TaxTMI Updates e-Newsletter
Aug 04,2021

Power to freeze bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Maintainability of writ under Article 226 after prior Supreme Court consideration and dismissal - Effect of subsequent superseding order making impugned communication otiose - Preclusion by earlier dismissal in higher forum

Maintainability of writ under Article 226 after prior Supreme Court consideration and dismissal - Preclusion by earlier dismissal in higher forum - Whether the petition challenging the Deputy Director's communication of 03.02.2021 freezing the petitioner's account is maintainable in view of the petitioner's earlier writ petition before the Supreme Court which sought the same relief and was dismissed. - HELD THAT: - The Court noted that the petitioner had earlier moved the Supreme Court in respect of the same impugned communication and that the Supreme Court dismissed that writ petition with the observation that there was no ground to entertain the matter and imposed costs. Having regard to that prior dismissal, the High Court exercised its discretion not to entertain a subsequent writ under Article 226 seeking the same relief. The Court further observed that a later order dated 25.02.2021 by the Additional Director freezing the same account had been passed after the communication dated 03.02.2021, rendering the earlier communication largely outlived in utility. In these circumstances the petition was declined, while recording that the petitioner remained free to challenge the later orders passed by the Additional Director subject to any legal impediment arising from the Supreme Court's earlier rejection.

Writ petition dismissed as not maintainable in view of prior Supreme Court dismissal and the impugned communication having been superseded by a subsequent freezing order; petitioner left free to challenge subsequent orders.

Final Conclusion: The writ petition challenging the Deputy Director's communication dated 03.02.2021 is dismissed on the ground of prior Supreme Court rejection and because the communication has been superseded by a later order; liberty granted to the petitioner to challenge subsequent orders subject to any legal impediment.

Revocation of cancellation of registration - Failure to furnish returns - Requirement to furnish returns and pay tax, interest, penalty and late fee before revocation - Rule 23 of the CGST Rules, 2017 - Circular No.99/18/2019-GST - effect of first proviso to sub rule (1) of Rule 23 - Verification of payment particulars and status of returns

Revocation of cancellation of registration - Requirement to furnish returns and pay tax, interest, penalty and late fee before revocation - Rule 23 of the CGST Rules, 2017 - Circular No.99/18/2019-GST - effect of first proviso to sub rule (1) of Rule 23 - Whether the appellant had complied with the conditions for filing an application for revocation of cancellation of registration and was entitled to have the cancellation considered for revocation. - HELD THAT: - The adjudicating authority cancelled registration for non filing of returns and non payment of interest. The appellant produced GSTR 3B returns up to January 2020 21 and produced challans showing payment of interest aggregating to the amount noted by the adjudicating authority for the periods July 2017 to March 2018, April 2018 to March 2019 and April 2019 to March 2020. Rule 23(1) precludes filing an application for revocation where returns are not furnished and amounts due are unpaid; Circular No.99/18/2019 clarifies that returns due till date of cancellation must be furnished before seeking revocation. The Commissioner (Appeals) found that the appellant had filed returns up to the date of cancellation and had deposited the pending interest liability, thereby substantially complying with the conditions for seeking revocation under Rule 23. On that basis the appeal was allowed to the extent of directing consideration of revocation. [Paras 5, 6, 9]

The appellant has substantially complied with the conditions for seeking revocation and the appeal is allowed to the extent that the registration may be considered for revocation.

Verification of payment particulars and status of returns - Revocation of cancellation of registration - Whether the revocation application should be finally granted without further verification by the proper officer. - HELD THAT: - Although the appellant has produced returns and challans evidencing payment of interest, the Commissioner (Appeals) did not itself effect the revocation but directed the proper officer to examine and verify the payment particulars of tax, late fee and interest and the status of returns before passing the order in FORM GST REG 22 or otherwise. The appellate order therefore requires the proper officer to carry out due verification of records and payments as a prelude to passing a final order on revocation. [Paras 9]

The matter is remitted to the proper officer to verify payment particulars and status of returns and thereafter consider the revocation application.

Final Conclusion: The appeal is allowed insofar as the appellant has been held to have substantially complied with the conditions for seeking revocation of cancellation; the matter is remitted to the proper officer to verify payments and return status and to pass appropriate order on revocation in accordance with Rule 23 of the CGST Rules, 2017 and relevant circular guidance.

Refund of tax paid on zero-rated supplies to SEZ units under Section 54(1) of the CGST Act - effect of physical filing of GSTR-3B pursuant to insolvency direction on discharge of tax liabilities and reflection in electronic ledgers - principles of natural justice and requirement of opportunity of hearing before rejection of refund - extension of time for compliance by Notification No. 35/2020 and amended Notification No. 55/2020 - Rule 92(3) of the CGST Rules - no rejection of refund without opportunity of being heard - remand for de novo consideration and requirement of a reasoned/speaking order

Refund of tax paid on zero-rated supplies to SEZ units under Section 54(1) of the CGST Act - effect of physical filing of GSTR-3B pursuant to insolvency direction on discharge of tax liabilities and reflection in electronic ledgers - Whether the adjudicating authority could reject the appellant's refund claims on the ground that tax was not reflected as paid into the Government account because GSTR-3B had been filed physically pursuant to NCLT direction. - HELD THAT: - The adjudicating authority rejected the refund applications on the sole basis that, because GSTR-3B returns were filed physically (as permitted by an insolvency order), the corresponding debits/credits were not reflected in the portal-ledgers and thus there was no payment in the Government account. The Commissioner (Appeals) noted these factual findings in the impugned orders but did not adjudicate the substantive entitlement to refund on merits. Given that the rejection was founded on the ledger reflection issue and that the appellant had not been heard before passing the orders, the appellate authority concluded that the matter requires fresh consideration by the adjudicating authority with opportunity to the appellant to place on record submissions and documents addressing the effect of physical filing and payment discharge. [Paras 7, 10]

Remanded to the adjudicating authority for fresh adjudication on the ledger/payment issue after giving the appellant an opportunity to submit its case and for the authority to pass a reasoned order.

Principles of natural justice and requirement of opportunity of hearing before rejection of refund - extension of time for compliance by Notification No. 35/2020 and amended Notification No. 55/2020 - Rule 92(3) of the CGST Rules - no rejection of refund without opportunity of being heard - Whether the impugned orders complied with the requirement of hearing and applicable time extensions before rejecting the refund claims. - HELD THAT: - The appellant alleged non-receipt of show-cause notices on account of COVID-19 lockdown and reliance on Government notifications extending time-limits. The appellate authority examined the record and accepted that the orders were passed without affording a proper opportunity of being heard, that the relevant periods fall within the extended timelines under Notification No. 35/2020 and its amendment No. 55/2020, and that Rule 92(3) mandates that no refund application be rejected without giving the applicant an opportunity of being heard. On these bases the Commissioner (Appeals) held that denial of hearing and summary rejection was procedurally improper. [Paras 8, 9, 10]

Matter remitted to the adjudicating authority to grant proper opportunity of hearing in accordance with Rule 92(3) and the time extensions and to pass a speaking order after considering the appellant's submissions.

Final Conclusion: All four appeals are disposed of by remitting the matters to the adjudicating authority for de novo consideration: the adjudicating authority shall afford the appellant the opportunity of being heard (allowing submission of its averments), consider the effect of physical filing of returns and the applicability of the time-extension notifications, and thereafter pass reasoned/speaking orders on the refund claims.

Personal hearing in faceless assessment - Principles of natural justice - Interpretation of 'may' in Section 144B(7)(vii) - Faceless Assessment Scheme - obligation to consider hearing requests - Non est assessment for non-compliance with faceless procedure

Personal hearing in faceless assessment - Interpretation of 'may' in Section 144B(7)(vii) - Principles of natural justice - Faceless Assessment Scheme - obligation to consider hearing requests - Validity of assessment order passed without granting the requested personal hearing under Section 144B and concomitant violation of natural justice and the Faceless Assessment Scheme. - HELD THAT: - The Court held that Section 144B(7)(vii) contemplates that the assessee may request a personal hearing where a variation is proposed in a draft or final draft assessment order, and that such a request must be considered under the Faceless Assessment Scheme. The use of the word 'may' in clause (vii) does not absolve the revenue of the obligation to consider requests for personal hearing; the scheme and enabling provisions require that requests be considered and, where appropriate under the standards and procedures to be laid down, approved. The Court relied on the reasoning in the predecessor Division Bench decision in Sanjay Aggarwal v. National Faceless Assessment Centre, which held that, in the absence of any standards having been framed for dealing with such requests, it was incumbent on the revenue to accord a personal hearing when requested. In the present case, the impugned assessment order was passed without granting the personal hearing sought by the petitioner despite repeated requests, resulting in a breach of the principles of natural justice and non-compliance with the mandatory procedure under the Faceless Assessment Scheme and Section 144B.

Impugned assessment order set aside; matter remanded to the Assessing Officer to grant an opportunity of hearing by Video Conferencing and thereafter pass a reasoned order in accordance with law.

Final Conclusion: The assessment order dated 31st May 2021 and proceedings pursuant thereto are set aside for failure to consider the petitioner's requests for personal hearing; the matter is remanded to the Assessing Officer to grant a hearing by video conferencing and pass a reasoned order in accordance with Section 144B and the Faceless Assessment Scheme.

Conversion of agricultural land into stock-in-trade - computation of capital gain on conversion using fair market value as on date of conversion - valuation of stock-in-trade: saleable plots versus entire converted land including roads and common areas - revenue neutrality of tax treatment

Computation of capital gain on conversion using fair market value as on date of conversion - valuation of stock-in-trade: saleable plots versus entire converted land including roads and common areas - revenue neutrality of tax treatment - Whether long term capital gain on conversion of agricultural land to non agricultural stock in trade must be computed on the fair market value of the entire converted land or may be computed with reference to the value attributable to the saleable plots only - HELD THAT: - The Tribunal noted that conversion to non agricultural use requires taking fair market value of the land as on the date of conversion because stock in trade must be valued. The assessee sought to compute long term capital gain with reference only to the saleable plot area, excluding roads and common peripheral areas, on the ground that such areas are not sold separately and have no independent market value. The Tribunal accepted that roads and peripheral development, though integral to the project, only serve to enhance the price of individual plots and cannot be sold in isolation; their cost, when loaded on saleable plots, increases the stock in trade value and will thereby reduce the taxable profit when those plots are sold as business income. The Departmental Representative failed to demonstrate any prejudice to revenue from allowing the assessee's method. Applying the principle that issues which are tax neutral need not be contested, the Tribunal held that permitting computation of capital gain with reference to the value attributable to the saleable plots is allowable and does not cause revenue loss. [Paras 5, 6]

Allowed the assessee's ground; long term capital gain may be computed with reference to the value attributable to the saleable plots (stock in trade) rather than the fair market value of the entire converted land, the claim being revenue neutral

Final Conclusion: Appeal partly allowed: the Tribunal allowed the assessee to compute long term capital gain on conversion with reference to the value attributable to the saleable plots rather than on the fair market value of the entire converted land, holding the approach to be revenue neutral.

Reopening of assessment for lack of fresh tangible material - application of mind by assessing officer - survey and impounded documents considered in original assessment - Kelvinator principle on reopening - quashing of reassessment proceedings

Reopening of assessment for lack of fresh tangible material - survey and impounded documents considered in original assessment - application of mind by assessing officer - Kelvinator principle on reopening - quashing of reassessment proceedings - Validity of reassessment initiated under Section 148/147 where impounded survey documents were in AO's possession at the time of original assessment - HELD THAT: - The Tribunal held that reassessment could not be sustained because the Assessing Officer relied upon the same impounded documents that were available and examined during the original assessment under Section 143(3). The assessee had explained those documents and had offered certain income during the original proceedings, and the original assessment was completed after considering them. There was no fresh tangible material brought into the AO's possession after completion of the original assessment to justify reopening. Absent such fresh material, the AO lacked power to reopen on the same set of documents. The Tribunal applied the principle in Kelvinator and found that the CIT(A) erred in upholding the reopening where reasons recorded did not disclose any new material or proper application of mind by the AO to justify reassessment. [Paras 8, 9, 10, 11]

Reopening under Section 148/147 quashed for want of fresh tangible material; cross-objection of the assessee allowed and Revenue's appeal dismissed as infructuous.

Final Conclusion: The reassessment initiated on the basis of survey/impounded documents that were already considered in the original assessment was quashed for lack of fresh tangible material; the assessee's cross-objection is allowed and the Revenue's appeal is dismissed as infructuous.

