TaxTMI Updates e-Newsletter
Nov 01,2023

Jurisdiction under Article 226 - condonation of delay - statutory remedy - principles of natural justice - appeal under Section 107 - amnesty scheme/recommendations of GST Council

Jurisdiction under Article 226 - condonation of delay - statutory remedy - Writ jurisdiction under Article 226 cannot be exercised to condone delay in filing an appeal where a statutory remedy of appeal is available and the larger bench's decision in Panoli Intermediate (India) Ltd. is applicable. - HELD THAT: - The Court noted that a statutory remedy to challenge the assessment order was available under the Act and that precedential guidance of the larger bench in Panoli Intermediate (India) Ltd. precludes invocation of Article 226 for the purpose of condoning delay in filing an appeal. Having regard to that principle, the Court declined to exercise writ jurisdiction to condone the delay and to entertain the petition as a substitute for the appellate remedy. The Court observed that the petitioner had, in any event, not preferred the statutory appeal and that reliance on Article 226 for condonation would be impermissible in the facts of the case. [Paras 6, 8]

Petition under Article 226 cannot be used to condone delay where statutory appeal remedy exists; writ jurisdiction to condone delay was not exercised.

Appeal under Section 107 - principles of natural justice - amnesty scheme/recommendations of GST Council - Petitioner permitted to file an appeal under Section 107 with an application for condonation of delay; appellate authority may consider allegations of violation of principles of natural justice and the GST Council's amnesty recommendations. - HELD THAT: - Although the Court did not adjudicate the merits of the assessment, it directed that the petitioner is free to file the statutory appeal accompanied by an application for condonation of delay, setting out grounds including alleged denial of opportunity of hearing and discrepancies in figures between the show-cause notice and the final order. The Court expressly observed that the appellate authority, while deciding the condonation application, may take into account the circumstances raised by the petitioner and the GST Council's recommendation permitting belated appeals against demand orders passed on or before 31.03.2023 up to 31.01.2024 subject to prescribed pre-deposit conditions. The Court left the decision on remittance, verification or consideration of natural justice issues to the appellate forum in accordance with law. [Paras 9, 10, 11]

Petitioner allowed to file appeal with a condonation application; appellate authority to consider alleged breach of natural justice and the GST Council's amnesty recommendations when deciding the condonation and appeal.

Final Conclusion: Writ petition dismissed without adjudication on merits; petitioner may pursue the statutory appeal under Section 107 with a condonation application, and the appellate authority is to consider the pleaded violation of principles of natural justice and the GST Council's amnesty recommendations in accordance with law.

Limitation period for filing appeal - service by uploading order on common portal and knowledge of order - requirement of speaking order and consideration of submissions

Requirement of speaking order and consideration of submissions - limitation period for filing appeal - Impugned order dismissing the appeal as time barred was non speaking and failed to consider the petitioner's written submissions on limitation and knowledge of the order. - HELD THAT: - The Appellate Authority dismissed the Appeal as barred by 59 days' delay without dealing with the petitioner's detailed submissions (dated 14th and 24th November, 2022) that the limitation should run from the date the petitioner came to know of the Order in Original (by recovery notice), and without giving reasons why the uploading/communication contention did not affect limitation. The Court found the impugned order bereft of reasons and observed that the Appellate Authority ought to have considered the form of the Appeal and the petitioner's specific plea that knowledge arose on 28th August, 2022. For these deficiencies the impugned order suffers from infirmity and must be quashed and set aside. [Paras 11]

Impugned order quashed and set aside for being non speaking and for failing to consider the petitioner's submissions on limitation.

Service by uploading order on common portal and knowledge of order - limitation period for filing appeal - Appeal restored and remitted for fresh consideration including personal hearing, with directions to decide the limitation point by reference to the petitioner's submissions and to pass a speaking order; merits to be considered only if no delay is found. - HELD THAT: - The Court restored the Appeal to the Appellate Authority's file and directed that the petitioner be given personal hearing. The Appellate Authority is required to consider all submissions regarding when the petitioner acquired knowledge of the O I O (including the contention that mere uploading on the portal did not constitute communication), adjudicate the limitation issue giving reasons in a speaking order, and if it concludes there is no delay then proceed to decide the appeal on merits. The remand is for fresh adjudication on the limitation question and consequential consideration of merits only if timely. [Paras 12]

Appeal restored; directed personal hearing and fresh, reasoned adjudication on limitation and, if timely, on merits.

Final Conclusion: The impugned order dated 12th December, 2022 is quashed and set aside; the appeal filed on 26th September, 2022 is restored and the Appellate Authority is directed to grant personal hearing, decide the limitation issue by a speaking order after considering the petitioner's submissions, and if it finds no delay, adjudicate the appeal on merits.

Regular bail under the Code of Criminal Procedure, 1973 - discretionary grant of bail in serious economic offences - completion of investigation and filing of charge-sheet as ground for bail - absence of parallel GST departmental proceedings bearing on criminal liability - application of the principle in Sanjay Chandra regarding grant of bail - imposition and enforcement of conditional bail

Regular bail under the Code of Criminal Procedure, 1973 - completion of investigation and filing of charge-sheet as ground for bail - absence of parallel GST departmental proceedings bearing on criminal liability - application of the principle in Sanjay Chandra regarding grant of bail - imposition and enforcement of conditional bail - Enlargement of the applicant on regular bail in FIR C.R. No. 11210015220162 of 2022 - HELD THAT: - Having considered the submissions and material on record, the Court exercised its discretionary power under the criminal law to grant regular bail. The Court took into account that the applicant has been in custody since 05.11.2022 and that the investigation is complete with filing of the charge-sheet. The absence of any departmental proceedings by the GST authority against the applicant was treated as a material consideration weighing in favour of grant of bail, particularly where the charges relate to alleged evasion of GST but no show-cause or recovery proceedings under the GST enactments have been initiated. The Court also noted the release of co-accused by coordinate benches and applied the guiding principles in Sanjay Chandra to the facts, concluding that discretion should be exercised. Bail was therefore granted subject to furnishing of personal bond with one surety and observance of enumerated conditions (including surrender of passport, restrictions on travel abroad, furnishing residence details, and monthly police station attendance), with liberty for the trial court to modify conditions and for the Sessions Judge to act on any breach. [Paras 5, 6]

Application allowed; applicant enlarged on regular bail on specified bond and conditions; trial court not to be influenced by preliminary observations.

Final Conclusion: The High Court allowed the Section 439 CrPC application and granted regular bail to the applicant on furnishing bond and complying with specified conditions, having regard to completed investigation, absence of GST departmental action against the applicant, release of co-accused, and the principles in Sanjay Chandra.

Statutory appeal - condonation of delay - relaxation of limitation by appellate authority - opportunity of hearing - assessment passed in absence of assessee - deposit as condition for admission of delayed appeal

Statutory appeal - condonation of delay - opportunity of hearing - assessment passed in absence of assessee - Petitioner permitted to file a delayed statutory appeal against the assessment order and appellate authority directed to consider the appeal notwithstanding limitation. - HELD THAT: - The petitioner, who did not participate in adjudication proceedings and did not file a timely statutory appeal, attributed non-participation to the pandemic and lack of virtual hearing facilities. The High Court held that, in the circumstances, the petitioner ought to be granted an opportunity to have the statutory appeal considered on merits. The court therefore directed that the petitioner be allowed to file the statutory appeal within four weeks from receipt of the order and that the appellate authority shall consider the appeal without insisting on the limitation bar. The direction restores the right to an appellate hearing where an assessment was concluded in the petitioner's absence and delay is explained by pandemic-related constraints. [Paras 3]

Petitioner directed to file the statutory appeal within four weeks; appellate authority to entertain the appeal without insisting on limitation.

Deposit as condition for admission of delayed appeal - Admission of the delayed appeal subject to payment of 7.5% of the assessed amount as a condition precedent to filing the appeal. - HELD THAT: - As a condition for permitting the belated appeal, the court required the petitioner to pay 7.5% of the assessed amount before filing the appeal. This conditional deposit operates as an equitable measure to balance the assessee's right to be heard against the respondent's interest in finality of assessment, and forms part of the court's grant of relief in lieu of dismissing the writ. The appellate authority is to proceed to consider the appeal on its merits after compliance with this condition and without raising the limitation defence. [Paras 3]

Petitioner to pay 7.5% of the assessed amount and then file the appeal; appellate authority to consider it without insisting on limitation.

Final Conclusion: Writ petition disposed by permitting the petitioner to file a delayed statutory appeal within four weeks on payment of 7.5% of the assessed amount; appellate authority directed to entertain the appeal without insisting on limitation; no order as to costs.

