TaxTMI Updates e-Newsletter
Jul 25,2020

Attachment of bank account - recovery of tax dues - grant of time to pay admitted dues - undertaking to pay - de-freezing of bank account - remedies available to revenue on failure to pay - interest claim and fresh proceedings

Grant of time to pay admitted dues - undertaking to pay - Petitioner permitted limited time to pay admitted tax dues on the basis of an undertaking. - HELD THAT: - The petitioner did not dispute liability but sought time to make payment because business operations were affected by the COVID-19 lockdown. The petitioner filed an affidavit undertaking to pay the balance within six months and pointed out that a portion had already been deducted from the bank account. Having considered the pandemic-related disruption and the petitioner's unequivocal undertaking, the Court exercised its discretion to allow a six-month period for payment, balancing the equities between the parties. [Paras 6, 8, 10]

Six months' time granted to the petitioner to pay the balance of the tax dues.

De-freezing of bank account - attachment of bank account - Bank account attached by the revenue to be de-frozen in view of the petitioner's undertaking. - HELD THAT: - The petitioner's affidavit contained a clear undertaking to settle the dues within six months and the Court noted that a part of the dues had already been recovered by deduction. In light of the undertaking and the need to enable the petitioner to operate day-to-day business and meet payroll during the moratorium, the Court directed the first respondent to lift the freeze on the petitioner's bank account forthwith. [Paras 6, 8, 10]

The first respondent directed to de-freeze the petitioner's bank account forthwith.

Remedies available to revenue on failure to pay - interest claim and fresh proceedings - Consequences of non-payment within the stipulated period and the revenue's rights regarding interest and fresh proceedings clarified. - HELD THAT: - The Court made clear that the indulgence granted was conditional. If the petitioner fails to make full payment within six months, the first respondent is entitled to pursue statutory remedies to recover the amount. Separately, any claim for interest remains open: the first respondent may issue fresh proceedings for interest, and the petitioner may contest such proceedings by available legal remedies. These directions preserve the revenue's enforcement rights while making the de-freeze conditional on the undertaking. [Paras 10]

If payment is not made within six months, the revenue may resume recovery remedies; interest claims may be pursued by fresh proceedings which the petitioner may legally contest.

Final Conclusion: Writ petition disposed by permitting the petitioner six months to pay the balance tax dues on the basis of an affidavit undertaking; bank account ordered to be de-frozen forthwith, subject to the condition that failure to pay within six months allows the revenue to resume recovery and to issue fresh proceedings in respect of interest.

Prohibition on coercive recovery without adjudication - adjudication process under the CGST Act - invitation to deposit with reduced interest and penalty under Section 74(5) of the CGST Act - summons for recording of statement under Section 70 - binding undertaking by counsel - obligation to cooperate in investigation

Prohibition on coercive recovery without adjudication - adjudication process under the CGST Act - invitation to deposit with reduced interest and penalty under Section 74(5) of the CGST Act - Validity of the letter requesting deposit of alleged inadmissible input tax credit without issuance of a show cause notice or initiation of adjudication proceedings. - HELD THAT: - The Court recorded the clarification made by counsel for the revenue that the impugned letter was an invitation to the petitioner to either explain the transactions or to pre-emptively deposit the tax with reduced interest and penalty under the scheme in Section 74(5), without commencing formal adjudication immediately. The Court accepted that statement and accordingly held the respondents bound by it. On that basis the Court declared that because the demand is disputed, respondents shall not take coercive steps for recovery of the said demand without following the adjudication process under the CGST Act; if the investigation thereafter does not satisfy the authority, the formal adjudication process would be the route for recovery.

Respondents bound by their counsel's undertaking; no coercive recovery to be taken absent initiation and completion of the adjudication process.

Summons for recording of statement under Section 70 - obligation to cooperate in investigation - binding undertaking by counsel - Whether the petitioner may be compelled to comply with the summons and the scope of obligations during the investigation. - HELD THAT: - The Court directed that the petitioner shall appear and cooperate in the investigation process. The Court accepted the revenue's explanation and conditioned enforcement by reiterating that cooperation in investigation does not enable the revenue to resort to coercive recovery without adjudication. The undertaking given on behalf of the respondents was treated as binding by the Court.

Petitioner directed to appear and cooperate; respondents restrained from coercive recovery pending adjudication.

Binding undertaking by counsel - Disposition of the writ petition after the parties' positions were recorded before the Court. - HELD THAT: - Learned counsel for the petitioner stated that he did not wish to press the writ petition further in view of the clarification and undertaking recorded on behalf of the respondents. The Court accepted that position and disposed of the petition and allied application accordingly.

Writ petition and connected application disposed of as not pressed.

Final Conclusion: The Court accepted the revenue's undertaking that the impugned communication was an invitation to explain or deposit under the scheme in Section 74(5) and held the respondents bound by that statement; directed that no coercive recovery be effected without following the adjudication process, required the petitioner to cooperate in the investigation, and disposed of the petition as not pressed.

Cancellation of registration - revocation of cancellation of registration - service of notice by e-mail or on the common portal - opportunity of being heard - computation of limitation period for filing revocation - Central Goods and Services Tax (Removal of Difficulties) Order, 2020 - liberty to approach the assessing authority for restoration of registration

Central Goods and Services Tax (Removal of Difficulties) Order, 2020 - computation of limitation period for filing revocation - revocation of cancellation of registration - Applicability of the CBIC Removal of Difficulties Order, 2020 (and the consequent State Government G.O.) for computing the thirty day period for filing application for revocation of cancellation of registration where cancellation orders were served by e-mail or made available on the common portal and passed up to 12.06.2020. - HELD THAT: - The Court noted the Central Board of Indirect Taxes and Customs Order No.01/2020 clarifying that, for registered persons served with cancellation notices under clause (b) or (c) of sub-section (2) of section 29 by means of communication to the e-mail address or by making it available on the common portal, and where the cancellation order was passed up to 12.06.2020, the later of the date of service or 31.08.2020 shall be treated as the relevant date for calculating the thirty day period for filing application for revocation under section 30(1). The Court further observed that the State Government issued G.O.Ms.No.102 dated 26.06.2020 consequent to the CBIC Order. In light of these executive clarifications, the petitioner sought leave to withdraw the writ petition and liberty to approach the assessing authority within the cut-off date provided by the Notification to seek restoration of registration. The Court accepted the petitioner's memo and granted the requested liberty.

CBIC's Removal of Difficulties Order, 2020 (and the State G.O.) applies for computing the revocation period as clarified; petitioner granted liberty to approach the assessing authority by the notified cut-off date to seek restoration of registration and the writ petition dismissed as withdrawn.

Dismissal on withdrawal - liberty to approach the assessing authority - Relief to be granted on petitioner's request to withdraw the writ petition while preserving the petitioner's right to seek statutory relief under the Notification. - HELD THAT: - The petitioner filed a memo requesting permission to withdraw the writ petition and sought liberty to approach the assessing authority pursuant to the cut-off date in the CBIC Notification and the State G.O. The Court placed the memo on record, dismissed the writ petition as withdrawn and expressly granted the petitioner liberty to approach the assessing authority within the period provided by the Notification. Connected miscellaneous petitions were closed and no costs were imposed.

Writ petition dismissed as withdrawn with liberty to approach the assessing authority by the cut-off date set out in the Notification; connected petitions closed, no costs.

Final Conclusion: The Court dismissed the writ petition as withdrawn after recording the CBIC Removal of Difficulties Order, 2020 and the State G.O., and granted the petitioner liberty to seek revocation/restoration of registration from the assessing authority within the cut-off date specified by the Notification; connected petitions were closed with no costs.

Cancellation of registration - show cause notice for non-filing of tax returns - non-consideration of reply to show cause notice - failure to consider representation - fresh consideration in accordance with law

Non-consideration of reply to show cause notice - failure to consider representation - cancellation of registration - The order of cancellation of registration was set aside because the authority did not consider the reply filed by the petitioner to the show cause notice. - HELD THAT: - The show cause notice dated 10.12.2018 alleged non-filing of tax returns and called upon the petitioner to show cause why registration should not be cancelled. The petitioner filed a response which is referred to in the impugned order, but the authority concluded the proceedings as if no response had been filed. The court found that the contents of the response were not taken into consideration, amounting to a failure to consider the petitioner's representation. For that reason the impugned order of cancellation was set aside. The respondent is permitted to initiate proceedings afresh, if at all, but such proceedings must be conducted in accordance with law. [Paras 3, 4]

Impugned order of cancellation set aside for non-consideration of the petitioner's reply; respondent may initiate fresh proceedings in accordance with law.

Final Conclusion: Writ petition allowed; impugned cancellation order set aside and respondent granted liberty to proceed afresh in accordance with law; no costs.

Revisional jurisdiction under Section 397 Cr.PC - default bail under Section 167(2) Cr.PC - arrest under Section 69 of the CGST Act, 2017 - bail in proceedings under the CGST Act, 2017

Revisional jurisdiction under Section 397 Cr.PC - default bail under Section 167(2) Cr.PC - Whether the impugned order dated 24.4.2020 passed by the JMFC, Gurugram is revisable under Section 397 Cr.PC and the appropriate course in respect of the writ challenge. - HELD THAT: - The High Court observed that the order of the JMFC dated 24.4.2020 dismissing the petitioner's application for default bail falls within the scope of revisional jurisdiction exercisable under Section 397 Cr.PC. The Court noted that other claims, if any, arising from the same proceedings may constitute separate causes of action and were not adjudicated in the present proceedings. On the application of the petitioner's counsel to withdraw the writ to enable filing of a fresh petition, the Court permitted the withdrawal and granted liberty to approach the Court afresh with better particulars and a proper cause of action. The Court clarified that allowance of withdrawal would not operate as a bar to the filing of a fresh petition.

Impugned order held to be revisable under Section 397 Cr.PC; writ petition dismissed as withdrawn with liberty to file a fresh writ petition; clarification that withdrawal will not hinder filing afresh.

Final Conclusion: Writ petition dismissed as withdrawn; impugned JMFC order dated 24.4.2020 is amenable to revision under Section 397 Cr.PC and petitioner granted liberty to file a fresh writ petition with appropriate particulars.