Disallowance under section 14A of the Income-tax Act - Rule 8D(2)(ii) - interest disallowance - Rule 8D(2)(iii) - expenditure disallowance - recording of satisfaction/dissatisfaction by the assessing officer - average value of investments for computation under Rule 8D - recomputation/remand for verification of disallowance

Recording of satisfaction/dissatisfaction by the assessing officer - Disallowance under section 14A of the Income-tax Act - Validity of invocation of Rule 8D in absence of a particular form of recorded satisfaction by the Assessing Officer. - HELD THAT: - The Tribunal held that the Assessing Officer's satisfaction or dissatisfaction need not be recorded in any prescribed form and may be inferred from the assessment order where the AO has considered the assessee's submissions and discussed applicability of section 14A. Reliance was placed on the Supreme Court's observation that an AO is not required to record satisfaction in a particular manner. On the facts, the AO had discussed section 14A after considering the assessee's letters, which demonstrated dissatisfaction with the claim, and therefore invocation of Rule 8D was valid. [Paras 8]

The legal ground that Rule 8D could not be invoked for want of a formally recorded satisfaction is rejected; AO's invocation of Rule 8D is valid.

Rule 8D(2)(ii) - interest disallowance - Disallowance under section 14A of the Income-tax Act - Whether interest disallowance under Rule 8D(2)(ii) is warranted for AY 2013-14 and 2014-15 where own funds and interest-free funds exceed investments and interest-free advances. - HELD THAT: - The Tribunal examined the assessee's statement of own funds and interest-free funds vis-a -vis investments and interest-free advances and found surplus non-interest-bearing funds in both years. Applying the ratio of the Karnataka High Court in CIT v. Micro Labs Ltd. (which follows the view that when non-interest-bearing funds exceed investments, investments are to be presumed financed from such funds), the Tribunal concluded that no disallowance of interest under Rule 8D(2)(ii) is called for. Accordingly the disallowances made by the AO and confirmed by the CIT(A) for these years were set aside. [Paras 9]

Disallowance under Rule 8D(2)(ii) for AY 2013-14 and 2014-15 deleted; AO directed to give effect to deletion.

Rule 8D(2)(iii) - expenditure disallowance - average value of investments for computation under Rule 8D - recomputation/remand for verification of disallowance - Fixing the correct base for computing disallowance under Rule 8D(2)(iii): whether average value of all investments must be taken or only those investments which yielded exempt income. - HELD THAT: - The Tribunal accepted the assessee's contention, supported by a decision of the Delhi Special Bench of the ITAT in Vireet Investments Pvt. Ltd., that for computing the average value of investments under Rule 8D(2)(iii) only those investments which have yielded exempt income should be taken into account. Consequently the Tribunal set aside the CIT(A)'s order on this point for all years and directed the Assessing Officer to recompute disallowances under Rule 8D(2)(iii) by considering only investments that produced exempt income. The Tribunal also specified that if such recomputation for AY 2016-17 results in an amount less than the sum voluntarily disallowed by the assessee, the disallowance shall be limited to the voluntarily disallowed amount of Rs. 5.00 lakhs. [Paras 10]

Order on disallowance under Rule 8D(2)(iii) set aside and remitted to AO for recomputation by considering only investments yielding exempt income; in AY 2016-17 disallowance to be not less than Rs. 5.00 lakhs if recomputed amount is lower.

Final Conclusion: Appeals partly allowed: AO's invocation of Rule 8D sustained; interest disallowances under Rule 8D(2)(ii) for AY 2013-14 and 2014-15 deleted; disallowances under Rule 8D(2)(iii) set aside and remitted for recomputation limited to investments yielding exempt income (with a floor of Rs. 5.00 lakhs for AY 2016-17).

Penalty under section 271(1)(c) - bona fide belief - definition of capital asset under section 2(14)(iii) - burden of proof on the assessee - inaccurate particulars - penalty under section 271F

Penalty under section 271(1)(c) - bona fide belief - definition of capital asset under section 2(14)(iii) - inaccurate particulars - burden of proof on the assessee - Whether penalty under section 271(1)(c) could be sustained where the assessee bona fide believed that the sold land was not a capital asset and produced documents in support. - HELD THAT: - The Tribunal found that the assessee produced a certificate from the Urban Development Department, a certificate from the Gram Sabha and a letter from the Revenue Department showing the land's agricultural status and that no town planning scheme applied. Relying on the principle that an assessee claiming that land is not a capital asset bears the initial burden to establish the same, the Tribunal held that on the material produced the assessee could reasonably entertain a bona fide belief that the land was agricultural and not within the definition of capital asset under section 2(14)(iii). The Tribunal applied the Supreme Court's teaching that a mere claim in the return which is not accepted by the assessing authority does not ipso facto amount to furnishing inaccurate particulars, and that where details in the return are not shown to be incorrect or false, penalty under section 271(1)(c) is not attracted. Earlier tribunal authority to the same effect was also noted. On this basis the Tribunal concluded that the burden cast by the Explanation to section 271(1)(c) was discharged and the penalty was not sustainable.

Penalty imposed under section 271(1)(c) deleted and appeal allowed.

Penalty under section 271F - bona fide belief - definition of capital asset under section 2(14)(iii) - Whether penalty under section 271F could be sustained where the assessee bona fide believed the sale did not attract capital gains as the land was not a capital asset. - HELD THAT: - The Tribunal, having decided in the connected appeal that the assessee was under a bona fide belief that the sold land was agricultural and not a capital asset, held that the same conclusion applies for the penalty charged under section 271F. As the foundational finding of bona fide belief and supporting documentary material was accepted in the connected matter, the Tribunal allowed relief in respect of the section 271F penalty as well.

Appeal against penalty under section 271F allowed.

Final Conclusion: Both appeals are allowed; the penalties under section 271(1)(c) and section 271F are deleted in view of the assessee's bona fide belief supported by documentary evidence that the sold land was agricultural and not a capital asset.

Assessment under Section 153C of the Income tax Act - AO's satisfaction that seized documents 'belong to' a person other than the searched person - satisfaction note - searched person and other person - requirement of recording satisfaction by the Assessing Officer - transmission of seized documents to jurisdictional Assessing Officer

AO's satisfaction that seized documents 'belong to' a person other than the searched person - satisfaction note - requirement of recording satisfaction by the Assessing Officer - Validity of initiation of proceedings under Section 153C where the Assessing Officer did not record satisfaction that seized documents belonged to the 'other person'. - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in M/s Super Malls Pvt. Ltd. and related authorities which require that, before proceedings under Section 153C are initiated, the Assessing Officer of the searched person must be conscious and satisfied that documents seized from the searched person belong to a person other than the searched person and must record that satisfaction in a satisfaction note. Where the Assessing Officer of the searched person and the other person is the same, a single satisfaction note stating that the documents seized from the searched person belong to the other person suffices; but the recording of such satisfaction remains mandatory. A review of the satisfaction notes in the present cases shows only recital of the fact of search and seizure in premises of the assessees (who are 'other persons' because the warrant named another person) and issuance of notices under Section 153C; none of the notes contains a finding that the seized documents 'belong to' the respective assessees. In absence of the mandatory recorded satisfaction that the seized materials belong to the other person, initiation of assessments under Section 153C is legally impermissible. Applying this principle to the facts before it, the Tribunal held that the proceedings under Section 153C were invalid and the resultant assessments could not stand.

Proceedings initiated under Section 153C were invalid for lack of recorded satisfaction that seized documents belonged to the other persons; assessments quashed and appeals allowed.

Final Conclusion: The Tribunal set aside the assessments completed under Section 153C for the stated assessment years for failure to record the mandatory satisfaction that seized documents belonged to the 'other persons', and allowed the appeals of the assessees.

Admission of additional claim during assessment without revised return - power of appellate authorities to admit new claims - distinction between powers of Assessing Officer and appellate authorities in Goetze (India) Ltd. - principle of consistency in taxation - CBDT Circular discouraging departmental advantage from assessee's omission

Admission of additional claim during assessment without revised return - power of appellate authorities to admit new claims - distinction between powers of Assessing Officer and appellate authorities in Goetze (India) Ltd. - principle of consistency in taxation - CBDT Circular discouraging departmental advantage from assessee's omission - Whether the claim for deduction of warranty expenses of Rs.12,26,74,120/- could be admitted and allowed by the appellate authority though not claimed in the return of income or by filing a revised return - HELD THAT: - The Tribunal found as an established fact that the assessee actually paid the warranty expenses of Rs.12,26,74,120/- in AY 2015-16 out of a provision of Rs.12,83,74,876/- created and offered to tax in AY 2014-15 but not claimed. While Goetze (India) Ltd. restricts the Assessing Officer from allowing a claim not made in the return (or revised return), the same authority recognises that appellate authorities possess power to admit new claims where the factual basis exists. The CIT(A), exercising plenary and co-terminus powers with the AO, admitted the appellant's inadvertent omission in the return and allowed the deduction, having regard to the assessee's consistent past practice accepted by the department and the CBDT guidance that the department should not take advantage of an assessee's omission. The Tribunal held that, in view of the AO's acceptance of the payment and the settled distinction in Goetze between AO's limitations and appellate powers, the CIT(A)'s admission and allowance of the warranty payment claim was proper and did not merit interference. [Paras 7, 8, 9]

The CIT(A)'s admission and allowance of the warranty expenses paid in AY 2015-16 is confirmed and the revenue's appeal is dismissed.

Final Conclusion: The Tribunal confirmed the CIT(A)'s exercise of power to admit and allow the assessee's inadvertent but legitimate claim for warranty expenses paid in AY 2015-16 (arising from a provision created and offered to tax in AY 2014-15), upheld the distinction in Goetze limiting the AO but permitting appellate admission, and dismissed the revenue's appeal.

Appeal maintainability where tax effect is neutral - Deduction under section 80-IC and its adjustment - Tax-neutral adjustment and absence of tax demand - Dismissal of Revenue appeals under CBDT Circular No. 17 of 2019

Appeal maintainability where tax effect is neutral - Deduction under section 80-IC and its adjustment - Appeals filed by the Revenue are not maintainable because the adjustments made did not affect the assessee's tax liability and were neutralised by the deduction under section 80-IC. - HELD THAT: - The Tribunal found that the Assessing Officer's reallocation of expenses increased the assessee's declared profit but the same amount of profit was allowed as deduction under section 80-IC, resulting in no change to the tax liability. Since the reduction in the claimed deduction was offset by the statutory deduction available to the assessee, the exercise was tax-neutral. In view of the absence of any tax demand or monetary effect on liability, the Revenue's appeals lack maintainability and are liable to be dismissed. [Paras 10]

Revenue appeals dismissed as not maintainable because the adjustments were tax-neutral and did not alter tax liability.

Dismissal of Revenue appeals under CBDT Circular No. 17 of 2019 - Tax-neutral adjustment and absence of tax demand - Pending Revenue appeals with no tax demand are liable to be dismissed in view of CBDT Circular No. 17 of 2019. - HELD THAT: - The Tribunal noted that where there is no tax demand arising from the assessment or where the tax effect falls within the parameters addressed by the CBDT circular, pending Revenue appeals are to be dismissed as a measure to reduce tax litigation. Applying the circular, and given that the appeals produced no tax effect on the assessee, the appeals were dismissed in limine. [Paras 11]

Revenue appeals dismissed in limine pursuant to CBDT Circular No. 17 of 2019 because there was no tax demand.

Dismissal of cross-objections not pressed - Cross-objections filed by the assessee were dismissed as not pressed. - HELD THAT: - The assessee's authorised representative expressly declined to press the cross-objections at the hearing. The Tribunal recorded that stance and dismissed the cross-objections accordingly. [Paras 12]

Cross-objections dismissed as not pressed.

Final Conclusion: All Revenue appeals for A.Ys. 2009-10 to 2011-12 are dismissed as not maintainable and, additionally, in limine under CBDT Circular No. 17 of 2019 for having no tax effect; the assessee's cross-objections are dismissed as not pressed.

Revenue expenditure - capital expenditure - recurring royalty for use of technical know how - non exclusive non transferable license - enduring benefit - distinguishing Southern Switchgear

Revenue expenditure - capital expenditure - recurring royalty for use of technical know how - non exclusive non transferable license - enduring benefit - distinguishing Southern Switchgear - Whether the royalty payments made under the licence agreements are revenue expenditure or capital expenditure for the assessment years 2009-10 to 2015-16. - HELD THAT: - The Tribunal considered the licence terms (Articles 2 and 12) which granted the assessee a non exclusive, non transferable right to use Industrial Property Rights and technical information to manufacture and sell in the territory, with recurring royalty computed as 5% of value addition. The payments were recurring and made only for use of technology; no right of acquisition or transfer of know how that would create an enduring asset in the assessee was conferred. The Tribunal distinguished the decision in Southern Switchgear on facts: there the technical know how conferred enduring benefit and exclusive manufacturing rights, whereas in the present case the licence restricted use to the term and did not vest exclusive or transferable rights. The existence of a joint venture relationship and the licensor's shareholding in the assessee did not, on the material, transform the nature of the payments into capital; control or common ownership does not alter the substance where the agreement confines the licensee to recurring use of technical information. The Tribunal also relied on precedents of the jurisdictional High Court (cited in the record) which treat recurring royalty for mere use of technology under non exclusive, non transferable licences as revenue expenditure. Applying these principles to the facts and licence clauses, the Tribunal held the royalty to be revenue in nature and allowable for the years under appeal. [Paras 8, 13, 14]

Royalty payments under the licence agreements for AYs 2009 10 to 2015 16 are revenue expenditure and allowable; revenue appeals dismissed.