Opportunity of hearing - principle of natural justice - mandatory personal hearing before adverse assessment - obligation under Section 75(4) to grant hearing where adverse decision is contemplated - remand for fresh hearing and adjudication

Opportunity of hearing - mandatory personal hearing before adverse assessment - obligation under Section 75(4) to grant hearing where adverse decision is contemplated - principle of natural justice - Assessing authority's duty to afford an opportunity of personal hearing before passing an adverse assessment order. - HELD THAT: - The Court applied the legal principle articulated by a coordinate bench in Bharat Mint & Allied Chemicals and held that Section 75(4) of the U.P. GST Act imposes a mandatory obligation on the assessing authority to grant an opportunity of hearing where an adverse decision is contemplated. The assessee is not required to separately request a personal hearing; the authority must afford the opportunity as a matter of right. A recorded indication by the assessee-such as marking 'No' in an online response-does not relieve the authority of that statutory and natural justice obligation when an adverse order involving substantial civil liability is under consideration. Granting at least a minimal, real opportunity of hearing ensures observance of natural justice, enables the authority to pass an appropriate and reasoned order, and facilitates proper appreciation at appellate stages.

The Court held that the assessing authority was obliged to grant a personal hearing before passing the adverse assessment order; the assessee's online indication of 'No' did not negate that obligation.

Remand for fresh hearing and adjudication - The consequence of non-compliance with the obligation to grant a hearing and the appropriate remedial direction. - HELD THAT: - Because the impugned order was passed without affording the mandatory opportunity of hearing, the Court set aside the order and remitted the matter for fresh consideration. The Assistant Commissioner is directed to issue a fresh notice to the petitioner within two weeks and to afford a real opportunity of personal hearing; the petitioner undertakes to appear on the next date fixed and the authority is to conclude the proceedings expeditiously. The remand is for fresh hearing and adjudication in accordance with law and the principles of natural justice.

Impugned order dated 14.09.2021 set aside; matter remitted to the Assistant Commissioner to issue fresh notice within two weeks, afford personal hearing, and conclude proceedings expeditiously.

Final Conclusion: Writ petition allowed; assessment order set aside for failure to afford mandatory personal hearing under Section 75(4) and remitted for fresh notice, hearing and adjudication in accordance with law.

Writ under Article 226 - maintainability of writ where statutory appeal period has expired - alternative remedy of statutory appeal before appellate authority - limitation for filing appeal - precedent precluding writ on expiry of appeal limitation

Writ under Article 226 - maintainability of writ where statutory appeal period has expired - alternative remedy of statutory appeal before appellate authority - limitation for filing appeal - precedent precluding writ on expiry of appeal limitation - Writ petition challenging the assessment order is not maintainable after the period for filing a statutory appeal has expired. - HELD THAT: - The petitioner challenged the Assessment order dated 08.08.2022 for Assessment year 2019-2020 by filing a writ petition on 03.08.2023, after the time allowed for preferring an appeal under the statutory appellate mechanism had lapsed. The Court noted that the petitioner ought to have preferred an appeal before the Appellate Commissioner under the GST Act within the prescribed period or sought condonation for delay. Reliance was placed on the settled principle that when the limitation for a statutory appeal has expired and an alternative statutory remedy exists, the High Court will not ordinarily entertain a writ under Article 226. Applying that principle to the present facts, and having regard to the failure to avail the appellate remedy within time, the Court held that the writ petition was not maintainable. [Paras 3, 4]

Writ petition dismissed for being barred by expiry of the period for filing a statutory appeal.

Final Conclusion: The writ petition challenging the Assessment order for Assessment year 2019-2020 was dismissed as not maintainable because the statutory period for filing an appeal had expired and the petitioner did not avail the appellate remedy.

Nonspeaking order - cancellation of registration - Form GST REG-19 - principles of natural justice - reconsideration/remand for fresh decision - benefit under Central Government notification No. 3 of 2023

Nonspeaking order - cancellation of registration - Form GST REG-19 - principles of natural justice - Validity of the order cancelling registration which does not assign reasons and does not refer to the show cause or reply - HELD THAT: - The Court examined Annexure-2 and observed that the cancellation order contains no stated reasons nor any reference to the subject of the notice or the show cause and reply. Rule-based Form GST REG-19 provides a specific column for stating reasons for cancellation; absence of reasons cannot be justified on the ground that the assessee did not appear or file objections. The court placed reliance on earlier Division Bench reasoning that where an order entails civil and penal consequences the authority must refer to the contents of the show cause and the response, and an order that is cryptic and nonspeaking violates principles of natural justice. For these reasons the impugned cancellation order was found to be legally unsustainable. [Paras 2, 5, 6, 7, 8]

Impugned cancellation order set aside and matter remitted for fresh consideration with reasons to be recorded and after affording appropriate opportunity of representation

Benefit under Central Government notification No. 3 of 2023 - Applicability of notification No. 3 of 2023 granting a time-limited remedy where cancellation arose from failure to file returns under specified clauses of Section 29(2) - HELD THAT: - The Court noted notification No. 3 of 2023 (issued on the recommendations of the GST Council) which allows, where cancellation was effected for failure to file returns under clause (b) or (c) of Section 29(2), a further period up to 30.06.2023 for the registered person to apply for revocation, subject to filing returns up to the effective date and payment of tax, interest, penalty and late fee. The Court recorded this as an available remedy for an assessee whose cancellation falls within those clauses. [Paras 9]

Assessee entitled to avail remedy under notification No. 3 of 2023 if cancellation falls under the specified clauses and conditions are met

Final Conclusion: Writ petition allowed; impugned order of cancellation set aside and remitted for fresh consideration in accordance with law after recording reasons and observing principles of natural justice; petitioner permitted to avail any relief available under notification No. 3 of 2023 where applicable.

Advertising, Marketing and Promotion (AMP) expenditure - international transaction - Arm's Length Price - Associated Enterprise - principle of consistency - no substantial question of law

Advertising, Marketing and Promotion (AMP) expenditure - international transaction - Arm's Length Price - Associated Enterprise - principle of consistency - Whether AMP expenditure incurred by the assessee for its Associated Enterprise constituted an international transaction attracting adjustment to bring the transaction to Arm's Length Price, and whether the Tribunal's decision declining such adjustment should be interfered with. - HELD THAT: - The Tribunal had treated AMP expenses incurred by the assessee as not constituting an international transaction, relying on its earlier decision in the assessee's own case for AYs 2007-08 to 2009-10 and noting the decision of this Court in Maruti Suzuki India Ltd. The Revenue's miscellaneous applications against those earlier Tribunal orders were dismissed and no further remedy was taken. Having regard to the unchanged factual matrix and the prior adjudication, the High Court applied the principle of consistency and declined to interfere with the Tribunal's conclusion for AY 2010-11. The Court recorded that no substantial question of law arose for consideration and therefore did not revisit the Tribunal's factual and contemporaneous treatment of the AMP expenditure as not amounting to an international transaction or warranting an ALP adjustment. [Paras 5, 6, 7, 8, 9]

Tribunal's order declining to treat AMP expenditure as an international transaction and disallowing the ALP adjustment is not disturbed; appeal dismissed.

Final Conclusion: The High Court, applying the principle of consistency with earlier Tribunal findings and on the basis that no substantial question of law arises, declined to interfere with the Tribunal's order for AY 2010-11 and closed the appeal.

Principles of natural justice - faceless assessment - personal hearing through video conferencing - show-cause notice-cum-draft assessment order - procedure under section 144B - effective opportunity of hearing - quash and set aside

Principles of natural justice - procedure under section 144B - personal hearing through video conferencing - show-cause notice-cum-draft assessment order - effective opportunity of hearing - Impugned assessment order was passed in violation of the principles of natural justice by not following the procedure under section 144B to provide an effective personal hearing. - HELD THAT: - The Court found that faceless assessment under the statutory scheme requires issuance of a show-cause notice-cum-draft assessment order and, where variation prejudicial to the assessee is proposed, affords the assessee the right to request personal hearing which, if approved, must be conducted by video conferencing in accordance with section 144B. On the material placed before it, the Court recorded that although a VC link was generated and some interaction occurred, technical glitches constrained oral communication and exchanges were confined to the chat box; requests to reschedule an effective VC were declined on the ground of impending limitation. The authority acknowledged audio errors and permitted upload of documents but did not provide an effective oral hearing nor follow the prescribed s.144B procedure of serving and considering a draft and then enabling a personal hearing. Applying the determinative reasoning in the cited Division Bench decision, the Court held that denial of an effective opportunity of personal hearing in the manner mandated by section 144B amounted to breach of natural justice, warranting quashing of the assessment and demand, while leaving open the power of the Revenue to proceed afresh in accordance with law. [Paras 9, 10]

Impugned assessment order dated 30.09.2021 and demand notice dated 30.09.2021 for AY 2018-19 quashed and set aside for failure to provide an effective hearing as required by section 144B; Revenue permitted to re-issue show-cause-cum-draft and afford hearing by VC in accordance with law.