Refund of tax paid on account of mistake or misrepresentation - taxability of interest under Section 28 of the Land Acquisition Act - delay in adjudication of refund applications - CBIT circular dated 9th June, 2015 - limitation of refund claims - direction to decide pending applications within a stipulated time

Delay in adjudication of refund applications - direction to decide pending applications within a stipulated time - Pending applications under Section 119(2)(b) filed for refund were to be decided by the respondent within a stipulated period. - HELD THAT: - Petitioners sought adjudication of applications for refund of income-tax allegedly paid inadvertently on interest received under the Land Acquisition Act. The petitions averred an unreasonable delay of nearly four years and reliance was placed upon administrative guidance in the CBIT circular dated 9th June, 2015. Respondent accepted notice and advanced preliminary contentions including limitation and contrary High Court precedents on taxability. Having regard to the limited relief sought, the Court did not undertake merits adjudication but directed the respondent to decide the pending applications in accordance with law within eight weeks, while expressly leaving open all substantive rights and contentions of the parties. The direction remedies the procedural delay and requires the authority to consider each application on its merits within the prescribed timeframe. [Paras 9]

Writ petitions disposed by directing the respondent to decide the applications under Section 119(2)(b) within eight weeks in accordance with law.

Taxability of interest under Section 28 of the Land Acquisition Act - refund of tax paid on account of mistake or misrepresentation - CBIT circular dated 9th June, 2015 - limitation of refund claims - Substantive questions regarding taxability of the interest, limitation of the refund claims and maintainability were not adjudicated and were left open for consideration by the respondent. - HELD THAT: - Petitioners relied on the Supreme Court decision cited in their submissions to contend that interest under the Land Acquisition Act is not taxable and that tax paid may be refundable if paid under mistake. The respondent drew attention to conflicting High Court decisions upholding taxability and contended that many applications may be barred by limitation as per the CBIT circular. The Court refrained from resolving these contested legal questions and expressly preserved all rights and contentions, directing only that the applications be decided in accordance with law. The matters of taxability, limitation and maintainability therefore require fresh adjudication by the respondent and were not finally determined by this order. [Paras 9]

Substantive issues of taxability, limitation and maintainability remitted for consideration by the respondent; no decision on merits was rendered by the Court.

Final Conclusion: Writ petitions disposed: respondent directed to decide the pending refund applications under Section 119(2)(b) within eight weeks in accordance with law; substantive questions on taxability of interest, limitation and maintainability were left open for adjudication by the respondent.

Reopening of assessment - reassessment under Section 147 requiring 'reason to believe' not being mere change of opinion - change of opinion - reason to believe - prospective operation of amendment to Section 50C - assessee's duty of full and true disclosure

Reopening of assessment - reassessment under Section 147 requiring 'reason to believe' not being mere change of opinion - change of opinion - reason to believe - prospective operation of amendment to Section 50C - assessments completed under Section 143(3) and subsequent notice under Section 148 - Validity of reopening assessment under Section 147 read with Section 148 in respect of the assessment year 2009-10 - HELD THAT: - The Court upheld the Tribunal's conclusion that the reassessment was invalid because it amounted to a change of opinion rather than being founded on fresh tangible material amounting to a 'reason to believe' that income chargeable to tax had escaped assessment. The judgment applies the schematic interpretation of 'reason to believe' in Kelvinator India Ltd., and follows Ashley Services Ltd., holding that reopening cannot be used as a device to review an order under Section 143(3). The sale deed on which the Assessing Officer relied was already available and considered at the original assessment; no new material was placed before the Assessing Officer to justify reopening. The Court also observed that the amendment to Section 50C (insertion of the words 'or assessable') operates prospectively and therefore could not be invoked against a transaction dated 02.05.2008. Distinguishing authorities relied upon by Revenue, the Court found no non-application of mind by the Assessing Officer at the original assessment nor any failure by the assessee to make full and true disclosure of primary facts that would justify reassessment. On these grounds the reopening was held to be mala fide as amounting to change of opinion and therefore unsustainable. [Paras 12, 13, 14, 15, 27]

Reopening of assessment under Section 147/148 was invalid as it amounted to a mere change of opinion; reassessment quashed and the Tribunal's order allowing the assessee's appeal is upheld.

Final Conclusion: The Revenue's appeal is dismissed; the reopening of assessment for AY 2009-10 was held invalid as a change of opinion and the substantial questions of law are answered in favour of the assessee.

Treatment of interest on deposits as business income - deduction under Section 32AB - interpretation of "purchase" for acquisition of plant and machinery - remand for verification of evidentiary material

Treatment of interest on deposits as business income - Interest received by the assessee from fixed deposits with IDBI is to be treated as business income. - HELD THAT: - The CIT(A) held that interest on deposits placed in IDBI constituted business income and the Tribunal affirmed that finding. The High Court examined the reasoning of the CIT(A) and the Tribunal and agreed with the elaborated rationale treating the interest as part of the assessee's business income. Having accepted the concurrent factual and legal conclusion of the lower authorities, the Court found no substantial question of law arising from that conclusion and declined to disturb the classification. [Paras 6, 7, 8]

The classification of the interest from IDBI deposits as business income is affirmed.

Deduction under Section 32AB - interpretation of "purchase" for acquisition of plant and machinery - remand for verification of evidentiary material - Whether items claimed by the assessee qualified as purchases of new plant and machinery for claiming deduction under Section 32AB was restored to the Assessing Officer for verification of evidentiary material. - HELD THAT: - The Assessing Officer had disallowed the claim on the basis that the items were not plant or machinery. The CIT(A) construed the term 'purchase' to include obtaining items by means other than direct buying and thereby allowed the claim subject to verification. The Tribunal confirmed the CIT(A)'s approach but directed that the issue be returned to the Assessing Officer to verify the evidence furnished by the assessee to show that purchase/acquisition of machinery was effected during the relevant period so as to qualify for deduction under Section 32AB. The High Court affirmed this course: the question of fact and entitlement requires verification and consequential computation by the Assessing Officer in accordance with the directions given. [Paras 5, 6, 7, 8]

The finding on the meaning of 'purchase' was accepted for the purpose of allowing the claim in principle, but the factual entitlement under Section 32AB is remanded to the Assessing Officer for verification and consequential orders.

Final Conclusion: The revenue's appeal is dismissed and the Tribunal's order is confirmed; the Court found no substantial question of law for determination, affirmed the treatment of interest as business income, and remanded the factual verification regarding entitlement to deduction under Section 32AB to the Assessing Officer for compliance with directions.

Reopening of assessment under Section 147 of the Income Tax Act - formation of belief by Assessing Officer - audit objection as information - borrowed suggestion/borrowed material - independence of Assessing Officer

Reopening of assessment under Section 147 of the Income Tax Act - audit objection as information - formation of belief by Assessing Officer - borrowed suggestion/borrowed material - independence of Assessing Officer - Validity of reopening assessment where reassessment was initiated after an objection by the audit party and whether the Assessing Officer acted on a 'borrowed suggestion' without independent formation of belief. - HELD THAT: - The Court examined whether the reassessment proceedings initiated by issuance of notice under Section 148/147 were justified when the only trigger was an objection communicated by the Senior Audit Officer. The Tribunal and the CIT(A) found, and this Court concurs, that an audit party's report or objection cannot substitute for the Assessing Officer's own reason to believe; while audit objection may constitute information, the Assessing Officer must independently form a belief that income has escaped assessment before reopening. Reliance on borrowed material or acting merely on the audit party's objection amounts to abdication of the Assessing Officer's statutory duty and undermines his independence. The orders of the CIT(A) and the Tribunal, which applied these principles (referring to earlier decisions including Assembly Rooms , EID Parry , Rajalakshmi Textile Processors , Jagat Jayantilal Parikh and Adani Exports ) were thus held to be correct. Applying these legal principles to the factual record (which shows the AO had recorded non-acceptance of the audit objection but proceeded thereafter on the basis of the audit objection), the reopening was held invalid. [Paras 12, 13, 14, 15, 16]

Reopening held invalid as assessment was proceeded with on the basis of audit objection/borrowed suggestion without independent formation of belief by the Assessing Officer; appeal dismissed.

Final Conclusion: The revenue's appeal fails. The reassessment initiated after the audit objection was held invalid because the Assessing Officer did not independently form a reason to believe; the impugned orders of the CIT(A) and the Tribunal are affirmed and the substantial questions of law are answered against the revenue.

Interpretation of amendment to Section 40(a)(ia) as curative and retrospective - retrospective operation of curative proviso to obviate unintended consequences - application of amendment to Section 40(a)(ia) from insertion date to protect bona fide taxpayers - allowability of expenditure where tax is withheld but not remitted before end of financial year

Interpretation of amendment to Section 40(a)(ia) as curative and retrospective - retrospective operation of curative proviso to obviate unintended consequences - Amendment made by Finance Act, 2010 to Section 40(a)(ia) applies retrospectively from the date of insertion of the provision. - HELD THAT: - The Court followed the reasoning in CIT v. Calcutta Export Company that a proviso inserted to remedy unintended consequences or to supply an obvious omission must be read into the statute to give a reasonable interpretation and, being curative in nature, is to be given retrospective operation. The amendment to Section 40(a)(ia) was held to be curative so as to prevent bona fide taxpayers, particularly marginal and medium assessees, from suffering deleterious consequences that the legislature could not have intended. Consequently, the amended provision is to be treated as operative from the date when Section 40(a)(ia) was originally inserted, i.e., with effect from Assessment Year 2005-06, permitting assessees who filed returns within the due date to claim the benefit of the amendment.

The amendment is to be given retrospective effect from the date of insertion of Section 40(a)(ia), and the Tribunal was correct in so holding.

Allowability of expenditure where tax is withheld but not remitted before end of financial year - application of curative amendment to preserve deduction where taxes withheld remain unremitted - Where tax is required to be withheld but the tax withheld has not been remitted before the end of the financial year, the corresponding expenditure is allowable as a deduction in view of the retrospective operation of the amendment. - HELD THAT: - Applying the principle that the Finance Act, 2010 amendment is curative and retrospective, the Court accepted the conclusion that expenditures in respect of which tax was withheld but not remitted by the end of the financial year remain deductible. This follows the view that the curative proviso was intended to avert harsh consequences on assessees and to give a workable, equitable construction to Section 40(a)(ia). The Tribunal's holding that such expenditures are allowable was therefore affirmed.