Final Conclusion: The Tribunal dismissed the Department's appeals and confirmed that the recurring royalty payments made under the non exclusive, non transferable licence agreements are revenue expenditure for the assessment years 2009 10 to 2015 16.

Assessment under section 153A - requirement of incriminating material for completed assessments - residential status - Explanation (a) to section 6(1)(c) - test of number of days of stay in India - lifting of corporate veil - perquisite taxable as business income under section 28(iv) - unexplained expenditure / onus under section 69C - nexus between additions and seized/incriminating material

Assessment under section 153A - requirement of incriminating material for completed assessments - nexus between additions and seized/incriminating material - Validity of issuance of notice and framing of assessments under section 153A for AYs 2009-10 to 2012-13 and extent to which additions in completed assessments must be founded on incriminating material - HELD THAT: - The Tribunal held that issuance of notice under section 153A consequent to a search under section 132 was valid and mandatory; section 153A empowers the AO to assess or reassess the 'total income' of the six years preceding the year of search and the non obstante clause removes procedural fetters. However, while notice and framing of assessment under section 153A could not be quashed merely because no incriminating material was found, completed assessments disturbed under section 153A must be examined on whether additions rest on incriminating material or other permissible material. The Tribunal noted binding and persuasive authorities which require a nexus between additions in respect of completed assessments and incriminating material found in the search; where additions are made solely on post-search information unrelated to seized/incriminating material, those additions must be examined independently. On the facts, although notices under section 153A were valid, the additions based solely on information obtained from foreign tax authorities and on non seized computer printouts lacked the necessary nexus with incriminating material and were unsustainable. [Paras 51, 53, 55]

Notice under section 153A was validly issued; framing of assessments under section 153A is sustained, but additions in the completed assessment years cannot be sustained where they are not based on incriminating material found in the search.

Residential status - Explanation (a) to section 6(1)(c) - test of number of days of stay in India - Whether the assessee was resident or non resident for AYs 2009-10 to 2012-13 - HELD THAT: - Applying Explanation (a) to section 6(1)(c) and relevant CBDT circulars and precedents, the Tribunal held that 'employment' in the Explanation includes self employment and taking up business abroad; the determinative test is the number of days of stay in India in the relevant previous year. On the material (days of presence recorded and passport pages), the assessee's presence in India during each relevant year was less than 182 days. The Tribunal followed authoritative decisions holding that where an Indian citizen leaves India to take up employment or business abroad, the 60 day threshold is replaced by 182 days. The Tribunal therefore accepted the assessee's claim of non resident status and rejected the AO's contrary inference based on business ties or frequency of visits. [Paras 72, 76, 77]

Assessee is a non resident for AYs 2009-10 to 2012-13; grounds changing residential status are allowed in favour of the assessee.

Unexplained expenditure / onus under section 69C - perquisite taxable as business income under section 28(iv) - lifting of corporate veil - Sustainability of additions made under section 69C and section 28(iv) in respect of alleged benefits from Romulus Assets Limited (RAL) and related payments for AYs 2009-10 to 2014-15 (and related years) - HELD THAT: - The Tribunal analysed whether the AO discharged the burden of proving that the assessee was the beneficial owner of RAL and that payments/expenses of RAL represented the assessee's income or unexplained expenditure. The AO relied on board minutes, insurance proposal documents and certain resolutions, but bank statements of RAL were not on record and a direct confirmation from RAL's management was available but rejected by the AO without adequate enquiry. The Tribunal reiterated settled principles that additions cannot rest on suspicion, surmise or conjecture, that corporate personality cannot be lightly pierced, and that section 69C requires the assessee to have incurred the expenditure. On the facts, the Tribunal found absence of cogent evidence to prove beneficial ownership, absence of enquiry to verify foreign documents, no demonstration that the assessee incurred the expenditures, and that quantification based solely on board resolutions was perverse. Consequently the additions under section 28(iv) and section 69C were held unsustainable and deleted. [Paras 112, 120, 126]

Additions made on account of alleged benefits from RAL (sections 28(iv) / 69C) are deleted for the assessment years under challenge.

Perquisite taxable as business income under section 28(iv) - nexus between corporate expenditure and personal benefit - Whether housewarming expenses (AY 2014 15) and guesthouse/farmhouse maintenance charges (AYs 2014 15 & 2015 16) incurred by group companies are taxable as perquisites in the assessee's hands under section 28(iv) - HELD THAT: - The Tribunal examined ownership and accounting records and concluded that the farmhouse/guesthouse was owned and accounted for by the respective companies and expenses were recorded in the companies' books (and in some instances disallowed by the companies themselves). Mere use of the word 'my house' in invitation cards or the fact that the assessee stayed in the premises did not establish personal perquisite; the expenditures were business/sales promotion or company expenses. The Tribunal held that where the company owns the asset and incurs the expenditure, and there is no clear material showing the expense was for the assessee's personal benefit, section 28(iv) cannot be invoked to tax the director personally. Accordingly the housewarming and maintenance expense additions were deleted. [Paras 129, 131, 133]

Additions on account of housewarming and guesthouse/farmhouse maintenance expenses are deleted and not taxable as perquisites in the assessee's hands.

Final Conclusion: Notwithstanding that notices under section 153A were validly issued following the search, the Tribunal allowed the assessee's challenges: it held the assessee to be non resident for AYs 2009 10 to 2012 13; it deleted the additions made under sections 28(iv) and 69C in relation to payments attributed to Romulus Assets Limited for the years in dispute; and it deleted additions treating housewarming and guesthouse/farm maintenance expenses as perquisites. The assessments under section 153A were upheld as properly initiated, but the impugned additions were quashed for lack of requisite evidential nexus and proof.

Fees for technical services under Article 12(4) of the Indo US DTAA - Fee for Technical Services (FTS) - business profits under Article 7 of the Indo US DTAA - permanent establishment - make available test

Fees for technical services under Article 12(4) of the Indo US DTAA - Fee for Technical Services (FTS) - business profits under Article 7 of the Indo US DTAA - permanent establishment - make available test - Receipts from centralized hotel services were not taxable as fees for technical services and represented business profits not taxable in India in absence of a permanent establishment. - HELD THAT: - The Tribunal examined the nature of services (sales and marketing, reservations, loyalty programs, technological, operational and training services) provided by the non resident group entities from outside India and found the Assessing Officer had not specified any limb of Article 12 in the assessment order. On the facts and on precedents relied upon (including the Tribunal's earlier decision for the group and the Delhi High Court's decision in Sheraton), the payments represented integrated business arrangements where advertising, publicity and sales promotion were the main activities and any use of trademarks or related elements were incidental. Consequently the receipts did not satisfy the make available criterion in Article 12(4) and were not FTS; they were business profits under Article 7 which could not be taxed in India as the assessee had no permanent establishment in India. The Tribunal therefore upheld the CIT(A)'s deletion of additions made by the AO and dismissed Revenue's appeal on this issue. [Paras 8, 9]

Tribunal dismissed the Revenue's appeal and held the receipts were not taxable as FTS and were business profits not taxable in India in absence of PE.

Afterthought - assessment order - appellate fact finding - New contentions raised by Revenue before the Tribunal, not made in the assessment order or before lower authorities, were inadmissible as afterthoughts. - HELD THAT: - The Tribunal noted that the Revenue sought to advance novel arguments (including invoking Article 12(4)(a) on facts not pleaded or decided in the assessment order) for the first time before this forum. As those contentions were not part of the assessment record or CIT(A)'s order, and amounted to a new case raised only on appeal, the Tribunal declined to entertain them. The Tribunal treated such written submissions as afterthoughts and refused to permit them to alter the outcome reached on the basis of the material and findings before the AO and CIT(A). [Paras 8]

Tribunal rejected the Revenue's fresh contentions as afterthoughts and did not admit them for deciding the appeal.

Final Conclusion: Revenue's appeals are dismissed; receipts from the centralized services were held not to be fees for technical services and, being business profits with no permanent establishment in India, were not taxable in India, and Revenue's new contentions raised before the Tribunal were refused as afterthoughts.

Principle of mutuality - deduction under section 80P(2)(a)(i) - deduction under section 80P(2)(d) - classification of interest as business income vis-a -vis income from other sources - construction of "members" in light of State Co-operative Societies Acts - de novo consideration / remand to Assessing Officer

Principle of mutuality - deduction under section 80P(2)(a)(i) - construction of "members" in light of State Co-operative Societies Acts - de novo consideration / remand to Assessing Officer - Claim for deduction under section 80P(2)(a)(i) in respect of income from providing credit to members was not finally adjudicated and is remitted to the Assessing Officer for fresh consideration in light of the decision of the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. and Ors. v. CIT & Anr. - HELD THAT: - The Tribunal observed that the Supreme Court in Mavilayi held that the expression "Members" in section 80P(2)(a)(i) must be construed with reference to the definition of "members" in the respective State Co-operative Societies Acts and that several issues relevant to entitlement under section 80P were settled by that decision. Given those principles, the facts of the present case require fresh examination by the Assessing Officer applying the Mavilayi dictum to determine whether the society's dealings (including admission of nominal and associate members) defeat the mutuality necessary for exemption under section 80P(2)(a)(i). Consequently the Tribunal set aside the orders of the CIT(A) and restored the matter to the file of the AO for de novo consideration. [Paras 9]

Issue restored to the Assessing Officer for de novo consideration in accordance with Mavilayi; grounds 3 to 5 allowed for statistical purposes.

Deduction under section 80P(2)(d) - classification of interest as business income vis-a -vis income from other sources - de novo consideration / remand to Assessing Officer - Claim for deduction under section 80P(2)(d) in respect of interest/dividend from co-operative institutions is remitted to the Assessing Officer for fresh consideration. - HELD THAT: - Relying on an earlier Tribunal order (M/s. The Jayanagar Co-operative Society Ltd.), the Bench noted that identical factual issues were restored to the AO to be decided afresh after examining precedents including Totgars and relevant Karnataka High Court decisions. The Tribunal considered that, on the present facts, the question whether interest from investments in co-operative banks qualifies for deduction under section 80P(2)(d) (rather than being income from other sources) requires re-examination by the AO in the light of the referred authorities and factual matrix. [Paras 9]

Issue restored to the Assessing Officer for de novo consideration; grounds 6 and 7 allowed for statistical purposes.

Classification of interest as business income vis-a -vis income from other sources - allowability of expenditure on income assessed as other sources - de novo consideration / remand to Assessing Officer - Alternative contention regarding allowability of expenditure (cost of funds) against interest income assessed under 'Other Sources' is remitted to the Assessing Officer for fresh consideration. - HELD THAT: - The Tribunal treated the contention as an alternate plea contingent on the treatment of the interest income. Since the issue under section 80P(2)(d) is restored to the AO, the Tribunal also restored the alternative ground concerning allowability of expenses (including the contention as to actual interest on members' deposits versus an arbitrary 10% allowance) so that the AO may decide the deductibility under section 57 or otherwise after determining the proper head of income. [Paras 9]

Alternative claim on allowability of expenses restored to the Assessing Officer for de novo consideration.

Final Conclusion: The Tribunal set aside the orders of the CIT(A) for assessment years 2015-2016 and 2016-2017 and restored the matters to the file of the Assessing Officer for fresh consideration on (i) entitlement to deduction under section 80P(2)(a)(i) in light of Mavilayi Service Co-operative Bank Ltd., (ii) claim under section 80P(2)(d), and (iii) the alternative contention on allowability of expenses; the appeals are allowed for statistical purposes. Order pronounced on 30th July, 2021.