Final Conclusion: Petition allowed; assessment order and demand notice quashed for breach of principles of natural justice for non-compliance with the procedure under section 144B. Revenue may proceed afresh after issuing a show-cause-cum-draft assessment order and providing an opportunity of hearing by video conferencing in accordance with section 144B; exercise to be completed within twelve weeks. Merits of the assessment not examined.

Discretion under Section 119(2)(b) of the Income Tax Act to condone delay and admit claims - limits on delegated administrative power and ultra vires effect of an administrative circular - exercising jurisdiction on merits versus condonation of delay - relegation of merits of refund claim to the assessing authority - requirement to consider justifiable reasons for delay

Discretion under Section 119(2)(b) of the Income Tax Act to condone delay and admit claims - limits on delegated administrative power and ultra vires effect of an administrative circular - exercising jurisdiction on merits versus condonation of delay - relegation of merits of refund claim to the assessing authority - requirement to consider justifiable reasons for delay - Whether the Principal Commissioner, exercising powers under Section 119(2)(b), was confined to deciding condonation of delay or could go into the merits of the refund claim and whether the matter should be remitted for fresh consideration. - HELD THAT: - The Court held that Section 119(2)(b) empowers the Board (and by authorised delegates) to admit an application or claim after the prescribed period and to deal with it on merits in accordance with law, but does not permit delegation that confers greater discretion than the statute contemplates. An administrative circular (Ext.P10) which authorised the Principal Commissioner to decide the merits of the refund claim while exercising delegated power under Section 119(2)(b) was impermissible to the extent it expanded the statutory mandate. On the facts, the Principal Commissioner did not decide, on merits, whether justifiable reasons for the delay had been shown; instead he examined the refund claim's merits and overlooked relevant earlier facts (earlier refund in 2006 for the same land). The Court concluded that the question of justification for condonation was not considered as required and that the merits of the refund claim are matters for the assessing authority if delay is condoned. Consequently the matter must be remitted to the Principal Commissioner for fresh determination strictly confined to whether justifiable reasons for condoning the delay have been made out, and, if condonation is granted, the assessing authority should consider the refund claim on merits.

Impugned order set aside; matter remitted to the Principal Commissioner to reconsider the application under Section 119(2)(b) solely to determine whether justifiable reasons for condoning the delay have been made out; if condonation is granted, the assessing authority to consider the refund claim on merits.

Final Conclusion: Writ appeal allowed; the judgment and the Principal Commissioner's order are set aside and the application under Section 119(2)(b) is remitted for fresh consideration limited to condonation of delay, to be decided after hearing the appellant within two months, with the assessing authority to examine the refund claim on merits if delay is condoned.

Condonation of delay - treatment of conditional marketing assistance payments - characterisation of receipts as income versus pass-through receipts - precedential effect of Tribunal's earlier findings on identical agreements - no substantial question of law

Condonation of delay - Application for condonation of delay of 116 days in filing the appeal - HELD THAT: - The Court considered the application filed on behalf of the appellant seeking condonation of delay of 116 days. Having regard to the period of delay, the Court exercised its discretion in favour of the appellant and allowed the application. The order disposes of the application by condoning the delay and permitting the appeal to proceed. [Paras 1, 2, 3, 4]

Delay of 116 days in filing the appeal is condoned and the application is allowed.

Treatment of conditional marketing assistance payments - characterisation of receipts as income versus pass-through receipts - precedential effect of Tribunal's earlier findings on identical agreements - no substantial question of law - Whether amounts received under Marketing Assistance Programme (MAP) agreements are assessable as the assessee's income or are not taxable given their conditional nature and practice of passing them to sub-distributors - HELD THAT: - The Court examined the MAP agreements and the factual matrix: the assessee received MAP payments as a distributor and passed amounts to sub-distributors when they lifted goods; the MAP payments were subject to conditionalities including repayment/adjustment on certain contingencies under clause 6. The Tribunal's earlier decision in respect of closely similar years (as recorded in its order dated 04.10.2018) had accepted the assessee's consistent practice of accounting for MAP receipts and upheld that treatment in preceding assessment years. The agreement clauses remained unchanged. The Assessing Officer added the difference between amounts received and amounts spent rather than treating the entire receipt as income; the Court noted that if the payments were income, the whole amount received should have been taxed, and that the AO's own characterization of the total as gross receipts indicated the amounts lacked the attribute of income. In view of the contractual conditionalities, the consistent contemporaneous accounting practice accepted earlier by the Tribunal, and the absence of any change in the MAP provisions, the Court found no substantial question of law arising from the Tribunal's order and declined to interfere. [Paras 19, 20, 21, 22, 23]

No substantial question of law arises regarding the addition made on account of MAP receipts; the appeal is closed.

Final Conclusion: The High Court condoned the delay in filing the appeal and, on the merits for AY 2013-14, declined to interfere with the Tribunal's treatment of MAP receipts, holding that no substantial question of law arises and therefore closing the appeal.

Limitation for imposing penalty - interpretation of Section 275(1)(c) - commencement of limitation in penalty proceedings - authority competent to impose penalty - effect of subsequent notice on limitation

Interpretation of Section 275(1)(c) - commencement of limitation in penalty proceedings - effect of subsequent notice on limitation - Whether the penalty under Section 271E was time-barred under Section 275(1)(c) and whether the notice issued subsequently by the Joint/Additional Commissioner could extend the period of limitation. - HELD THAT: - The Court parsed Section 275(1)(c) as containing two alternative limbs for computing the outer limit for passing penalty orders: (a) the end of the financial year in which the proceedings in the course of which action for imposition of penalty is initiated are completed, and (b) six months from the end of the month in which action for imposition of penalty is initiated, whichever is later. Applying these limbs to the facts, the assessment order dated 31.12.2010 constituted the trigger for initiation of penalty proceedings. Consequentially, the limitation under the first limb expired at the end of the financial year immediately following completion of those proceedings and, under the second limb, six months from the end of the month in which the action was initiated. The Court rejected the revenue's contention that limitation should be measured from the date when the Joint Commissioner issued the notice under Section 274, observing that permitting the date of a subsequent notice to determine limitation would enable the revenue to extend limitation at will and lead to absurdity. The Court further noted that the Assessing Officer had obtained prior approval of the Additional Commissioner before initiating penalty proceedings, and that a later notice issued on 13.06.2011 could not validly extend the statutory limitation. On this basis the Court held that the penalty order dated 30.12.2011 was beyond the period of limitation as prescribed by Section 275(1)(c) and therefore liable to be set aside. [Paras 16, 17, 19, 20, 21]

The limitation prescribed by Section 275(1)(c) had expired and the subsequent notice could not extend it; the penalty was time-barred and the question of law is answered against the revenue.

Final Conclusion: The appeal is disposed of against the appellant/revenue and in favour of the respondent/assessee: the Tribunal was correct in deleting the penalty as time barred under Section 275(1)(c).

Assumption of jurisdiction under Section 148A and reassessment under Section 147 - effect of Section 149 threshold on time-barred reassessment - separation between jurisdictional satisfaction and determination of escaped income - effect of subsequent reduction in quantified escapement on validity of initiation - discretionary remedy under Article 226 to quash reassessment proceedings

Assumption of jurisdiction under Section 148A and reassessment under Section 147 - effect of Section 149 threshold on time-barred reassessment - Validity of initiation of reassessment proceedings where, at the stage of issuance of the Section 148A order, information indicated two accommodation entries aggregating above the statutory threshold. - HELD THAT: - The Court held that the assessing authority complied with the procedural requirements of the amended law by issuing the Section 148A(b) notice, considering objections and recording a reasoned satisfaction in the order dated 31.7.2022 which referred to two accommodation entries and an aggregate escapement above the statutory threshold, thereby making reassessment initiation permissible. The correctness of the tentative factual conclusion reached at that stage is not a precondition for valid assumption of jurisdiction; the requisite satisfaction need only be based on the material then available. Subsequent re-quantification does not vitiate the prior valid assumption of jurisdiction where the initial material supported the finding that escapement exceeded the threshold and time-bar protection under Section 149(b) was therefore available. [Paras 11, 12, 15, 20, 21]

Initiation of reassessment was validly founded on the satisfaction recorded at the Section 148A stage and is not rendered invalid by later reduction in the assessed component of escapement.