Expenditure for which tax was withheld but not remitted before the end of the financial year is allowable as a deduction under the retrospectively effective amendment.

Final Conclusion: Following the binding decision in CIT v. Calcutta Export Company, the appeal is dismissed; the substantial questions of law are answered against the Revenue, the Finance Act, 2010 amendment to Section 40(a)(ia) is given retrospective effect from its insertion (Assessment Year 2005-06), and the Tribunal's view that the relevant expenditures are allowable is upheld; no costs.

Order without reasons violates principles of natural justice - distinction between settlement and gift - transfer as defined under Section 2(47) of the Income Tax Act - capital gains under Section 45 of the Income Tax Act - remand for fresh consideration

Order without reasons violates principles of natural justice - The order of the Commissioner of Income Tax (Appeals) dated 27.1.2016 is vitiated for want of reasons and is a nullity. - HELD THAT: - The Court examined the CIT(A)'s order and found that it merely noted the assessee's grounds and referred to authorities without applying the law to the material facts or explaining why the Assessing Officer's factual findings were incorrect. An appellate order must explain the basis for disagreeing with the lower authority so that parties understand the reasoning; absence of such reasoning renders the order arbitrary and violative of natural justice. Consequently the CIT(A) order is held to be devoid of reasons and unsustainable. [Paras 20, 21, 22]

CIT(A) order dated 27.1.2016 set aside as an order without reasons.

Order without reasons violates principles of natural justice - The Income Tax Appellate Tribunal's common order dated 15.3.2017 is not supported by reasons and is therefore not sustainable. - HELD THAT: - The Tribunal's order contains only short conclusions (notably in paragraphs 14 and 15 of the impugned order) that dismiss the Assessing Officer's characterization and treat settlement and gift as indistinguishable for the purpose relied upon, but it fails to articulate how those conclusions follow from the facts or legal analysis. The Tribunal also relied on a Coordinate Bench decision without explaining its applicability. For want of reasoned discussion, the Tribunal's finding cannot stand. [Paras 23, 24]

Tribunal order dated 15.3.2017 set aside for lack of reasons.

Transfer as defined under Section 2(47) of the Income Tax Act - capital gains under Section 45 of the Income Tax Act - distinction between settlement and gift - remand for fresh consideration - Whether the settlement between the assessee and his brother amounted to a 'transfer' attracting capital gains is not decided on merits and is remitted for fresh consideration. - HELD THAT: - The Assessing Officer reached detailed factual conclusions that the settlement resulted in an exchange of rights-the assessee relinquished 50% in certain properties and acquired absolute rights in others-thereby amounting to a transfer under Section 2(47) and giving rise to capital gains under Section 45. However, because both the CIT(A) and the Tribunal disposed of the matter without adequate reasoning, the Court did not adjudicate the merits of that factual and legal controversy. The matter is therefore remitted to the CIT(A) to re-examine the transaction, apply the law to the facts, hear both the assessee and the Departmental Representative, and decide in accordance with law. [Paras 6, 7, 8, 12, 25]

Matter remitted to the CIT(A) for fresh consideration on merits with directions to hear both parties and dispose of the appeal expeditiously.

Final Conclusion: The Revenue's appeal is allowed; the orders of the CIT(A) and the Tribunal are set aside for want of reasons and the matter is remitted to the CIT(A) for fresh, reasoned consideration of whether the settlement amounts to a transfer attracting capital gains. The CIT(A) is directed to hear both the assessee and the Departmental Representative and dispose of the appeal expeditiously; the Principal Chief Commissioner of Income Tax, Chennai is to ensure departmental representation before the appellate authorities.

Reopening of assessment under reason to believe vis-a -vis mere change of opinion - tangible material/new information as precondition for reassessment - expense prohibited by law and the Explanation to section 37(1) - applicability and prospective effect of administrative circulars (CBDT Circular No.5/2012) - scope of Indian Medical Council regulations and their applicability to pharmaceutical companies - computation of manufacturing wastage and DPCO prescribed wastage limits - inference of suppressed production from unexplained wastage - eligibility and procedural requirements for deduction under section 80IB

Reopening of assessment under reason to believe vis-a -vis mere change of opinion - tangible material/new information as precondition for reassessment - Validity of reassessment initiated under Sec.147 (whether reassessment was based on fresh tangible material or mere change of opinion). - HELD THAT: - The Tribunal examined the reasons recorded by the Assessing Officer and the material available to the predecessor AO at the time of the original assessment. The AO had before him the bifurcated details of sales promotion expenses and had, after applying his mind, disallowed a specific part (gifts to doctors). The successor AO reopened the assessment to disallow additional components on the same factual material. Following settled precedents emphasising that reassessment must be founded on fresh tangible material or new information and cannot be used as a vehicle for review or mere change of opinion, the Tribunal found that no new material or information was brought on record after the original assessment. The reopening therefore amounted to substitution of the successor AO's view for that of his predecessor and lacked juridical foundation to invoke Sec.147. The reassessment framed under Sec.143(3) r.w.s.147 dated 20.12.2017 was quashed for want of jurisdiction. [Paras 11, 12, 13, 14]

Reassessment set aside for want of jurisdiction; Ground No.1 allowed.

Expense prohibited by law and the Explanation to section 37(1) - scope of Indian Medical Council regulations and their applicability to pharmaceutical companies - applicability and prospective effect of administrative circulars (CBDT Circular No.5/2012) - Whether sales promotion expenses (conference, travel, doctors' expenses, product reminders) are hit by the Explanation to Sec.37(1) as expenses 'prohibited by law' by virtue of MCI regulations and CBDT Circular No.5/2012; and temporal applicability of that Circular. - HELD THAT: - On merits the Tribunal followed a coordinate-bench approach that the IMC regulations govern registered medical practitioners and do not, by their text or statutory scheme, regulate conduct of pharmaceutical companies. The CBDT Circular of 01.08.2012 purports to make such freebies inadmissible in a taxpayer's hands, but where it imposes a new burden on taxpayers it must be prospective. The Tribunal agreed with the view that (i) MCI regulations do not, as a matter of statutory scope, directly apply to pharmaceutical companies, (ii) CBDT Circular No.5/2012 cannot be read as imposing a retrospective liability for the year under consideration, and (iii) CBDT cannot enlarge the scope of MCI regulations to create a new statutory disqualification without enabling law. On those bases the Tribunal held that the impugned sales promotion expenses would not be hit by the Explanation to Sec.37(1) for A.Y.2012-13 and deleted the addition on merits (noting that the legal observations are academic in light of the quashing of reassessment). [Paras 16, 17, 18, 19, 20]

Addition/disallowance of sales promotion expenses (Ground No.2) deleted on merits; Ground No.2 allowed.

Computation of manufacturing wastage and DPCO prescribed wastage limits - inference of suppressed production from unexplained wastage - Whether the Assessing Officer's addition for alleged suppressed production (computed from excess raw material consumption) is sustainable, and the proper consequence of unexplained excess wastage. - HELD THAT: - The Tribunal upheld the CIT(A)'s acceptance that wastages within the DPCO-prescribed range are to be accepted. However, it disagreed with the CIT(A)'s conclusion that any wastage exceeding DPCO norms automatically establishes suppressed production and unrecorded sales. The Tribunal held that unexplained excess wastage, absent independent material proving suppressed production or unaccounted sales, cannot ipso facto justify an addition equal to alleged unrecorded sales. Instead, the appropriate consequence is a disallowance limited to the cost of excess raw material wastage charged to the books for the year. The order was modified to restrict the AO to disallowing only the cost of such excess wastage as reflected in the assessee's accounts. [Paras 24, 27, 28]

AO directed to restrict disallowance to cost of excess raw material wastage; Ground I partly allowed.

Eligibility and procedural requirements for deduction under section 80IB - Whether increased business income (as adjusted by additions) entitles the assessee to revise/allow deduction under Sec.80IB. - HELD THAT: - The Tribunal agreed with CIT(A) that the entitlement to deduction under Sec.80IB is governed by statutory conditions, including auditor certification in prescribed form (Form 10CCB) and other requirements. Addition made on account of alleged suppressed production could not be treated as qualifying for the Sec.80IB deduction in the absence of fulfilment of the statutory conditions and authentication. The claim for adjusting 80IB consequent to additions was therefore rejected. [Paras 24, 29]

Claim for enhanced 80IB relief on account of additions dismissed; Ground II dismissed.

Expense prohibited by law and the Explanation to section 37(1) - scope of Indian Medical Council regulations and their applicability to pharmaceutical companies - Sustainability of disallowance of Rs.5,37,46,137 (gifts to doctors) in the regular assessment. - HELD THAT: - The Tribunal applied its earlier reasoning on the scope of MCI regulations and CBDT Circular No.5/2012 (as recorded while deciding the reassessment appeal) and held that the disallowance sustained by the lower authorities could not be maintained. Consequently, the addition of Rs.5,37,46,137 was deleted in the regular assessment appeal as well. [Paras 30]

Addition of Rs.5,37,46,137 deleted; Ground III allowed and Ground IV rendered infructuous.

Final Conclusion: The reassessment framed under Sec.143(3) r.w.s.147 dated 20.12.2017 is quashed for want of jurisdiction. On merits the Tribunal deleted the disallowance of sales promotion/gifts and directed that any disallowance attributable to excess raw material wastage be limited to the cost charged in the books; the claim for enhanced Sec.80IB relief was rejected. Appeals allowed in part and in terms stated.