Allowability of SPV contribution as business expenditure under section 37(1) - compensatory payment versus penalty - applicability of Explanation 1 to section 37(1) - diversion of income by overriding title - application of mercantile/accrual method for recognition of sale proceeds - payments for reclamation and rehabilitation (R&R) plans as revenue expenditure - double taxation and remedy by exclusion in subsequent year - reconciliation of receipts with Form 26AS / TDS discrepancies - allowability of business contributions/donations as expenditure under section 37(1)

Allowability of SPV contribution as business expenditure under section 37(1) - compensatory payment versus penalty - applicability of Explanation 1 to section 37(1) - diversion of income by overriding title - 15% of sale proceeds retained by CEC/Monitoring Committee for transfer to SPV is allowable as business expenditure for the assessment years 2013-14 to 2015-16. - HELD THAT: - The Tribunal considered the Supreme Court direction creating the Monitoring Committee/CEC and requiring retention of 10%/15% of sale proceeds and the subsequent treatment of those amounts. Applying the principle distinguishing an amount diverted at source from an amount received and thereafter applied, the Bench held that the 15% retention was a guarantee/condition precedent for resumption of mining and formed part of the commercial framework necessary to carry on the business. The Tribunal accepted coordinate-bench precedents which treated the contribution as compensatory/guarantee money for implementation of R&R plans, refundable if surplus, and therefore incidental to earning business income; Explanation 1 to section 37(1) was held inapplicable because the payments were not punitive fines but amounts collected for remedial/public purposes under the Supreme Court scheme. Accordingly the 15% retained for SPV was allowed as an expenditure. [Paras 3]

Allowed; ground Nos.2.1 to 2.4 for AYs 2013-14 to 2015-16 are allowed.

Payments for reclamation and rehabilitation (R&R) plans as revenue expenditure - compensatory payment versus penalty - applicability of Explanation 1 to section 37(1) - Amounts retained towards compensation for illegal mining and dumping outside leased area (including R&R costs) are allowable as revenue expenditure for assessment years 2013-14 and 2014-15. - HELD THAT: - The Tribunal examined the CEC recommendations and the Supreme Court's acceptance of those recommendations, noting the purpose of the retained funds (implementation of R&R and ameliorative measures). Reliance was placed on coordinate-bench and High Court decisions treating similar payments as compensatory and incidental to business (not punitive), and on the commercial expediency that the assessee could not resume operations without making such payments. The Tribunal held that such payments are not hit by Explanation 1 to section 37(1) because they were directed to be used for public remedial purposes and thus are compensatory/revenue in nature; accordingly the amounts retained for compensation and R&R were allowed as deductions. [Paras 4]

Allowed; ground Nos.3.1 to 3.3 for AYs 2013-14 and 2014-15 are allowed.

Application of mercantile/accrual method for recognition of sale proceeds - double taxation and remedy by exclusion in subsequent year - Sale proceeds from declared stock sold through the Monitoring Committee/accrued on e auction accrue to the assessee in the year of e auction and are taxable in that year; the assessee may seek exclusion in the subsequent year to avoid double taxation. - HELD THAT: - On the facts, the Tribunal found that the assessee owned the declared stock, the e auction transferred property and risks to buyers, and the right to receive sale proceeds (subject to statutory deductions and CEC directions) had accrued in the year of sale. Applying real-income and accrual principles and authoritative decisions, the Bench held that date of actual payment did not postpone accrual: recognition is governed by the mercantile/accrual method. Because the Tribunal acknowledged that the same amounts were later offered to tax in subsequent years, it directed the assessee to apply to the assessing officer for exclusion to prevent double taxation and directed the AO to consider such application. [Paras 5]

Addition upheld for the year of accrual; ground No.3 for AY 2013-14 is rejected, with direction that the AO consider an application for exclusion to avoid double taxation.

Reconciliation of receipts with Form 26AS / TDS discrepancies - Discrepancy between book receipts and Form 26AS (TDS) is to be examined by the Assessing Officer in light of the assessee's reconciliation; matter remitted for verification. - HELD THAT: - The assessee explained that tax was deducted twice by a third party (initial advance and final payment) and furnished a reconciliation showing the duplicate TDS. The Tribunal did not decide the substantive correctness itself but directed the AO to consider the reconciliation statement, provided the assessee files an application asserting there is no difference between disclosed income and Form 26AS entries. The direction leaves factual verification and final adjustment to the assessing authority after opportunity to the assessee. [Paras 6]

Remitted to AO for consideration of the reconciliation; ground No.4 for AY 2013-14 disposed with directions.

Allowability of business contributions/donations as expenditure under section 37(1) - Contribution to the Deputy Commissioner, Government of Karnataka for Hampi Utsav is allowable as business expenditure for assessment year 2015-16. - HELD THAT: - Following the Tribunal's earlier decision in the assessee's own case for AY 2009-10 and applying the same reasoning, the Bench accepted that the contribution produced business goodwill in the local context and was incurred in connection with the assessee's business. The Tribunal therefore treated the payment as an allowable expenditure under section 37(1) and directed the AO to allow the amount. [Paras 7]

Allowed; ground No.3 for AY 2015-16 is allowed.

Final Conclusion: The appeals are partly allowed: the Tribunal allowed the SPV contributions (15%) as business expenditure for AYs 2013-14 to 2015-16; allowed amounts retained for compensation and R&R for illegal mining/dumping for AYs 2013-14 and 2014-15; confirmed that sale proceeds from declared stock accrue in the year of e auction (with direction to avoid double taxation by exclusion application); remitted the Form 26AS/TDS discrepancy to the AO for verification; and allowed the Hampi Utsav contribution for AY 2015-16.

Arm's length principle - determination of ALP of intra-group services - burden of proof for receipt and utilisation of intra group services - cost contribution / reimbursement arrangements and allocation of costs - remand for fresh transfer pricing adjudication to AO/TPO - applicability of section 14A to insurance companies - special computation regime under section 44 and First Schedule overriding other provisions

Determination of ALP of intra-group services - arm's length principle - burden of proof for receipt and utilisation of intra group services - cost contribution / reimbursement arrangements and allocation of costs - remand for fresh transfer pricing adjudication to AO/TPO - Whether the ALP of payments for intra group services should be sustained as Nil and the addition upheld, or the matter remanded for fresh consideration by the AO/TPO. - HELD THAT: - The Tribunal held that the proper enquiry is whether the price charged is what an independent enterprise would have paid (arm's length principle) and not whether the assessee objectively 'needed' the services or derived a measurable financial benefit. Where payments are reimbursements of actual costs without markup, the real issue is whether those costs are inflated or improperly allocated among group entities. The assessee must discharge the onus of demonstrating receipt, nature and utilisation of services and the basis of cost allocation; mere voluminous correspondence is insufficient. In view of the authorities cited and the applicable tests (identification of costs, allocation keys, need for markup, and comparability), the Tribunal set aside the CIT(A)'s confirmation and remanded the issue to the TPO/AO for fresh consideration in light of these principles, directing the assessee to comply with queries and affording an opportunity of hearing. [Paras 11, 12, 14, 15]

Order of CIT(A) on ALP set aside and issue remanded to TPO/AO for fresh adjudication in accordance with arm's length principles and directions given; assessee to be afforded hearing.

Applicability of section 14A to insurance companies - special computation regime under section 44 and First Schedule overriding other provisions - Whether disallowance under section 14A is leviable on the assessee engaged in insurance business governed by section 44 and the First Schedule. - HELD THAT: - Relying on consistent tribunal precedent and reasoning that section 44 (a special non obstante provision for insurance companies read with the First Schedule) overrides other computation provisions, the Tribunal held that provisions like section 14A do not apply to computation of profits of an insurance business governed by section 44. The Tribunal followed its earlier decision in the assessee's own case and the reasoning of the Delhi High Court that section 44 excludes the operation of section 14A for insurance companies. Consequently, the addition made under section 14A was held not sustainable. [Paras 16, 17]

Addition under section 14A deleted; section 44/First Schedule governs computation for insurance business and excludes applicability of section 14A.

Final Conclusion: Appeal partly allowed: transfer pricing addition disallowed by lower authorities set aside and remitted to AO/TPO for fresh ALP determination in accordance with the arm's length principle and directions given; addition under section 14A deleted as inapplicable to an insurance company governed by section 44 and the First Schedule.

Condonation of delay - Disallowance under Section 14A read with Rule 8D - Assessing Officer's satisfaction to be recorded with reference to the assessee's accounts - Deletion of disallowance in absence of identifiable expenditure attributable to exempt income - Principle of consistency in assessment

Condonation of delay - Whether the Tribunal should condone the delay in filing the assessee's appeals. - HELD THAT: - The assessee filed an application for condonation supported by affidavits explaining that appeal papers were misplaced during office renovation and discovered only after a substantial lapse of time. The Tribunal accepted that the appeals raised issues covered by an earlier Tribunal order in the assessee's own case and found no mala fide intention to circumvent process. Emphasising that technicalities should not impede justice, the Tribunal exercised its discretion to condone the delay and admit the appeals for adjudication on merits. [Paras 4, 7, 8]

Delay in filing the appeals is condoned and the appeals are admitted for adjudication.

Disallowance under Section 14A read with Rule 8D - Assessing Officer's satisfaction to be recorded with reference to the assessee's accounts - Deletion of disallowance in absence of identifiable expenditure attributable to exempt income - Principle of consistency in assessment - Whether the disallowance computed under Section 14A read with Rule 8D can be sustained where the AO did not record satisfaction based on the assessee's accounts and failed to identify any specific expenditure attributable to exempt income. - HELD THAT: - The Assessing Officer made disallowances under Section 14A r.w. Rule 8D on the premise that some expenditure must have been incurred to earn exempt dividend income, yet recorded that no expenditure was directly attributable to the exempt income and made the additions based on past history and to keep the issue alive. The Tribunal examined the coordinate-bench decision in the assessee's earlier assessment year, which held that the AO did not record the requisite satisfaction in terms of Section 14A and Rule 8D, failed to identify specific items of expense related to exempt income, and that investments and dividend credits evidenced absence of attributable expenditure. Relying on those findings and established precedents requiring objective satisfaction based on accounts before invoking Rule 8D, the Tribunal found no distinguishing circumstances and directed deletion of the impugned disallowances. [Paras 9, 10, 12, 14, 15]

The disallowances under Section 14A read with Rule 8D are deleted and the appeals are allowed on merits.

Final Conclusion: The Tribunal condoned the delay in filing the appeals and, on merits, set aside the disallowances made under Section 14A read with Rule 8D for A.Ys 2011-12 and 2012-13, directing deletion of the impugned additions.

Anticipatory bail - enlargement on anticipatory bail - failure to cooperate with investigation / non appearance to summons - risk of interference with investigation and witnesses - prohibited goods (red sanders) as a factor against bail - claim of ignorance of contents of sealed container

Anticipatory bail - risk of interference with investigation and witnesses - prohibited goods (red sanders) as a factor against bail - Enlargement on anticipatory bail refused. - HELD THAT: - The Court refused to enlarge the petitioner on anticipatory bail having regard to the totality of circumstances: the goods intercepted were alleged prohibited items (red sanders), the container was sealed at CFS and later found to contain the logs, and the respondent submitted a case of an international smuggling racket. The Court accepted that permitting anticipatory bail at this stage would be prejudicial to the investigation because the petitioner had not fully cooperated, had avoided appearance despite summons, and had given evasive answers; consequently the likelihood of interference with the investigation and witnesses could not be ruled out. These considerations led the Court to decline the relief sought. [Paras 11, 12, 14]

Prayer for enlargement on anticipatory bail denied.

Failure to cooperate with investigation / non appearance to summons - claim of ignorance of contents of sealed container - Petitioner's plea of ignorance (that he only signed shipping bills and did not know about the red sanders) does not absolve him in the absence of full cooperation; the matter requires deeper investigation. - HELD THAT: - Although the petitioner asserted that he merely signed the shipping bills and trusted a third party who did the stuffing, the Court noted that the petitioner admitted during enquiry that he had sourced the logs from an individual named Penchiliah but failed to furnish any particulars. The petitioner also did not attend enquiries as directed and gave evasive responses, including leaving an enquiry midway and not returning. In these circumstances the Court held that the petitioner's claimed lack of knowledge cannot be accepted at face value and that a full fledged investigation is necessary to identify the true culprit; non disclosure of source details and lack of participation in enquiry weighed against accepting the plea of ignorance. [Paras 11, 12, 13, 14]

Claim of ignorance rejected for present purposes; matter remitted to investigation for full inquiry.

Final Conclusion: The petition for enlargement on anticipatory bail is dismissed: the petitioner's non cooperation, evasive responses regarding the source of the seized prohibited goods, and the risk of interference with investigation warranted refusal of anticipatory bail and further investigation by the respondent.

Scheme of Amalgamation - dispensation of meeting under Section 230 of the Companies Act, 2013 - consent affidavits constituting more than 90% of value of creditors - no meeting required where there are NIL secured creditors - appointed date - statutory auditors' certificate of accounting compliance

Scheme of Amalgamation - dispensation of meeting under Section 230 of the Companies Act, 2013 - Dispensation of convening and holding meeting of equity shareholders of the Transferor Company - HELD THAT: - The Transferor Company has 14 equity shareholders and affidavits of all 14 consenting shareholders have been placed on record. Having examined the application and documents, the Tribunal is satisfied that the necessity of convening and holding a meeting of equity shareholders to consider and approve the Scheme is dispensed with. [Paras 4, 13]

Meeting of equity shareholders of the Transferor Company dispensed with.