Separation between jurisdictional satisfaction and determination of escaped income - effect of subsequent reduction in quantified escapement on validity of initiation - Whether the assessing authority is bound to assess all income commensurate with the information that gave rise to the reason to believe, or whether it may drop part of the allegations during reassessment. - HELD THAT: - The Court reiterated the established principle that the satisfaction or reason to believe recorded to assume jurisdiction and the merits of assessment are distinct exercises. The assessing authority is not obliged to assess all alleged components of escapement that formed the basis for initiation; it may, during reassessment, accept explanations, drop, or modify allegations. Thus, the fact that one of the two initially alleged accommodation entries may no longer be pursued or quantified does not mean the initiation itself was improper. [Paras 15, 16, 17, 18, 21]

Assessing authority may, in reassessment proceedings, drop or modify parts of the initial allegations; such modification does not negate the earlier valid assumption of jurisdiction.

Discretionary remedy under Article 226 to quash reassessment proceedings - Whether the High Court should exercise its discretionary writ jurisdiction to quash the reassessment proceedings at the late stage on the ground that the escapement finally quantified is below the statutory threshold. - HELD THAT: - Applying equitable considerations and the facts that the assessing authority had followed the statutory pre-initiation procedure, recorded reasons for jurisdiction, and the matter had progressed to a final show cause stage and reassessment order, the Court declined to exercise its discretionary power to quash the proceedings. The Court observed that a purely technical challenge at the fag end, where the component of escapement exists and requires final determination by the assessing authority, did not warrant interference. The Court therefore refused relief under Article 226 while leaving open merits to be decided in the assessment or appeal process. [Paras 14, 19, 22, 23]

Discretionary writ relief to quash the reassessment proceedings is refused; the proceedings will continue and merits remain open for adjudication.

Final Conclusion: Writ petition challenging initiation of reassessment proceedings dismissed. The High Court held that the assessing authority validly assumed jurisdiction after complying with Section 148A procedures and that subsequent reduction in the quantified escapement does not invalidate the initiation; discretionary relief to quash the proceedings at this late stage was refused, with merits to be determined in the reassessment/appeal process.

Deduction under section 80IB(10) - Allotment of more than one residential unit to the same individual - Proportional disallowance where some units violate statutory conditions - Effect of registered sale deed as vesting of rights and title

Deduction under section 80IB(10) - Proportional disallowance where some units violate statutory conditions - Whether violation attributable to some residential units justifies denial of deduction for the entire housing project under section 80IB(10) - HELD THAT: - The Tribunal held that the question is no longer res integra and is governed by the decisions of the Hon'ble Supreme Court and the coordinate Bench which establish that non-compliance in respect of some units (for example excess built-up area or other disqualifying allotments) does not justify denial of the section 80IB(10) deduction for the entire project. The correct approach is to confine disallowance to the allotments/sales which do not comply with the conditions of section 80IB(10) and allow the remaining deduction in respect of compliant units. The Tribunal accordingly approved the CIT(A)'s approach to restrict disallowance proportionately and relied upon the cited precedents to uphold that legal principle. [Paras 11, 12]

Disallowance cannot be denied for the entire project where only some units are in violation; A.O. must restrict disallowance proportionately to the non compliant allotments.

Allotment of more than one residential unit to the same individual - Effect of registered sale deed as vesting of rights and title - Whether Flats A-101 and A-102 were allotted to the same individual (Smt. Usha Basant Sethia) so as to attract disallowance under clause (f) of sub section (10) of section 80IB - HELD THAT: - On facts the Tribunal concluded that Flat No. A-102 was allotted to Smt. Usha Basant Sethia by virtue of a registered sale deed executed in her favour, which vested in her the rights and title of an allottee. The existence of an earlier agreement to sell in favour of Mahendra Sethiya HUF and the subsequent contention that the HUF thereafter sold to Smt. Usha Basant Sethia did not negate the legal effect of the registered deed executed by the assessee. The Tribunal found no merit in the CIT(A)'s view that the two sales were independent because Smt. Usha Basant Sethia was not a member or karta of the HUF; on the contrary, the registered deed and the assessee's recognition of profit on that deed established that both units were allotted to the same individual. Consequently the CIT(A)'s deletion of disallowance in respect of those units was set aside to the extent indicated. [Paras 13, 14, 15]

Flat A-102 stood allotted to Smt. Usha Basant Sethia by registered sale deed; the CIT(A)'s acceptance of two distinct sales is set aside and disallowance under section 80IB(10)(f) is sustained insofar as those allotments relate to the same individual.

Final Conclusion: The revenue's appeal is partly allowed: the legal principle that only non compliant units should attract proportionate disallowance under section 80IB(10) is accepted, but on the facts the Tribunal finds that the assessee allotted more than one unit to the same individual (Smt. Usha Basant Sethia) and sets aside the CIT(A)'s deletion of disallowance in respect of those allotments; the A.O. is to restrict disallowance proportionately in accordance with these findings.

Reopening of assessment - reasons to believe - assumption of jurisdiction under Section 147 - approval under Section 151 - recording of reasons - nexus between reasons recorded and material on record - void ab initio - role and duty of Dispute Resolution Panel (DRP)

Reopening of assessment - assumption of jurisdiction under Section 147 - reasons to believe - nexus between reasons recorded and material on record - approval under Section 151 - void ab initio - role and duty of Dispute Resolution Panel (DRP) - Validity of reopening assessment for A.Y. 2013-14 under Section 147 and related approvals and DRP directions. - HELD THAT: - The Tribunal held that the foundation for invoking Section 147 is the reasons recorded by the Assessing Officer forming a bona fide belief that income chargeable to tax has escaped assessment. The reasons placed on record were replete with factual inaccuracies and non existent or irrelevant statements (including wrong assessment year and misidentification of parties) and thus lacked any live link or nexus with tangible material on file. The Assessing Officer himself, while disposing objections, admitted inadvertent errors in the recorded reasons. Approval under Section 151, intended as a safeguard against arbitrary reopening, must be granted after an application of mind to the reasons and material; here the Additional CIT and CIT granted approval mechanically without proper verification of facts. The DRP, while disposing the assessee's objections, failed to appreciate the factual position and upheld the reopening on incorrect premises. Given that the reasons did not make out a case for escapement of income and approvals were mechanical, the reopening was invalid and the consequent assessment could not stand. Because the jurisdictional defect went to the root, the assessment order was held void ab initio. Following this conclusion, all other grounds (including merits of additions) were left undecided as academic. [Paras 13, 14, 15, 17, 18]

Reopening of assessment under Section 147 for A.Y. 2013-14 was invalid; approvals under Section 151 were mechanical; DRP failed to appreciate factual inaccuracies; assessment order quashed as void ab initio.

Final Conclusion: The appeal is allowed: the reopening of assessment for A.Y. 2013-14 was invalid for lack of proper reasons and nexus with material, approvals under Section 151 were granted mechanically, the DRP's rejection of objections was unsatisfactory, and the assessment order is declared void ab initio and quashed; other grounds are left open as academic.

Reopening of assessment under section 147 - reason to believe - change of opinion - tangible material requirement for reassessment - undisclosed investment under section 69 - Rule 27 of the Income Tax Appellate Tribunal Rules - raising jurisdictional objection orally - right to raise jurisdictional objection before ITAT without filing cross objection

Rule 27 of the Income Tax Appellate Tribunal Rules - raising jurisdictional objection orally - right to raise jurisdictional objection before ITAT without filing cross objection - Admissibility of the assessee's oral preliminary objection under Rule 27 challenging the validity of the reopening under section 147 - HELD THAT: - The Tribunal examined whether the assessee could, without filing a cross appeal or written application, raise at the hearing a jurisdictional objection under Rule 27. Relying on recent High Court precedents cited in the order, the Tribunal held that Rule 27 does not prescribe a particular form and does not require a written application; accordingly an oral objection going to the root of jurisdiction may be entertained. The Tribunal further accepted the principle that an assessee may support the CIT(Appeals) order before the ITAT on a jurisdictional ground even without filing cross objections where the point is purely legal and does not call for further factual investigation. On that basis the Tribunal admitted the preliminary objection challenging the reopening. [Paras 11, 14, 15, 16, 18]

The oral jurisdictional objection under Rule 27 was admitted and the assessee was permitted to raise the challenge to the reopening.

Reopening of assessment under section 147 - reason to believe - change of opinion - tangible material requirement for reassessment - Validity of the assessment reopenings under section 147 in absence of fresh tangible material - HELD THAT: - The Tribunal considered the reasons recorded by the AO for reopening, which relied on re appreciation of material already available during the original assessment (treatment of performance guarantees/deposits). Applying settled precedent, including Kelvinator and subsequent High Court decisions, the Tribunal reiterated that section 147 requires 'reason to believe' supported by fresh/tangible material and that mere change of opinion by the AO is not a valid basis to reopen a concluded assessment. As the AO had already examined the same claim in the original 143(3) order and no new information or material had been produced to justify reassessment, the reopening was held to be invalid for want of jurisdiction. [Paras 19, 21, 22, 23, 24]

The reassessment framed under section 143(3)/147 was quashed for lack of valid assumption of jurisdiction as the reopening was based on a mere change of opinion and not on any fresh tangible material.

