TaxTMI Updates e-Newsletter
Sep 23,2019

Composite supply of works contract - Affordable housing (infrastructure status) - Carpet area up to 60 square metres - Concessional GST rate of 12% (CGST 6% + SGST 6%) - Benefit available to supplier of service irrespective of being developer or contractor - Applicability from notification effective date 25.01.2018

Composite supply of works contract - Affordable housing (infrastructure status) - Carpet area up to 60 square metres - Concessional GST rate of 12% (CGST 6% + SGST 6%) - Construction services supplied by the applicant in respect of apartments of carpet area up to 60 sq. m. in the 'La-Riveria' project qualify for the concessional rate of GST as specified in the notification. - HELD THAT: - The Authority examined the notification entry that grants concessional tax to works contract services pertaining to low cost houses up to a carpet area of 60 square metres in an affordable housing project which has been given infrastructure status. The project 'La-Riveria' was found to satisfy the definition of Affordable Housing as per the Department of Economic Affairs' notification (use of at least 50% FAR/FSI for dwelling units with carpet area not more than 60 sqm) and the record shows each apartment in the project has carpet area less than 60 sq. m. The notification entry is directed at the supply of service (works contract for low cost houses in an affordable housing project) and, therefore, where the supply relates to such houses in a qualifying project, the concessional rate of 12% (6% CGST + 6% SGST) applies. The Authority further clarified that the reduced rate is available only for supplies effected on or after the date of the rate notification, i.e., from 25.01.2018.

Construction services provided by the applicant for the specified apartments in the La-Riveria project qualify for the concessional GST rate of 12% for supplies effected after 25.01.2018.

Benefit available to supplier of service irrespective of being developer or contractor - Composite supply of works contract - The concessional rate is not restricted to the developer alone and applies to contractors/sub-contractors supplying the qualifying works contract services. - HELD THAT: - The Authority observed that the notification entry applies to the supply of services and does not limit the benefit to any particular class of person. The notifications and subsequent clarifications envisage that once a project qualifies as an affordable housing project with infrastructure status, works contract services pertaining to low cost houses in that project attract the concessional rate irrespective of whether the supplier is the developer, main contractor or a sub-contractor, provided the supply itself pertains to qualifying low cost houses. Consequently, the applicant, being a supplier of works contract services for the qualifying apartments, is entitled to the concessional rate.

The reduced rate under the notification is available to the applicant (contractor/sub-contractor) for qualifying works contract supplies and is not confined to the developer.

Final Conclusion: The Advance Ruling answers the question in the affirmative: the applicant's construction services relating to apartments of carpet area up to 60 sq. m. in the La-Riveria affordable housing project qualify for the concessional GST rate of 12% (CGST 6% + SGST 6%), and this benefit extends to the contractor/sub-contractor supplying the qualifying works contract services for supplies effected after 25.01.2018.

Value of taxable supply - transaction value - works contract service - inclusion of recipient incurred costs in valuation - treatment of materials supplied by the recipient of service

Value of taxable supply - inclusion of recipient incurred costs in valuation - transaction value - Taxable value for GST on works contract services where materials are supplied by the contractee - HELD THAT: - The Authority applied the valuation rule in Section 15 and, in particular, clause (2)(b) which requires inclusion of any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient and not included in the price. The materials (cement, mild steel, tor steel, structural steel) supplied by the contractee were held to be essential components of the construction service and, on the contract terms and the certificate issued by the architect (RA Bill), the total contract value certified includes those materials. The Authority drew support from the Supreme Court decision in M/s. N.M. Goel & Co vs Sales Tax Officer, Rajnandgaon & ... for the proposition that appropriation/use of materials supplied by the recipient in performance of the works contract results in inclusion of their value in the taxable base. Applying these principles, the Authority concluded that the amount certified by the architect for the invoice (i.e., the contract value as certified in the RA Bill) before deducting the value of the materials supplied by the contractee shall be the value of supply for levy of GST under Section 15.

Tax is payable on the entire contract value as per the architect's certificate (RA Bill) without deducting the value of materials supplied by the contractee.

Final Conclusion: The Authority declined to answer the first question and answered the second by holding that for the purposes of Section 15 the taxable value of the construction service is the amount certified by the architect (RA Bill) i.e. the contract value before deduction of materials supplied by the contractee.

Application to Assessing Officer under the UP VAT and UP GST Acts for confirmation of sale - verification by Assessing Officer of invoices against respondent's returns - direction for issuance of confirmation or denial within two days - adjournment to enable respondent to revisit objections - remand for limited verification

Application to Assessing Officer under the UP VAT and UP GST Acts for confirmation of sale - verification by Assessing Officer of invoices against respondent's returns - direction for issuance of confirmation or denial within two days - Whether the applicants may seek administrative verification from the Assessing Officer of the alleged sales to the respondent by producing the invoices claimed to have been issued. - HELD THAT: - The Court left open to the applicants the procedural remedy of making an application to the Assessing Officer under the relevant VAT and GST enactments, accompanied by the invoices said to have been issued against sales to the respondent. The Assessing Officer(s) were directed, upon receipt of such application on 24.09.2019, to examine the respondent's relevant returns and to issue a letter either confirming or denying the existence of the sales within two days of such examination. This course constitutes a remand for limited administrative verification rather than a final adjudication on the merits of the transactions. [Paras 1]

Applicants permitted to apply to the Assessing Officer for verification of the alleged sales; Assessing Officer to issue confirmation or denial within two days after examining respondent's returns if application filed on 24.09.2019.

Adjournment to enable respondent to revisit objections - Whether the Court's direction for administrative verification should be issued immediately. - HELD THAT: - Although the Court indicated the administrative procedure above, the operative direction was withheld at this stage because learned counsel for the respondent sought time to revisit his objections. Consequently the matter was adjourned for further consideration on the listed date. [Paras 2]

Direction withheld and matter posted for further hearing on 23.09.2019 to enable the respondent to revisit objections.

Final Conclusion: The Court authorised a limited administrative verification by the Assessing Officer-permitting the applicants to apply with invoices and directing a confirmation or denial within two days if the application is filed on 24.09.2019-but withheld immediate implementation of that direction and adjourned the matter to 23.09.2019 for the respondent to revisit objections.

Regular bail under Section 439 CrPC - default bail - release on conditions - trial court not to be influenced by preliminary observations

Regular bail under Section 439 CrPC - default bail - conditions of bail - Applicant enlarged on regular bail on account of entitlement to default bail and exercise of judicial discretion subject to conditions. - HELD THAT: - The applicant was arrested on 08.07.2019 in connection with an offence registered as F.No.: IV/0650/CEP/201819 under the Central Goods & Services Tax regime. The Court noted that even after the lapse of 60 days from arrest no complaint or charge-sheet had been filed. In view of the admitted position and the statutory consequence of non-filing within the prescribed period, the applicant was held entitled to default bail. Applying its discretion, the Court ordered regular bail rather than denying relief, while imposing specified conditions tailored to prevent misuse of liberty and to secure attendance during trial. The order also provided that release is subject to the applicant not being required in connection with any other offence, that the Sessions Judge may modify or relax conditions as appropriate, and that the trial court should not be influenced by the preliminary observations made while granting bail.

Application allowed; applicant released on regular bail on executing a bond with one local surety and subject to specified conditions, with liberty for the Sessions Judge to modify conditions and a direction that the trial court remain uninfluenced by preliminary observations.

Final Conclusion: Rule made absolute to the extent that the applicant is enlarged on regular bail due to entitlement to default bail in the absence of a charge-sheet/complaint within 60 days, subject to the enumerated conditions and safeguards.

Refund claims under Central Goods and Services Tax Act - implementation of statutory refund mechanism - non-adversarial proceedings for administrative resolution - stakeholder consultations for administrative resolution of GST issues - judicial supervision by placing minutes before the Court

Refund claims under Central Goods and Services Tax Act - implementation of statutory refund mechanism - stakeholder consultations for administrative resolution of GST issues - Direction to convene stakeholder consultations to address difficulties in acknowledgement, processing and grant of GST refund claims and to streamline implementation of the statutory refund mechanism. - HELD THAT: - The Court, treating the proceedings as non-adversarial and aimed at administrative improvement, recorded that despite remedial steps taken since the rollout of GST, serious issues persist in the processing of refund claims under the GST framework (paras 1-2, 6-7). To facilitate resolution, the Court directed a meeting of all relevant stakeholders, to be attended by specified officers including representatives of the GST Network and Commissioner-level officers of the concerned authorities, to take up the petitioners' grievances and other outstanding trade issues in seriatim (para 9). The petitioners were directed to submit a bullet-point representation listing the issues within one week and to circulate it to the respondents; the respondents were directed to participate in the meeting arranged at the GST Council office; the minutes were to be drawn and placed before the Court (paras 8-9). These directions are administrative and supervisory measures to ensure implementation of the statutory refund mechanism and to facilitate resolution through consultation rather than decide the merits of any particular refund claim. [Paras 8, 9]

Petitioners to furnish a bullet-point representation within one week; a stakeholder meeting at the GST Council office to be convened within one week with specified attendees; minutes to be recorded and placed before the Court.

Final Conclusion: Writ petition proceeds by directing structured stakeholder consultations and judicial oversight (placement of minutes) to address and streamline the acknowledgement, processing and grant of GST refund claims; matter listed for further consideration on 15.10.2019.

Refund of late fee - waiver of late fee by notification - exercise of power under Section 120 of the Act - statutory notification not amenable to Single Bench validity review

Refund of late fee - administrative remedy - Petition for refund of late fee paid while filing GSTR-3B returned without prior application to the authority cannot be entertained by the High Court. - HELD THAT: - The Court held that if the petitioner was entitled to refund of the late fee deposited, he was required to approach the concerned authority by filing the appropriate application or representation in accordance with law. The writ petition seeking a direction for refund without first availing the statutory or administrative remedy was not maintainable before the Single Bench. Consequently, the Court declined to entertain the substantive claim for refund on the present petition. [Paras 2, 4]

Writ petition dismissed insofar as it seeks direction for refund without the petitioner first approaching the concerned authority.

Waiver of late fee by notification - statutory notification not amenable to Single Bench validity review - exercise of power under Section 120 of the Act - Validity of Notification No.76/2018 (waiving late fee exceeding specified amount for GSTR-3B from July 2017 onwards) is a question of the notification's validity which the Single Bench will not examine; challenge must be pursued before a Division Bench. - HELD THAT: - The Court observed that the impugned notification was issued by the Central Government in exercise of powers under the Act and published in the official gazette, characterising it as a statutory notification. The Single Bench declined to examine its validity and indicated that any challenge to the validity of the notification should be instituted before the Division Bench if the petitioner so advised. No adjudication on the merits of the notification's validity was undertaken by the Single Bench. [Paras 3, 4]

Question of validity of the notification not decided on merits by this Bench; petitioner may challenge the notification before the Division Bench.

Final Conclusion: The writ petition is dismissed: the claim for refund is not entertained for failure to first approach the competent authority; the validity of Notification No.76/2018 is not adjudicated by the Single Bench and may be challenged before the Division Bench.

Vires of Section 6(1) of the Goods and Services Tax Act - Authorisation of State officers as proper officers - Mechanism for common assessment and collection - Arbitrariness - Transitional input tax credit - Circular as executive clarification and policy - Show cause notice - Alternative remedy by appeal

Vires of Section 6(1) of the Goods and Services Tax Act - Authorisation of State officers as proper officers - Mechanism for common assessment and collection - Arbitrariness - Transitional input tax credit - Challenge to the constitutional validity and arbitrariness of Section 6(1) of the Goods and Services Tax Act - HELD THAT: - The Court examined Section 6(1) in the context of the GST regime enacted pursuant to the Constitutional amendment and the creation of the GST Council which frames binding policy for unified taxation by Centre and States. Section 6(1) authorises officers appointed under State or Union Territory GST law to act as proper officers for the purposes of the Act, subject to conditions prescribed by the Central Government. The provision is part of a mechanism to enable common action for assessment and collection across jurisdictions created by GST, comparable in principle to long standing statutory arrangements (historically reference being made to the precedent of common action under earlier law). Given the unified fiscal architecture and administrative necessity, the formation of such a mechanism cannot be characterised as per se arbitrary, and the impugned provision does not in itself curtail the entitlement to claim input or transitional credit. [Paras 5]

Section 6(1) is not per se arbitrary and the constitutional challenge to its vires is rejected.

Circular as executive clarification and policy - Show cause notice - Alternative remedy by appeal - Validity of the circular implementing authorisation under Section 6(1) and of the show cause notice issued in the petitioner's case - HELD THAT: - The Court observed that the impugned circular operates to effectuate the authorisation envisaged by Section 6(1) and represents a matter of administrative policy. However, by the time of hearing assessment had been completed pursuant to the show cause notice. In the circumstances the Court declined to entertain a direct adjudication on the validity of the circular or the show cause notice, noting that an alternative remedy by way of statutory appeal is available to the petitioner. The Court left the question of the validity of the show cause notice/circular to be considered on merits in the appellate proceedings if the petitioner so chooses. [Paras 6, 7]

The Court did not decide the validity of the circular or the show cause notice and directed that any challenge be pursued and adjudicated in the statutory appeal.