No meeting required where there are NIL secured creditors - Requirement for convening a meeting of secured creditors of the Transferor Company - HELD THAT: - The Transferor Company is represented to have NIL secured creditors and a certificate by chartered accountants to this effect is on record. Therefore, there is no necessity to convene a meeting of secured creditors. [Paras 4, 13]

No meeting of secured creditors of the Transferor Company is required.

Consent affidavits constituting more than 90% of value of creditors - dispensation of meeting under Section 230 of the Companies Act, 2013 - Dispensation of convening and holding meeting of unsecured creditors of the Transferor Company - HELD THAT: - The Transferor Company has two unsecured creditors and consent affidavits from one unsecured creditor amounting to 91.87% of the total value of creditors have been filed. This exceeds the 90% threshold referred to in the application such that the Tribunal, on perusal of the records, dispenses with the necessity of convening a meeting of unsecured creditors to consider the Scheme. [Paras 4, 13]

Meeting of unsecured creditors of the Transferor Company dispensed with.

Scheme of Amalgamation - dispensation of meeting under Section 230 of the Companies Act, 2013 - Dispensation of convening and holding meeting of equity shareholders of the Transferee Company - HELD THAT: - The Transferee Company has 15 equity shareholders and affidavits of all 15 consenting shareholders have been placed on record. On consideration of the application and documents, the Tribunal dispenses with convening and holding a meeting of equity shareholders for approval of the Scheme. [Paras 5, 13]

Meeting of equity shareholders of the Transferee Company dispensed with.

No meeting required where there are NIL secured creditors - Requirement for convening a meeting of secured creditors of the Transferee Company - HELD THAT: - The Transferee Company is represented to have NIL secured creditors with a certificate by chartered accountants on record. Consequently, no meeting of secured creditors is necessary. [Paras 5, 13]

No meeting of secured creditors of the Transferee Company is required.

Consent affidavits constituting more than 90% of value of creditors - dispensation of meeting under Section 230 of the Companies Act, 2013 - Dispensation of convening and holding meeting of unsecured creditors of the Transferee Company - HELD THAT: - The Transferee Company has two unsecured creditors and consent affidavits from one unsecured creditor amounting to 96.15% of the total value of creditors have been filed. The Tribunal, having perused the records, finds this satisfactory and dispenses with the need to convene a meeting of unsecured creditors for consideration of the Scheme. [Paras 5, 13]

Meeting of unsecured creditors of the Transferee Company dispensed with.

Appointed date - statutory auditors' certificate of accounting compliance - Records and filing direction following approval in principle of dispensation of meetings - HELD THAT: - The Scheme specifies an appointed date of 1st April 2020 and statutory auditors of the Transferor Company have certified accounting compliance. The Tribunal has considered the application and connected documents and directs that the Company Petition(s) be submitted within seven days of receipt of the order. [Paras 11, 12, 14]

Applicant companies directed to submit Company Petition(s) within seven days; application allowed.

Final Conclusion: The Tribunal allowed the joint application under Sections 230-232 as filed: convening of meetings of equity shareholders and unsecured creditors of both Transferor and Transferee Companies is dispensed with on the basis of the affidavits and creditor consents filed; no meetings are required for secured creditors as none exist; the Scheme's appointed date is 1 April 2020 and the Applicant Companies are directed to file the Company Petition(s) within seven days.

Dispensing with meetings under Section 230(1) read with Section 232(1) of the Companies Act, 2013 - Consent by all equity shareholders and unsecured creditors by affidavit - Service of notice under Section 230(5) of the Companies Act, 2013 - Filing of representations by regulatory authorities and affidavit of service

Dispensing with meetings under Section 230(1) read with Section 232(1) of the Companies Act, 2013 - Consent by all equity shareholders and unsecured creditors by affidavit - Application under Section 230(1) read with Section 232(1) for dispensing with convening separate meetings of classes of equity shareholders and unsecured creditors was allowed. - HELD THAT: - The Tribunal examined the application for directions to dispense with separate class meetings in connection with the Scheme of Amalgamation. The applicants produced affidavits evidencing that all equity shareholders and all unsecured creditors of each of the three applicant companies had given their written consent to the proposed scheme. On that basis the Tribunal concluded that the statutory requirement to convene and hold separate meetings of the relevant classes to ascertain consent could be dispensed with. The Tribunal therefore allowed the application and recorded that the requirement of convening and holding separate meetings of the applicant companies for the purposes of the Scheme of Amalgamation stood dispensed. In addition, the Tribunal directed compliance with the procedural requirements of service under sub section (5) of Section 230 by sending the application, scheme and statement to the Regional Director (Eastern Region), Registrar of Companies, Official Liquidator, Income Tax Department and other relevant authorities for filing any representation within 30 days, and required the applicants to file affidavits of service with the Tribunal. [Paras 5, 6, 7, 8]

Application CA (CAA) No. 32/KB/2021 allowed; convening of separate class meetings dispensed with in view of unanimous affidavits of consent, subject to service of notices and filing of representations as directed, and the application disposed of.

Final Conclusion: The Tribunal allowed the application to dispense with separate meetings of equity shareholders and unsecured creditors for the Scheme of Amalgamation since all such members and creditors consented by affidavit; it directed statutory service to specified authorities, filing of any representations within 30 days, filing of affidavit of service, and disposed of CA (CAA) No. 32/KB/2021.

Scheme of Amalgamation sanction - Appointed date - Transfer and vesting of assets and liabilities - Adjustment of fees on clubbing of authorised share capital - Liability for stamp duty on transfer of immovable property - Continuation of pending legal proceedings - Engagement of employees post-amalgamation

Scheme of Amalgamation sanction - Sanction of the Scheme of Amalgamation of the seven petitioner companies and its operative binding effect - HELD THAT: - The Tribunal considered the petition filed under the Companies Act, 2013 for sanctioning the Scheme of Amalgamation, the board approvals, statutory auditor certificates as to accounting treatment, service and publication of notices, the reports of the Official Liquidator and Regional Director and the submissions of the parties. The Official Liquidator reported no indicia of conduct prejudicial to members or public interest. The Regional Director's representations were examined and addressed by the petitioners through undertakings and explanations. Having found no impediment, the Tribunal granted sanction to the Scheme and directed that it be binding on all equity shareholders and concerned parties with effect from the appointed date specified in the Scheme.

Scheme sanctioned and ordered to be binding on all concerned.

Appointed date - Retention of the appointed date as 01/04/2018 - HELD THAT: - Although the Regional Director noted the Ministry Circular and queried the appointed date, the petitioners explained that the appointed date of 01/04/2018 had been fixed at board meetings on 22/01/2019 and that the financials as at 31/03/2018 formed the basis of valuation. The petitioners also expressed willingness to accept alternate dates if directed, but the Tribunal retained the appointed date as 01/04/2018 because the stated financials as at 31/03/2018 were the basis for the Valuation Report.

Appointed date retained as 01/04/2018.

Transfer and vesting of assets and liabilities - Continuation of pending legal proceedings - Effect of amalgamation on assets, liabilities and ongoing proceedings - HELD THAT: - The Tribunal directed that all properties, rights, interests, benefits, advantages, liabilities and obligations of the Transferor Companies specified in the Scheme be transferred to and vested in the Transferee Company without further act or deed, and that such assets and liabilities shall become the debts, liabilities, duties and obligations of the Transferee Company. The Tribunal also ordered that all legal proceedings, suits and appeals pending by or against the Transferor Companies shall be continued by or against the Transferee Company.

Assets and liabilities transferred to Transferee Company; pending proceedings to be continued by/against Transferee Company.

Adjustment of fees on clubbing of authorised share capital - Liability for stamp duty on transfer of immovable property - Undertakings by petitioners to comply with fee adjustment and stamp duty obligations - HELD THAT: - In response to the Regional Director's representation, the petitioners undertook to comply with the statutory requirement to adjust fees upon clubbing of authorised share capital and to pay fees where applicable if the Transferee Company's authorised capital increases post-amalgamation. The petitioners also undertook to pay stamp duty, if applicable, on transfer of immovable properties from the Transferor Companies. The Tribunal accepted these undertakings in the exercise of its supervisory jurisdiction and proceeded to sanction the Scheme subject to such compliance.

Petitioners directed to comply with fee adjustment and to pay applicable stamp duty as undertaken.

Engagement of employees post-amalgamation - Employment of transferor companies' employees by the Transferee Company - HELD THAT: - The Scheme provides for engagement of the employees of the Transferor Companies by the Transferee Company. The Tribunal recorded and sanctioned this provision, directing that employees of the Transferor Companies shall be engaged by the Transferee Company as provided in the Scheme.

Employees of Transferor Companies to be engaged by the Transferee Company in accordance with the Scheme.

Filing of certified copy and dissolution without winding up - Filing requirement and consequent dissolution of Transferor Companies - HELD THAT: - The Tribunal directed that each of the Transferor and Transferee Companies shall within thirty days of receipt of the order deliver a certified copy to the Registrar of Companies for registration; upon such filing the Transferor Companies shall be dissolved without winding up. The petitioners were also directed to supply legible printouts of the Scheme and schedule of assets for verification and appendment by the department.

Certified copy to be filed with ROC; Transferor Companies to be dissolved without winding up upon registration.

Final Conclusion: The Tribunal, after considering the petition, statutory reports and the parties' undertakings, sanctioned the Scheme of Amalgamation with appointed date retained as 01/04/2018; directed transfer and vesting of assets and liabilities in the Transferee Company, continuation of pending proceedings, engagement of employees by the Transferee Company, compliance with fee and stamp duty undertakings, and filing of certified copy with the Registrar leading to dissolution of the Transferor Companies.

Corporate Insolvency Resolution Process - admission of company petition under Section 7 of the Insolvency and Bankruptcy Code - debt and default - limitation - appointment of Interim Resolution Professional - moratorium - inspection of accounts

Debt and default - admission of company petition under Section 7 of the Insolvency and Bankruptcy Code - Whether the Financial Creditor has established debt and default so as to justify admission of the company petition and initiation of CIRP. - HELD THAT: - The Tribunal found that the loan facilities were restructured in 2015 and that the Corporate Debtor executed the requisite documents pursuant to that restructuring. The Financial Creditor produced bank statements showing the last payments towards the term loan (02.05.2017) and cash credit (11.11.2016), after which no payments were made. The Corporate Debtor contested only the quantum and sought inspection of historical accounts, but did not deny the existence of debt or default and had even made an OTS offer. The Tribunal held that adjudication of the precise quantum is beyond the scope of a Section 7 proceeding and that demands for account statements from inception after restructuring were not legally permissible to defeat the petition. On this basis the Tribunal concluded that debt and default were established and that the petition was liable to be admitted. [Paras 3, 7]

Debt and default established; petition admitted and CIRP ordered.

Limitation - debt and default - Whether the company petition was filed within the period of limitation. - HELD THAT: - Counsel for the Financial Creditor relied on the dates of last payment reflected in bank statements to show that the petition filed on 06.05.2019 was within limitation. The Tribunal accepted that the last payments were in 2016 and 2017 as recorded and held that the petition was within the limitation period for initiation of CIRP. [Paras 3, 4, 8]

Petition held to be within limitation.

Inspection of accounts - admission of company petition under Section 7 of the Insolvency and Bankruptcy Code - Whether the Corporate Debtor's contention regarding non-provision of inspection of accounts prevented admission of the petition. - HELD THAT: - The Tribunal noted that the Corporate Debtor's grievance related to alleged inconsistencies and its request for inspection of accounts from inception. It observed that after restructuring the Corporate Debtor could not lawfully insist on reopening the restructuring for the purpose of defeating a Section 7 petition and that the dispute over quantum and alleged failure to provide historical accounts did not defeat the primacy of establishing debt and default under Section 7. The Tribunal therefore rejected the contention as not warranting dismissal. [Paras 7]

Failure or delay in providing historical inspection did not bar admission; contention rejected.

Appointment of Interim Resolution Professional - Appointment of Interim Resolution Professional and consequential directions upon admission. - HELD THAT: - Having admitted the petition, the Tribunal appointed the proposed insolvency professional whose consent was filed in amended form, directed deposit by the Financial Creditor towards initial CIRP costs, ordered public announcement, declared the moratorium and attendant prohibitions, and directed registry to communicate the order and update ROC master data. These directions flow from admission and conform to the functions and consequences prescribed under the Code. [Paras 8, 9]

IRP appointed and standard CIRP directions (deposit, moratorium, public announcement, management vesting) issued.

Final Conclusion: The Tribunal admitted the company petition filed by the Financial Creditor under the Code, holding that debt and default were established and the petition was within limitation; initiation of CIRP was ordered, Mr. Vivek Murlidhar Dabhade was appointed as Interim Resolution Professional, and standard moratorium and consequential directions were issued.