Final Conclusion: The assessee's preliminary objection under Rule 27 was admitted; on the merits of jurisdiction the Tribunal quashed the reassessment order under sections 143(3)/147 for being founded on mere change of opinion without fresh tangible material, and consequently dismissed the revenue's appeal.

Penalty under Section 271(1)(c) - Concealment of income or furnishing inaccurate particulars - Estimated disallowance for bogus purchases - Requirement of cogent evidence to support purchases - Opening balance versus expenditure in assessment year

Penalty under Section 271(1)(c) - Estimated disallowance for bogus purchases - Concealment of income or furnishing inaccurate particulars - Requirement of cogent evidence to support purchases - Opening balance versus expenditure in assessment year - Imposition of penalty under Section 271(1)(c) on estimated additions made towards alleged bogus purchases. - HELD THAT: - The Tribunal held that imposition of penalty under Section 271(1)(c) requires that the disputed amount represent concealed income or that the assessee furnished inaccurate particulars of income. Where disallowance is made on an estimated basis because of perceived excessiveness of expenditure and absence of cogent supporting evidence, the totality of circumstances must nonetheless reasonably demonstrate concealment. In the present case the assessee contended that the amounts in question related to opening balances of the suppliers and did not represent purchases incurred in the assessment year. The Tribunal found that on this point alone the penalty is unsustainable. It observed that estimations of bogus purchases, without a clear finding that the amounts represent concealed income for the year under consideration, do not support the imposition of penalty. The Tribunal also relied on precedents where penalties were struck down in similar circumstances of estimated disallowances towards bogus purchases. Applying these principles, the Tribunal concluded that the penalty could not be sustained and directed its reversal by the Assessing Officer. [Paras 5, 7, 8]

Penalty under Section 271(1)(c) imposed on the estimated disallowance for alleged bogus purchases is unsustainable and is set aside; Assessing Officer directed to reverse the penalty.

Final Conclusion: The appeal is allowed: the penalty imposed under Section 271(1)(c) in respect of estimated additions for alleged bogus purchases for AY 2012-13 is quashed and the Assessing Officer is directed to reverse the penalty.

Employees' contribution to provident fund and ESIC - timely deposit qua the due date prescribed under the respective labour statutes - deduction under Section 80JJA and requirement of Form 10DA - directory versus mandatory nature of procedural compliance - disallowance under Section 36(1)(va) read with Section 43B

Employees' contribution to provident fund and ESIC - timely deposit qua the due date prescribed under the respective labour statutes - disallowance under Section 36(1)(va) read with Section 43B - Whether employees' contribution to PF/ESIC was deposited in time for the purposes of Section 36(1)(va) read with Section 43B - HELD THAT: - The Tribunal recognised the distinction between employees' and employer's contribution and accepted the assessee's alternative plea that timeliness must be judged with reference to the due date under the respective labour enactments as explained in the Co-ordinate Bench decision in Kanoi Papers. The Tribunal found that Revenue had not examined this aspect and that the assessee should be permitted to place the factual matrix before the Assessing Officer for evaluation of whether any delay occurred when reckoned by the statutory due date under the relevant labour law. [Paras 4]

Matter restored to the file of the Assessing Officer for fresh examination of timeliness of deposit of employees' contribution in light of the approach in Kanoi Papers; assessee to be given opportunity of being heard.

Deduction under Section 80JJA and requirement of Form 10DA - directory versus mandatory nature of procedural compliance - Whether denial of deduction under Section 80JJA on account of belated filing of Form 10DA is justified - HELD THAT: - The Tribunal noted that the assessee had claimed the deduction in the return, subsequently filed the Tax Audit Report and Form 10DA before the intimation, and relied on the coordinate bench view in Jeans Knit that the prescribed form is a directory requirement capable of being satisfied by filing during the course of assessment. The Tribunal accepted that mere belated filing of the prescribed form, where substantial compliance is demonstrated before intimation, does not justify denial of the deduction. [Paras 16, 17, 18]

Denial of deduction under Section 80JJA solely for belated filing of Form 10DA set aside; Assessing Officer directed to grant the deduction as claimed.

Deduction under Section 80JJA and requirement of Form 10DA - Whether the claim under Section 80JJA (in regular assessment proceedings) is allowable on merits - HELD THAT: - In the appeal against the regular assessment the Tribunal observed that the Assessing Officer had raised a separate merits-based objection that conditions for entitlement were not satisfied. Because the CIT(A) had not adjudicated the merits and the record before the Tribunal did not permit a conclusive finding on eligibility, the Tribunal considered it expedient to remit the question of factual and merits compliance to the CIT(A) for fresh adjudication after giving the assessee an opportunity to be heard. [Paras 26]

Issue remitted to the CIT(A) for de novo adjudication on merits of eligibility for deduction under Section 80JJA after affording the assessee an opportunity of being heard.

Disallowance under Section 36(1)(va) read with Section 43B - Allowability of expenditures/additions raised under Section 36(1)(va) in AY 2018-19 (connected to employees' contribution issues) - HELD THAT: - The Tribunal did not decide the substantive question on the merits but restored the issue to the file of the Assessing Officer for fresh determination in accordance with the approach directed in the related appeals (specifically the examination of timeliness of deposit and related aspects). [Paras 19]

Issue restored to the Assessing Officer for fresh determination in accordance with law.

Final Conclusion: Appeals allowed for statistical purposes in part: deduction under Section 80JJA granted (subject to directions), issues concerning employees' contribution to PF/ESIC and related disallowances under Section 36(1)(va) read with Section 43B are restored/remitted for fresh adjudication by the Assessing Officer/CIT(A) after affording the assessee an opportunity of being heard.

Onus of proof for source of investment - unexplained advance treated as unexplained expenditure - estimation of agricultural income for evidentiary deficiency - afterthought explanation furnished after survey

Onus of proof for source of investment - unexplained advance treated as unexplained expenditure - Whether the advance of Rs.5,00,000/- to the land owner could be treated as explained by the assessee or required to be treated as unexplained expenditure. - HELD THAT: - The Tribunal noted that the assessee claimed the impugned advance was financed from past accumulated savings, agricultural income and HUF funds but failed to produce any supporting documentary evidence before the revenue authorities or the Tribunal. When a taxpayer admits source, the onus lies on the taxpayer to substantiate it with cogent evidence. In the absence of documentary proof to substantiate the claimed sources, the Tribunal found no reason to interfere with the AO and CIT(A)'s finding that the difference between the advance and the established source was unexplained and rightly brought to tax as unexplained expenditure. [Paras 8]

Appeal dismissed; addition treating part of the advance as unexplained expenditure upheld.

Estimation of agricultural income for evidentiary deficiency - afterthought explanation furnished after survey - Whether the AO's estimation of agricultural income at Rs.1,67,000/- (on the basis that assessee held 16.77 acres) in place of Rs.3,10,000/- claimed by the assessee was justified. - HELD THAT: - The Tribunal observed that records supported only 16.77 acres in the assessee's name, contrary to the assessee's claim of 27.50 acres. The original return for the year did not disclose any agricultural income; agricultural income was admitted only after the departmental survey and notice under section 148, which the Tribunal treated as an afterthought to explain the source of the advance. Further, entries in the receipts and payments account showing credit from HUF against the claimed agricultural income were unexplained and unsupported by evidence. In view of these discrepancies and absence of corroborative proof, the AO's conservative estimation of agricultural income was sustained. [Paras 11]

Appeal dismissed; estimation of agricultural income by the AO upheld.

Final Conclusion: Appeal dismissed in entirety; additions made by the AO (upholding unexplained portion of the advance and estimated agricultural income) were affirmed for lack of cogent supporting evidence and due to the assessee's afterthought adjustments.