Final Conclusion: Writ petition dismissed; Section 6(1) upheld as not per se arbitrary; the challenge to the circular and show cause notice was not adjudicated and the petitioner is directed to seek relief through the statutory appeal, which shall be decided on merits.

Transfer pricing adjustment limited to international transactions - comparability and FAR analysis in transfer pricing - assessee not precluded from withdrawing a selected comparable - exclusion of non functionally comparable entities as comparables - remand for determination of risk adjustment by TPO/AO

Transfer pricing adjustment limited to international transactions - Whether transfer pricing adjustment must be restricted only to the international transaction and cannot be applied to the entire sales or at entity level. - HELD THAT: - The Court noted that the Tribunal allowed the assessee on this point by following its co ordinate Bench in Sandvik Asia Pvt. Ltd. and that this Court has since dismissed Revenue's challenge to that position in Income Tax Appeal No.1088 of 2015 (CIT v/s. Sandvik Asia Pvt. Ltd.). The learned counsel for Revenue conceded that the point is thus concluded by the earlier decision. Applying that settled position, the Court held that transfer pricing adjustments are to be made in respect of international transactions with associated enterprises and not at the entity level, and found that the question raised does not give rise to any substantial question of law warranting entertainment of the appeal. [Paras 3]

Question not entertained as settled; transfer pricing adjustment confined to international transactions - appeal dismissed on this point.

Comparability and FAR analysis in transfer pricing - exclusion of non functionally comparable entities as comparables - assessee not precluded from withdrawing a selected comparable - Whether M/s. Genesys International Corp. Ltd. could be excluded from the set of comparables for determining ALP. - HELD THAT: - The Tribunal found on facts that Genesys carried on geospatial services requiring different skillsets and inputs and was therefore functionally dissimilar to the assessee providing IT based CAD/CAM engineering services; on that factual finding the Tribunal excluded Genesys as a comparable. The Court observed that the Revenue's contention - that the assessee is barred from withdrawing a comparable it had initially selected - is no longer res integra and noted authority accepting that an assessee may seek exclusion of a comparable if inclusion was a mistake on facts. The factual finding of functional dissimilarity was not shown to be perverse. Consequently the proposed question did not disclose any substantial question of law. [Paras 4]

Question not entertained; Tribunal correctly excluded Genesys as not functionally comparable and the Revenue's objection to withdrawal of a comparable was rejected.

Remand for determination of risk adjustment by TPO/AO - Whether the Tribunal was justified in directing the TPO/Assessing Officer to examine and allow appropriate risk adjustment claimed by the assessee. - HELD THAT: - The Court recorded that the assessee did not dispute the necessity of a risk adjustment between the assessee and its comparables but that the Tribunal found the appropriate grant of risk adjustment required adjudication and therefore restored the matter to the TPO/AO for examination of the allowability of the claimed risk adjustment. Given that the Tribunal remitted the issue for factual and adjudicatory determination by the TPO/AO, the Court found the question premature and not to raise any substantial question of law for interference. [Paras 5]

Question not entertained as premature; issue remitted to the TPO/Assessing Officer for determination of the allowability of the risk adjustment.

Final Conclusion: The appeal is dismissed. Questions (a) and (b) were not entertained as they did not raise substantial questions of law in view of settled precedent and unchallenged factual findings; question (c) was held premature and the matter remitted to the TPO/AO for examination of the claimed risk adjustment.

Revenue recognition from contract activity - treatment of liquidated damages - deductibility of legal expenses incurred to defend litigation - ad hoc disallowance of business expenses - disallowance under section 14A read with Rule 8D - depreciation rate on plant and machinery - treatment of prior period expenses - provision for warranty - remand for fresh consideration to Assessing Officer

Revenue recognition from contract activity - Deletion of additions made on account of income recognition from contract/freight activity - HELD THAT: - For both AY 2007-08 and AY 2008-09 the Tribunal followed its consistent precedent in the assessee's earlier years and recorded that the additions made by the AO on account of revenue recognition from contract/freight activity are not sustainable. The parties agreed that facts were mutatis mutandis similar to earlier years where the Tribunal decided in assessee's favour; accordingly the Tribunal allowed the assessee's grounds and dismissed the Revenue's corresponding grounds.

Additions on account of contract/freight income recognition deleted for both years; Revenue's grounds on the same are dismissed.

Treatment of liquidated damages - Allowability of liquidated damages claimed as deduction - HELD THAT: - The Tribunal dealt with two distinct components for AY 2008-09. For one component (the smaller amount) and for similar items in earlier years the Tribunal consistently decided in favour of the assessee and so allowed that part. For the larger component relating to invocation of a performance bank guarantee by Arsmeta Captive Power Company the Tribunal held that mere invocation on 28-04-2007 did not amount to a finally incurred liability for the year; subsequent vacatur of injunction and final settlement (payment in a later year) meant no deduction was permissible in the year under consideration.

Part of the liquidated damages claim allowed following precedent; the claim relating to invocation of bank guarantee disallowed for AY 2008-09 as no liability was finally incurred in that year.

Deductibility of legal expenses incurred to defend litigation - Deduction of legal and professional fees paid for defence of foreign litigation - HELD THAT: - The assessee paid legal fees to defend litigation instituted by Purolite in the USA concerning alleged misuse of trade secrets. The AO disallowed the expenditure invoking the Explanation to section 37(1) as expenditure on account of infringement of rights. The Tribunal applied the principle in Sassoon J. David & Company Pvt. Ltd. (quoted) that expenditure incurred wholly and exclusively for the purpose of business is deductible even if the benefit percolates to another entity. The Tribunal observed that the expenditure was incurred to defend the assessee and, notwithstanding benefit to the US subsidiary, deduction was allowable. Following this reasoning the additions confirmed by the authorities were deleted for both years.

Addition in respect of legal fees paid for defence of USA litigation deleted for AY 2007-08 and AY 2008-09.

Ad hoc disallowance of business expenses - Deletion of ad hoc disallowances made by AO in respect of various business expenses - HELD THAT: - The Tribunal noted that ad hoc disallowances of items such as public relations, membership and subscription, garden expenses, house magazine, vehicle expenses, miscellaneous foreign travel and telephone expenses had been repeatedly deleted in the assessee's earlier years. Following those precedents the Tribunal deleted the ad hoc additions for AY 2007-08 and dismissed corresponding Revenue grounds for AY 2008-09 where facts were similar.

Ad hoc disallowances deleted; Revenue's appeals on these points dismissed.

Treatment of prior period expenses - Disallowance of prior period expenses - HELD THAT: - The Tribunal observed that the issue had been decided against the assessee in earlier years. On the facts for AY 2007-08 and AY 2008-09 the Tribunal followed the earlier decision and dismissed the assessee's grounds challenging the additions of prior period expenses.

Assessee's grounds on prior period expenses dismissed for both years.

Depreciation rate on plant and machinery - Allowability of depreciation at higher block rate claimed by the assessee - HELD THAT: - The Tribunal recorded that identical issue had earlier been decided in the assessee's favour for the immediately preceding and earlier assessment years. Applying that precedent the Tribunal allowed the assessee's claim of depreciation at the higher rate (instead of restricting to 25%) for the respective items of plant and machinery.

Disallowance of depreciation at 80% confirmed by AO set aside; depreciation at the higher rate allowed following precedent.

Ad hoc disallowance of sales commission - remand for fresh consideration to Assessing Officer - Treatment of sales/commission expenses and remand where appropriate - HELD THAT: - For AY 2007-08 the Tribunal found that the assessee had produced books of account before the AO who had full opportunity to examine them but made an ad hoc disallowance without pointing out specific defects; following earlier Tribunal orders such ad hoc disallowance was deleted. For a related commission payment in AY 2008-09 (commission to Nischal Corporate Services), the Tribunal observed similarity to the AY 2006-07 position where the matter had been restored for fresh consideration; accordingly it set aside the order and remitted the issue to the AO to decide afresh in accordance with the directions given in the earlier order.

Ad hoc disallowance of commission deleted for AY 2007-08; the commission matter for AY 2008-09 remitted to AO for fresh adjudication.

Provision for warranty - Allowability of provision for warranty - HELD THAT: - Both assessment years contained identical grounds on provision for warranty which the Tribunal had consistently decided in the assessee's favour in earlier years. Following those precedents the Tribunal allowed the assessee's grounds and dismissed Revenue's corresponding grounds.

Provision for warranty additions deleted; Revenue's grounds dismissed.

Disallowance under section 14A read with Rule 8D - remand for fresh consideration to Assessing Officer - Computation of disallowance under section 14A read with Rule 8D and directions for recomputation - HELD THAT: - For AY 2008-09 the AO computed disallowance under section 14A r.w. Rule 8D. The CIT(A) directed recomputation by excluding investments yielding taxable income from the average value of investments, rejecting the assessee's contention to consider fixed assets at gross value, and by excluding post-shipment packing credit interest of Rs.19.99 lakh. The Tribunal held these directions to be in order and restored the matter to the AO for recomputation in accordance with those directions.

Matter remitted to AO for recomputation of section 14A disallowance in accordance with the specific directions of the CIT(A).

Provision for medical and leave travel allowance - Deletion of addition in respect of provision for medical and LTA - HELD THAT: - The Tribunal noted that similar issues had been decided in the assessee's favour in earlier assessment years (specific earlier orders cited in the record). Following those precedents the Tribunal maintained the deletion of additions made by the AO in relation to provision for medical and LTA for both years.

Addition in respect of provision for medical and LTA deleted; Revenue's grounds dismissed.

Final Conclusion: Both assessment years were partly decided in favour of the assessee and against the Revenue; multiple additions and ad hoc disallowances were deleted following the Tribunal's precedents, certain issues (notably recomputation under section 14A and a commission claim) were remitted to the Assessing Officer for fresh consideration in accordance with the directions, and the Revenue's cross appeals were largely dismissed.

Reopening of assessment u/s 147- change in method of accounting in relation to NPAs - Provision for fraud cases treated as expenditure in the profit and loss account - The Revenue's appeal is dismissed; the Tribunal's order quashing the reassessment proceedings for AY 2006-07 is upheld because the change in accounting method for NPAs was fully and truly disclosed and the other ground for reopening was not sustained [2018 (11) TMI 646 - DELHI HIGH COURT]

HELD THAT:- SLP dismissed.

Addition due to discrepancy found in stock statements - Addition on the basis of inflated stock statement submitted to bank - Addition under Section 69B - Learned Additional Solicitor General invited our attention to orders C .I.T AHMEDABAD III VERSUS RIDDHI STEEL AND TUBES P. LTD. [2014 (9) TMI 1204 - SC ORDER]

HELD THAT:- Delay condoned. Leave granted.

Determination of refund under Section 143(1) of the Income Tax Act - withholding of refund under Section 241A of the Income Tax Act - premature invocation of statutory power - revised return abandoning original return

Determination of refund under Section 143(1) of the Income Tax Act - withholding of refund under Section 241A of the Income Tax Act - premature invocation of statutory power - Validity of issuing a notice/communication to withhold refund under Section 241A prior to determination of the refund under Section 143(1). - HELD THAT: - Section 241A permits withholding of a refund only where a refund has become due under subsection (1) of Section 143 and the Assessing Officer, with prior approval of the Principal Commissioner or Commissioner, records reasons that grant of refund is likely to adversely affect revenue. On the admitted facts neither the original return nor the revised return for AY 2017-18 had been processed under Section 143(1). Consequently the statutory pre-condition for invoking Section 241A - namely, determination that a refund has become due under Section 143(1) - was not satisfied. The invocation of Section 241A at this stage is therefore premature and without authority of law, rendering the show cause notice dated 14 November 2018 and the communication of 18 July 2019 invalid to the extent they seek to withhold a refund which has not been determined under Section 143(1). [Paras 9, 10]

Impugned notice dated 14 November 2018 and communication dated 18 July 2019 quashed and set aside insofar as they purport to withhold refund prior to determination under Section 143(1).

Revised return abandoning original return - determination of refund under Section 143(1) of the Income Tax Act - Effect of filing the revised return dated 27 March 2019 on the original return dated 30 November 2017 and consequent validity of actions taken in relation to the original return. - HELD THAT: - The Assessing Officer's affidavit records that upon filing the revised return the original return stands abandoned and the Revenue will deal only with the revised return for AY 2017-18. The impugned show cause notice emanated in relation to the original return. Since the original return has been abandoned by the filing of the revised return and no refund has been determined under Section 143(1) in respect of the revised return, any action taken on the basis of the original return to withhold refund is without jurisdiction. The Court accordingly treated the notice and the communication as invalid on this additional ground. The Respondent accepted to process the revised return under Section 143(1) within eight weeks and that undertaking was recorded and accepted by the Court. [Paras 8, 10, 11]

Original return is treated as abandoned upon filing of the revised return; actions based on the original return to withhold refund are without jurisdiction; Respondent to process the revised return under Section 143(1) within eight weeks as undertaken.