Initiation of Corporate Insolvency Resolution Process (CIRP) - debt due and payable - default - pre-existing dispute - admission of petition under section 9 of the IBC - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional (IRP) - public announcement of CIRP and invitation of claims

Debt due and payable - default - pre-existing dispute - admission of petition under section 9 of the IBC - The Company Petition under section 9 of the IBC filed by the Operational Creditor is maintainable and is admitted on the ground that debt and default stand established and no pre-existing dispute is shown. - HELD THAT: - The Tribunal found that invoices were raised in June 2019 and, by agreement between the parties, payment was due within an extended period ending 05.08.2019, after which default occurred. The Operational Creditor served statutory notice in Form 3 and received a reply which did not raise a concrete pre-existing dispute but only sought withdrawal or time to pay. The Corporate Debtor thereafter failed to make payment and did not file a substantive reply despite opportunities. Having regard to the documentary record, notices issued and the absence of any demonstrable pre-existing dispute, the application complied with the statutory requirements and the Tribunal concluded that the debt and default were established and not barred by any valid dispute. On these findings the petition was admitted and CIRP ordered to be initiated. [Paras 3, 11]

Petition under section 9 admitted; debt and default established and no pre-existing dispute shown.

Initiation of Corporate Insolvency Resolution Process (CIRP) - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional (IRP) - public announcement of CIRP and invitation of claims - Consequential measures on admission - imposition of moratorium, appointment of IRP, public announcement and procedural directions - were ordered. - HELD THAT: - Upon admitting the petition the Tribunal directed initiation of CIRP and imposed the moratorium in terms of the IBC, restraining institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property. The Tribunal preserved supply of essential goods and noted statutory exceptions. The Tribunal appointed an Interim Resolution Professional to perform duties under the IBC, directed public announcement of CIRP and invited claims in accordance with the regulations, required deposit by the Operational Creditor to meet public notice expenses, and directed communication of the order to the parties and the Registrar of Companies for updating records. These directions were issued as necessary and incidental to effectuate the admitted CIRP. [Paras 13]

Moratorium imposed; IRP appointed; public announcement and other procedural directions issued to commence and manage the CIRP.

Final Conclusion: The Tribunal admitted the section 9 petition, holding that the Operational Creditor established a debt and default with no pre-existing dispute, directed initiation of CIRP against the Corporate Debtor, imposed the statutory moratorium, appointed an Interim Resolution Professional and issued consequential procedural directions including public announcement and communication to the Registrar of Companies.

Commencement of liquidation under Section 33 - resolution to liquidate by the Committee of Creditors - appointment of liquidator on suggestion of the Committee of Creditors - liquidator's fees under the IBBI (Liquidation Process) Regulations - liquidator's obligation to advertise liquidation and submit progress reports - notice of discharge to officers, employees and workmen upon commencement of liquidation - liquidator's power to represent the corporate debtor before government authorities

Commencement of liquidation under Section 33 - resolution to liquidate by the Committee of Creditors - Initiation of the liquidation process of the Corporate Debtor. - HELD THAT: - The Tribunal recorded that the Committee of Creditors, by unanimous vote in its eighth meeting, concluded there was no likelihood of a resolution plan and resolved to liquidate the Corporate Debtor. The Tribunal, having considered the factual background including non-receipt of any resolution plan despite issuance of invitation for EoI and limitations on information about assets, ordered commencement of the liquidation process under the relevant provisions of the IBC from the date of the order. [Paras 13, 21]

Liquidation of Tribhovandas Bhimji Zaveri & Sons Retail Private Limited is ordered to commence as per Chapter III of the IBC from the date of the order.

Appointment of liquidator on suggestion of the Committee of Creditors - Appointment of the liquidator for the Corporate Debtor. - HELD THAT: - Having noted the Committee of Creditors' suggestion and the written consent of the proposed professional, the Tribunal appointed Mr. Rahul Kavathekar (IBBI registration as stated in the record) to act as Liquidator. The appointment follows the CoC's resolution suggesting the individual and the professional's consent, and the Tribunal directed his appointment pursuant to the liquidation order. [Paras 16, 18, 21]

Mr. Rahul Kavathekar is appointed as Liquidator of the Corporate Debtor.

Liquidator's fees under the IBBI (Liquidation Process) Regulations - Fixation and applicability of liquidator's fees. - HELD THAT: - The Committee of Creditors fixed the fee for the liquidator in accordance with its powers under the applicable insolvency regulations and recorded a fee structure in its resolution. The Tribunal noted the CoC's fixation and directed that the fees payable to the liquidator shall be in accordance with Regulation 4 of the IBBI (Liquidation Process) Regulations, 2016, as applied to the liquidation process. [Paras 17, 23]

Fees payable to the Liquidator shall be in accordance with the IBBI (Liquidation Process) Regulations, 2016.

Liquidator's obligation to advertise liquidation and submit progress reports - notice of discharge to officers, employees and workmen upon commencement of liquidation - liquidator's power to represent the corporate debtor before government authorities - Ancillary duties and powers of the liquidator to be observed during liquidation. - HELD THAT: - The Tribunal directed customary and statutory steps to be followed in the liquidation: the liquidator is to advertise the liquidation in two newspapers (one English and one regional) as required; a copy of the order is to be forwarded to the authority where the Corporate Debtor is registered; the order shall be deemed notice of discharge to officers, employees and workmen except where the business continues under the liquidator; the liquidator must submit progress reports in terms of the IBBI (Liquidation Process) Regulations; and the liquidator is authorized to represent the Corporate Debtor before government authorities and may seek directions from the Adjudicating Authority as necessary. [Paras 21, 22, 24, 25, 26]

The Liquidator shall perform statutory advertising and reporting obligations, effect the discharge notice as ordered, represent the Corporate Debtor before authorities if needed, and may seek directions from the Adjudicating Authority.

Final Conclusion: The Tribunal allowed the application under Section 33 and ordered commencement of liquidation of the Corporate Debtor; appointed Mr. Rahul Kavathekar as Liquidator; endorsed the CoC's steps regarding fee fixation subject to applicable IBBI Regulations; and directed the usual ancillary actions including advertisement, forwarding of the order to the registration authority, discharge notice to employees, submission of progress reports, and authority for the liquidator to represent the Corporate Debtor and seek directions.

Approval of Resolution Plan under Section 30(6) and Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - Compliance with requirements of Section 30(2) and Regulations 37-39 of the IBBI (CIRP) Regulations, 2016 - Effect of Committee of Creditors' commercial decision and limited judicial review by the Adjudicating Authority - Binding nature of an approved Resolution Plan and extinguishment of liabilities on implementation - Non-waiver of statutory obligations and need for statutory/administrative approvals - Rejection of reliefs and concessions sought in the Resolution Plan - Termination of moratorium under Section 14 upon effectiveness of the Resolution Plan - Discharge of Resolution Professional and handover to successful Resolution Applicant

Approval of Resolution Plan under Section 30(6) and Section 31(1) of the Insolvency and Bankruptcy Code, 2016 - Compliance with requirements of Section 30(2) and Regulations 37-39 of the IBBI (CIRP) Regulations, 2016 - Effect of Committee of Creditors' commercial decision and limited judicial review by the Adjudicating Authority - The Resolution Plan submitted by KINFRA is approved by the Tribunal, subject to exceptions noted in the order. - HELD THAT: - The Tribunal examined the Resolution Plan as approved by the Committee of Creditors (92.72% voting share) and found that it meets the conditions prescribed by Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the IBBI (CIRP) Regulations, 2016. The Plan was held not to be in contravention of Section 29A. The Tribunal applied the settled principle that its scrutiny is limited to the requirements of Section 30(2) and cannot trespass upon the commercial decision of the CoC, relying on the reasoning in A. Sashidhar and Committee of Creditors of Essar Steel. On that basis the Plan was approved by the Adjudicating Authority. [Paras 12, 13, 14]

Resolution Plan of KINFRA is approved by the Tribunal as meeting the statutory requirements.

Rejection of reliefs and concessions sought in the Resolution Plan - Non-waiver of statutory obligations and need for statutory/administrative approvals - Reliefs and concessions sought under Chapter XIII of the Resolution Plan are not granted; any statutory waivers remain subject to approval by competent authorities. - HELD THAT: - While approving the Plan, the Tribunal expressly declined to accede to the reliefs and concessions sought by the Resolution Applicant under Chapter XIII. The order clarifies that approval of the Plan does not operate as a waiver of any statutory obligations of the Corporate Debtor; any such waivers or permits must be obtained from the relevant authorities and will be considered by those authorities in accordance with law. [Paras 9, 14]

Reliefs/concessions in Chapter XIII are refused and statutory waivers require separate approval by competent authorities.

Binding nature of an approved Resolution Plan and extinguishment of liabilities on implementation - Termination of moratorium under Section 14 upon effectiveness of the Resolution Plan - Discharge of Resolution Professional and handover to successful Resolution Applicant - On approval, the Resolution Plan becomes binding on the Corporate Debtor and stakeholders; moratorium under Section 14 ceases; the RP is discharged and must hand over records to the Resolution Applicant; implementation will be supervised by a monitoring committee. - HELD THAT: - The Tribunal directed that the approved Plan shall become effective from the date of the order and be binding on the Corporate Debtor, its employees, members, creditors (including governmental authorities) and other stakeholders; thereafter no creditor can claim beyond the liabilities provided in the Plan. The moratorium under Section 14 was ordered to cease from the date of the order. The Bench discharged the Resolution Professional from his duties and directed handover of records/premises/documents to the Resolution Applicant, while vesting supervisory responsibility in the Applicant and a Monitoring Committee to oversee implementation and file status reports before the Tribunal. [Paras 11, 14]

The Plan is effective and binding; moratorium ceases; RP discharged; monitoring and implementation arrangements directed.

Final Conclusion: The Tribunal allowed the application under Section 30(6) and 31(1) of the Code and approved the Resolution Plan of KINFRA as satisfying the statutory requirements, excepting the reliefs and concessions sought in Chapter XIII; the Plan is declared effective and binding on stakeholders, statutory obligations remain unaffected, the moratorium is terminated, the RP is discharged, and implementation will be supervised by the Monitoring Committee with reports to the Tribunal.

Quashing of prosecution under the Prevention of Money Laundering Act - predicate offence and registration of FIR as trigger for PMLA investigation - relevance of administrative enquiry report to criminal prosecution - projection of proceeds of crime as untainted property - limitations of a Section 482 Cr.P.C. petition in probing questions of fact - requirement of application of mind while taking cognizance and issue of summons - distinction between standards for taking cognizance/summoning and framing of charge

Predicate offence and registration of FIR as trigger for PMLA investigation - quashing of prosecution under the Prevention of Money Laundering Act - Validity of initiating prosecution under the PML Act based on FIRs and consequent complaint by the Enforcement Directorate; whether the PMLA complaint can be quashed at this stage. - HELD THAT: - The court held that where FIRs and police investigation disclose the commission of a scheduled offence, registration of an ECIR and a complaint under the PML Act can validly follow. The existence of a final police report/charge sheet filed earlier on the basis of police materials reinforces the basis for proceedings under the PML Act. Consequently, the scope of a Section 482 Cr.P.C. petition is limited and is not the proper forum to probe the merits of whether the predicate offence exists or whether the ED's complaint is factually unsustainable; such factual matters are to be examined by the trial Court during trial. [Paras 5]

Petition to quash the PMLA complaint on the ground that the prosecution lacks basis is dismissed; initiation of PMLA proceedings based on FIR/charge-sheet is valid and matters of fact are for trial.

Relevance of administrative enquiry report to criminal prosecution - limitations of a Section 482 Cr.P.C. petition in probing questions of fact - Whether the administrative enquiry report by Mr. Sagayam, I.A.S. (not disclosed publicly) is a foundation for quashing the prosecution under the PML Act. - HELD THAT: - The Court found that the FIRs in this matter arose from complaints by Revenue officials and not solely from the administrative enquiry, and therefore the undisclosed report of Mr. Sagayam has no bearing on the validity of the criminal prosecution under the PML Act. The Court relied on the principle that registration of an FIR can trigger PMLA investigation when a scheduled offence is disclosed and referred to the explanation to Section 44 of the PML Act to support that administrative reports do not preclude subsequent criminal proceedings based on independent police materials. [Paras 5]

Reliance on the undisclosed administrative enquiry report is insufficient to quash the PMLA prosecution; the report does not invalidate the proceedings.