Disallowance under section 14A and Rule 8D - Taxability of interest under section 244A - Treatment of government subsidy as capital receipt - Reduction of capital subsidy from actual cost for computation of depreciation - Allowability of depreciation on UPS as integral part of computers - Allowability of depreciation for energy saving and pollution control equipment where assets are installed and ready for use - Binding effect of earlier judicial orders in the assessee's own case

Disallowance under section 14A and Rule 8D - Extent of disallowance under section 14A read with Rule 8D in respect of exempt dividend income. - HELD THAT: - The Assessing Officer had made a disallowance of Rs. 39,25,411 under section 14A read with Rule 8D. The CIT(A) reduced this to Rs. 32,93,106 having found that Rule 8D(2)(ii) could not apply in view of substantial surplus funds available and that investments were not carried forward from earlier years. The Tribunal found that neither the AO nor the CIT(A) addressed the assessee's alternate computation of treasury costs (Rs. 8,34,934) and that the mandatory satisfaction required of the AO before making a Rule 8D disallowance (as laid down by the Delhi High Court in Maxopp) was not recorded. In absence of the required satisfaction, the Tribunal restricted the disallowance to the assessee's computed treasury cost of Rs. 8,34,934 and directed deletion of the remainder. [Paras 7]

Disallowance under section 14A/Rule 8D restricted to the assessee's treasury cost of Rs. 8,34,934; remaining disallowance deleted.

Taxability of interest under section 244A - Whether interest received under section 244A on income tax refunds is taxable in the assessment year. - HELD THAT: - The assessee challenged addition of interest received under section 244A relating to earlier assessment years. The assessee's representative conceded the issue was covered against the assessee. The Tribunal confirmed the CIT(A)'s upholding of the addition but directed that if the quantum of interest varies pursuant to pending higher court appeals, the AO shall substitute the varied amount accordingly. [Paras 7]

Addition on account of interest under section 244A upheld; AO to substitute any altered amount resulting from the outcome of pending appeals.

Treatment of government subsidy as capital receipt - Reduction of capital subsidy from actual cost for computation of depreciation - Purpose of subsidy governing tax character - Characterisation of the State investment subsidy and whether it must be reduced from the actual cost of assets for purposes of depreciation. - HELD THAT: - The subsidy under the Goa State Investment Subsidy Scheme was held by the CIT(A) to be a capital receipt. The AO had treated it as revenue. The Tribunal agreed with the CIT(A) that the purpose of the scheme (promoting industrialization in backward areas and employment generation) demonstrates the subsidy is an incentive and not a reimbursement of asset cost; accordingly it is a capital receipt. However, the CIT(A)'s further direction to reduce the subsidy from the written down value of the relevant block of assets when computing depreciation was held to be incorrect. Reliance on PJ Chemicals and other authorities established that quantification of subsidy as a percentage of fixed capital is a measure to compute subsidy, not a payment to defray asset cost. The Tribunal set aside the direction to reduce asset cost and directed depreciation be allowed on the actual cost without deducting the subsidy. [Paras 7]

Subsidy is a capital receipt; subsidy need not be reduced from actual cost of assets for computing depreciation and depreciation must be allowed on actual cost.

Binding effect of earlier judicial orders in the assessee's own case - Whether the ad hoc disallowance of license fee could be sustained in view of binding precedents in the assessee's earlier assessment years. - HELD THAT: - The AO disallowed a portion of license fees relying on his predecessor's treatment. The CIT(A) deleted the disallowance relying on a series of earlier Tribunal and High Court orders in the assessee's own case across assessment years, which were shown to be binding and uncontested by the Department. The Tribunal found no reason to interfere with the CIT(A)'s reliance on those binding precedents and dismissed the Department's ground. [Paras 7]

Deletion of the license fee addition upheld in view of binding earlier orders in the assessee's own case; Department's ground dismissed.

Allowability of depreciation on UPS as integral part of computers - Correct rate of depreciation for UPS-whether UPS should be treated as integral to computers and depreciated at higher rate. - HELD THAT: - The Assessing Officer had restricted depreciation on UPS to a lower rate. The CIT(A) deleted that restriction. The Department accepted that the issue is covered by the Delhi High Court decisions holding UPS to be an integral part of computers and eligible for higher rate of depreciation. The Tribunal followed the settled law and upheld the CIT(A)'s order. [Paras 7]

Depreciation on UPS allowed at higher rate as UPS is integral to computers; AO's restriction deleted.

Allowability of depreciation for energy saving and pollution control equipment where assets are installed and ready for use - Whether depreciation on energy saving and pollution control equipment is allowable when the assessee has purchased, installed and produced engineer certificates but AO alleges assets not put to use. - HELD THAT: - The AO disallowed depreciation alleging assets were not put to use and no comparative results were furnished. The assessee produced certificates from Chartered Engineers certifying the nature of the assets and there was no adverse finding on purchase or installation. The Tribunal observed Sec.32 does not require the assessee to monitor outcomes and that 'use' includes readiness for use (following Delhi High Court authority). In absence of contrary findings, the CIT(A)'s deletion of the disallowance was sustained. [Paras 7]

Depreciation on energy saving and pollution control equipment allowed; AO's disallowance deleted.

Final Conclusion: The assessee's appeal is partly allowed (14A disallowance restricted; subsidy treatment and depreciation issues decided in assessee's favour; interest addition upheld subject to variation) and the Department's appeal is dismissed in its entirety.

Unexplained cash credits under section 68 - assessment under section 153A following search and seizure - requirement of incriminating material seized upon the assessee for additions in assessment under section 153A - genuineness, identity and creditworthiness of creditors - doctrine of approbate and reprobate - alternative addition as deemed dividend under section 2(22)(e)

Assessment under section 153A following search and seizure - requirement of incriminating material seized upon the assessee for additions in assessment under section 153A - unexplained cash credits under section 68 - Sustaintability of additions under section 68 in assessments framed under section 153A where no incriminating material was found/seized from the assessee - HELD THAT: - The Tribunal found that assessments were framed pursuant to search and seizure but the assessment orders do not refer to any incriminating material found upon the assessee that would justify additions under section 153A; references in the assessment order to material seized in searches of other group entities do not supply jurisdiction under section 153A in the assessee's case and, if material was found in the hands of other persons, the proper proceedings would be under section 153C. In respect of assessment years which were not pending at the time of search, additions under section 153A are not permissible unless supported by incriminating material discovered in the search relating to the assessee. Applying these principles and judicial precedents, the Tribunal held that additions made under section 68 in the absence of incriminating material seized from the assessee are not sustainable. [Paras 16, 17, 19, 31]

Additions under section 68 in assessments framed under section 153A without incriminating material seized from the assessee are not sustainable and are set aside.

Genuineness, identity and creditworthiness of creditors - unexplained cash credits under section 68 - doctrine of approbate and reprobate - Validity of addition under section 68 based solely on the assessee's statement that the loans were accommodation entries originating from a group company, while simultaneously accepting the statement that the creditors had no independent source - HELD THAT: - The Tribunal observed that the assessing officer's order rests primarily on the assessee's own recorded statement which attributed the loans to accommodation transactions originating from the group company. The AO accepted the part of the statement that the creditors lacked independent source but rejected the part that the funds originated from and returned to the group company, without any independent enquiry (such as calling the lenders, obtaining their financials, or referring to seized incriminating material relating to the assessee). The Tribunal held that one cannot accept a part of a statement and reject the rest (approbate and reprobate) to justify taxation where there is no corroborative material; a mere admission, de hors corroborative seized material and without further enquiry, cannot be the sole basis for additions under section 68. [Paras 20, 22, 23, 26]

Addition under section 68 cannot be sustained where it is based solely on the assessee's statement and where the AO selectively accepts part of that statement without independent verification; the addition is set aside.

Alternative addition as deemed dividend under section 2(22)(e) - unexplained cash credits under section 68 - Validity of alternative addition as deemed dividend under section 2(22)(e) where no finding of control or incriminating material exists in the assessee's case - HELD THAT: - The Tribunal noted that the Assessing Officer made a brief alternative plea treating the amounts as deemed dividend under section 2(22)(e) by reliance on precedent where funds were traced through entities controlled by the assessee and discoveries were made in search. In the present case there was no finding that the intermediary entities were under the control of the assessee nor were the additions based on incriminating material discovered on the assessee; further, once an amount is assessed under one head it cannot be again taxed under another head. On these bases the AO's reliance on the cited authority was inapplicable and the alternative addition was academic and not sustainable. [Paras 27, 28, 29]

The alternative addition as deemed dividend under section 2(22)(e) is not sustainable on the facts; it was not upheld.

Final Conclusion: The Tribunal set aside the CIT(A)'s order and decided the appeals in favour of the assessee: additions made under section 68 in assessments framed under section 153A (for the assessment years in issue) are not sustainable in the absence of incriminating material seized from the assessee and where the additions rest solely on the assessee's statement without independent verification; the alternative plea under section 2(22)(e) was also not sustained.

Deduction of interest under section 24(b) of the Income-tax Act - disallowance under section 14A read with Rule 8D - allowability of business expenditures "wholly and exclusively" for business - precedential effect of earlier departmental orders

Deduction of interest under section 24(b) of the Income-tax Act - precedential effect of earlier departmental orders - Deduction of interest paid on borrowed funds was to be allowed proportionately for the acquisition of the rented property after ascertaining funds actually utilised for purchase. - HELD THAT: - The CIT(A) had directed the AO to ascertain the interest on funds utilised for acquisition of the property and allow proportionate deduction under section 24(b), following the finding in the preceding assessment year that borrowed funds were ultimately applied to purchase the rented property once investments (bonds) were redeemed. The Tribunal observed that the revenue did not dispute the earlier-year finding nor produce evidence that that order had been challenged successfully. In these circumstances the Tribunal found no infirmity in directing the AO to compute and allow the interest attributable to funds used for acquisition of the property as deduction under section 24(b). [Paras 9]

Ground one dismissed; AO directed to ascertain and allow proportionate interest under section 24(b) attributable to acquisition of the rented property.

Disallowance under section 14A read with Rule 8D - limitation of disallowance to exempt income - exclusion of interest attributable to house property and other sources - precedential effect of earlier departmental orders - Disallowance under section 14A/Rule 8D was to be restricted in view of earlier year findings and relevant precedent; the AO was to exclude interest pertaining to house property and other sources and to consider only interest connected with tax-free investments for the 0.5% computation. - HELD THAT: - The AO had disallowed expenditure including interest and processing charges as allocable to investments yielding exempt income and applied the 0.5% Rule 8D component on average investment value. The CIT(A), following his predecessor and the Delhi High Court decision in JOINT INVESTMENTS PRIVATE LIMITED v. CIT, directed the AO to confine the disallowance to the extent of exempt income, exclude interest attributable to house property and other sources, and apply the 0.5% computation only to bonds yielding tax-free income. The Tribunal found no infirmity in this approach, noting the revenue had not shown that the earlier assessment-year order was set aside, and upheld the CIT(A)'s directions. [Paras 11]

Grounds two and three dismissed; AO to recompute section 14A disallowance in accordance with the CIT(A)'s directions and applicable precedent.