Final Conclusion: The petitions are disposed: the notice dated 14 November 2018 and the communication dated 18 July 2019 are quashed insofar as they seek to withhold refund before a refund is determined under Section 143(1); the original return stands abandoned on filing the revised return; the Assessing Officer will process the revised return under Section 143(1) within eight weeks. No order as to costs.

Penalty under section 271(1)(c) of the Income Tax Act - computation of partners' remuneration under section 40(b) of the Income Tax Act - bonafide belief and absence of furnishing inaccurate particulars of income - oversight or bona fide mistake in reporting income (capital gains and interest) - disallowance for failure to deduct tax at source

Computation of partners' remuneration under section 40(b) of the Income Tax Act - penalty under section 271(1)(c) of the Income Tax Act - bonafide belief and absence of furnishing inaccurate particulars of income - Validity of penalty under section 271(1)(c) in respect of disallowance of partners' remuneration - HELD THAT: - The disallowance of partners' remuneration arose because the AO treated certain interest income as not forming part of book profit for computing remuneration under section 40(b). The Tribunal noted that there were divergent views in co ordinate benches on whether income under heads other than 'profit and gains of business' may be considered for computing partners' remuneration, and therefore the correctness of the claim was not free from debate at the time of filing the return. In those circumstances the assessee's position amounted to a bonafide belief and could not be equated with furnishing inaccurate particulars or concealment of income as contemplated by section 271(1)(c). Consequently the statutory conditions for levying penalty were not satisfied.

Penalty imposed in respect of disallowance of partners' remuneration is cancelled.

Oversight or bona fide mistake in reporting income (capital gains and interest) - penalty under section 271(1)(c) of the Income Tax Act - disallowance for failure to deduct tax at source - Validity of penalty under section 271(1)(c) in respect of omission of capital gains on mutual fund redemption and interest income - HELD THAT: - The assessee explained that omission of capital gains on redemption of mutual funds resulted from oversight and a mistaken belief that such gains were exempt, and that interest income omission arose from non availability of correct details though conforming with TDS certificates. The explanations constituted discharge of the burden to show circumstances of omission or mistake. There was no falsity or deliberate concealment demonstrated on the record. As the existence of conditions required for penalty under section 271(1)(c) is a sine qua non and was not established, imposition of penalty on these grounds could not be sustained.

Penalty imposed in respect of omitted capital gains and interest income is cancelled.

Final Conclusion: The Tribunal allowed the appeal for A.Y. 2008-09 and set aside the CIT(A)'s order confirming penalty under section 271(1)(c), directing the Assessing Officer to cancel the penalty as the additions/disallowances arose from bona fide belief or oversight and did not amount to furnishing inaccurate particulars of income.

Penalty under section 271(1)(c) - return filed under section 153A deemed to be return under section 139 - penalty leviable only on income assessed in excess of the return filed under section 153A

Penalty under section 271(1)(c) - return filed under section 153A deemed to be return under section 139 - penalty leviable only on income assessed in excess of the return filed under section 153A - Whether penalty under section 271(1)(c) can be sustained where the assessee filed a return in response to notice under section 153A and the assessment under section 153A(1)(b) adopts the same income as returned. - HELD THAT: - The Tribunal found that the assessees filed returns in response to notices under section 153A and the assessing officer made assessments under section 153A(1)(b) on the same income as declared in those returns with no variation. The authorities did not point to any incriminating material discovered during the search to support concealment. In view of the statutory scheme, a return filed under section 153A is to be treated as a return filed under section 139 for all consequential provisions; consequently penalty under section 271(1)(c) can be imposed only in respect of income assessed in excess of the return furnished under section 153A. Following the decisions of the jurisdictional High Court and relevant precedent, the Tribunal held that where the assessed income equals the return filed under section 153A, no penalty under section 271(1)(c) is sustainable and directed deletion of the penalty.

Penalty under section 271(1)(c) deleted as the return filed under section 153A was treated as a return under section 139 and the assessed income equalled the returned income.

Final Conclusion: Appeals allowed; penalties under section 271(1)(c) deleted for the assessment year 2012-13 as the assessments under section 153A adopted the income declared in the returns filed under section 153A and no additional concealed income was established.

Prior approval under section 153D - validity of assessment passed without prior approval - administrative nature of prior approval - mechanical approval / non-application of mind - right to personal hearing before approving authority - nullity of assessment if approval is absent or vitiated

Prior approval under section 153D - right to personal hearing before approving authority - Whether the assessee is entitled to a personal hearing from the Joint Commissioner/Addl. CIT before grant of approval under section 153D - HELD THAT: - The Tribunal held that section 153D does not mandate that the superior approving authority must give a fresh hearing to the assessee prior to granting approval. The assessee already receives opportunity of hearing during assessment proceedings before the Assessing Officer and has appellate remedy thereafter; therefore principles of natural justice do not require a separate pre-approval hearing by the JCIT/Addl. CIT. The Tribunal agrees with precedents holding that the approving authority's function in giving prior approval under the scheme is administrative and does not, as such, require a fresh hearing of the assessee. [Paras 4]

No personal hearing before the JCIT/Addl. CIT is required prior to granting approval under section 153D.

Administrative nature of prior approval - validity of assessment passed without prior approval - Whether the approval under section 153D is purely administrative and whether an assessment passed without such prior approval is valid - HELD THAT: - The Tribunal concluded that the approval under section 153D is administrative in character, akin to prior-approval provisions in other chapters, but the statutory wording of section 153D is mandatory. Because the provision begins with a prohibition and uses peremptory language, non-obtainment of prior approval renders the assessment order invalid. The Tribunal relied on High Court and Tribunal precedents interpreting similarly worded provisions and held that assessments completed without the required prior approval are null and void. [Paras 4, 14]

Approval under section 153D is administrative in nature, but where prior approval is absent the assessment is invalid and vitiated.

Mechanical approval / non-application of mind - nullity of assessment if approval is absent or vitiated - Whether an approval granted by the superior authority without application of mind (mechanical approval) is a valid approval and whether an assessment based on such approval stands - HELD THAT: - The Tribunal held that the prior approval mandated by section 153D is not an empty formality; the approving authority is under a duty to apply its mind to the material and proposals placed before it. Where the approving officer's own record shows that he did not examine the draft order or the material and granted approval solely on an undertaking of the Assessing Officer, such approval is not an approval in law. A mechanically granted approval, showing non-application of mind, loses character as valid approval and the assessment founded on it is void. The Tribunal emphasized that the manner and material on the basis of which approval was accorded can be examined by the Tribunal and courts; in the present facts the approval was self-evidently mechanical and therefore the assessments were quashed. [Paras 4]

An approval granted without application of mind is vitiated and an assessment based on such mechanical approval is null and void.

Nullity of assessment if approval is absent or vitiated - Whether the revenue should be permitted a remand or a second opportunity to cure the defective approval and re-assess - HELD THAT: - The Tribunal declined to permit a 'second inning' for the revenue to rectify the defect by obtaining fresh approval and passing a fresh assessment. Having held that the original assessment was void for want of valid approval, and given the prolonged litigation history and prejudice to the assessee, the Tribunal exercised its discretion to quash the assessments rather than remit for fresh proceedings. [Paras 4]

No remand for re-assessment or opportunity to cure the defect; assessments quashed and second inning refused.

Final Conclusion: The Tribunal allowed the assessee appeals and quashed the assessment orders for the years under consideration on the ground that the prior approval recorded on 27 March 2014 was mechanically granted without application of mind and hence not an approval in law; assessments founded on that vitiated approval are null and void, and the Revenue's appeals were dismissed with no remand for fresh assessment.

Tribunal's power to admit new grounds and to decide questions of law arising from assessment proceedings - Reopening under section 147 - change of opinion and applicability of proviso where no scrutiny assessment under section 143(3) - Commencement of business for benefit under section 80JJA - Non application of newly introduced deduction to extend the five year benefit where business commenced prior to enactment - Computation of tax on book profit under section 115JB and levy of interest under sections 234A/234B

Tribunal's power to admit new grounds and to decide questions of law arising from assessment proceedings - Admission of the additional ground raising a challenge to reopening under section 147. - HELD THAT: - The Tribunal exercised its wide jurisdiction to admit a legal ground raised for the first time before it where the relevant facts were on record. Reliance was placed on the principle that the Tribunal may consider questions of law arising from assessment proceedings even if not raised earlier before the Commissioner (Appeals), provided the facts necessary to decide the question are on record. The additional ground presented was legal in nature and the Revenue did not oppose admission; therefore the ground was admitted for adjudication. [Paras 5, 6]

The additional ground was admitted.

Reopening under section 147 - change of opinion and applicability of proviso where no scrutiny assessment under section 143(3) - Validity of reopening assessments under section 147 where reasons were recorded after verification of assessment records and there was no prior scrutiny assessment under section 143(3). - HELD THAT: - The reasons recorded by the Assessing Officer showed that reopening was based on verification of the case record and no tangible material from an external source was produced. The return for the year was processed under section 143(1) and there had been no scrutiny assessment under section 143(3); accordingly the condition in the first proviso (failure to disclose material facts in a scrutiny assessment) was not attracted. Where reopening is based on the same record without fresh tangible material and there was no prior scrutiny, the circumstance cannot be treated as a mere change of opinion by the AO to justify reopening. The Tribunal found no reason to interfere with the finding of the CIT(A) on this aspect. [Paras 8, 9]

The reopening was not sustained; the assessee's challenge to the reopening was dismissed (i.e., no interference with the CIT(A)'s conclusion).

Commencement of business for benefit under section 80JJA - Non application of newly introduced deduction to extend the five year benefit where business commenced prior to enactment - Whether the assessee was entitled to claim five years' deduction under section 80JJA beginning from A.Y. 1999-2000 despite having commenced commercial production earlier (A.Y. 1994-95). - HELD THAT: - Evidence on record (sales, depreciation claims and prior claims under section 80IA) showed that the assessee commenced commercial production with effect from assessment year 1994-95. Section 80JJA allows deduction for five consecutive assessment years beginning with the assessment year in which such business commences. The statutory text and scheme demonstrate that the five year benefit runs from the actual commencement of the business; there is no provision in the statute to shift the commencement date to a later year merely because the deduction provision was introduced subsequently. The Tribunal found no applicability of the authorities relied upon by the assessee to alter this statutory intent and concurred with the authorities below in denying the claim. [Paras 15]

The claim for deduction under section 80JJA from A.Y.1999-2000 was rejected; deduction was not allowable as contended by the assessee.

Computation of tax under section 115JB (book profit) and levy of interest under sections 234A/234B - Validity of charging tax on book profit under section 115JB and interest under sections 234A/234B for A.Y. 2004-05. - HELD THAT: - For the relevant year the Assessing Officer computed a tax liability under section 115JB on book profit which had not been offered to tax by the assessee; consequential interest under sections 234A/234B was also charged. The assessee did not point out any defect in the computation or the orders of the authorities below and the Revenue supported those findings. In absence of any challenge to the merits of the computation, the Tribunal found no infirmity in the orders upholding tax under section 115JB and the associated interest charges. [Paras 19, 21, 23]

The levy of tax under section 115JB and interest under sections 234A/234B was upheld.

Final Conclusion: All appeals filed by the assessee for A.Ys. 2000-01 to 2003-04 and A.Y. 2004-05 were dismissed: the Tribunal admitted the additional legal grounds but upheld the findings of the authorities below that reopening under section 147 was not to be interfered with on the facts, the claim under section 80JJA was not allowable as argued by the assessee, and the tax and interest computed under section 115JB and sections 234A/234B respectively were sustained.

Deduction under section 80-IE for undertakings undergoing substantial expansion - Definition of substantial expansion under industrial incentive policy and tax law - Cap of ten assessment years for tax-exemption benefits under incentive provisions - Interaction of prior claims under sections 80-IB/10C with subsequent 80-IE claims - Entitlement under NEIIPP-2007 for new units and existing units undergoing substantial expansion

Deduction under section 80-IE for undertakings undergoing substantial expansion - Interaction of prior claims under sections 80-IB/10C with subsequent 80-IE claims - Cap of ten assessment years for tax-exemption benefits under incentive provisions - Allowability of deduction under section 80-IE in respect of M/s Charu Engineering Industries which had earlier availed exemptions under section 80-IB/10C but underwent substantial expansion in financial year 2008-09. - HELD THAT: - The Tribunal held that an existing industrial undertaking which undergoes a qualifying 'substantial expansion' is entitled to claim deduction under section 80-IE from the assessment year corresponding to that expansion. The North East policy (NEIIPP-2007) and the statutory scheme treat 'substantial expansion' as an event that can give rise to an initial assessment year for the purpose of claiming the incentive. The Tribunal noted that the assessee demonstrated an increase in fixed capital investment in plant and machinery (an increase exceeding the threshold prescribed by NEIIPP-2007 and section 80-IE's definition), supported by permanent registration, schedule of fixed assets and an eligibility certificate for modernization. While section 80-IE(5) places a cap that the total period of deduction (whether under sections 80-IB/80-IC/80-IE or section 10C) shall not exceed ten assessment years, this cap does not prevent recognition of a new initial assessment year upon substantial expansion; it only limits the aggregate duration of exemption. Applying these principles to the material on record, the Tribunal concluded that the assessee's modernization (financial year 2008-09) entitled it to claim deduction under section 80-IE, subject to the overall ten-year cap on exemption periods. [Paras 10, 13, 14]

Deduction under section 80-IE in respect of M/s Charu Engineering Industries was allowable from the year of substantial expansion; the claim disallowed by the AO/CIT(A) is set aside.