Deduction under section 35(2AB) - certification and scope of reports by prescribed authority - principle of natural justice in certification of R&D expenditure by DSIR - disallowance under section 14A read with Rule 8D - requirement of objective satisfaction - computation of book profit under section 115JB - scope of Explanation 1 clause (f) - treatment of interest on income-tax refund for computation of book profits - exemption of capital gains under Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 and its effect on income-tax liability - foreign tax credit - entitlement and appropriate forum for examination - transfer pricing - recharacterisation of share-applicant money as loan and imputing interest - transfer pricing - benchmarking of cross-border services (TNMM, CUP, internal CUP) and comparability analysis - application of contract/Production Sharing Contract terms and operation of section 42 in PSC cases

Deduction under section 35(2AB) - certification and scope of reports by prescribed authority - principle of natural justice in certification of R&D expenditure by DSIR - Validity of reliance on DSIR Form 3CL and consequent disallowance of weighted deduction under section 35(2AB). - HELD THAT: - The Tribunal examined the amendment to section 35(2AB) and Rule 6(7A) and held that the amended subsection (3) of section 35(2AB) (w.e.f. 1.4.2016) requires furnishing of reports in the manner prescribed; that amendment operates as an enabling provision for Rule 6(7A) which empowers DSIR to quantify expenditure. However, because DSIR did not certify part of the expenditure and did not furnish reasons or afford the assessee an opportunity, the Tribunal found a breach of principles of natural justice in the certification process. The Tribunal therefore did not decide the allowance of the claimed expenses on merits but restored the issue to the file of the Assessing Officer with directions to ascertain reasons for non-certification and to permit the assessee to be heard; the AO is to examine the matter afresh in accordance with law after compliance. [Paras 5]

Issue remitted to the file of the AO for fresh consideration after ascertaining reasons for DSIR's non-certification and affording the assessee opportunity to be heard.

Depreciation claim and prior-year thrusting of WDV - Legitimacy of disallowance of depreciation in the subject years by reducing opening WDV on account of depreciation 'thrust' in earlier years when claim was optional. - HELD THAT: - The assessee conceded that the issue was covered by earlier Tribunal orders adverse to it in prior years; the Tribunal observed that where depreciation was optional in earlier years and the issue has been decided in favour of the assessee by coordinate benches in those earlier years, the AO cannot now thrust such depreciation to reduce WDV in the subsequent years. Following the Tribunal's earlier decisions in the assessee's case, the Tribunal upheld the CIT(A)'s deletion of the disallowance. [Paras 6]

Assessee's challenge dismissed; CIT(A)'s order deleting the consequential disallowance is upheld.

Disallowance under section 14A read with Rule 8D - requirement of objective satisfaction - Validity of AO's invocation of Rule 8D to compute disallowance under section 14A where AO did not record objective dissatisfaction with assessee's workings. - HELD THAT: - The Tribunal reiterated that Rule 8D can be invoked only when the AO, having regard to the accounts, is not satisfied with the correctness of the assessee's claim or that no expenditure has been incurred; such satisfaction must be objective and recorded. The AO's observations were general and did not examine or identify deficiencies in the specific workings submitted by the assessee. Following precedent, the Tribunal concluded that the AO had not reached the requisite objective satisfaction and therefore could not apply Rule 8D to enhance the disallowance; it directed acceptance of the disallowance computed by the assessee and deletion of the AO's additions. [Paras 7]

AO directed to accept the assessee's disallowance calculations under section 14A; the AO's enhanced disallowance computed under Rule 8D is deleted.

Computation of book profit under section 115JB - scope of Explanation 1 clause (f) - relation between sec.14A disallowance and clause (f) of Explanation 1 to section 115JB - Whether disallowance computed under section 14A can be adopted verbatim for addition under clause (f) of Explanation 1 to section 115JB, and proper approach to computing addition. - HELD THAT: - The Tribunal followed the Special Bench decision in Vireet Investments P. Ltd. that the disallowance under section 14A (determined under income-tax provisions) cannot be imported verbatim for computation of additions under clause (f) to Explanation 1 of section 115JB. Instead, for book-profit additions, the AO must compute expenses relatable to exempt income based on items in the profit and loss account. The Tribunal held that the CIT(A)'s direction to restrict the clause (f) addition to the assessee's section 14A computation was erroneous and set that direction aside; because the assessee itself had made an addition in its books, the issue is restored to the AO to examine the addition on the basis of profit and loss account items. [Paras 8]

CIT(A)'s direction set aside; issue restored to AO to examine and compute clause (f) addition under section 115JB on the basis of P&L account items.

Treatment of interest on income-tax refund for computation of book profits - finality of accounts and scope of AO under section 115JB - Whether interest on income-tax refund, not credited to profit and loss account but offered to tax under normal provisions, is to be added to book profit under section 115JB. - HELD THAT: - The Tribunal followed the coordinate-bench decision in the assessee's own case (AY 2016-17) and Supreme Court precedent (Apollo Tyres Ltd.) that where accounts have been prepared in accordance with Companies Act and audited/approved, the AO's power under section 115JB is limited to adjustments specified in Explanation 1. Interest that has not been credited to P&L (because quantum was unsettled) but offered and assessed under normal provisions cannot be added to book profits. The Tribunal set aside the CIT(A)'s confirmation and directed deletion of the addition. [Paras 9]

Addition of interest on income-tax refund to book profit under section 115JB deleted; AO to remove the addition.

Exemption of capital gains under Right to Fair Compensation and Transparency in Land Acquisition Act, 2013 and its effect on income-tax liability - Admissibility and treatment of newly raised claim for exemption of capital gains on compulsory acquisition under section 96 of the Land Acquisition Act. - HELD THAT: - The Tribunal admitted the fresh legal ground raised before it as purely legal and not requiring new facts. While noting the assessee's reliance on Bombay High Court authority, the Tribunal did not decide the substantive entitlement on merits because the AO had not examined the claim; instead the Tribunal restored the issue to the AO for verification and fresh adjudication in accordance with law. [Paras 10]

Additional ground admitted; issue remitted to the AO for examination and decision in accordance with law.

Foreign tax credit - entitlement and appropriate forum for examination - Claim for short grant of foreign tax credit and appropriate relief. - HELD THAT: - The Tribunal noted the assessee's reliance on the Karnataka High Court decision in Wipro Ltd. and observed that the AO had not given reasons for the short grant. CIT(A) had rejected the main claim but allowed the amounts as business expenditure under section 37(1). The Tribunal held that the Karnataka High Court decision is applicable and set aside the CIT(A)'s order on the main claim, restoring the matter to the AO to examine the foreign tax credit claim afresh in accordance with that precedent. [Paras 11]

Matter remitted to the AO to examine the assessee's main claim for foreign tax credit afresh in accordance with Wipro Ltd. (Karnataka HC).

Transfer pricing - recharacterisation of share-applicant money as loan and imputing interest - Imputing interest by recharacterising share application money (preference share subscription/refund) as loan for TP adjustment. - HELD THAT: - The Tribunal relied on its own decision in the assessee's earlier year (AY 2016-17) where it deleted TP adjustments imputing interest on share-application monies that were refunded prior to allotment and where the underlying subscription transaction was not found to be sham. Following that precedent, and noting that the present adjustments were a continuation of the same issue, the Tribunal directed deletion of the TPO/AO's TP adjustment in the years under appeal. [Paras 14]

Transfer-pricing adjustment imputing interest on the share-application money/refund deleted; AO/TPO to give effect accordingly.

Application of contract/Production Sharing Contract terms and operation of section 42 in PSC cases - Allowability of expenses for KG-DWN-98/3 (KGD-6) and CBM Sohagpur blocks under section 42 and PSC terms. - HELD THAT: - The Tribunal analysed the PSC clauses. For the CBM block, PSC mandated aggregation and carry-forward of expenditures (no option to amortise over ten years); therefore the AO's restriction to 10% was not justified and the CIT(A) correctly allowed the expenses. For the KGD-6 block, the option to amortise over ten years applied only to expenditures incurred prior to commercial production; the CIT(A) found that the contested expenses were post-commercial-production and thus not subject to the ten-year amortisation clause. The Tribunal upheld CIT(A)'s direction to allow the claimed expenses in both blocks. [Paras 21]

CIT(A)'s direction to allow the full expenses in respect of CBM and KGD-6 blocks is upheld; AO to give effect.

Transfer pricing - benchmarking of cross-border and domestic services (TNMM, internal CUP) and comparability analysis - Multiple transfer-pricing comparability and benchmarking issues (management consultancy, technical services, business support services, guarantee commission, inter-unit power transfers and IT/BSS SDTs) including acceptance or rejection of specific comparables and methods. - HELD THAT: - The Tribunal consistently applied its earlier decisions in the assessee's own case and held: (a) internal CUP and the assessee's LIBOR+200bps benchmark for interest on delayed receipts were acceptable in light of prior years; (b) yield-spread approach and 50:50 split for guarantee commission was acceptable as per prior departmental and Tribunal findings; (c) internal CUP for inter-unit power transfers was acceptable following earlier years; (d) where CIT(A) had accepted or rejected specific comparables after function/turnover and segmental analysis, the Tribunal generally upheld those findings but, recognizing disputes on several comparables, remitted multiple benchmarking matters back to AO/TPO for redetermination of ALP in the light of the Tribunal's comparability discussions (including direction which comparables to include or exclude and which companies to be considered for recomputation of ALP for IT support and BSS SDTs). The Tribunal thus effected a mixed outcome: several TP additions deleted while others were remitted for reworking with prescribed comparable sets. [Paras 28, 30, 31, 33, 36]

Some TP adjustments upheld in favour of assessee (LIBOR+200, yield-spread, internal CUP) and several TP benchmarks remitted to AO/TPO for redetermination in accordance with the Tribunal's comparability directions.