Allowability of business expenditures "wholly and exclusively" for business - precedential effect of earlier departmental orders - Disallowance of business expenses was deleted because the CIT(A) followed his predecessor's detailed favourable findings and the revenue produced no evidence upsetting those findings. - HELD THAT: - The AO had disallowed various business expenses. The CIT(A) relied on the earlier assessment-year order where the allowability of those expenditures had been examined and disallowance deleted. Both parties agreed there was no change in facts; the revenue did not produce evidence that the earlier order had been reversed or challenged successfully. The Tribunal found no infirmity in the CIT(A)'s reliance on the predecessor order and sustained deletion of the disallowance. [Paras 12]

Ground four dismissed; disallowance of business expenses deleted.

Final Conclusion: The appeal filed by the assessing officer is dismissed; the CIT(A)'s directions to allow proportionate interest under section 24(b), to recompute and limit the section 14A/Rule 8D disallowance in accordance with earlier findings and precedent, and to delete the disallowance of business expenses are upheld.

Preventive detention under COFEPOSA - subjective satisfaction of the detaining authority - duty to place material relevant to formation of satisfaction - judicial review of preventive detention - withholding of exculpatory documents and vitiation of detention

Withholding of exculpatory documents and vitiation of detention - duty to place material relevant to formation of satisfaction - Non-placement by the sponsoring authority of the 'Letter of Extrication', summons and the Non Recovery Panchnama did not vitiate the detaining authority's subjective satisfaction and did not render the detention order invalid. - HELD THAT: - The Court examined whether the detaining authority's subjective satisfaction was vitiated by alleged non placement of documents which, according to the detenue, were vital and exculpatory. It found that the 'Letter of Extrication' was received by the sponsoring authority only after the detention order had been passed and therefore could not have been placed before the detaining authority. Further, the Advisory Board had considered and rejected the contention that the letter established that the voluntary statements were not in the detenue's handwriting. The summons had been received by the detenue (his signature was on it) and he complied by attending the airport; it was not material to the formation of subjective satisfaction. The Non Recovery Panchnama did not contain incriminating material relevant to the formation of the satisfaction because the search at the detenue's residence yielded only personal documents. On this basis the Court held that none of the withheld or unplaced documents were of such a character as to have influenced the detaining authority's satisfaction one way or the other, and therefore their non placement did not vitiate the detention order. [Paras 10, 11]

Alleged non placement of the specified documents did not invalidate the detention order; the subjective satisfaction of the detaining authority remains unimpeached on that ground.

Preventive detention under COFEPOSA - subjective satisfaction of the detaining authority - judicial review of preventive detention - Whether the detaining authority's subjective satisfaction, formed on the material placed before it, was judicially sustainable in view of the detenue's conduct and admissions. - HELD THAT: - The Court applied the settled principle that while the detaining authority's satisfaction is subjective and courts should not substitute their view for that of the authority, such satisfaction is amenable to judicial review to the extent prescribed by precedent. Having reviewed the material relied upon - including the voluntary statements recorded under Section 108 of the Customs Act, admissions by the detenue regarding multiple trips and smuggling of gold, corroborative statements of other persons and investigative material - the Court was satisfied that the detaining authority legitimately recorded subjective satisfaction that the detenue was an important part of an organised smuggling syndicate and had high propensity to continue smuggling. The preventive character of COFEPOSA detention and the need to balance individual liberty with public interest in curbing smuggling were noted; on the material before the authority, the Court found no ground to substitute its view or to hold the detention order unsustainable. [Paras 12, 13, 14]

The detaining authority's subjective satisfaction, founded on the admissible material and admissions, was sustainable and did not merit interference.

Final Conclusion: The writ petition challenging the COFEPOSA detention order was dismissed: the court held that the alleged non placement of certain documents did not vitiate the detaining authority's subjective satisfaction and, on the material before the authority (including the detenue's admissions and corroborative evidence), the preventive detention was legally sustainable.

Condonation of delay - re-presentation of appeal after unexplained delay - dismissal of delay condonation petition - application of precedent Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy - rejection of appeal for want of condonation - direction to Assessing Officer to pass fresh order - remand for fresh adjudication by Assessing Officer

Condonation of delay - re-presentation of appeal after unexplained delay - application of precedent Esha Bhattacharjee v. Managing Committee of Raghunathpur Nafar Academy - dismissal of delay condonation petition - rejection of appeal for want of condonation - Delay in filing and re-presenting the appeal was not sufficiently explained and the delay condonation petition was dismissed, resulting in rejection of the appeal. - HELD THAT: - The appeal was initially presented with a delay of thirty-five days and, after defects were pointed out, was re-presented only after nearly five years. The prolonged unexplained re-presentation was held to be without plausible explanation. Applying the legal principle reflected in the cited Apex Court authority, the Court found no sufficient ground to exercise discretion in favour of condoning the delay. On that basis the petition seeking condonation of delay was refused and the appeal was rejected. [Paras 2]

Delay condonation petition dismissed and the appeal rejected for want of condonation.

Direction to Assessing Officer to pass fresh order - remand for fresh adjudication by Assessing Officer - Assessing Officer directed to pass an order within three months if no order in terms of the impugned judgment has been passed; Assessing Officer permitted to pass a fresh order in accordance with law. - HELD THAT: - The Court recorded that, in the event the Assessing Officer has not implemented the impugned judgment by passing an order, he shall do so within three months from the date of the order. The Assessing Officer was expressly left free to pass a fresh order independently in accordance with law and applicable provisions. This directs further administrative action rather than deciding merits afresh and requires compliance within the specified timeframe. [Paras 3]

Assessing Officer to pass the appropriate order within three months; permitted to pass a fresh order in accordance with law.

Final Conclusion: The Court refused to condone the substantial unexplained delay in re-presenting the appeal and dismissed the delay condonation petition, resulting in rejection of the appeal; separately, the Assessing Officer was directed to pass an order within three months if not already passed, with liberty to pass a fresh order in accordance with law.

Entitlement to refund of Special Additional Duty - acceptance of CESTAT order by Committee of Commissioners - direction to consider refund claims on application

Entitlement to refund of Special Additional Duty - acceptance of CESTAT order by Committee of Commissioners - direction to consider refund claims on application - Petitioners are entitled to have their claims for refund of Special Additional Duty considered in view of the respondents' in-principle acceptance of the CESTAT decision and administrative sanction to dispose of similar refund claims. - HELD THAT: - The Court recorded that CESTAT Chennai had decided entitlement to refund of Special Additional Duty in favour of importers in earlier orders, and that the Committee of Commissioners had accepted that CESTAT order and sanctioned disposal of pending refund claims on that basis. Relying on the respondents' written instructions and their expressed willingness to pass similar orders in the present cases, the Court declined to adjudicate the merits and instead granted relief by way of direction: the petitioners were given liberty to file applications for refund, and the concerned authority was directed to pass necessary orders on receipt of such applications within eight weeks. The Court therefore provided a remedial procedure rather than a merits determination. [Paras 4, 5, 6]

Writ petitions allowed; petitioners granted liberty to file refund applications and respondents directed to decide refund claims within eight weeks of receipt.

Final Conclusion: Writ petitions allowed on the respondents' stated in-principle acceptance of the CESTAT position; petitioners may file applications for refund of Special Additional Duty and the authorities are directed to dispose of such applications within eight weeks.

Lis pendens - impleadment of subsequent purchasers - reasoned order requirement - remand for fresh consideration - interim injunction affecting regulatory compliance

Remand for fresh consideration - reasoned order requirement - interim injunction affecting regulatory compliance - Disposal of I.A. No. 352/2017 by NCLT without reasons and whether it must be remitted for fresh decision - HELD THAT: - The Tribunal found that the relief sought in I.A. No. 352/2017 (seeking modification of an interim injunction stated to impede compliance with SEBI directions) was distinct from the relief in I.A. No. 222/2017. NCLT disposed of I.A. No. 352/2017 without assigning reasons, merely disposing it in view of its disposal of I.A. No. 222/2017. Because the two applications raised different reliefs and no reasons were recorded for disposing I.A. No. 352/2017, the Appellate Tribunal set aside the impugned order insofar as I.A. No. 352/2017 is concerned and remitted the matter to the NCLT, Kolkata Bench, directing that after giving reasonable opportunity of hearing a reasoned order be passed expeditiously. [Paras 13]

I.A. No. 352/2017 is remitted to the NCLT for fresh disposal by a reasoned order after hearing the parties.

Lis pendens - impleadment of subsequent purchasers - Disposal of I.A. No. 222/2017 seeking impleadment of subsequent purchasers and effect of NCLT's direction on lis pendens - HELD THAT: - NCLT refused to implead the subsequent purchasers sought to be added in I.A. No. 222/2017 but recorded that the broad principles of lis pendens would apply to such purchasers and kept the question open for determination. The Appellate Tribunal found this order to be non-final on the substantive rights of subsequent purchasers and, on examination, found no ground to interfere with the NCLT's disposal of I.A. No. 222/2017. Accordingly the Tribunal maintained the impugned order in respect of I.A. No. 222/2017. [Paras 15]

I.A. No. 222/2017 is upheld; the NCLT's refusal to implead subsequent purchasers and its observation that lis pendens principles apply is maintained.

Final Conclusion: The appeal arising from I.A. No. 352/2017 is allowed in part: the order disposing I.A. No. 352/2017 is set aside and remitted to the NCLT for fresh, reasoned consideration; the order in respect of I.A. No. 222/2017 is maintained. Company Appeal (AT) No. 266/2019 is allowed and Company Appeal No. 294/2019 is dismissed; no order as to costs.