Entitlement under NEIIPP-2007 for new units and existing units undergoing substantial expansion - Definition of substantial expansion under industrial incentive policy and tax law - Requirement of documentary evidence to establish eligibility for incentive - Allowability of deduction under section 80-IE in respect of M/s Charu Innovation Department and Industries, a unit which commenced commercial production in 2011 and claimed exemption under NEIIPP-2007. - HELD THAT: - The Tribunal examined the documentary record relating to the new unit and found that the assessee produced a permanent registration certificate, schedule of fixed assets and an eligibility certificate for modernization, and that these documents, together with the policy's provisions, established the unit's entitlement under NEIIPP-2007. Although the AO's inspection report noted absence of certain documents at the site, the Tribunal accepted the eligibility certificates and related material placed before it. In consequence, the Tribunal held that the unit qualified as a new industrial undertaking (or an undertaking eligible under the policy on account of modernization) and was entitled to claim deduction under section 80-IE, subject to statutory conditions and the aggregate ten-year cap on exemptions. [Paras 6, 13, 14]

Deduction under section 80-IE in respect of M/s Charu Innovation Department and Industries is allowable; the disallowance by the AO/CIT(A) is set aside.

Final Conclusion: All appeals filed by the assessee in respect of the stated assessment years are allowed: the Tribunal held that both the existing undertaking (after substantial expansion) and the new undertaking are entitled to claim deductions under section 80-IE in accordance with NEIIPP-2007 and the statutory scheme, subject to the ten-assessment-year aggregate cap.

Onus of proof under Section 68 - accommodation entries - independent verification of creditors and 'source of source' - notice-based verification under Section 133(6) - human probabilities and circumstantial evidence - distinguishing precedents where entry operators are established

Onus of proof under Section 68 - accommodation entries - independent verification of creditors and 'source of source' - Deletion of addition of Rs. 18,48,00,000/u/s 68 in respect of unsecured loans from two creditors was sustained. - HELD THAT: - The Tribunal held that the assessee discharged the onus under Section 68 by furnishing complete particulars of the loan creditors, confirmations of accounts, bank statements, audited accounts and ITR particulars. The Assessing Officer had issued and received replies to notices under Section 133(6) from the creditors and further verified the 'source of source' (Promart Retail India Pvt. Ltd.), which confirmed the provenance of funds. The AO did not produce any specific material impeaching the documents or showing the creditors to be non existent or self confessed entry operators; mere suspicion and reference to seized documents without bringing them on record could not substitute positive evidence. The Tribunal distinguished authorities relied upon by Revenue on facts where entry operators or incriminating material were established, and applied the principle that where the assessee furnishes prima facie credible documentary evidence and the revenue has not disproved it or adduced contrary material, additions under Section 68 are not warranted. [Paras 5]

Uphold deletion of the addition of Rs. 18,48,00,000 and reject Revenue's ground seeking its restoration.

Accommodation entries - onus of proof under Section 68 - Deletion of addition of Rs. 13,86,000 alleged to be commission paid for obtaining the loans was sustained. - HELD THAT: - The Tribunal observed that the addition for alleged commission was consequential to the disallowed loans. Having held that the loans were duly proved and verified, the consequential addition for commission could not be sustained. The Assessing Officer had not produced independent material to establish payment of commission as an indicator of bogus accommodation entries. [Paras 7]

Uphold deletion of the addition of Rs. 13,86,000 and reject Revenue's ground on this point.

Notice-based verification under Section 133(6) - distinguishing precedents where entry operators are established - Allegation that the CIT(A) admitted additional evidence without giving opportunity to the AO was dismissed. - HELD THAT: - Revenue failed to specify which additional evidence was admitted by the CIT(A) for which the AO was denied opportunity of examination. The Tribunal recorded that no particular prejudice or omitted opportunity was demonstrated by Revenue and therefore this ground of appeal failed. [Paras 8]

Dismiss the ground alleging improper admission of additional evidence by the CIT(A).

Final Conclusion: Revenue's appeal is dismissed: the Tribunal affirms the CIT(A)'s deletions of the additions under Section 68 and the consequential commission addition, and rejects the contention of improper admission of evidence by the CIT(A).

Allowability of interest as business expenditure - nexus between interest-bearing funds and interest income - application of fund-flow analysis to establish business purpose - disallowance under section 14A - consistency of findings across assessment years

Allowability of interest as business expenditure - nexus between interest-bearing funds and interest income - application of fund-flow analysis to establish business purpose - consistency of findings across assessment years - Deletion of addition by way of disallowance of interest of Rs. 9,67,285/- paid to M/s. India Infoline Financial Services Ltd. in A.Y. 2014-15. - HELD THAT: - The Tribunal examined the assessment record, the appellate orders and the submissions of the parties and found no change in the material facts between A.Y. 2014-15 and the earlier assessment years 2012-13 and 2013-14. The assessee produced fund-flow details and documentary material before the CIT(A) for the earlier years showing that loans from IIFSL were advanced to a related company and were returned within the same financial year, and that the assessee maintained a mixed portfolio of funds (own capital, interest-free funds and interest-bearing funds). On the strength of those verifications the CIT(A) for the earlier years had deleted identical disallowances after holding that the payments served a business exigency and that the interest-bearing funds were not diverted so as to negate the nexus with interest income. Revenue did not place contrary material before the Tribunal to rebut those findings. In these circumstances, and having regard to the consistency of findings across the assessment years and the fund-flow verification establishing the business purpose of the transactions, the Tribunal found it appropriate to set aside the disallowance made for A.Y. 2014-15 and directed the Assessing Officer to delete the addition. [Paras 8, 9]

The addition of Rs. 9,67,285/- made by the Assessing Officer is deleted and the appeal is allowed on this ground.

Final Conclusion: The appeal is partly allowed: the disallowance of interest of Rs. 9,67,285/- for A.Y. 2014-15 is deleted and the Assessing Officer is directed to give effect to this order.

Completed assessment - non-completed (pending) assessment - scope of assessment under section 153A - incriminating material found during search - disallowance under section 40(a)(ia) - estimation of income on basis of seized evidence - application of deemed profit provision as guidance (section 44AD)

Completed assessment - incriminating material found during search - disallowance under section 40(a)(ia) - Allowability of disallowance under section 40(a)(ia) in a year treated as a completed assessment where no incriminating material on the specific disallowance was found during search - HELD THAT: - The Tribunal examined whether the addition made by the AO by invoking section 40(a)(ia) could be sustained where the return had been filed earlier, no notice under section 143(2) could be issued before the date of search (so the assessment stood as a completed assessment), and the disallowance was not founded on any incriminating material discovered during the search. The Court reproduced the scheme distinguishing completed and non-completed assessments for the purpose of section 153A and held that for completed assessments additions under section 153A are restricted to items supported by incriminating material found during search. Applying that principle to the present facts, the Tribunal found that the disallowance on account of failure to deduct tax at source in respect of alleged transportation payments was not based on incriminating material discovered during the search. Following the jurisdictional High Court precedents cited, the Tribunal deleted the disallowance. [Paras 6, 8, 9]

The disallowance under section 40(a)(ia) is deleted because the assessment for 2006-07 was a completed assessment and no incriminating material supporting that disallowance was found during the search.

Estimation of income on basis of seized evidence - incriminating material found during search - application of deemed profit provision as guidance (section 44AD) - Appropriate net profit percentage to be applied where seized material shows inflated expenses but precise quantification is not ascertainable - HELD THAT: - The Tribunal noted that search and seized material, statements and other facts established inflation and unsubstantiated expenses and differences between two sets of books, so that an addition on estimation basis was permissible. The AO had estimated an addition by applying a 14.73% differential, whereas the CIT(A) reduced the estimate to 10% after allowing reconciliations. The Tribunal found that although evidence of inflated expenses existed, precise quantification was not available from the record. As guidance, the Tribunal referred to the non-obstante deeming percentage in the special provisions for civil construction (section 44AD), observing that while that provision did not technically apply (gross receipts exceeded the threshold), it furnished a reasonable benchmark. The Tribunal adopted an 8% net profit rate to be applied on gross contract receipts after excluding receipts of a nature to be taxed separately (interest on income-tax and office rent), and directed the AO to recompute income accordingly after excluding those items and giving the assessee an opportunity of hearing. The Tribunal thus set aside the orders below on this issue and remitted computation to the AO. [Paras 12, 13, 14, 15, 16]

Income to be computed by the AO applying a net profit rate of 8% on gross contract receipts (excluding specified receipts) and to recompute the addition after giving the assessee opportunity of hearing; matter remanded to AO for computation.

Final Conclusion: The Tribunal deleted the disallowance under section 40(a)(ia) for AY 2006-07 as the year was a completed assessment and no incriminating material supported that disallowance; however, on the question of estimated income based on seized evidence the Tribunal accepted that inflation of expenses was shown but, in absence of precise quantification, directed recomputation by the AO applying an 8% net profit rate on gross contract receipts (with specified exclusions) and remitted the matter for calculation and hearing. Both appeals were partly allowed.

Estimation of income in absence of books of account - application of presumptive profit rate - penalty for non-audit under section 44AB - opportunity to produce books before appellate authority

Estimation of income in absence of books of account - application of presumptive profit rate - Validity and quantum of income estimation made by applying a profit rate where books of account, bills and vouchers were not produced. - HELD THAT: - The Tribunal accepted the factual finding of the authorities below that the assessee failed to produce books of account, bills and vouchers before the assessing officer and did not show that such records were produced before the First Appellate Authority. The assessing officer had warned that, in absence of books, income would be assessed by applying a 12% profit rate on declared receipts. The Tribunal held that, having found non-production of books and no substantiation of claimed expenses, the authorities were justified in estimating income by applying a higher profit rate. However, exercising its evaluative discretion and having regard to the relatively small turnover and the nature of the assessee's business, the Tribunal deemed the 12% rate excessive and reduced the profit rate to 8%, directing recomputation of income accordingly. The Tribunal therefore confirmed the methodology of estimation but modified the quantum by substituting the profit rate applied. [Paras 3, 6]

Estimation by applying a presumptive profit rate is upheld for failure to produce books, but the applied rate is reduced from 12% to 8% and income is to be recomputed accordingly.

Opportunity to produce books before appellate authority - penalty for non-audit under section 44AB - Effect of alleged denial of opportunity to produce books before the assessing officer and the role of the appellate authority in such circumstances. - HELD THAT: - The Tribunal noted the assessee's contention that he was not afforded sufficient opportunity to produce books before the assessing officer, but observed that the assessee could have produced the books before the First Appellate Authority who possesses co-terminus powers with the assessing officer. The assessee did not demonstrate that books were produced before the appellate authority. In absence of proof of production or legitimate opportunity shown to have been denied and availed, the appellate challenge could not succeed. The penalty proceedings for non-audit were factually noted but not separately adjudicated by the Tribunal in the order; the primary adjudication concerned estimation of income. [Paras 6]

Allegation of denial of opportunity to produce books did not absolve the assessee; absence of production before either authority justified estimation. No relief granted on the ground of procedural denial.

Final Conclusion: Appeal partly allowed: the estimation of income in absence of books is sustained, but the presumptive profit rate is reduced from 12% to 8%; income to be recomputed on that basis for assessment year 2010-11.

Treatment of surplus inventory as unexplained investment under section 69 - characterisation of surplus stock as regular business income - effect of timing of physical verification and incorporation in books on assessability - set-off of current year's business loss against income assessed under provisions corresponding to sections 68-69

Treatment of surplus inventory as unexplained investment under section 69 - characterisation of surplus stock as regular business income - effect of timing of physical verification and incorporation in books on assessability - Whether the surplus stock of Rs. 4,70,54,450/- found in documents seized during search constituted an unexplained investment assessable under section 69 or formed part of the assessee's regular business income. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that the assessee had conducted internal physical verification of inventory in January-February 2015 and had, by March 2015, incorporated the surplus stock in its books of account. The records seized on 05/05/2015 merely included the earlier inventory inspection reports and instructions that had been prepared and acted upon before the resumed search. There was no contemporaneous annexure or record showing the excess stock was discovered only on the date of search; on the contrary the auditor's Note and the assessee's stock correction entries predated the search conclusion. In these factual circumstances the Tribunal held that the amount did not represent unexplained investment under section 69 but was part of the assessee's regular business income, noting that a sister concern with identical facts had been assessed consistently as regular business income. [Paras 3, 6]

Surplus stock is regular business income and not an unexplained investment assessable under section 69 for AY 2015-16.