Deduction under section 10AA - computation of 'profits and gains of undertaking' - Approach to computation of profits/gains for deduction under section 10AA and effect of Explanation to section 10AA (prospective application). - HELD THAT: - The Tribunal agreed with the CIT(A) and coordinate-bench precedent that the 'profits and gains of undertaking' for section 10AA should be computed in line with the commercial conception adopted in Vijay Industries and earlier Tribunal orders in the assessee's own case; the Explanation inserted w.e.f. 1.4.2018 was prospective and does not alter the manner of computation for the years under appeal. The Tribunal therefore upheld the CIT(A)'s direction to compute profits of the undertaking as interpreted by earlier authority. [Paras 19]

CIT(A)'s order allowing the assessee's approach to compute profits/gains for section 10AA is upheld; AO to give effect.

Deduction under section 80G for donations falling within CSR - interplay with Explanation to section 37 - Whether payments forming part of CSR can qualify for deduction under section 80G and procedure to establish eligibility. - HELD THAT: - The Tribunal followed coordinate-bench decisions and observed that while Explanation 2 to section 37 disallows CSR expenditure for business income computation, expenditures that qualify under sections 30-36 or as donations under section 80G may still be claimed at the total-taxable-income stage. The CIT(A)'s acceptance of section 80G claims was consistent with Tribunal precedents; however, because quantification and conditions had not been verified, the Tribunal remitted the matter to the AO for verification of eligibility and quantum, directing the assessee to furnish supporting details. [Paras 20]

CIT(A)'s order allowing section 80G claims in principle is upheld; matter remitted to AO for verification of conditions and quantum.

Final Conclusion: Appeals by both parties were partly allowed. Several additions and transfer-pricing adjustments were deleted following earlier Tribunal precedents (notably on interest benchmarking, guarantee commission, internal CUP for power transfers, and recharacterisation of share-application money). Key issues requiring further factual or technical determination were remitted to the Assessing Officer/ TPO for fresh consideration (notably DSIR certification/section 35(2AB) quantification, computation of clause (f) addition under section 115JB on P&L items, verification of capital-gains exemption under the Land Acquisition Act, foreign tax credit re-examination, and certain transfer-pricing benchmarking issues) with directions to afford the assessee opportunity of being heard and to act in accordance with law and the Tribunal's comparability guidance.

Document Identification Number (DIN) requirement for departmental communications - Invalidity of communication issued without DIN / communication deemed to have never been issued - Binding effect of CBDT Circular No.19/2019 issued under Section 119 of the Income-tax Act

Document Identification Number (DIN) requirement for departmental communications - Invalidity of communication issued without DIN / communication deemed to have never been issued - Binding effect of CBDT Circular No.19/2019 issued under Section 119 of the Income-tax Act - Validity of the DRP order and consequent assessment passed in the absence of a computer generated DIN as mandated by CBDT Circular No.19/2019 - HELD THAT: - The Tribunal examined CBDT Circular No.19/2019 which mandates that no communication relating to assessment, appeals or orders shall be issued on or after 1 October 2019 unless a computer generated DIN is allotted and quoted; specified narrow exceptions require recording reasons and prior written approval and a prescribed format. Paragraph 4 of the Circular provides that any communication not in conformity with paras 2 and 3 shall be treated as invalid and deemed never to have been issued. Circulars issued under Section 119 are binding on revenue authorities. The DRP order in the present case contained no DIN nor recorded any of the exceptional circumstances or requisite approvals; therefore it did not comply with the Circular. Applying the Circular and following the reasoning of the jurisdictional High Court, the Tribunal held that the DRP order is invalid and, being the basis of the final assessment, the assessment passed pursuant thereto must be quashed. The Tribunal accordingly allowed the additional ground going to the validity of proceedings and did not adjudicate the remaining grounds as academic. [Paras 6, 7, 8]

The DRP order lacking a DIN and without compliance with the exceptions in CBDT Circular No.19/2019 is invalid and deemed never to have been passed; the assessment order passed pursuant to that DRP order is quashed.

Final Conclusion: The appeal is allowed: the DRP order without a DIN is held invalid under CBDT Circular No.19/2019 and the assessment order passed pursuant thereto is quashed for AY 2017-18.

Reassessment under Section 147 - mere change of opinion - first proviso to Section 147 - failure to disclose fully and truly all material facts - principle of natural justice - inadequacy of opportunity to be heard - application of Section 68 to unexplained share capital

Reassessment under Section 147 - mere change of opinion - first proviso to Section 147 - failure to disclose fully and truly all material facts - Validity of reassessment proceedings initiated after scrutiny assessment when same matters were examined earlier and whether conditions of the first proviso to Section 147 were satisfied - HELD THAT: - Tribunal accepted the CIT(A)'s finding that during the original scrutiny assessment under Section 143(3) the Assessing Officer had issued notices under Section 133(6) to the share subscribers, received their replies and financial documents, and had accepted the share capital and share premium as genuine; hence the assessee had disclosed fully and truly all primary facts necessary for assessment. The reasons recorded for reopening merely revisited the same issues already examined in the original assessment, amounting to a change of opinion by the Assessing Officer. In the absence of fresh tangible material showing failure of disclosure, the pre-conditions of the first proviso to Section 147 (income escaped assessment due to failure to disclose fully and truly all material facts) were not satisfied, especially where more than four years had elapsed; reliance was placed on controlling precedents emphasising that reassessment cannot be based on mere change of opinion. Consequentially the reasons to believe, notice under Section 148 and the reassessment order were held to be without jurisdiction and nullities. [Paras 13, 14, 15, 17]

Reassessment proceedings quashed as initiated on mere change of opinion and without satisfaction of the first proviso to Section 147; reassessment declared without jurisdiction.

Principle of natural justice - inadequacy of opportunity to be heard - reassessment under Section 147 - procedural fairness - Whether the reassessment proceedings complied with principles of natural justice by affording a meaningful opportunity to the assessee to present evidence - HELD THAT: - The Tribunal endorsed the CIT(A)'s finding that the Assessing Officer issued show-cause notice and, simultaneously at the fag end of proceedings, notices under Section 133(6) and summonses under Section 131 with very short compliance dates amid disruptive local conditions, thereby denying the assessee and third parties a reasonable opportunity to collect and place material. The concurrent timing of show-cause and inquiry notices indicated that the Assessing Officer had formed a pre-determined view. On this procedural basis, the reassessment failed the test of audi alteram partem and was held void ab initio. [Paras 16, 17]

Reassessment set aside for gross violation of natural justice; assessment order quashed as nullity on procedural fairness grounds.

Final Conclusion: Tribunal dismissed Revenue's appeals and upheld the CIT(A)'s quashing of the reassessment orders in respect of both assessees for A.Y. 2012-13, holding the reopening to be invalid (being based on mere change of opinion and not satisfying the first proviso to Section 147) and vitiated by denial of a meaningful opportunity to be heard.

Summary order. Civil appeal dismissed; delay condoned; all pending applications disposed of.

Summary order. Delay condoned; appeals dismissed and pending applications disposed of.

Compounded rubber, unvulcanised - Classification under Heading 4005 of the Customs Tariff - General Interpretative Rules for classification - HSN Explanatory Notes to heading 4005 - Chemical composition and vulcanisation as determinative test - Eligibility for duty exemption under the ASEAN-India FTA notification

Compounded rubber, unvulcanised - Classification under Heading 4005 of the Customs Tariff - Chemical composition and vulcanisation as determinative test - Classification of compounded rubber formulation 1 (containing less than 5 parts of carbon black). - HELD THAT: - The tariff heading 4005 is for "Compounded rubber, unvulcanised, in primary forms or in plates, sheets or strip" and subheading 4005 1000 covers compounded rubber compounded with carbon black or silica. The applicant declared formulation 1 as unvulcanised and the formulation contains carbon black (2.6% with tolerance). Presence of carbon black in unvulcanised compounded rubber is sufficient to place the product under CTH 4005 1000. However, the presence of zinc oxide and stearic acid requires objective verification to confirm that these are not acting as vulcanising agents; the unvulcanised status must be established by chemical testing at importation. The ruling is therefore confined to the classification based on the chemical composition as represented by the applicant and subject to confirmation by sample testing for vulcanisation. [Paras 5]

Formulation 1 merits classification under CTH 4005 1000 (compounded with carbon black or silica), subject to confirmation that the product is unvulcanised by chemical testing.