Paramount lien on shares - lien as a right of retention (not a right of sale) - shares as movable property and 'goods' under the Sale of Goods Act, 1930 - exercise of lien vis-a -vis pledge and resale - rectification of the register of members - unilateral sale/auction of fully paid-up shares invalid without consent

Paramount lien on shares - lien as a right of retention (not a right of sale) - shares as movable property and 'goods' under the Sale of Goods Act, 1930 - The extent of the company's power to exercise a lien over a shareholder's fully paid-up shares and whether such lien permits unilateral sale. - HELD THAT: - The Tribunal examined the company's articles and the model articles and held that the articles excluded the application of the Table A/Table F provisions which would have set out a procedure for forfeiture or sale. Shares are movable property and fall within the definition of 'goods' under the Sale of Goods Act, 1930; the Sale of Goods Act recognises rights of an unpaid seller including a lien and a restricted right of resale in specific circumstances. Applying this jurisprudence and the distinction between lien and pledge, the Tribunal concluded that a lien primarily confers a right of retention (a right to retain the res until the claim is satisfied) and does not, in itself, confer a unilateral power of sale over fully paid-up shares held by a shareholder. In the absence of express procedural provision in the articles authorising sale, the company could only retain the shares but could not unilaterally auction or transfer them without the shareholder's consent. [Paras 22, 23, 24, 25, 26]

The company cannot unilaterally sell or auction the applicants' fully paid-up shares by exercising a paramount lien; the lien is confined to retention and does not authorise disposal without consent or express article-based procedure.

Contractual basis for recovery of rental dues - absence of lease or rent agreement - Whether the company's action in recovering 'rental dues' by auctioning shares was supported by any contractual lease or agreement with the applicants. - HELD THAT: - The Tribunal found no documentary evidence of any lease or rental agreement between the company and the applicants; the company collected 'service charges' and did not produce a written contract establishing a lessor-lessee relationship or a registered lease. In the absence of any contractual foundation or registered instrument showing entitlement to rental arrears, the company's unilateral action to recover alleged rental dues by vesting and auctioning shares lacked basis and could not be upheld. [Paras 27]

There was no contractual or documentary foundation for recovering rental dues by auctioning the applicants' shares; the action was without basis.

Exercise of lien versus power of sale - due process in transfer/auction of shares - unilateral sale/auction of fully paid-up shares invalid without consent - Whether due process was followed by the company in auctioning and allotting the shares to a third party. - HELD THAT: - The articles are silent as to the procedure for enforcing a lien. The Tribunal examined the facts and previous authority distinguishing lien (retention) from pledge (which carries a power of sale). The company auctioned and transferred shares without possession of original share certificates, without consent of the shareholders, and without following any applicable procedural provisions; no steps had been taken to regularise occupation or to evict occupants for alleged arrears. The Tribunal held that the auction and transfer were not in accordance with the Companies Act or the company's articles and were therefore illegal and mala fide in effect. [Paras 28, 29, 30]

The auction and allotment of the applicants' shares to a third party were effected without due process and are invalid; the company lacked authority to effect such transfers in the manner adopted.

Final Conclusion: The application succeeds. The applicants are declared the legitimate equity shareholders under the relevant folio and the register of members is directed to be rectified to restore their 100 shares as they existed prior to February 8, 2019. The company is restrained from selling, allotting or transferring those shares without the applicants' express consent until rectification is carried out; the company must file the rectified register with the Registrar of Companies within one month and pay costs to the applicants.

Scheme of amalgamation under sections 230-232 of the Companies Act, 2013 - dispensation of convening meetings of shareholders and unsecured creditors - compliance with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - notice to the Central Government through the Regional Director and other regulatory authorities under section 230(5) - valuation and share exchange ratio based on net asset value - accounting treatment certified as compliant with Accounting Standards prescribed under section 133 - territorial jurisdiction of the Tribunal

Scheme of amalgamation under sections 230-232 of the Companies Act, 2013 - dispensation of convening meetings of shareholders and unsecured creditors - notice to the Central Government through the Regional Director and other regulatory authorities under section 230(5) - compliance with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - accounting treatment certified as compliant with Accounting Standards prescribed under section 133 - valuation and share exchange ratio based on net asset value - Application for dispensation of convening meetings of shareholders and unsecured creditors in respect of the proposed scheme of amalgamation was allowed, subject to specified directions. - HELD THAT: - The Bench examined the materials filed in support of the first motion under the Companies Act, 2013, including board resolutions approving the scheme, statutory auditors' certificates and audited balance-sheets as on March 31, 2019, valuation report fixing the share exchange ratio on net asset value basis, and affidavits of consent from all shareholders and unsecured creditors of the respective companies. For each transferor and the transferee company the record showed either (i) the required shareholders and unsecured creditors had furnished consent affidavits, or (ii) absence of secured creditors as certified by the chartered accountant. The companies' registered offices fell within the Tribunal's territorial jurisdiction. On that basis and in exercise of the Tribunal's powers under the Companies Act and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the requirement to convene meetings of shareholders and unsecured creditors was dispensed with. The Bench nevertheless directed that notices, with requisite documents and disclosures, be sent to the Central Government through the Regional Director (Northern Region), the Income-tax Authorities, the Registrar of Companies, the Official Liquidator and other sectoral regulators as mandated by law, and that proof of dispatch and an affidavit of compliance be filed. Compliance with applicable forms, formats and statutory provisions was mandated before the Tribunal and for subsequent filing with the Registrar of Companies upon sanction.

The application is allowed; meetings of shareholders and unsecured creditors are dispensed with for the applicant companies, subject to the Tribunal's directions to serve prescribed notices and to file proofs of dispatch and affidavit of compliance in accordance with law.

Final Conclusion: The Tribunal allowed the first-motion application under sections 230-232, dispensed with convening meetings of shareholders and unsecured creditors for the applicant companies on the basis of recorded consents and certifications, and directed service of statutory notices to the prescribed authorities and strict compliance with the Companies Act, 2013 and the Rules, with filings of proof of dispatch and affidavit of compliance.

Conversion of loan into builder-buyer agreement - Section 7 IBC summary jurisdiction - Home buyer exclusion under Section 5(8)(f) of the IBC - Premature filing - Effect of latest agreement between parties - Inadmissibility of settlement not placed before Adjudicating Authority

Conversion of loan into builder-buyer agreement - Effect of latest agreement between parties - Home buyer exclusion under Section 5(8)(f) of the IBC - Whether the Application under Section 7 was maintainable where the parties had executed a subsequent builder-buyer agreement which, on its face, altered the relationship between lender and corporate debtor. - HELD THAT: - The Court treated the Agreement dated 01.10.2016 as the latest admitted document between the parties and held that, on its terms, the appellant had assumed the position of a home buyer under the builder-buyer arrangement. The Adjudicating Authority examined the contents of that Agreement and applied the exclusionary concept embodied in Section 5(8)(f) of the IBC read with its explanation to conclude that the relationship was governed by the builder-buyer arrangement rather than a simple repayable loan. Because the Agreement did not describe the transfer as mere security and on its face provided for transfer/performance by allotment of the flat, the Tribunal accepted the Adjudicating Authority's conclusion that the Section 7 petition was not maintainable on that basis. [Paras 7, 8, 9, 11]

The appeal does not warrant interference with the Adjudicating Authority's finding that the parties' latest arrangement was a builder-buyer agreement and that the Section 7 application was therefore not maintainable on that foundation.

Premature filing - Section 7 IBC summary jurisdiction - Whether the Section 7 petition was premature in view of the timelines and grace period provided in the builder-buyer agreement. - HELD THAT: - The Adjudicating Authority computed the contractual period of 12 months and the additional grace period of 180 days as specified in the 01.10.2016 Agreement and found that possession had been offered within that combined period. The petition under Section 7 was filed on 04.01.2018, which the Tribunal accepted as being earlier than the expiry of the contractual period plus grace period, leading the Adjudicating Authority to treat the petition as premature. The Court found no reason to disagree with this assessment, noting the limited scope of summary proceedings under Section 7 and that detailed factual re examination of the real nature of the transaction is not appropriate in such proceedings. [Paras 9, 11]

The Adjudicating Authority correctly characterized the Section 7 petition as premature, and the finding was not disturbed.

Inadmissibility of settlement not placed before Adjudicating Authority - Section 7 IBC summary jurisdiction - Whether settlement documents and communications said to have been executed during the pendency of the Section 7 proceedings could be considered when those documents were not placed before the Adjudicating Authority. - HELD THAT: - The appellant pointed to alleged settlement documents and cheques executed during the pendency of the Section 7 application. The Court observed that those documents did not appear to have been brought to the Adjudicating Authority's notice and that, on the record before the Tribunal, there was a dispute as to the genuineness and effect of the purported settlement. Given that the contested settlement was not on record before the Adjudicating Authority, the Tribunal held it could not take cognizance of those documents for the purpose of overturning the dismissal of the Section 7 petition. [Paras 10]

The contested settlement documents, not having been placed before the Adjudicating Authority, could not be relied upon to impugn the dismissal of the Section 7 application.

Final Conclusion: The Tribunal found no merit in the appeal: the Adjudicating Authority's conclusion that the parties' latest arrangement was a builder-buyer agreement, that the Section 7 petition was premature, and that unaudited settlement documents not placed before the Adjudicating Authority could not be acted upon, was upheld; the appeal is dismissed with no costs.

Initiation of corporate insolvency resolution process - operational creditor - admission under section 9 of the Insolvency and Bankruptcy Code, 2016 - effect of acknowledgment and memorandum of understanding on limitation - jurisdiction of the Adjudicating Authority - invocation of moratorium - appointment of interim resolution professional

Initiation of corporate insolvency resolution process - operational creditor - admission under section 9 of the Insolvency and Bankruptcy Code, 2016 - The application under section 9 IBC filed by the applicant as an operational creditor is maintainable and is admitted, thereby initiating CIRP against the corporate debtor. - HELD THAT: - On the material placed on record the ledger and invoices show the existence of an operational debt and the respondent has defaulted in payment of the claimed amount which was admitted by the respondent in its reply. The Tribunal, on perusal of the application and annexures, found that the debt is due and payable and that the facts justify admission of the petition under section 9 of the IBC, 2016. Consequently the Tribunal held that initiation of the corporate insolvency resolution process is warranted and admitted C. P. No. (IB)-233/9/JPR/2019. [Paras 11]

Application under section 9 IBC admitted and CIRP initiated against the respondent/corporate debtor.