Set-off of current year's business loss against income assessed under provisions corresponding to sections 68-69 - Whether the assessee was entitled to set off the current year's business loss of Rs. 1,17,55,657/- against the income represented by the surplus stock, even if that income were treated as assessable under provisions corresponding to sections 68-69. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s alternative finding that, under the law applicable for AY 2015-16, there was no statutory prohibition on setting off current year's business loss against income assessed under sections corresponding to 68-69. Reliance was placed on High Court decisions which treated income-tax as a tax on total income and permitted set-off of non-capital losses against income assessed under section 69. The statutory bar to such set-off was introduced later by the Finance Act, 2016 with effect from 01.04.2017 and did not apply to the year in question. Consequently, even on the hypothetical premise that the surplus stock were assessable under section 69, the assessee would still be entitled to set off the current year's business loss. [Paras 3, 6]

Assessee entitled to set off current year's business loss against the income represented by the surplus stock for AY 2015-16; the Assessing Officer's refusal to allow set-off was not justified.

Final Conclusion: The Tribunal affirmed the Commissioner (Appeals): the surplus stock did not constitute unexplained investment under section 69 but was regular business income incorporated in the books before the search conclusion, and, in any event for AY 2015-16 the assessee was entitled to set off the current year's business loss against that income. The Revenue's appeal is dismissed.

Foreign Trade Policy - "Served from India" scheme - Policy Interpretation Committee interpretation - challenge to administrative interpretation - judicial discipline

Foreign Trade Policy - "Served from India" scheme - Policy Interpretation Committee interpretation - Validity of the Policy Interpretation Committee's interpretation of paragraph 3.12.1 of the FTP 2009-14 and of the consequential Order dated 01.08.2019 sought to be quashed by the petitioner. - HELD THAT: - The petitioner sought to quash the interpretation adopted by the Policy Interpretation Committee that the Foreign Trade Policy does not intend to incentivize any brand created outside India and that an Indian brand must be uniquely recognisable both domestically and internationally to qualify as a "Served from India" brand. The Division Bench of this Court had earlier considered the same question in its order dated 17 August 2015 and dismissed writ petitions raising identical contentions. Having noted that the issue was previously adjudicated by the Division Bench, the learned Judges declined to reopen that question in the present petition and, as a matter of judicial discipline, dismissed the petition. The court noted that the Supreme Court had issued notice in related proceedings but did not undertake fresh adjudication of the interpretation or of the impugned administrative order itself.

Petition dismissed on the ground of judicial discipline in view of the earlier Division Bench decision dismissing identical challenges.

Final Conclusion: The writ petition seeking to set aside the Policy Interpretation Committee's interpretation of paragraph 3.12.1 of the FTP 2009-14 and the consequential order dated 01.08.2019 was dismissed by the High Court as being precluded by the earlier Division Bench decision of 17 August 2015; no fresh adjudication of the interpretation was undertaken.

Mandamus for compliance of tribunal directions - release of goods under Section 110-A of the Customs Act, 1962 - infructuousness of proceedings where relief is obtained during pendency - enforcement of CESTAT directions

Mandamus for compliance of tribunal directions - enforcement of CESTAT directions - infructuousness of proceedings where relief is obtained during pendency - Writ petition seeking a mandamus to enforce the Tribunal's direction for release of seized goods. - HELD THAT: - The petitioner sought a writ of mandamus directing compliance with the CESTAT's order allowing release of goods seized on alleged mis-declaration and permitting release under statutory provision subject to conditions. During the pendency of the writ petition, final adjudication occurred and the seized goods were released upon payment of tax, penalty and fine. The High Court recorded that the primary relief sought (enforcement of the Tribunal's directions for release) had been achieved and, accordingly, the writ petition had lost its practical efficacy. No further adjudicatory relief was required from the Court once the relief originally sought had been given by the authorities.

Writ petition dismissed as infructuous since the seized goods were released during pendency on payment of tax, penalty and fine.

Final Conclusion: The petition for mandamus to enforce the Tribunal's order was dismissed as infructuous because the relief sought was rendered redundant by release of the goods following final adjudication.

Maintainability of writ petition in presence of effective alternative statutory remedy - interference with administrative adjudication for inordinate delay - relegation to appellate fact finding forum - submission to jurisdiction and waiver of procedural objections

Maintainability of writ petition in presence of effective alternative statutory remedy - relegation to appellate fact finding forum - Writ petition challenging the order in original is not maintainable when an effective statutory appellate remedy is available and the appellate forum is the appropriate fact finding authority. - HELD THAT: - The Court held that the petitioner had an adequate and effective remedy by way of appeal to the Customs, Excise and Service Tax Appellate Tribunal and that fiscal adjudications are ordinarily to be contested first before the designated appellate forum. The Tribunal, as the first appellate and fact finding authority, is the proper forum to examine the merits and factual aspects of the adjudication. The petitioner's choice to approach the High Court by way of writ instead of pursuing the statutory appeal was characterized as an attempt to short circuit the appellate process. In view of settled precedents emphasising that orders of adjudication in fiscal matters should generally be challenged before the statutory appellate authority, the writ petition was not entertained and was dismissed while granting liberty to agitate all grounds before the appellate forum. [Paras 4, 7]

Writ petition dismissed for want of maintainability; petitioner permitted to file appeal before the competent appellate forum.

Interference with administrative adjudication for inordinate delay - submission to jurisdiction and waiver of procedural objections - Inordinate delay of eight years in passing the adjudication order did not, on the facts of this case, warrant quashing the adjudication solely on that ground. - HELD THAT: - The Court observed that although authorities have held that adjudication should be completed within a reasonable time, the question of whether delay vitiates proceedings depends on factual circumstances. Here, the show cause notice was issued in 2011 and a personal hearing notice was issued in 2018, after which the petitioner appeared, submitted to the authority's jurisdiction and filed objections on merits. The proceedings involved serious allegations of large scale smuggling and a confessional statement linking the petitioner. The Court concluded that scrutiny of reasons for delay would require probing factual matters better suited to the fact finding appellate forum and that the petitioner could not seek relief in the High Court on a purely technical ground of delay when he had participated in the adjudicatory process. The precedents relied upon were held distinguishable on facts. [Paras 3, 5, 6]

Delay in adjudication did not justify quashing the impugned order on the facts; matter to be agitated before the appellate authority.

Final Conclusion: The writ petition was dismissed without adjudication on merits because an effective statutory appeal lay to the Appellate Tribunal; the petitioner was granted liberty to pursue the appellate remedy and the Court declined to quash the adjudication solely on account of the delay observed in issuance and completion of proceedings.

Mistake apparent on the face of the record - rectification under Section 129B of the Customs Act, 1962 - consent against the record - jurisdiction to issue show cause notice - remand to the Adjudicating Authority - rehearing on merits

Mistake apparent on the face of the record - rectification under Section 129B of the Customs Act, 1962 - consent against the record - The Tribunal rightly invoked its power to rectify its earlier order on the ground of a mistake apparent on the face of the record and recalled the final order. - HELD THAT: - The Tribunal found that material facts-namely, that the Commissioner of Customs (Preventive), Jodhpur had recorded a detailed finding of jurisdiction and that that order (along with the show cause notice) had been upheld by this Court-were not placed before it when the appeals were earlier heard. On that basis the Tribunal concluded that the authorised representative of the department had consented to remand against the true position on record, which amounted to a consent contrary to the record and justified invocation of its power of rectification under Section 129B. The Tribunal supported its approach by reference to binding precedents of the Supreme Court addressing recall/rectification where proceedings were affected by a mistaken or misrepresented factual foundation. The High Court, after considering the submissions, found no reason to interfere with the Tribunal's conclusion that a mistake apparent on the face of the record existed and that rectification was justified.

Tribunal's exercise of power to recall and rectify its earlier order was upheld and not interfered with.

Jurisdiction to issue show cause notice - remand to the Adjudicating Authority - rehearing on merits - The matter is to be remanded for rehearing on merits and the petitioner may canvass before the Tribunal the question of coverage by the decision in Mangali Impex Ltd. and/or the competence of the Commissioner to issue the notice. - HELD THAT: - The High Court recorded that, in any event, the appeals will now be reheard on merits by the Tribunal. The petitioner remains free to argue before the Tribunal that the matter was covered by the Delhi High Court decision in Mangali Impex Ltd. and to press the contention that the Commissioner of Customs (Preventive), Jodhpur lacked competence to issue the notice under Section 18(2). If the Tribunal is persuaded on those submissions, it will dispose of the appeals on merits rather than on the basis of purported consent. The High Court declined to adjudicate afresh on the jurisdictional competence in this writ petition, leaving the question for the Tribunal to decide in the rehearing.

Appeals remanded for rehearing on merits; petitioner permitted to raise the coverage and jurisdictional contentions before the Tribunal.

Final Conclusion: Writ petition dismissed; the Tribunal's order allowing rectification and directing rehearing on merits is upheld, and the appeals stand remitted to the Tribunal for fresh adjudication on merits with liberty to the petitioner to raise the contested points.

Penalty under section 112(a) of the Customs Act, 1962 for failure to exercise due diligence - Due diligence obligation of authorized courier under Regulation 13 of the Courier Import and Export (Clearance) Regulations, 1998 - Use of Form V Bill of Entry versus filing of regular Bill of Entry for high value or second hand imports

Due diligence obligation of authorized courier under Regulation 13 of the Courier Import and Export (Clearance) Regulations, 1998 - Penalty under section 112(a) of the Customs Act, 1962 for failure to exercise due diligence - Whether imposition of penalty on the appellant under section 112(a) for filing Form V instead of a regular Bill of Entry (despite value and nature of goods) is sustainable for failure to exercise due diligence under Regulation 13. - HELD THAT: - The Tribunal accepted the Revenue's contention that the authorised courier has an obligation under Regulation 13 to exercise due diligence to ensure correctness and completeness of information submitted for clearance. The Tribunal noted that the consignment's declared description and weight were inconsistent and that such a discrepancy could have been detected by the courier exercising due diligence. The appellant's contentions - that there was no intention to evade duty arising from subsequent enhancement of assessable value, and that old/second hand machinery is freely importable - were considered but not treated as displacing the courier's regulatory obligation. The Tribunal relied on precedent in the appellant's own earlier decision applying Regulation 13 to similar facts and found no reason to deviate from that finding. On these grounds the Tribunal upheld the imposition of penalty under section 112(a).

The penalty imposed on the appellant for failure to exercise due diligence in filing Form V instead of a regular Bill of Entry was upheld and the appeal dismissed.

Final Conclusion: The appeal is dismissed; the order of confiscation with redemption option and the penalty imposed on the appellant for non compliance with due diligence obligations under Regulation 13 (and consequent sanction under section 112(a)) is affirmed.

Enrolment as insolvency professional - cut-off date for compliance with amended regulations - effect of public holidays on procedural timelines - consideration of bona fide applications received prior to amendment - order not to be treated as precedent

Enrolment as insolvency professional - cut-off date for compliance with amended regulations - effect of public holidays on procedural timelines - Petitioner entitled to enrolment notwithstanding the amended regulation which came into force on 01.04.2018, because the petitioner's application was received by the Insolvency Professional Agency prior to the effective date but could not be processed due to holidays. - HELD THAT: - The petitioner submitted an application for registration on 29.03.2018 which was received by respondent No.2 on 31.03.2018 and also submitted online on 30.03.2018. The amended regulation came into force w.e.f. 01.04.2018. The only reason the petitioner was not enrolled before the amendment took effect was that 30.03.2018 and 31.03.2018 (and 01.04.2018) were holidays and the application could not be processed. Respondent No.1 had, by communication dated 16.04.2018, advised IPAs to forward applications of persons who had enrolled with IPAs as on 31.03.2018. On receipt of applications from IPAs, respondent No.1 granted registrations to those applicants after scrutiny. In the circumstances and in view of the fact that the petitioner's application was received prior to the cut-off date but not processed due solely to holidays, the court directed respondent No.2 to enrol the petitioner as an insolvency professional on deposit of requisite fees, and to forward the application to respondent No.1 to be considered as having been received prior to the effective date of the amendment. [Paras 2, 3, 4, 5, 6]

Respondent No.2 to enrol the petitioner as an insolvency professional on deposit of requisite fees within three days; the application to be forwarded and treated as received before the amended regulation took effect.

Final Conclusion: Writ petition disposed of by directing enrolment of the petitioner as an insolvency professional on payment of requisite fees within three days; the order is confined to the peculiar facts (holidays causing non-processing) and shall not be treated as a precedent.