Projection of proceeds of crime as untainted property - limitations of a Section 482 Cr.P.C. petition in probing questions of fact - Whether purchases of immovable properties and fixed deposits predating the alleged predicate offence defeat prosecution under the PML Act at the quash stage. - HELD THAT: - The Court held that the critical inquiry under the PML Act is whether the properties or deposits represent proceeds of crime or were projected as untainted. Determination of whether particular assets were acquired with proceeds of crime is a question of fact involving evidence, and such factual adjudication cannot be undertaken in a petition under Section 482 Cr.P.C. The trial court alone is the appropriate forum to examine and decide these factual issues. [Paras 6]

Contention that prior purchases or loans negate the PMLA prosecution is rejected at the quash stage; factual determination is left to trial.

Requirement of application of mind while taking cognizance and issue of summons - distinction between standards for taking cognizance/summoning and framing of charge - Whether the order of the trial Court taking cognizance and issuing process is vitiated for lack of application of mind in light of Sunil Bharti Mittal and related authorities. - HELD THAT: - The Court reviewed authorities and explained that the doctrine in Sunil Bharti Mittal applies where a person not named in the charge-sheet is summoned without material implicating them; however, where a police report or charge-sheet with materials has been filed, the standard for taking cognizance/summoning under Section 204 Cr.P.C. is lower than that for framing charges. The court observed that it is not necessary at the cognizance stage to examine merits and demerits or to evaluate evidence fully; an order need not contain detailed reasons so long as there is sufficient basis to proceed. Applied to the present facts, the challenge to cognizance for want of application of mind does not warrant quashing. [Paras 7]

The contention that the cognizance order is vitiated for lack of application of mind is rejected; the summons/ taking of cognizance was properly founded and not subject to quashing on that ground.

Final Conclusion: The criminal original petition under Section 482 Cr.P.C. seeking quashment of the complaint filed by the Enforcement Directorate under the PML Act is dismissed. The High Court held that initiation of PMLA proceedings on the basis of FIRs/charge-sheet is valid, the administrative enquiry report does not negate the prosecution, disputed factual issues regarding assets are for trial, and the cognizance order does not suffer from want of application of mind.

Normal period of limitation versus extended period for issuance of show cause notice - prospective operation of statutory amendment - time barred demands cannot be revived by a subsequent amendment - pre deposit adjustment and quantification on remand

Normal period of limitation versus extended period for issuance of show cause notice - prospective operation of statutory amendment - time barred demands cannot be revived by a subsequent amendment - Whether demands in respect of April 2014 to September 2014 were time barred and could be confirmed by applying the extended limitation period when the show cause notice was issued after the amendment came into force - HELD THAT: - The Tribunal held that the amendment extending the limitation period cannot be given retrospective effect to revive demands which had already become barred before the amendment came into force. Applying the Division Bench's reasoning in Aveco Technologies (endorsed by the Apex Court), demands which had become irrecoverable as on 13 05 2015 could not be resurrected by the Finance Act, 2016 effective from 14 05 2016. Consequently, the extended period applicable at the time of issuance of the show cause notice could not validate confirmation of demand for periods already time barred on the date prior to the amendment. The Tribunal therefore set aside confirmation of demand for April 2014 to September 2014 as barred by limitation. [Paras 6, 7]

Confirmation of demand for April 2014 to September 2014 is set aside as barred by limitation.

Pre deposit adjustment and quantification on remand - Treatment of the demand for October 2014 to March 2015 and consequential relief on predeposit - HELD THAT: - The Tribunal did not adjudicate the quantum of demand for October 2014 to March 2015 on merits but remitted that portion to the original authority for quantification. The remand directs adjustment of the quantified demand against the mandatory predeposit already made by the appellant and, after such adjustment, any remaining predeposit amount is to be refunded to the appellant. The directions preserve the procedural step of computation and adjustment without deciding the substantive quantum in the appeal. [Paras 7]

Demand for October 2014 to March 2015 is remanded to the original authority for quantification and adjustment against the predeposit; any balance to be refunded.

Final Conclusion: Appeal partly allowed: demand for April 2014 to September 2014 set aside as time barred; demand for October 2014 to March 2015 remanded for quantification and adjustment against the predeposit, with refund of any balance.

Refund under Section 11B of the Central Excise Act, 1944 - refund claim and unjust enrichment - principles of natural justice (audi alteram partem) - show cause notice and personal hearing - remand for fresh adjudication by the refund sanctioning authority - limits of appellate interference; appellate forum cannot itself reprocess and verify evidence - requirement of a speaking order when rejecting a refund

Principles of natural justice (audi alteram partem) - show cause notice and personal hearing - requirement of a speaking order when rejecting a refund - Whether the Commissioner (Appeals) was justified in setting aside the Order in Original and remanding the refund claim on grounds of violation of natural justice and absence of personal hearing or show cause notice, and for lack of a speaking, reasoned order. - HELD THAT: - The Tribunal found that the original authority rejected the refund on the ground that necessary documents to show absence of unjust enrichment were not produced, but did so without issuing a show cause notice or affording the appellant adequate personal hearing. The Commissioner (Appeals) correctly recorded that this amounted to disregard of the principles of audi alteram partem and that an opportunity to be heard should have been provided before rejecting the refund. The Commissioner (Appeals) also noted the absence of discussion as to the nature of proof required and that the Order in Original was not a well reasoned speaking order. In these circumstances remand to the refund sanctioning authority for reprocessing after granting opportunity of personal hearing and for taking on record evidence was appropriate in the interest of justice. [Paras 6, 8, 10]

The remand by the Commissioner (Appeals) was upheld; the Order in Original was set aside and the matter remitted for fresh decision after affording hearing and permitting production of evidence.

Limits of appellate interference; appellate forum cannot itself reprocess and verify evidence - remand for fresh adjudication by the refund sanctioning authority - Whether the Tribunal or the Commissioner (Appeals) could reprocess the refund claim by verifying documents themselves instead of remitting the matter to the original authority. - HELD THAT: - The Tribunal observed that neither the Commissioner (Appeals) nor the Tribunal has authority to undertake reprocessing or verification of the evidentiary materials; such function lies with the refund sanctioning authority. Therefore the Commissioner (Appeals) correctly confined himself to setting aside the original order and consigning the matter back to the original authority to decide afresh after giving the appellant opportunity to produce evidence and for personal hearing. The appeal by the appellant against that remand was without merit. [Paras 6]

Appellate authorities cannot themselves reprocess or verify documents; remand to the original authority for fresh adjudication was proper.

Final Conclusion: Appeal dismissed; the order of the Commissioner (Appeals) setting aside the Order in Original and remitting the refund claim to the refund sanctioning authority for fresh decision after affording personal hearing and permitting production of evidence is upheld.

Application of Section 11B to refunds under Rule 5 - Refund under Rule 5 of the Cenvat Credit Rules, 2004 - Notification No. 5/2006-C.E. (N.T.) paragraph 6 - Relevant date for export-related refund - Time-bar for refund claims

Application of Section 11B to refunds under Rule 5 - Notification No. 5/2006-C.E. (N.T.) paragraph 6 - Relevant date for export-related refund - Time-bar for refund claims - Refund claim under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-C.E. (N.T.) is governed by the one-year time limit of Section 11B and the claim for April 2008 to June 2008 was time-barred. - HELD THAT: - Paragraph 6 of Notification No. 5/2006-C.E. (N.T.) expressly requires that applications under Rule 5 be filed "before the expiry of the period specified in section 11B of the Central Excise Act, 1944." Section 11B contains a definition of "relevant date" which, in sub-clause (a) of clause (B), covers refunds in respect of excisable materials used in the manufacture of goods exported out of India and identifies the date of export as the relevant date. The Tribunal accepted the High Court and tribunal precedents treating refund claims under the notification as subject to the one-year limitation in Section 11B, and distinguished earlier decisions of the appellant that did not address the statutory definition of "relevant date" or which concerned deemed credit. Applying these principles, the refund claim relating to inputs used in exported goods was required to be filed within one year from the relevant date (date of export) and, having been filed after that period, was rightly held to be time-barred. [Paras 4, 5, 6, 7]

The refund claim was correctly rejected as barred by the one-year period specified in Section 11B; the appeal is dismissed.

Final Conclusion: The Tribunal held that refund claims under Rule 5 read with Notification No. 5/2006-C.E. (N.T.) are subject to the time limit in Section 11B (with the relevant date for export-related refunds being the date of export) and dismissed the appeal as the claim for April 2008 to June 2008 was time-barred.

Demand under Rule 6(3) of the Cenvat Credit Rules - Reversal of Cenvat credit for non-excisable or exempted goods - Empty packaging material/containers not arising out of manufacture - Scope of Explanation (1) and Explanation (2) to Rule 6(1) - Final products manufactured from inputs - Principle that duty is not leviable on empty containers cleared from factory

Demand under Rule 6(3) of the Cenvat Credit Rules - Empty packaging material/containers not arising out of manufacture - Scope of Explanation (1) to Rule 6(1) - Whether a demand under Rule 6(3) for an amount equal to 6% of the value of empty packaging material (in which inputs were received) is sustainable where such packaging material does not arise out of the manufacture of any final product. - HELD THAT: - The Tribunal found that the Show Cause Notice invoked Rule 6(3) and relied on Explanation (1) and (2) to Rule 6(1). Explanation (1) applies only to goods falling within clause (d) (exempted goods) or clause (h) (final products) of Rule 2, and clause (h) requires the goods to be manufactured or produced from input. The empty packaging material in the present case did not arise out of any manufacturing process and therefore does not fall within the scope of clause (d) or clause (h); consequently Explanation (2) (which only fixes value of non-excisable goods) is inapplicable. The Tribunal applied the principle, as articulated by the Supreme Court in CCE v. West Coast Industrial Gases Ltd. , that there is no rule levying duty on such drums/barrels/containers and that empty containers cleared from the factory are not liable to duty; reliance was also placed on subsequent precedent treating waste/containers not arising from manufacture as outside the reversal obligation under Rule 6, including the decision considered in Balrampur Chini Mills Ltd. v. Union of India which followed Union of India v. DSCL Sugar Ltd. . On this basis the impugned demand under Rule 6(3) was held not sustainable. The Tribunal therefore set aside the adjudicating orders which sustained the demand.

Demand under Rule 6(3) qua the empty packaging material (not arising out of manufacture) is unsustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the demand made under Rule 6(3) of the Cenvat Credit Rules in respect of empty packaging material that did not arise out of the manufacture of any final product, holding such demand not tenable in law.

Refund governed by Section 11B - pre-deposit under Section 35F - relevant date under clause (ec) of Section 11B - time bar for refund claims - payment pursuant to Section 11A(2B)

Pre-deposit under Section 35F - payment pursuant to Section 11A(2B) - Characterisation of the amount deposited during investigation as excise duty, interest and penalty and not as a pre-deposit under Section 35F. - HELD THAT: - The tribunal found that the appellant had consciously paid the amount under distinct account heads-Excise Duty, interest and 25% penalty-and was not compelled by the department to make the payment. The stay order recorded the deposit as duty, interest and 25% penalty. The appellant had availed benefits under the provisions permitting payment during investigation (Section 11A(2B)) and therefore the payment was a voluntary discharge of liability rather than a tribunal-directed pre-deposit under Section 35F. Reliance on precedents where deposits were held to be pre-deposits was distinguished on the factual basis that, in the present case, the payment was specifically made and recorded as duty, interest and penalty. [Paras 4]

Deposit treated as excise duty, interest and penalty and not as a pre-deposit under Section 35F.

Refund governed by Section 11B - relevant date under clause (ec) of Section 11B - time bar for refund claims - Applicability of Section 11B to the refund claim and whether the refund application is time-barred. - HELD THAT: - The tribunal held that where duty becomes refundable as a consequence of an appellate order, the relevant date for computing limitation is the date of that order as provided by clause (ec) of Section 11B. The demand was set aside by the tribunal and the one-year limitation period runs from the date of that order. The appellant filed the refund claim after the one-year period from the tribunal's order setting aside the demand; therefore the refund claim in respect of duty and interest is barred by time under Section 11B. The refund of penalty had earlier been allowed by the Commissioner (Appeals) on a different view, but the present decision confines the refund regime for duty and interest to Section 11B limitation. [Paras 4]

Refund claim for duty and interest governed by Section 11B and barred by the one-year limitation from the appellate order; claim dismissed as time-barred.

Final Conclusion: On the facts the deposits were held to be excise duty, interest and penalty (not pre-deposits) and the refund claim for duty and interest is governed by Section 11B and barred by limitation; the impugned order is upheld and the appeal is dismissed.