Effect of acknowledgment and memorandum of understanding on limitation - The executed memorandum of understanding and earlier admissions by the corporate debtor brought the claim within the law of limitation and rendered the application maintainable despite the last invoice being dated earlier. - HELD THAT: - The last invoice was dated January 11, 2011, but the respondent admitted past dues in correspondence dated July 20, 2015 and August 3, 2016, and both parties executed a memorandum of understanding on August 16, 2018 whereby the respondent agreed to pay within six months. The Tribunal observed that the admissions and the MOU operate to revive/extend the claim for limitation purposes and, relying on the relevance of the contractual acknowledgment, held that the matter falls within the applicable limitation principle (article 137) and is not time-barred for purposes of section 9 proceedings. [Paras 10]

Admissions and MOU remove the bar of limitation and the claim is within limitation for adjudication under section 9.

Jurisdiction of the Adjudicating Authority - This Tribunal has jurisdiction to entertain and adjudicate the application as the registered office of the corporate debtor is located within its territorial jurisdiction. - HELD THAT: - The registered office of the corporate debtor is situated in Jaipur, which falls within the territorial limits of this Bench. On the records and pleadings, the Tribunal specifically recorded territorial competence to hear the petition and proceed with admission. [Paras 11]

Tribunal has jurisdiction to entertain and adjudicate the section 9 application.

Appointment of interim resolution professional - invocation of moratorium - An interim resolution professional was appointed and the moratorium under the Code was declared consequent to admission of the application; related directions regarding IRP's duties and deposit for expenses were issued. - HELD THAT: - Upon admission the Tribunal appointed the named IRP whose consent and registration were on record. The Tribunal directed the IRP to take over the affairs of the corporate debtor, issue public notices, collate claims and perform duties under the Code. It also invoked the moratorium under the Code and directed the applicant to deposit a specified sum to defray IRP's expenses, while requiring co-operation from the debtor's personnel and compliance with statutory timelines. [Paras 12, 13]

Named IRP appointed; moratorium invoked and procedural directions issued for conducting CIRP.

Final Conclusion: The Tribunal admitted the section 9 application filed by the applicant as an operational creditor, held that admissions and the MOU brought the claim within limitation, recorded territorial jurisdiction, appointed the named interim resolution professional and invoked the moratorium, thereby directing commencement of the CIRP against the respondent.

Regular bail - presumption of innocence - pre-trial detention - constitutional invalidity of the twin conditions for bail in section 45 of the PMLA - completion of investigation versus custody - documentary evidence and seizure - risk of tampering with evidence or influencing witnesses - conditions of bail and travel restrictions (passport surrender, look-out-circular)

Constitutional invalidity of the twin conditions for bail in section 45 of the PMLA - Whether the twin conditions for grant of bail contained in section 45 PMLA operate as a bar to grant of bail in this case. - HELD THAT: - The court accepted the settled position in Nikesh Tarachand Shah that the twin conditions in section 45(1) are constitutionally invalid and struck down insofar as they imposed additional conditions for release on bail. In light of the absence of any subsequent authoritative decision restoring those twin conditions as constitutionally valid, this court treated the twin conditions as inapplicable and therefore proceeded to consider the bail application on conventional bail principles. [Paras 19]

The twin conditions in section 45(1) PMLA were treated as invalid and were not applied in considering the bail application.

Regular bail - presumption of innocence - pre-trial detention - completion of investigation versus custody - documentary evidence and seizure - risk of tampering with evidence or influencing witnesses - Whether the applicant should be enlarged on regular bail notwithstanding the gravity and quantum of alleged economic wrongdoing. - HELD THAT: - Applying established bail principles, the court considered the nature of the allegations, the materials on record, and the reality of continued custody. The court observed that (i) the alleged offences arise from commercial financial transactions recorded through banking channels and reflected in documentary records; (ii) substantial time elapsed before arrest and there was no material of tampering during that period; (iii) physical and electronic records have been seized and are in the ED's control; (iv) a complaint arising from the ECIR has been filed and investigation in respect of that complaint stands completed to the extent reflected therein; and (v) the applicant has strong societal roots and is not a flight risk. Given the documentary character of the prosecution case, the seizure of evidence, absence of material showing present likelihood of tampering or influencing witnesses, and the inappropriateness of indefinite pre-trial detention merely to await further investigation, the court found there was no compelling reason to continue judicial custody. [Paras 22, 23, 24, 25, 26]

The applicant is entitled to regular bail; continued judicial custody was not justified.

Completion of investigation versus custody - documentary evidence and seizure - Whether the ED's ongoing investigation into other alleged transactions (beyond those investigated to date) is a sufficient ground to keep the applicant in custody. - HELD THAT: - The court recorded that investigation traced and completed matters aggregating to a part of the alleged amount and that no timeline was indicated for completion of the remaining probe. The court held that tying the applicant's prolonged custody to indefinite further investigation would vest the key to his liberty with the investigating agency. Where documentary evidence and electronic records have been seized and a complaint filed, the court found no justification to detain the accused merely because further international or prolonged tracing of transactions may be pending. [Paras 20, 21]

Ongoing or incomplete investigation into other transactions is not a sufficient ground for continued judicial custody in this case.

Risk of tampering with evidence or influencing witnesses - conditions of bail and travel restrictions (passport surrender, look-out-circular) - What conditions, if any, should be imposed on bail to allay concerns about absconding, tampering or influencing witnesses and to secure the investigation and trial. - HELD THAT: - While concluding there was no prima facie basis to regard the applicant as a flight risk or as likely to tamper with evidence, the court imposed stringent conditions to mitigate any residual risk and to ensure the applicant's availability for trial. The conditions included a substantial personal bond with sureties from family members, surrender of passport, prohibition on leaving the country without court permission, furnishing contact details, cooperation in further investigation, prohibition on contacting prosecution witnesses and relevant officials (domestic or abroad), obligation to disclose certain financial/corporate transactions, and a direction to the ED to request a look-out-circular. These measures were tailored to secure the ends of justice while protecting the applicant's liberty pending trial. [Paras 29]

Bail was granted subject to specified conditions including bond with sureties, passport surrender, non-departure without court permission, cooperation with investigation, non-contact with witnesses and certain officials, disclosure of specified financial transactions, and steps to institute a look-out-circular.

Final Conclusion: The High Court allowed the applicant's regular bail application in proceedings arising from ECIR No. ECIR/05/DLZO-II/2019 dated 24.07.2019, holding that the twin conditions in section 45 PMLA were not to be applied, that continued judicial custody was not justified given the documentary nature of the case and seizure of records, and releasing the applicant on bail subject to detailed restrictive conditions to secure investigation and trial.

Cross-sectoral utilisation of CENVAT credit - intersectoral CENVAT credit / common pool of credit - no one-to-one correlation requirement for availment or utilisation of CENVAT credit - availability of CENVAT credit on input services for manufacturers of excisable goods - time bar/limitation for issuance of show cause notice

Cross-sectoral utilisation of CENVAT credit - no one-to-one correlation requirement for availment or utilisation of CENVAT credit - availability of CENVAT credit on input services for manufacturers of excisable goods - intersectoral CENVAT credit / common pool of credit - Utilisation of CENVAT credit availed on input services for payment of excise duty on manufactured and cleared excisable goods is permissible and is not subject to a one to one correlation requirement. - HELD THAT: - The Tribunal held that Rule 3(1) read with the amendment effective 10.09.2004 permits a manufacturer of excisable goods to take CENVAT credit of Service Tax paid on input services and there is no statutory requirement of a one to one nexus between a particular input service and a specific excisable output. The Budget speech and CBEC clarification confirming that credits on inputs, capital goods and input services are available in a common pool for payment of Excise duty and/or Service Tax were noted as consistent with this scheme. Prior decisions, including apex court and tribunal authorities cited in the order, support the principle that cross utilisation of credit is permissible and that credit cannot be denied merely for lack of direct correlation. The case relied upon by the Department was distinguished as concerning transfer of accumulated credit under a different rule and not on the present question of utilisation. For these reasons the impugned order denying utilisation on the stated ground was held unsustainable on merits. [Paras 6, 7]

Credit availed on input services could lawfully be utilised for payment of duty on excisable goods; the denial of such utilisation on the ground of absence of one to one correlation was set aside.

Time bar/limitation for issuance of show cause notice - The show cause notice dated 05.09.2011 in respect of March 2009 to August 2009 is barred by limitation. - HELD THAT: - The Tribunal found that the SCN was issued after expiry of the normal period and that the Revenue's recourse to extended limitation was not justified on the material on record. The appellants had been regularly filing returns disclosing the accumulated credit and there was no prima facie suppression or mis declaration warranting invocation of extended limitation; a prior order disposing a stay petition also observed absence of suppression. The Tribunal noted that timely scrutiny by the Department could have detected the accumulated credit earlier and that the Department was therefore not entitled to the extended period in the circumstances of the case. [Paras 8]

The SCN in question was held time barred and liable to be quashed.

Final Conclusion: Appeal allowed; the impugned order confirming demand and penalty is set aside as unsustainable on merits and barred by limitation.

Classification as white chocolate - sugar confectionery (including white chocolate) not containing cocoa - classification under Heading 1704.90 - HSN Explanatory Notes as interpretative aid - commercial parlance test - burden of proof on Revenue to establish exclusionary clause - extended period of limitation for suppression - penalties and interest where dispute arises from bona fide interpretation

Classification as white chocolate - classification under Heading 1704.90 - HSN Explanatory Notes as interpretative aid - commercial parlance test - burden of proof on Revenue to establish exclusionary clause - Whether the impugned products (Nestle Milky Bar and Eclairs) are white chocolate and therefore excluded from the concessional notifications under Heading 1704.90 - HELD THAT: - The Tribunal held that HSN Explanatory Notes to Chapter 17 expressly describe 'white chocolate' (inter alia) as composed of sugar, cocoa butter, milk powder and flavouring agents and thus the Explanatory Notes are relevant and operative for classification. The determinative factual question is whether cocoa butter was used in the manufacture of the impugned products during the relevant periods. The appellants produced affidavits and documentary material asserting that cocoa butter was not used in Milky Bar and was discontinued in Eclairs w.e.f. 01.01.2008; the Department relied largely on packing-materials and wrapper descriptions but did not produce sample draws, chemical tests or other conclusive evidence to demonstrate presence of cocoa butter in the goods cleared during the periods in dispute. On the record the Revenue failed to discharge the burden of proof to bring the goods within the exclusion for 'white chocolate'. In those circumstances, and having regard to relevant precedent (including a coordinate tribunal decision holding similar boiled-sweets without cocoa butter not to be white chocolate), the Tribunal concluded that the impugned goods are not excluded as white chocolate and therefore remain within the scope of Heading 1704.90 and eligible for the notifications relied upon by the appellants. [Paras 23, 24, 25, 26, 28]

Impugned goods are not shown to be white chocolate; they are not excluded from the concessional notifications under Heading 1704.90.