Inherent powers of the Tribunal - power to pass interim orders before admission of insolvency application - moratorium under Section 14 of the I&B Code - prevention of abuse of the process

Inherent powers of the Tribunal - power to pass interim orders before admission of insolvency application - prevention of abuse of the process - Whether the Adjudicating Authority (NCLT) has jurisdiction to pass an interim restraint on alienation, encumbrance or creation of third party interest in the assets of the corporate debtor before admission of an application under Sections 7 or 9 of the I&B Code. - HELD THAT: - Rule 11 confers inherent powers on the Tribunal to make orders necessary to meet the ends of justice or to prevent abuse of the Tribunal's process. The Tribunal may, upon being informed of a bona fide apprehension that the corporate debtor intends to alienate assets to defeat creditors' rights, pass appropriate ad interim orders restraining such actions even before the application under Sections 7 or 9 is admitted. Such exercise of inherent power is available where the facts before the Adjudicating Authority justify protection of creditors and prevention of abuse; the availability of ordinary procedural safeguards (such as opportunity to file reply) does not oust the power to pass interim measures where a real apprehension is shown or where the corporate debtor refuses to give an undertaking against alienation. [Paras 8, 9, 11, 12]

The Adjudicating Authority was competent to pass the interim restraint order prior to admission of the Section 9 application; the impugned interim order is not interfered with.

Moratorium under Section 14 of the I&B Code - power to pass interim orders before admission of insolvency application - Legal effect and temporal relationship between an ad interim order passed under inherent powers and the moratorium on admission of the insolvency petition. - HELD THAT: - An ad interim order passed under the Tribunal's inherent powers is distinct from the statutory moratorium which follows admission under Section 14. If the application is admitted, the statutory moratorium will take effect and supersede the interim regime by imposing the consequences and prohibitions prescribed by Section 14. Conversely, if the insolvency application is rejected, any ad interim interim order passed in aid of preventing abuse will automatically stand vacated. [Paras 10, 12]

An interim order under Rule 11 is different from and temporally prior to the moratorium under Section 14; the interim order will cease if the application is rejected and will be replaced by the statutory moratorium if the application is admitted.

Final Conclusion: The appeal is dismissed; the impugned interim restraint order passed by the Adjudicating Authority before admission of the Section 9 application is upheld and no costs are awarded.

Acceptance of settlement under Rule 11 of the NCLAT Rules - Setting aside of admission order under Section 9 of the I&B Code - Payment of Resolution Professional's fees and costs as condition for exit from resolution process - Setting aside appointment of Interim Resolution Professional and lifting of moratorium - Disposal of Section 9 application as withdrawn and closure of insolvency proceedings

Acceptance of settlement under Rule 11 of the NCLAT Rules - Setting aside of admission order under Section 9 of the I&B Code - Terms of settlement reached between parties accepted and impugned admission order dated 4th December, 2018 set aside. - HELD THAT: - The Appellate Tribunal, exercising powers under Rule 11 of its Rules, recorded that the parties reached a settlement prior to constitution of the Committee of Creditors and, having considered the facts and parties' submissions, accepted the settlement. Consequent upon acceptance, the Tribunal set aside the impugned order dated 4th December, 2018 admitting the Section 9 application. [Paras 2, 5]

Settlement accepted and the impugned admission order dated 4th December, 2018 set aside.

Payment of Resolution Professional's fees and costs as condition for exit from resolution process - Setting aside appointment of Interim Resolution Professional and lifting of moratorium - Disposal of Section 9 application as withdrawn and closure of insolvency proceedings - Corporate debtor to pay Resolution Professional's fees and costs; consequential orders appointing IRP, declaring moratorium and actions pursuant to the admission are set aside and the Section 9 application disposed of as withdrawn. - HELD THAT: - The Tribunal directed the corporate debtor to pay the Resolution Professional a specified sum within three weeks to cover incurred costs and fees; failure to do so would entitle the Resolution Professional to bring the matter to the Tribunal's notice. Upon acceptance of settlement and subject to the payment direction, all orders passed by the Adjudicating Authority appointing the Interim Resolution Professional, declaring moratorium and other consequential orders arising from the admission were set aside. The Section 9 application was disposed of as withdrawn, the Adjudicating Authority was directed to close the proceedings and the respondent company was released to function through its Board of Directors. [Paras 6, 7, 8]

Corporate debtor to pay the Resolution Professional's fees and costs within three weeks; appointment of IRP, moratorium and related orders set aside; Section 9 application disposed of as withdrawn and proceedings closed; respondent company released to function independently.

Final Conclusion: The appeal is allowed: the terms of settlement are accepted, the admission order of 4th December, 2018 is set aside, the corporate debtor must pay the Resolution Professional's fees and costs within three weeks, and the Section 9 proceedings are disposed of as withdrawn with consequent closure and release of the company to function through its Board.

Resolution Plan by Promoter of MSME - Maximisation of value and going concern - Committee of Creditors' discretion to defer Expression of Interest and Information Memorandum - Feasibility and viability as determinative for approval of a Resolution Plan - Section 29A ineligibility not a precondition for acceptance by CoC in MSME promoter cases

Resolution Plan by Promoter of MSME - Committee of Creditors' discretion to defer Expression of Interest and Information Memorandum - Feasibility and viability as determinative for approval of a Resolution Plan - Whether the Committee of Creditors could defer issuance of an Expression of Interest and circulation of the Information Memorandum and approve the promoter's resolution plan in respect of an MSME without following the full CIRP solicitation procedure. - HELD THAT: - The Tribunal held that where the corporate debtor is an MSME and the promoter offers a resolution plan that is viable, feasible and maximises the value of the corporate debtor as a going concern, the Committee of Creditors may, in exceptional circumstances, defer the process of issuing an Expression of Interest and circulating the Information Memorandum and may accept the promoter's plan. The Court relied on the statutory objective of the I&B Code to maximise asset value and preserve going concern status (noting the reasoning in Swiss Ribbons regarding the Code's objectives) and observed that Parliament intended to allow promoters of MSMEs to file resolution plans. Consequently, where the promoter's plan meets the requirements of Section 30(2) and applicable IBBI regulations, and is not in contravention of Section 29A, the CoC need not mechanically follow all CIRP solicitation steps before approving such a plan. The Adjudicating Authority's findings that the plan provided for settlement of creditors, complied with statutory requirements, and obtained requisite CoC votes supported approval in the facts of this case. [Paras 20, 21, 22, 23, 24]

Approval of the promoter's resolution plan without issuing the Expression of Interest or circulating the Information Memorandum was permissible in the circumstances of an MSME where the promoter's plan is viable, feasible and maximises stakeholder value.

Opportunity to file competing Resolution Plan - Feasibility and viability as determinative for approval of a Resolution Plan - Whether the appellants were entitled to be granted an opportunity to submit a competing resolution plan before approval of the promoter's plan. - HELD THAT: - The Tribunal declined to grant the appellants an opportunity to submit a competing plan. It recorded that the promoter's plan had been actively considered at multiple CoC meetings, was amended as directed, and ultimately approved by the CoC with the required voting share; the Resolution Professional and CoC had complied with statutory and regulatory requirements as to the plan's contents and certification. Further, the Tribunal noted adverse factual background concerning one of the appellants' directors (declared NPA by the lead bank) and, in the exercise of its discretion, was not inclined to permit a belated opportunity to file an offer. [Paras 8, 10, 11, 12, 25]

No opportunity was to be afforded to the appellants to file their resolution plan in the circumstances; the appeal was dismissed.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's approval of the promoter's resolution plan for the MSME corporate debtor, holding that the CoC could defer issuing an Expression of Interest and circulating the Information Memorandum where the promoter's plan is viable, feasible and maximises stakeholder value; no opportunity to file a competing plan was granted to the appellants in the facts of this case.

Pre-existing dispute - section 9 petition - rejection by Adjudicating Authority - demand notice - summary suit as evidence of dispute

Pre-existing dispute - section 9 petition - demand notice - summary suit as evidence of dispute - Existence of a pre-existing dispute between the parties which justified rejection of the petition under section 9. - HELD THAT: - The Tribunal found on the material before it that disputes regarding the work had arisen and were communicated to the appellant prior to the demand notice dated 10.05.2017. Contemporaneous communications and steps taken by the respondent, including emails dated 03.04.2017, 05.05.2017 and 09.05.2017 showing actions for imposition of penalty and other adverse measures, and the institution of a summary suit in the Bombay High Court, demonstrate preparation for and existence of a dispute before the demand notice was issued. Having regard to these communications and steps, the Adjudicating Authority was justified in treating the claim as hit by a pre-existing dispute and in rejecting the section 9 petition. [Paras 19]

The appeal is dismissed for want of merit as the Adjudicating Authority correctly found a pre-existing dispute; no costs.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's conclusion that a pre-existing dispute existed prior to the demand notice is affirmed and the section 9 petition was correctly rejected; no costs.

Existence of dispute - maintainability of an application under the Insolvency and Bankruptcy Code, 2016 (application under Section 9) - prior civil suit as a defence to a Section 9 claim - settlement by payment and closure of insolvency proceedings - setting aside appointment of Interim Resolution Professional and lifting of moratorium

Existence of dispute - prior civil suit as a defence to a Section 9 claim - maintainability of an application under the Insolvency and Bankruptcy Code, 2016 (application under Section 9) - Application under Section 9 of the I&B Code was not maintainable because a pre existing civil suit created an existence of dispute between the parties. - HELD THAT: - The record shows that the corporate debtor had instituted a civil suit (R.C.S. No. 98 of 2017) on 22nd February, 2017 seeking to restrain the operational creditor from encashing cheques. The demand notice relied upon by the operational creditor was issued on 22nd February, 2018, after institution of that suit. On these facts the Tribunal found that a dispute existed prior to the filing of the Section 9 application and that the insolvency application was therefore not maintainable. The Tribunal accepted the factual position that the suit pre dated the demand notice and applied the principle that a genuine dispute existing between the parties on the relevant claim precludes admission of a Section 9 application. [Paras 2, 3, 4]

Section 9 application dismissed as not maintainable for existence of dispute arising from the prior civil suit.

Settlement by payment and closure of insolvency proceedings - setting aside appointment of Interim Resolution Professional and lifting of moratorium - Proceedings under the I&B Code were closed and consequential orders (appointment of IRP, moratorium and actions by the Resolution Professional) were set aside upon settlement by payment of the claimed amount. - HELD THAT: - After finding the Section 9 application not maintainable, the Tribunal recorded that the appellant handed over a demand draft for the claimed amount dated 8th March, 2019. Having regard to the payment and readiness to settle the claim, the Tribunal considered it appropriate to close the proceedings. Accordingly, the impugned admission order was set aside, the Section 9 application dismissed, and all orders made pursuant to that admission-appointment of Interim Resolution Professional, declaration of moratorium and actions taken by the Resolution Professional-were set aside. The Tribunal directed transmission of the draft to the operational creditor, ordered closure of the proceedings and permitted the corporate debtor to function through its board. The Tribunal also directed the Adjudicating Authority to fix the fee of the IRP, to be paid by the corporate debtor, with any amounts already paid to be adjusted. [Paras 3, 4, 5, 6]

Proceedings closed on settlement; impugned order set aside; IRP appointment, moratorium and consequent actions revoked; Adjudicating Authority to fix IRP fee and adjust any amounts paid.

Final Conclusion: Impugned order admitting the Section 9 application is set aside; the Section 9 application is dismissed as not maintainable due to an existence of dispute arising from a prior civil suit; the claimed amount was tendered and proceedings under the I&B Code are closed with consequential orders (IRP appointment, moratorium and actions) set aside and the Adjudicating Authority directed to fix the IRP's fee.

Maintainability of writ petition where statutory appeal exists - alternative remedy by statutory appeal - conflicting revenue orders on same tax period - contradictory departmental stands - exercise of extraordinary writ jurisdiction

Maintainability of writ petition where statutory appeal exists - alternative remedy by statutory appeal - exercise of extraordinary writ jurisdiction - Whether the High Court should entertain the petition under Article 226 when the impugned orders are appealable under the Finance Act, 1994. - HELD THAT: - The Court informed the petitioner at the outset that both impugned orders are appealable under the Act and, on that basis, expressed reluctance to exercise its extraordinary jurisdiction under Article 226. The Court observed that ordinarily where a statutory appellate remedy is available, writ jurisdiction is not to be invoked. The presence of two contradictory departmental orders for the same period was noted as an exceptional factual backdrop, but the Court emphasised that availability of the statutory appeal remains the primary consideration in assessing maintainability of the writ petition. [Paras 1, 2, 3]

Petition not to be entertained prima facie because the impugned orders are appealable; the availability of statutory appeal militates against exercise of writ jurisdiction.

Conflicting revenue orders on same tax period - contradictory departmental stands - Directive issued to the Revenue to clarify which of the two contradictory orders it stands by and adjournment for further instructions. - HELD THAT: - Noting that one departmental order treated the freight charges as taxable while the other held them to be exempt for the identical period, the Court observed that the Revenue cannot sustain two mutually inconsistent positions simultaneously. The Court therefore called upon the counsel for the respondents to obtain instructions from the Revenue as to which order the department endorses and, if possible, to explain the basis for the contradictory views. The matter was adjourned to enable the respondents to take and communicate instructions. [Paras 2, 3, 4, 5]

Respondents directed to take instructions and state which impugned order the department stands by; petition adjourned to 27 September 2019 for further proceedings.