Confiscation under Rule 25(1) of the Central Excise Rules, 2002 - penalty and redemption fine under Rule 26 and incidental orders - accounting of same-day production where registers are taken into custody - intention to remove excisable goods without payment of duty - evidentiary value of panchnama and physical stock verification - custody and unavailability of RG-1 register during search - cross-examination of panchnama-principles of natural justice

Confiscation under Rule 25(1) of the Central Excise Rules, 2002 - accounting of same-day production where registers are taken into custody - custody and unavailability of RG-1 register during search - intention to remove excisable goods without payment of duty - Alleged excess stock assessed on panchnama liable to confiscation - HELD THAT: - The tribunal found that the officers commenced the panchnama at 11.45 am on 13.01.2015 and continued on-site till 6.30 am on 14.01.2015 and had taken the RG-1 register in their custody at the outset. The appellants produced Form IV (raw material register) showing consumption and production on 13.01.2015-consumption of raw material and recorded production of MS TMT Bars for that day with corresponding burning loss and end cutting-indicating production continued after the register was taken. The same-day production which occurred during the officers' presence could not be entered in the seized RG-1 register and was thereafter recorded by the appellant in a new register. There was no evidence of any intention by the appellants to remove or clear goods without payment of duty; no iota of evidence suggested clandestine removal. On these facts the tribunal concluded that the situation did not amount to non-accountal of excisable goods attractable to confiscation under Rule 25(1), because the apparent excess resulted from production during the period the original register was in custody of the officers and not from concealment or removal. [Paras 4]

Alleged excess stock of finished goods is not liable to confiscation; finding of confiscation under Rule 25(1) set aside.

Penalty and redemption fine under Rule 26 and incidental orders - consequential relief on setting aside confiscation - Validity of fines and penalties imposed consequential to confiscation - HELD THAT: - Having concluded that the goods were not liable to confiscation, the tribunal held that the redemption fine and penalties imposed on the appellant company and its manager, which were consequential to the confiscation finding, could not stand. The tribunal therefore set aside the adjudicating authority's imposition of a redemption fine and the penalties on both the company and the manager. The tribunal noted that cited precedents varied on facts and that the present conclusion was reached on the particular facts of the case. [Paras 4, 5]

Redemption fine and penalties imposed on the appellant company and its manager are set aside; appeal allowed with consequential relief.

Final Conclusion: On the facts, production taking place after the RG-1 register was taken into custody explained the apparent excess; there was no evidence of intent to remove goods without payment of duty. Confiscation under Rule 25(1) was unjustified and, accordingly, the redemption fine and penalties imposed consequentially were set aside and the appeal allowed.

Audit assessment time limit - Completion within six months from the date of receipt of the Audit Visit Report - Proviso power to extend time on merit - Outer limit of one year for audit assessment - Ex post facto extension invalid - Requirement of application of mind by the Commissioner - Assessing authority barred from passing time barred order pending extension - Refund of deposit upon application

Audit assessment time limit - Completion within six months from the date of receipt of the Audit Visit Report - Assessing authority barred from passing time barred order pending extension - Validity of assessment order dated 15th May, 2013 in view of the six month limitation under Section 42(6) of the OVAT Act. - HELD THAT: - Section 42(6) mandates that an audit assessment shall be completed within six months from the date of receipt of the Audit Visit Report. The notice in Form VAT 306 was served on 1st October, 2012, so the six month period expired on 31st March, 2013. The assessing authority passed the impugned assessment on 15th May, 2013, after the six month period had expired and before any extension had been granted by the Commissioner of Sales Tax (CST). The court held that the assessing authority could not proceed to pass the assessment order knowing that, on the date it proposed to pass it, the order was barred by limitation; the mandatory language of Section 42(6) required the authority to wait for any valid extension. Consequently the assessment order dated 15th May, 2013 is unsustainable as being time barred on the date it was passed. [Paras 13, 17, 22, 29]

The assessment order dated 15th May, 2013 is invalid because it was time barred when passed.

Proviso power to extend time on merit - Outer limit of one year for audit assessment - Requirement of application of mind by the Commissioner - Ex post facto extension invalid - Validity of the CST's order dated 20th July, 2013 purportedly extending time under the proviso to Section 42(6) of the OVAT Act to validate the assessment. - HELD THAT: - The proviso to Section 42(6) permits the CST to allow further time not exceeding six months 'on the merit of each such case', and Section 42(7) places an outer limit of one year from receipt of the Audit Visit Report. The CST's order of 20th July, 2013 was passed after the assessment order and purported to grant a 'post facto' extension. The court found that the CST did not record any consideration of the factors or merits of the case and merely validated an order already passed, thereby abdicating the statutory quasi judicial function to assess merits before extending time. Reliance on the principle in State of Punjab v. Shreyans Industries Ltd. underscored that extension must be exercised before the original period expires; a post expiry, post hoc extension cannot retrospectively validate an order that had already become time barred. [Paras 21, 23, 24, 28, 29]

The CST's order dated 20th July, 2013 cannot validate the assessment; a post facto extension granted without applying mind to the merits is invalid to cure a time barred assessment.

Refund of deposit upon application - Disposition of amounts deposited by the petitioner pursuant to interim order. - HELD THAT: - The court directed that the amount deposited pursuant to the interim order of 27th August, 2013 shall be refunded to the petitioner upon application made on the basis of this order. The court fixed a timeliness requirement: if the petitioner applies not later than 1st September, 2021 the department shall process the application and pass an appropriate order within three months thereafter. This is a procedural direction ancillary to allowing the petition. [Paras 5, 6, 30]

Deposit made pursuant to the interim order shall be refunded on application in accordance with the timetable specified by the court.

Final Conclusion: The petition is allowed. The assessment order dated 15th May, 2013 was time barred when passed and is set aside. The CST's post facto extension of time dated 20th July, 2013 cannot validate the illegal assessment. The amount deposited under the interim order shall be refunded to the petitioner on application as directed; no order as to costs.

Penalty under Section 53(12) of the KVAT Act - Transit pass and check-post verification - Transporter deemed owner of taxable goods - Genuineness of consignment documents and mens rea - Power to impose penalty for evasion of tax

Penalty under Section 53(12) of the KVAT Act - Genuineness of consignment documents and mens rea - Imposition of penalty under Section 53(12) upheld where documents were found to be not genuine, consignor non-existent or de-registered, and consignment details did not match declarations. - HELD THAT: - The Tribunal's and appellate authority's findings that the tendered documents were not genuine and that the consignor/consignee either did not exist or their registration was cancelled were accepted. The Court relied on the principle that submission of false or forged documents and mismatches between actual goods and declared particulars demonstrate culpable intent and justify levy of penalty. Material factual discrepancies recorded by the authorities - including mismatching description, brand and value, different vehicle numbers than shown in transit passes, and confirmation from Delhi authorities that a consignor was non-existent - supported the imposition of penalty. In these circumstances the authorities acted within the statutory scheme to treat the transaction as an attempt to evade tax and to impose penalty under Section 53(12).

Penalty imposed under Section 53(12) was justified and is upheld.

Transit pass and check-post verification - Power to impose penalty for evasion of tax - Authorities were justified in examining consignments in transit within Karnataka and in treating irregularities discovered at check-posts as grounds for penalty. - HELD THAT: - Section 53 is directed to prevent evasion by providing for check-posts and verification of transit documents. Where documents produced at entry or during transit are found to be false, forged or inconsistent with the goods carried, the statutory mechanism permits detention, inquiry and levy of penalty after following the prescribed procedure. The Court observed that the transporter, being deemed the owner of taxable goods while in transit, is bound to comply with statutory requirements; therefore, exercise of powers to examine and penalise in the facts found was lawful.

The action of authorities in checking goods in transit and imposing penalty on finding irregularities was lawful and sustained.

Transit pass and check-post verification - Transporter deemed owner of taxable goods - Absence of a transit pass at the first entry check post or claimed inability to obtain it due to external circumstances did not absolve the petitioner where documentary and factual inconsistencies persisted. - HELD THAT: - The petitioner's contention that transit pass could not be obtained due to disturbances was rejected on facts: there were either no recorded transit passes for the intercepted consignments or the particulars did not tally. The Court noted that documentary discrepancies and failure to produce prescribed documents at the time of interception, together with inconsistent confirmations and mismatching TIN details, warranted treating the consignments as liable to penalty. Exceptional circumstances asserted by the petitioner did not dispel the factual findings justifying penalty.

Claim of inability to obtain transit pass did not negate the justification for imposing penalty.

Final Conclusion: The revision petitions are without merit and are dismissed; the penalty orders imposed under Section 53(12) of the KVAT Act are sustained in view of documentary falsity, mismatches between goods and declarations, and the lawful exercise of check-post powers to prevent tax evasion.

Authorization / power of attorney to represent a company in a criminal complaint - requirement that the authorized representative have knowledge of the relevant transactions - judicial notice of documents exhibited in connected proceedings - vicarious liability under Section 141 of the Negotiable Instruments Act and imperative of arraignment of the company/firm

Authorization / power of attorney to represent a company in a criminal complaint - judicial notice of documents exhibited in connected proceedings - requirement that the authorized representative have knowledge of the relevant transactions - Validity of relying upon an authorization letter exhibited in a connected complaint (Complaint Case No. 87/2006) to validate institution of Complaint Case No. 86/2006 where the authorised witness was not produced or examined in that case. - HELD THAT: - The Court held that an authorization letter exhibited in the connected Complaint Case No. 87/2006 (marked Exhibit-6 there) could not be read into Complaint Case No. 86/2006 to cure the absence of authorization in that case. The complainant had been granted liberty to recall P.W.-1 in Complaint Case No. 86/2006 and to produce and have the authorization exhibited and the witness cross-examined on both the authorization and his knowledge of the transactions; that opportunity was not availed. Reliance on Exhibit-6 from the separate proceeding did not substitute for production and examination of the authorized representative in Complaint Case No. 86/2006. In light of the Supreme Court authority that an authorization/power of attorney must exist and the authorized person must have knowledge of the transaction, the trial and appellate courts' reliance upon the authorization exhibited only in the connected case amounted to perversity and could not be sustained; consequently Complaint Case No. 86/2006 was held to have been filed without proper authorization. The Court contrasted this with the position in the connected case where the authorization was duly exhibited on recall, the witness was cross-examined and concurrent findings of the lower courts affirmed maintainability there. [Paras 23, 24, 25, 26, 27]

Complaint Case No. 86/2006 was filed without proper authorization and the finding upholding institution of that complaint by referring to Exhibit-6 from the connected case is unsustainable; issue decided in favour of the accused in Criminal Revision No. 833/2012.

Authorization / power of attorney to represent a company in a criminal complaint - requirement that the authorized representative have knowledge of the relevant transactions - Whether P.W.-1 was duly authorized to file Complaint Case No. 87/2006 where the authorization letter was produced on recall, marked as Exhibit-6 (with objection) and P.W.-1 was cross-examined on authorization. - HELD THAT: - The Court found that in Complaint Case No. 87/2006 the authorization letter was produced on recall, exhibited (albeit with objection) and P.W.-1 was cross-examined on the point of authorization. The mode and scope of delegation within a company are matters of evidence; the lower courts had given concurrent findings after appreciating the material on record that P.W.-1 was duly authorized and the complaint was maintainable. On revisional scrutiny there was no illegality or perversity in those concurrent findings warranting interference. Therefore the institution and maintainability of Complaint Case No. 87/2006 stood affirmed. [Paras 18, 21, 28, 29]

Issue decided against the petitioner and in favour of the complainant in Criminal Revision No. 830/2012; authorization to file Complaint Case No. 87/2006 upheld.

Vicarious liability under Section 141 of the Negotiable Instruments Act and imperative of arraignment of the company/firm - requirement to implead the real juridical person (partnership/firm) when the cheque is issued for and on behalf of that firm - Whether it was imperative to implead the partnership firm (Mehta Transport Company) as a co-accused in both complaint cases where cheques were issued from the partnership account and signed by the accused as partner. - HELD THAT: - The Court, after surveying binding Supreme Court authority, held that where the offence under Section 138 arises in respect of a juristic person such as a firm, Section 141 and its explanation require arraignment of the firm as an accused before prosecuting persons alleged to be vicariously liable. The records admitted that the hire-purchase loans were taken by the partnership firm, the cheques were issued from the firm's account and signed by the accused as partner; yet the firm was not made an accused and no legal impediment to impleadment appears. In consequence, prosecutions under Section 138 only against the partner (without arraigning the firm) were not maintainable. The Court held that the lower courts' findings treating the accused as the natural borrower and proceeding without impleading the firm were ex facie perverse and required setting aside. [Paras 37, 38, 46, 47, 48]

It was imperative to implead the partnership firm as a co-accused; failure to do so rendered the complaints under Section 138 not maintainable and issue decided in favour of the accused in both revisions.

Final Conclusion: Both Criminal Revision petitions allowed: the conviction and sentence in both complaint cases are set aside. Complaint Case No. 86/2006 was held to have been instituted without proper authorization; Complaint Case No. 87/2006 was held to be instituted with proper authorization; but because the partnership firm was not impleaded as an accused in either case, prosecution under Section 138 was not maintainable and the petitioner is discharged from liabilities under his bail bonds.