Extended period of limitation for suppression - penalties and interest where dispute arises from bona fide interpretation - burden of proof on Revenue to establish exclusionary clause - Whether invocation of the extended period of limitation, and the levy of interest and penalties, were justified in respect of the earlier periods - HELD THAT: - The Tribunal examined the temporal and evidential matrix and noted that the Department delayed issuing proceedings despite being aware of prior decisions (including the 2008 coordinate Bench ruling) and, crucially, did not conduct sample testing or produce decisive proof of cocoa butter in the goods. Given the absence of conclusive evidence of suppression and that the classification point involved a bona fide question of tariff interpretation, the Department did not establish deliberate suppression to justify extended limitation or penal consequences. Where short-payment arises from bona fide differences of legal interpretation, penalties are not warranted; interest and extended-period invocation were held unjustified on the facts. [Paras 21, 25, 28]

Invocation of extended limitation, and imposition of interest and penalties for the earlier periods, are not sustained on the record.

Final Conclusion: All appeals are allowed: the Tribunal concluded that Revenue failed to prove that the goods were white chocolate excluded from the notifications and that extended limitation, interest and penalties were not justified; consequential relief to the appellants follows as per law.

Service of assessment order - validity of recovery notice - notice and service requirement in tax proceedings - quashing of recovery proceedings for lack of service

Service of assessment order - validity of recovery notice - Impugned recovery notice issued to enforce demands for the periods 2008-09 to 2015-16 is invalid because the underlying orders of assessment were not served on the petitioner. - HELD THAT: - The petition challenged a recovery notice calling upon the petitioner to pay demands raised for the periods 2008-09 to 2015-16. It was common ground that, although assessment orders had been prepared and dispatched, they were returned and had not been served on the petitioner. In the absence of service of the assessment orders giving rise to the demands, the recovery notice issuing enforcement of those demands lacked foundation. Consequently, the Court quashed the recovery notice. The Court also continued the interim stay of recovery for four weeks to enable the petitioner to pursue remedies against the assessment orders now received through counsel. [Paras 6, 7]

Recovery notice quashed for want of service of the assessment orders; interim stay continued for four weeks to enable petitioner to take action against the assessment orders.

Final Conclusion: The writ petition is allowed to the extent that the impugned recovery notice is quashed for lack of service of the assessment orders for 2008-09 to 2015-16; interim stay of recovery extended for four weeks to enable the petitioner to challenge the assessment orders.

Refund of excess tax under Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006 - statutory interest for delayed refund - admitted liability to refund by assessing authority - obligation to disburse refund notwithstanding transfer of assessment file - judicial direction for payment within stipulated timeline

Refund of excess tax under Section 42(5) of the Tamil Nadu Value Added Tax Act, 2006 - statutory interest for delayed refund - obligation to disburse refund notwithstanding transfer of assessment file - The respondents were directed to disburse the refund found due for Assessment year 2008-2009, together with statutory interest for delay, within a specified period. - HELD THAT: - The Court recorded that the assessing authority had determined a refund due for Assessment year 2008-2009 and that the respondents in their counter-affidavit admitted liability for the refund. Section 42(5) prescribes that excess tax found refundable must be paid and that statutory interest is payable where refund is not made within ninety days of the relevant order. The respondents' explanation that the assessment file had been transferred and that the file must be traced, or that verification is pending, was held insufficient to postpone payment where liability is admitted and the statutory provision for interest applies. In these circumstances the Court exercised its supervisory jurisdiction to direct payment of the refund along with statutory interest and fixed a limited timeline for compliance. [Paras 2, 4, 9, 10]

Respondents directed to pay the refund due for Assessment year 2008-2009 together with statutory interest, within twelve weeks from receipt of the order.

Final Conclusion: Writ petition allowed; respondents directed to disburse the admitted refund for Assessment year 2008-2009 with statutory interest within twelve weeks; no costs.

Independent application of mind - reliance on Enforcement Wing report - Assessing Officer may deviate from Enforcement/ISIC proposals subject to recording of reasons - quashing of assessment passed without independent scrutiny

Independent application of mind - reliance on Enforcement Wing report - quashing of assessment passed without independent scrutiny - Validity of assessments framed wholly on the report of the Enforcement Wing without any independent application of mind by the Assessing Officer - HELD THAT: - The Court found that the impugned assessments for the specified periods were enacted entirely on the Enforcement Wing's report and did not reflect any independent evaluation by the Assessing Officer. The Court relied on administrative guidance in Circular No.3/2019 which recognizes that where the Audit/Inspection proposals from the Enforcement Wing or ISIC are not in conformity with law or established judicial principles, the Assessing Officer is permitted to deviate from those proposals and finalize assessment after recording reasons. Because no independent application of mind was exercised and no reasons were recorded, the assessments were without requisite adjudicatory scrutiny and could not stand. [Paras 3, 4]

Impugned assessment orders quashed for lack of independent application of mind by the Assessing Officer.

Assessing Officer may deviate from Enforcement/ISIC proposals subject to recording of reasons - remand for fresh proceedings - Whether fresh proceedings may be initiated following quashing of the assessments - HELD THAT: - The Court granted liberty to the revenue to initiate fresh proceedings, while emphasizing the Assessing Officer's duty to independently examine issues and to record reasons where deviating from Enforcement/ISIC proposals as per the cited circular. The liberty to proceed afresh is subject to the temporal limitation imposed by the Court, thereby allowing re-examination consistent with statutory and administrative prescriptions. [Paras 5]

Liberty granted to initiate fresh proceedings within six weeks from receipt of a copy of the order.

Final Conclusion: Assessments for 2011-12 and 2012-13 framed solely on the Enforcement Wing report without independent adjudication are quashed; revenue permitted to recommence proceedings afresh subject to the Court's six week timeframe and in accordance with the Assessing Officer's duty to independently examine and record reasons if deviating from Enforcement/ISIC proposals.

Regular bail - economic offences involving public money - role of accused as managing director/CEO in assessing bail - apprehension of tampering with evidence - ongoing investigation and further investigation material - parity in grant of bail - Article 21 personal liberty - grave offences punishable with life imprisonment

Regular bail - economic offences involving public money - role of accused as managing director/CEO in assessing bail - apprehension of tampering with evidence - ongoing investigation and further investigation material - Article 21 personal liberty - grave offences punishable with life imprisonment - Whether the petitioner is entitled to grant of regular bail - HELD THAT: - The Court considered the chargesheet and the material placed on record, including allegations that the petitioner, as CEO and Managing Director, approved numerous unsecured Corporate Loan Book (CLB) advances which form part of an alleged scheme to siphon public money. The Court noted that substantial parts of the money trail remain untraced and further investigation by the Economic Offences Wing and SEBI is ongoing. It accepted the prosecution's contention that the petitioner, by virtue of his position, had a central role in approvals and that there is some documentary and investigative material (including RBI/SEBI communications and alleged fabricated minutes and ante dated documentation) relevant to the conspiracy. The Court also found a real apprehension that the petitioner, being influential and having access to subordinates, could tamper with evidence or influence witnesses and that there was a risk of absconding. While recognising the constitutional importance of personal liberty and authorities emphasising protection against indefinite detention, the Court distinguished precedents relied upon by the petitioner on the basis that those decisions involved different factual matrices (including absence of public money or lower maximum punishments) and were therefore not comparable. Given the gravity of the offences alleged (including Section 409 IPC attracting life sentence), the scale of alleged loss, the stage and extent of ongoing investigations, and the risk of tampering/absconding, the Court concluded that bail ought not to be granted. [Paras 17, 18, 22, 23, 34]

Petition for regular bail dismissed; court not inclined to grant bail in view of the gravity of allegations, ongoing investigation and risk of tampering/absconding.

Parity in grant of bail - regular bail - Whether the bail order granted to a co-accused (Anil Saxena) operates as a precedent or mandates similar relief to the petitioner - HELD THAT: - The Court examined the earlier bail order in favour of co-accused Anil Saxena and the subsequent disposition by the Supreme Court. It observed that the earlier order was fact specific and expressly confined to the facts and role of that co-accused (not being part of day-to-day functioning of RFL), and that the Supreme Court declined to interfere while noting the limited scope of the observations. The Court held that the earlier grant of bail to another accused does not create parity for the petitioner where the petitioner's alleged role, extent of approvals, and position in the company are materially different and where the facts and stage of investigation as to the petitioner are distinct. [Paras 20, 32, 33]

Order granting bail to co-accused does not entitle the petitioner to parity; previous bail order not applicable to petitioner.

Ongoing investigation and further investigation material - Whether the Trial Court should be influenced by observations made in this order - HELD THAT: - The High Court expressly directed that the Trial Court shall not be influenced by the observations made by this Court while passing the order in the present petition. The direction preserves the trial court's independent adjudicatory function and confines the High Court's remarks to the bail proceedings, without dictating trial-stage findings. [Paras 36]

Trial Court to remain uninfluenced by the High Court's observations in this bail order.

Final Conclusion: The petition for regular bail is dismissed. The High Court refused bail on the basis of the gravity of allegations involving public funds, the petitioner's alleged central role as CEO/MD, ongoing investigations and the real risk of tampering with evidence or absconding; the earlier bail granted to a co-accused was held inapplicable to the petitioner and the Trial Court was directed not to be influenced by this order.