Final Conclusion: Because the impugned orders are appealable, the High Court declined to entertain the petition at this stage, while directing the Revenue to clarify which of the two contradictory orders for 2011-12 to 2014-15 it stands by and adjourning the matter to 27 September 2019 for further consideration.

CENVAT credit on input services - admissibility of CENVAT credit - input services used for erection and commissioning of telecom towers - input versus input services distinction - functional utility test - binding precedent of the jurisdictional High Court - reference to Larger Bench - limitation and penalty to be decided after remand

CENVAT credit on input services - input services used for erection and commissioning of telecom towers - admissibility of CENVAT credit - input versus input services distinction - Reference of the question whether CENVAT credit for specified input services used in erection and commissioning of BTS towers/shelters by telecom service providers is admissible to a Larger Bench. - HELD THAT: - The Tribunal recorded that the core controversy is the admissibility of CENVAT credit on construction, erection, commissioning & installation, and technical testing & analysis services used for erection and commissioning of telecom towers/shelters. Noting that the Bombay High Court has decided against credit for inputs used in erection of towers and that there exist conflicting decisions of various Tribunal Benches on input services, the Bench concluded that the jurisdictional High Court's ratio cannot be bypassed. Several earlier Tribunal orders allowing input-service credit were examined and found not to have engaged fully with the High Court's reasoning. Given the existence of significant conflicting tribunal precedents on this question and the binding nature of the High Court decision, the Tribunal considered the legal question fit for determination by a Larger Bench and formally referred the specific question of admissibility to the President for constitution of a Larger Bench. The reference framed the exact question of law to be decided by the Larger Bench. [Paras 4]

The matter of admissibility of CENVAT credit on the specified input services is referred to the President for constitution of a Larger Bench to decide on the merits.

Binding precedent of the jurisdictional High Court - functional utility test - Treatment of the Bombay High Court decision as binding on the Tribunal and inability to distinguish it on the facts presented. - HELD THAT: - The Tribunal concluded that the Bombay High Court's decision draws a clear distinction between inputs and input services in the context of erection of telecom towers and has applied the functional-nexus reasoning to hold towers/shelters to be immovable and not eligible as 'goods' for credit. The Bench found that other Tribunal orders which purported to distinguish the High Court relied more on factual differentiation than on engaging with the High Court's ratio; therefore, they did not justify departing from the jurisdictional High Court's precedent. In view of this binding precedent and the conflicting authorities, the Tribunal considered the question appropriate for a reference rather than resolving it itself. [Paras 4]

The Tribunal treated the Bombay High Court decision as binding for the present Bench and has not decided the substantive admissibility question itself.

Limitation and penalty to be decided after remand - reference to Larger Bench - Postponement of adjudication on limitation (extended period) and imposition of penalties until after the Larger Bench decides the referred question on admissibility. - HELD THAT: - Because the principal question of law-whether the input services are admissible for CENVAT credit-has been referred to a Larger Bench for authoritative determination, the Tribunal held that ancillary matters dependent on that finding, specifically the invocation of extended period of limitation and the assessment of penalties, should not be adjudicated at this stage. The Bench therefore left those issues open for consideration after the Larger Bench pronounces on the admissibility question. [Paras 4]

Limitation and penalty issues are deferred and will be considered after the Larger Bench decides the referred question.

Final Conclusion: The Tribunal did not decide on the merits of admissibility of CENVAT credit for the specified input services; noting binding authority of the Bombay High Court and conflicting tribunal precedents, it referred the legal question to the President for constitution of a Larger Bench and deferred consideration of limitation and penalty issues until after the Larger Bench's decision.

Summary order. Special Leave Petitions dismissed; delay condoned and pending interlocutory applications disposed of.

Rectification of orders - requirement of reasons in appellate orders - remand for fresh decision - limitation as a defence to demand - judicial review of non-speaking orders

Rectification of orders - requirement of reasons in appellate orders - judicial review of non-speaking orders - limitation as a defence to demand - Whether the Tribunal's order dismissing the rectification application was legally sustainable in view of the absence of reasons addressing the petitioner's contention that the demand was barred by limitation, and what relief should follow. - HELD THAT: - The Tribunal's impugned order consisted of three sentences which dismissed the rectification application without addressing the specific contention raised by the petitioner that the demand was barred by limitation. The High Court found that the order was in substance non speaking as it gave no reasons explaining why the limitation plea was not a justifiable ground for rectification. Given the absence of any consideration of the limitation defence in the impugned order, the Court concluded that the proper course was to set aside the Tribunal's dismissal and restore the rectification application for fresh consideration. The Court clarified that restoration and remand were directed solely to secure adjudication on merits by the Tribunal and were not to be construed as any expression on the substantive merits of the petitioner's limitation plea. [Paras 6, 7]

Impugned order set aside; rectification application restored to the Tribunal for decision in accordance with law, without any observation on merits.

Final Conclusion: Writ petition allowed. The Tribunal's order of 20 November 2018 is set aside and the rectification application is restored to the Tribunal to be decided afresh in accordance with law; no decision is expressed on the merits of the petitioner's limitation defence.

Non-cooperation in settlement proceedings - distinction between settlement proceedings and adjudication - power to remit matters under section 32F(5) - consequences of sending a case back under section 32L and section 32O - right to opportunity of hearing / principles of natural justice - inadmissibility of Cenvat credit as a disputed question of fact and law

Non-cooperation in settlement proceedings - right to opportunity of hearing / principles of natural justice - Whether the Settlement Commission was justified in rejecting the petitioner's settlement application on the ground of non-cooperation and for that reason sending the matter to the adjudicating authority under section 32L. - HELD THAT: - The Court examined the sequence of events, the receipt and exchange of departmental reports and the petitioner's responses. The record showed the petitioner admitted the tax liability, made payments, disclosed documents and repeatedly furnished Cenvat-related invoices and registers; the revenue raised a dispute on admissibility of Cenvat credit and requested time for verification. A report dated 6.9.2017 (Assistant Commissioner) favourable to the petitioner was later described by the Additional Commissioner as interim; a subsequent report dated 22.11.2017 raising a legal bar under Rule 4 of the Cenvat Credit Rules, 2004 was communicated to the petitioner only on 18.12.2017 and the petitioner replied on 27.12.2017. Earlier adjournments or non-appearance on dates when the revenue itself sought verification could not, in the circumstances, be equated with non-cooperation in the sense of concealment or failure to make full and true disclosure under Chapter V. The Settlement Commission did not record any finding that the petitioner had failed to make full and true disclosure. Therefore the Commission was not justified in characterising the petitioner's conduct as non-cooperation and rejecting the application on that ground. [Paras 17, 18]

Finding of non-cooperation and consequent rejection under section 32L set aside.

Distinction between settlement proceedings and adjudication - inadmissibility of Cenvat credit as a disputed question of fact and law - power to remit matters under section 32F(5) - consequences of sending a case back under section 32L and section 32O - Whether, having regard to the disputed nature of admissibility of Cenvat credit and the Commission's view that the case required adjudication, the matter should have been sent back under section 32L or remitted under section 32F(5), and the legal consequence of a section 32L remand. - HELD THAT: - The Court accepted that the admissibility of Cenvat credit raised complex questions of fact and law which may properly require adjudication. However, where the Settlement Commission concludes that it cannot decide disputed questions, it should exercise its broad powers under section 32F(5) to pass such orders as it thinks fit, including remitting the matter to the adjudicating authority, rather than invoke section 32L which imports a finding of non-cooperation and attracts the serious bar in section 32O(1)(iii) against future settlement applications. Given the Commission's stated view that adjudication was necessary, the appropriate course was to direct remand under the discretionary provision section 32F(5) so as to avoid the permanent disqualification entailed by a section 32L finding. [Paras 12, 19]

Order read and reformed so that the application is deemed sent back under section 32F(5) to the proper officer for disposal; the consequences flowing from a section 32L remand are avoided.

Final Conclusion: The petition is partly allowed: the Settlement Commission's finding of non-cooperation and its rejection under section 32L are quashed; the application is to be treated as remitted to the adjudicating authority under section 32F(5) for disposal in accordance with law; rule made absolute to that limited extent.

Excess CENVAT credit on inputs from Export Oriented Units - Applicability of Rule 3(7)(a) of the CENVAT Credit Rules, 2004 - Credit of Special Additional Duty (SAD) as CENVAT credit - Retrospective effect of amendment of CENVAT Rules w.e.f. 07.09.2009 - Liability to pay interest on wrongly availed but reversed credit - Penalty for erroneous CENVAT credit reversed before utilisation

Excess CENVAT credit on inputs from Export Oriented Units - Applicability of Rule 3(7)(a) of the CENVAT Credit Rules, 2004 - Liability to pay interest on wrongly availed but reversed credit - Penalty for erroneous CENVAT credit reversed before utilisation - Whether the demand for excess CENVAT credit on inputs received from EOU is sustainable, whether extended period invocation is justified, and whether interest and penalties are payable where excess credit was reversed before utilisation. - HELD THAT: - The Tribunal found that the excess credit quantified for the periods April 2006 to March 2009 and April 2009 to February 2010 was small relative to the total credits claimed and arose from calculation error and incorrect application of the revised formula under Rule 3(7)(a). On this basis the appellants' explanation that the excess arose from bona fide error was accepted and the invocation of the extended period for recovery was held unsustainable and set aside. Separately, relying on higher court authority cited by the Revenue, the Tribunal held that interest is payable on wrongly availed credit even if reversed before utilisation, but penalties are unwarranted where reversal has been effected once pointed out and there is no culpable suppression. [Paras 6, 7, 9]

Demand for excess credit for the extended period set aside; demand for excess credit for the normal period upheld along with interest; penalties relating to the excess credit reversed before utilisation are set aside.

Credit of Special Additional Duty (SAD) as CENVAT credit - Retrospective effect of amendment of CENVAT Rules w.e.f. 07.09.2009 - Whether credit of Special Additional Duty (SAD) paid by EOUs is admissible as CENVAT credit for periods prior to 07.09.2009. - HELD THAT: - The Tribunal followed precedent reasoning that the term 'additional duty of customs' in the Rule encompasses both kinds of additional duties under Section 3 (including SAD under sub section (5)), and that the 2009 amendment was clarificatory. Having regard to the economic and legal rationale set out in earlier Tribunal decisions, the demand disallowing SAD credit for periods prior to 07.09.2009 was held unsustainable and set aside. [Paras 8, 9]

Demand disallowing CENVAT credit of SAD for the period prior to 07.09.2009 set aside; credit of SAD allowed.

Final Conclusion: Appeal partly allowed: demands in respect of credit of SAD (including periods prior to 07.09.2009) and demands for excess credit raised for the extended period are set aside; demand for excess credit for the normal period is sustained with interest payable, but penalties imposed in relation to the reversed credit are deleted.

Interest on delayed refund - Section 11-BB of Central Excise Act - interest on delayed refunds - Proviso to Section 11-BB - application to refund claims pending on date of enactment - Remand for computation of interest

Section 11-BB of Central Excise Act - interest on delayed refunds - Proviso to Section 11-BB - application to refund claims pending on date of enactment - Interest under Section 11-BB is payable in respect of refund applications pending on the date of enactment, from the date specified in the proviso. - HELD THAT: - The Tribunal examined Section 11-BB and its proviso and held that the proviso applies to refund applications made before the date on which the Finance Act, 1995 received presidential assent but still pending on that date. The proviso requires that such pending refund applications be decided within three months of the enactment date and, if not refunded within that period, interest under Section 11-BB accrues from the date immediately after the expiry of those three months until actual payment. The Commissioner (Appeals) erred in treating the fact of filing in 1989 as excluding the claim from any interest under Section 11-BB; he failed to consider the proviso which makes the revenue's liability begin after the three-month period following 26.05.1995. The Tribunal also relied on the Supreme Court authority cited in the order for the proposition that interest liability commences from expiry of three months from receipt of the enactment, where applicable to pending matters. [Paras 5, 6, 7]

Claim for interest is allowable but only from the date immediately after the expiry of three months from 26.05.1995, in terms of the proviso to Section 11-BB.

Remand for computation of interest - Computation and sanction of interest in accordance with the Tribunal's view is to be carried out afresh by the adjudicating authority. - HELD THAT: - The Tribunal set aside the impugned order to the extent it denied interest and remanded the matter to the Original Adjudicating Authority for calculation of interest payable to the appellant in accordance with the finding that interest accrues from the date immediately after the three-month period following 26.05.1995 until the date of actual payment. The remand is limited to quantification and payment in conformity with the legal conclusion reached by the Tribunal. [Paras 7]

Matter remanded to the Original Adjudicating Authority for calculation of interest in terms of the Tribunal's order.

