Court quashed the communication declaring the appellant the preferred bidder and confirmed liberty for respondents to conduct a fresh e-auction. To vindicate the public interest and proportionately address the appellant's negligence, the Court directed the appellant to pay a quantified sum within a stipulated period, failing which the bank guarantee may be encashed; payment would render the bank guarantee inoperative and the amount appropriated partly towards losses/costs and partly to charitable purposes for local tribal development. The order balanced non-interference in commercial affairs with corrective equitable relief given the system constraints and prompt action by the appellant. [Paras 26]

Impugned communication set aside; respondents permitted to hold fresh e-auction; appellant directed to make payment on specified terms as a condition of relief.

Final Conclusion: The High Court judgment is set aside. The communication declaring the appellant as preferred bidder is quashed; respondents are permitted to conduct a fresh e-auction. In the exercise of equitable jurisdiction and applying the doctrine of proportionality the appellant is required to make a specified payment within a month (default permitting encashment of the bank guarantee), upon which the bank guarantee shall cease and the relief shall stand granted; parties to bear their own costs.

Power to recover Overcharged Amount - definition of 'distributor', 'dealer' and 'wholesaler' under the DPCO - purposive construction of price-control provisions

Power to recover Overcharged Amount - definition of 'distributor', 'dealer' and 'wholesaler' under the DPCO - purposive construction of price-control provisions - Validity of the demand raised by the NPPA under Paragraph 13 of the DPCO and whether the appellant fell within its ambit - HELD THAT: - Paragraph 13 of the DPCO empowers the Government to require manufacturers, importers or distributors to deposit amounts accrued from charging prices higher than those fixed by the Government. The DPCO definitions of 'dealer', 'distributor' and 'wholesaler' overlap and are not mutually exclusive; a distributor may also perform the functions of a wholesaler or dealer. The appellant's own replies to NPPA notices admitted purchase of the drug from the manufacturer, showing direct contact with the manufacturer. The appellant thus functioned in a dual role which brought it within the scope of Paragraph 13. The objective and intent of Paragraph 13-controlling prices of medicinal formulations to protect the common man-requires a purposive and not a restrictive interpretation. The appellant failed to produce the alleged agreement with the manufacturer and furnished inconsistent versions regarding its source of supply; these factual deficiencies undermined its claim to stand outside Paragraph 13. In the circumstances the High Court rightly held that the appellant was accountable and liable to deposition of the overcharged amount and interest in exercise of power under Paragraph 13. [Paras 10, 11, 12, 13, 14]

Demand raised by the NPPA under Paragraph 13 of the DPCO was justified and the High Court correctly rejected the appellant's claim that it did not fall within Paragraph 13; appeal dismissed.

Final Conclusion: Appeal dismissed; order of status quo dated 10.11.2014 vacated; parties to bear their own costs.

Dishonour of cheque under Section 138 of Negotiable Instruments Act covered where endorsement is 'refer to drawer' - Statutory ingredients for offence under Section 138: presentation, bank return, service of notice and expiry of fifteen days - Service by registered post presumed to be effected within thirty days under Section 27 of the General Clauses Act - Power of attorney holder may initiate proceedings on behalf of principal but cannot file complaint in his own name - Presumption under Section 139 of the Negotiable Instruments Act

Dishonour of cheque under Section 138 of Negotiable Instruments Act covered where endorsement is 'refer to drawer' - Presumption under Section 139 of the Negotiable Instruments Act - Dishonour of the cheque marked 'refer to the drawer' attracts the penal provision of Section 138 of the Negotiable Instruments Act. - HELD THAT: - The Court considered binding precedents of this Court and the Supreme Court, notably Electronics Trade & Technology Development Corpn. Ltd., K.K. Sidharthan and Modi Cements, and held that dishonour endorsements such as 'refer to drawer', 'stop payment' or 'exceeds arrangement' fall within the mischief of Section 138. A narrow construction of the penal provision is required, but earlier three-Judge and Division Bench precedents establish that refusal on instructions or reference to the drawer does not preclude Section 138 action; upon issuance of statutory notice and non-payment the statutory presumption of dishonest intention arises subject to rebuttal. [Paras 16]

The submission that a return marked 'refer to the drawer' does not attract Section 138 is rejected.

Statutory ingredients for offence under Section 138: presentation, bank return, service of notice and expiry of fifteen days - Service by registered post presumed to be effected within thirty days under Section 27 of the General Clauses Act - The complaint was premature because there was no averment as to actual service of the legal notice and, on the presumption of service by registered post, the statutory fifteen day period had not expired when the complaint was filed. - HELD THAT: - Section 138 requires that payment be demanded by notice and that the drawer fail to make payment within fifteen days of service. Where service is effected by registered post, in absence of contrary averment or proof, Section 27 of the General Clauses Act permits presuming service within thirty days. The notice here was posted on 19.12.2018; in absence of proof of earlier service it must be presumed to have been effected at best within thirty days, rendering the complaint lodged on 14.1.2019 premature. Consequently, on the record before the Court, no cause of action under Section 138 had arisen on the date of filing. [Paras 17, 19]

The complaint was filed prematurely and, on that ground, no offence under Section 138 was made out at the time of filing.

Power of attorney holder may initiate proceedings on behalf of principal but cannot file complaint in his own name - A complaint filed by a power of attorney holder in his personal name (and not as attorney on behalf of the payee) is not maintainable. - HELD THAT: - The Court relied on A.C. Narayanan which held that an attorney-holder cannot file a complaint as if he were the complainant in his personal capacity, though he may initiate proceedings on behalf of his principal. Where the payee is a proprietary concern, the complaint must be in the name of the proprietor, the proprietary concern (represented by its proprietor), or the proprietor/concern represented by the attorney-holder under a valid power of attorney. In the present case the complaint was filed by the power of attorney holder in his own name and not as representing the payee; accordingly it was not competent. [Paras 20, 21]

The complaint is not maintainable insofar as it was filed in the name of the power of attorney holder instead of in the name of, or on behalf of, the payee.

Final Conclusion: The petition under Section 482 Cr.P.C. is allowed; Criminal Complaint Case No.61 of 2019 under Section 138 of the Negotiable Instruments Act pending before the Chief Judicial Magistrate, Bhadohi is quashed on the grounds that the complaint was premature and was in any event filed by a power of attorney holder in his personal name.