Final Conclusion: Impugned order set aside to the extent of denial of interest; interest payable from the date immediately after expiry of three months from 26.05.1995 until payment; matter remanded to the Original Adjudicating Authority for computation and sanction of interest accordingly.

Summary order. Appeals dismissed for non-prosecution.

Financing illicit traffic and harbouring offenders - confession recorded under Section 67 of the NDPS Act - corroboration requirement for confessional evidence - weakness of confession recorded in custody absent proof of voluntariness - insufficiency of evidence to link accused to narcotics offence

Corroboration requirement for confessional evidence - weakness of confession recorded in custody absent proof of voluntariness - insufficiency of evidence to link accused to narcotics offence - Whether the conviction of the appellant could be sustained on the basis of (a) the confessional statement of a co-accused, and (b) the appellant's own confession recorded after arrest, in the absence of independent corroborative evidence linking the appellant to the financing of international smuggling. - HELD THAT: - The Court proceeded on the premise that the appellant's confession recorded by the investigating officer could be treated as admissible, but emphasised that a confession recorded after arrest is a weak piece of evidence unless shown to be voluntary and accompanied by corroboration. The co-accused's statement amounted to hearsay as it related events said to have been told by a third person (Mohammed of Bombay) and alleged that the contraband would ultimately be handed to the appellant; neither the third person nor the intermediary (Nalliappan) was examined. The confessional statement of the co-accused therefore provided only a clue for investigation and required independent corroboration which was not produced. No material was placed on the record to show the appellant's confession was free from pressure or that the appellant had been apprised of his rights; similarly, no other evidence linked the appellant to financing or to the recovered consignments. In these circumstances, even assuming admissibility of the confessions, the evidence was legally insufficient to establish the essential ingredient of the offence charged against the appellant.

Conviction set aside for want of reliable and corroborative evidence; appellant acquitted and bail bonds discharged.

Final Conclusion: Appeal allowed. Both confessional statements (of a co-accused and of the appellant) were insufficient, in the absence of corroborative evidence and proof of voluntariness, to sustain conviction for financing international smuggling under the NDPS Act; the judgments of the Trial Court and the High Court are set aside and the appellant is acquitted.

Amendment of plaint under Order VI Rule 17 CPC - computational error in plaint - no new cause of action - Order II Rule 2 CPC not attracted where basic nature of cause unchanged - limitation as a mixed question of fact and law - CENVAT credit as component of service tax - costs for grant of amendment

Amendment of plaint under Order VI Rule 17 CPC - computational error in plaint - Amendment to the plaint to include the CENVAT credit amount was rightly allowed under Order VI Rule 17 CPC. - HELD THAT: - The plaint and its annexed computation chart (Annexures P-3 and P-4) disclosed a separate column for CENVAT credit which was omitted from the final relief due to a computational/clerical oversight. The trial court found, and this Court concurs on the record before it, that the basic nature of the claim has not changed by including the CENVAT credit and that the omission was a rectifiable error. Consequently, allowance of the amendment to correct the computation was appropriate, subject to the plaintiff proving payments and entitlement in the course of trial. The trial court's exercise in admitting the amendment was therefore justified. [Paras 7, 8, 9]

Application under Order VI Rule 17 CPC was rightly allowed to add the CENVAT credit amount, subject to proof at trial and enhanced costs.

No new cause of action - Order II Rule 2 CPC not attracted where basic nature of cause unchanged - Addition of the CENVAT credit did not constitute a new cause of action and therefore Order II Rule 2 CPC did not bar the amendment. - HELD THAT: - The court accepted the trial court's conclusion that inclusion of the CENVAT credit does not introduce a new cause of action distinct from the existing claim for service tax. Since the amendment merely corrected the quantum arising from the same claim and did not alter the fundamental nature of the relief sought, the bar under Order II Rule 2 CPC was not attracted on the material before the court. [Paras 8, 9]

Order II Rule 2 CPC does not preclude the amendment because no new cause of action has been pleaded.

Limitation as a mixed question of fact and law - amendment of plaint under Order VI Rule 17 CPC - The objection that the added CENVAT credit claim is time-barred did not preclude allowance of the amendment at this stage; limitation is a mixed question of fact and law to be adjudicated finally. - HELD THAT: - The trial court held, and this Court upheld, that the question of limitation in respect of the CENVAT credit component cannot be finally determined on the amendment application alone. Because limitation involves factual elements and legal interpretation, it must be considered at trial after appropriate evidence and pleadings. The Delhi Development Authority remains entitled to raise and press limitation and other legal objections during further proceedings, including framing of additional issues. [Paras 8, 9, 11]

Limitation does not operate as a bar to the amendment at this interlocutory stage; the question of limitation shall be adjudicated on merits later.

CENVAT credit as component of service tax - Whether the CENVAT credit claimed by the plaintiff in fact forms a component of the recoverable service tax was not decided on merits and remains to be adjudicated. - HELD THAT: - The Court expressly refrained from expressing any view on the substantive question whether the CENVAT credit claimed would on the facts constitute part of the service tax recoverable from the respondent. The plaintiff will have to prove entitlement and payments in accordance with law, and the defendant may raise all available legal and factual objections. The matter is therefore left for determination in the course of trial. [Paras 9, 10, 11]

Merits of whether the CENVAT credit forms part of the service tax claim are not decided and are remanded for adjudication at trial.

Final Conclusion: The High Court upheld the trial court's allowance of the plaintiff's amendment under Order VI Rule 17 CPC to include CENVAT credit (a computational omission), holding that no new cause of action was introduced and that limitation is not a bar at this interlocutory stage; the substantive entitlement to CENVAT credit remains open for trial. Costs for the amendment were enhanced.

Definition of "deposit" under MPID Act - inter-corporate deposits - Companies (Acceptance of Deposits) Rules exclusion of amounts received from another company - legislative intent to protect small depositors - application of MPID Act to corporate depositors

Definition of "deposit" under MPID Act - inter-corporate deposits - Companies (Acceptance of Deposits) Rules exclusion of amounts received from another company - legislative intent to protect small depositors - application of MPID Act to corporate depositors - Whether an inter-corporate deposit/loan made by one company with another company amounts to a "deposit" within the meaning of the MPID Act - HELD THAT: - The Court examined the inclusive definition of "deposit" in section 2(c) of the MPID Act and the express exclusions contained in the Companies (Acceptance of Deposits) Rules (both 1975 and 2014) which exclude any amount received by a company from another company from the term "deposit" under the Companies enactments. Regard being had to the object and legislative history of the MPID Act - conceived to protect unsuspecting small and individual depositors from fraudulent financial establishments - and the nature and expected sophistication of corporate actors, the Court held that Parliament and rule making authority deliberately excluded inter corporate receipts from regulation as "deposits" under the Companies law. Applying this background and purposive comparison of the statutory schemes, the Court concluded that the MPID Act was not intended to extend the special summary protection aimed at vulnerable individual depositors to transactions between companies, and that treating inter corporate advances as "deposits" would both undermine the regulatory field occupied by the Companies Act and potentially prejudice small depositors. On that basis the Court held that inter corporate deposits/loans do not amount to "deposit" for the purposes of the MPID Act and directed that such inter corporate deposits in the present proceedings shall not be taken into account for prosecution or MPID proceedings; the Special Court remains competent to determine quantification and related issues in accordance with this declaration. [Paras 34, 35, 36, 39, 40]

Inter corporate deposits/loans do not amount to a "deposit" within the meaning of the MPID Act and shall not be taken into account for prosecution or proceedings under the MPID Act.

Final Conclusion: The petition is allowed: it is declared that inter corporate deposits/loans between companies registered under the Companies Act are not "deposits" under the MPID Act and inter corporate deposits in the present MPID proceedings shall be excluded; ancillary directions were given for deposit of amounts attributable to individual/non corporate depositors before further consideration of attachment notifications.

Prima facie case under Section 138 of the Negotiable Instruments Act - pre-summoning affidavit and pre-summoning evidence - dishonour of cheque for insufficiency of funds - statements under Section 251 Cr.P.C. and Section 313 Cr.P.C. not constituting evidence - burden on accused to lead cogent evidence in defence

Prima facie case under Section 138 of the Negotiable Instruments Act - pre-summoning affidavit and pre-summoning evidence - dishonour of cheque for insufficiency of funds - burden on accused to lead cogent evidence in defence - Validity of summoning, trial and conviction of the petitioner under Section 138 NI Act on the basis of the complainant's pre-summoning affidavit and the evidence placed on record. - HELD THAT: - The Court recorded that the complainant examined himself in pre-summoning evidence and placed on record bills, the cheque, cheque return memo showing 'funds insufficient', legal notice and postal proof. The petitioner admitted business transactions and admitted his signature on the cheque while denying having filled in its contents and claimed misplacement of cheques and lodging of a police complaint; however, he did not lead cogent supporting evidence or himself testify in defence. The reason for dishonour being insufficiency of funds and the absence of any credible explanation (such as stop-payment instructions) or corroborative evidence for the misplacement claim led the Court to conclude that the trial and appellate courts did not err in summoning, trying and convicting the petitioner. Reliance was placed on the settled position that defensive assertions in procedural statements are not evidence and that the prosecution's documentary and pre-summoning testimony supported a prima facie case. On these findings the petition was found to be without merit. [Paras 7, 8, 9, 10, 12]

The summoning, trial and conviction were valid; the petition contesting them is dismissed.

Statements under Section 251 Cr.P.C. and Section 313 Cr.P.C. not constituting evidence - Whether the defence taken by the accused during framing of notice or in explanations under Section 313/281 Cr.P.C. can be treated as evidence. - HELD THAT: - The Court affirmed the legal principle that pleas or explanations recorded under procedural provisions such as the framing of notice or statements under Section 313 Cr.P.C. (and related pre-summoning statements) do not amount to 'evidence' within the meaning of the Indian Evidence Act. The Court observed that oral testimony given on oath and subjected to cross-examination constitutes evidence, whereas procedural defenses or explanations, unsupported by formal examination-in-chief and cross-examination, cannot be treated as proof of facts. The judgment relied upon earlier decisions to this effect and applied the principle to hold that the petitioner's procedural statements could not substitute for cogent defence evidence. [Paras 11]

Defensive assertions recorded under the cited procedural provisions are not evidence and cannot vitiate the prosecution's case in the absence of sworn testimony or corroborative proof.

Final Conclusion: The petition seeking to set aside the conviction and sentences was dismissed; the findings of the trial and appellate courts were upheld and the petition is without merit.

Additional essential qualification for language medium under Rule 5(c) - interpretation of "subsequent higher level of education" in eligibility criteria - eligibility for teacher appointment in a specified medium - limits of judicial review under Article 226 - error apparent on the face of the record

Additional essential qualification for language medium under Rule 5(c) - interpretation of "subsequent higher level of education" in eligibility criteria - eligibility for teacher appointment in a specified medium - limits of judicial review under Article 226 - Whether the High Court was justified in holding that the Respondent's one year part time Certificate Course in Bengali satisfied the Advertisement/Rule 5(c) requirement of having "succeeded at any subsequent higher level of education in that language paper", and whether such a finding was open to interference under Article 226. - HELD THAT: - The Court held that the Single Judge and the Division Bench erred in concluding that the Certificate Course indisputably met the requirement of Paragraph 2 of the Advertisement and/or Rule 5(c). Determination whether a University Certificate Course is of a level higher than Higher Secondary or equivalent requires enquiry into and a factual determination of the standard of the course; a part time Certificate Course for graduates is not necessarily of a level higher than Higher Secondary and may be elementary. The High Court, exercising writ jurisdiction under Article 226, must confine itself to correcting decisions vitiated by an apparent error on the face of the record, arbitrariness, perversity or violation of legal/constitutional rights, and must not sit as an appellate forum to re weigh merits where the statutory provision admits of more than one plausible construction. Here the Commission's interpretation - that the requirement contemplates success at graduation/post graduation level or an equivalent examination, and not any part time university certificate course - is a plausible construction which the writ court ought not to have displaced. Further, the respondent failed to produce any University certification that the Certificate Course was equivalent to post Higher Secondary/graduate level, and the course materials indicated elementary level content (including an oral paper testing basic reading, writing and conversation), supporting the conclusion that the Certificate Course did not prima facie satisfy Rule 5(c). For these reasons the High Court's allowance of the writ petition involved impermissible appellate review and was liable to be set aside. [Paras 33, 34, 35, 36, 37]

The High Court's judgment and order allowing the writ petition was set aside; the interpretation adopted by the Commission that a part time Certificate Course did not necessarily satisfy the requirement of having succeeded at a subsequent higher level was a plausible construction and the respondent had not proved equivalence, accordingly the appeal is allowed.

Final Conclusion: The appeal is allowed; the Division Bench/Single Judge orders that had directed appointment on the basis of the Certificate Course are set aside because the High Court impermissibly sat in appeal and the respondent did not establish that the Certificate Course was of a standard equivalent to higher level language study; no order as to costs.