Compounded rubber, unvulcanised - Classification under Heading 4005 of the Customs Tariff - HSN Explanatory Notes to heading 4005 - Chemical composition and vulcanisation as determinative test - Classification of compounded rubber formulation 2 (without carbon black or silica; contains less than 5 parts SBR). - HELD THAT: - Tariff entry 4005 1000 specifically requires compounded rubber compounded with carbon black or silica. Formulation 2, as declared, lacks both carbon black and silica and therefore does not fall under subheading 4005 1000. The HSN Explanatory Notes indicate that compounded rubbers not containing carbon black or silica fall within the 'other' category of the heading. Accordingly, formulation 2 is classifiable as 'other' under CTH 4005 99 90. As with formulation 1, the presence of zinc oxide and stearic acid must be chemically tested at importation to verify the unvulcanised status; the advance ruling applies to the composition and characteristics as declared by the applicant. [Paras 5]

Formulation 2 merits classification under CTH 4005 99 90 (other) and not under CTH 4005 1000, subject to confirmation that it is unvulcanised by chemical testing.

Compounded rubber, unvulcanised - Classification under Heading 4005 of the Customs Tariff - HSN Explanatory Notes to heading 4005 - Chemical composition and vulcanisation as determinative test - Classification of compounded rubber formulation 3 (without carbon black or silica; contains less than 5 parts clay). - HELD THAT: - Formulation 3 does not contain carbon black or silica and therefore cannot be classified under CTH 4005 1000. The HSN Explanatory Notes show that such compounded rubbers fall within the residual 'other' subheading of heading 4005. Consequently, formulation 3 is classifiable under CTH 4005 99 90. Confirmation of the unvulcanised state remains a matter for chemical testing at importation and the ruling is limited to the composition and characteristics as declared. [Paras 5]

Formulation 3 merits classification under CTH 4005 99 90 (other) and not under CTH 4005 1000, subject to confirmation that it is unvulcanised by chemical testing.

Eligibility for duty exemption under the ASEAN-India FTA notification - Customs Compliance Verification and origin criteria - Chemical composition and vulcanisation as determinative test - Eligibility for duty exemption under the ASEAN-India FTA notifications for each formulation. - HELD THAT: - Duty exemption under the relevant preferential notification (Notification 46/2011 as amended, read with Notification 189/2009 (N.T.)) is contingent on fulfilling the rules of origin and other conditions prescribed by the FTA and the specific notification entries. For formulation 1, being classifiable under CTH 4005 1000, the applicant is eligible for the duty exemption benefit under serial number 503 of Notification 46/2011 subject to fulfillment of the notification's conditions and origin documentation. Formulations 2 and 3, classifiable under CTH 4005 99 90, are not eligible for serial number 503 but may be eligible for partial duty exemption under serial number 504, subject to compliance with the notification conditions and origin criteria. All eligibility findings are subject to Customs Compliance Verification at importation, including chemical testing to verify unvulcanised status and verification of origin documents. [Paras 5]

Formulation 1 is eligible for duty exemption under serial number 503 of Notification 46/2011 subject to conditions; formulations 2 and 3 are not eligible under serial number 503 but may be eligible under serial number 504, all subject to fulfilment of notification conditions and Customs Compliance Verification.

Final Conclusion: Advance rulings granted: formulation 1 classifiable under CTH 4005 1000 and eligible for the serial no. 503 preferential exemption subject to meeting notification conditions and verification of unvulcanised status; formulations 2 and 3 classifiable under CTH 4005 99 90, not eligible for serial no. 503 but potentially eligible for serial no. 504, all subject to chemical testing and compliance verification at importation.

Arbitral award - operational creditor - resolution plan - category of operational creditors - remand for fresh consideration of categorisation

Arbitral award - The Supreme Court declined to interfere with the arbitral award dated 19.03.2015 and the National Company Law Appellate Tribunal's finding thereon. - HELD THAT: - The Court recorded that the appellants had not challenged the NCLAT's finding concerning the arbitral award dated 19.03.2015. The award is already the subject of proceedings in the District Court, Ankleshwar, Bharuch, Gujarat, and the parties have stated they will abide by the outcome of those proceedings. In view of these circumstances, the Court was not inclined to interfere with the arbitral award or the NCLAT's decision in respect of that award.

The arbitral award dated 19.03.2015 and the NCLAT finding are not interfered with.

Operational creditor - resolution plan - category of operational creditors - remand for fresh consideration of categorisation - The question of which category of operational creditor the respondent falls into under the resolution plan was not finally decided and is to be considered afresh by the adjudicating authority. - HELD THAT: - The impugned judgment contained observations about payment parity among categories but did not conclusively determine the specific category in which the respondent, Kanoria Chemicals and Industries Ltd., would be placed. Competing contentions were advanced before this Court that the respondent should be placed in category "H" while the respondent contended for "G" or, alternatively, "F". The Supreme Court clarified that those observations did not specify the respondent's category and directed that this aspect be raised and considered by the National Company Law Tribunal, leaving all pleas and contentions open for that forum to decide.

Categorisation of the respondent as an operational creditor is remanded to the National Company Law Tribunal for fresh consideration; the matter is not finally adjudicated by this Court.

Resolution plan - Contentions that the resolution plan has been substantially implemented were left open for determination by the tribunal. - HELD THAT: - The Supreme Court expressly left open the appellants' contention that the resolution plan has been substantially implemented and did not decide that question. That factual and legal contention is to be considered by the National Company Law Tribunal along with other related pleas.

The question of substantial implementation of the resolution plan is left open for the tribunal to decide.

Contempt petition - The respondent informed the Court that it would not press the contempt petition in view of the order passed, and the Court recorded the same. - HELD THAT: - On the respondents' statement before the Court that they would not pursue the contempt petition in light of the directions given, the Supreme Court recorded that the contempt petition would not be pressed. No separate adjudication on contempt was undertaken.

Contempt petition will not be pressed by the respondent and is not pursued further in these proceedings.

Final Conclusion: The appeal is disposed of: the Court declined to interfere with the arbitral award dated 19.03.2015 and the NCLAT finding thereon; the categorisation of the respondent as an operational creditor under the resolution plan and the question of substantial implementation are remitted to the National Company Law Tribunal for fresh consideration; the respondent will not press the contempt petition; pending applications stand disposed of.

Remand to appellate tribunal - incomplete adjudicatory process - scope of exemption of premia collected on insurance of export of goods from India - treatment of inland transit component of marine insurance premium - equal treatment of taxpayers and scrutiny of certificates

Remand to appellate tribunal - incomplete adjudicatory process - Whether the CESTAT's order remanding the matter to the original adjudicating authority was appropriate or required setting aside and restoration to the tribunal for determination of the legal questions raised by the appellant. - HELD THAT: - The High Court found that the CESTAT had not addressed the specific legal questions raised by the appellant and that the adjudicatory process, as reflected in the impugned order, was incomplete. The Court observed that the tribunal failed to examine and decide the core legal issues which the appellant had specifically placed before it and, instead, remanded the matter to the original authority without resolving those legal points. In those circumstances the High Court concluded that a remand back to the adjudicating authority was inappropriate and that the proceedings should be restored to the CESTAT so that it may adjudicate the legal questions urged by the appellant; the impugned CESTAT order dated 9 September 2022 was set aside and the appeal restored to the tribunal for consideration of the issues identified by the High Court. All contentions of the parties were kept expressly open for the tribunal's decision. [Paras 6]

Impugned CESTAT order set aside; Service Tax Appeal restored to CESTAT for adjudication of the legal issues identified by the High Court; contentions kept open.

Scope of exemption of premia collected on insurance of export of goods from India - treatment of inland transit component of marine insurance premium - Whether the Court would decide on the substantive question of law concerning whether the portion of premium notionally attributed to inland movement to port of export falls within the exemption for premia on insurance of export of goods from India. - HELD THAT: - The High Court expressly declined to decide the substantive merits of the legal question regarding the inclusion of the inland transit component within the exemption for premia on insurance of export of goods. Instead, the Court remanded that legal question to the CESTAT for fresh adjudication, making clear that its remand is limited to the questions of law raised by the appellant and that other issues, if they arise thereafter, remain open for consideration by the tribunal.

Substantive legal question as to the scope of the exemption (including inland transit component) not decided; remanded to CESTAT for adjudication on merits; other contentions reserved.

Equal treatment of taxpayers and scrutiny of certificates - Whether the practice of giving blanket acceptance to certificates (for example, Chartered Accountant certificates) or according special treatment to public sector entities was endorsed by the Court. - HELD THAT: - The High Court endorsed the tribunal's observation that blanket acceptance of certificates without independent scrutiny does not lend credence to a finding and that according special treatment to public sector entities is inconsistent with the principle of equal treatment under tax law. That observation formed part of the Court's assessment that the adjudicatory process was incomplete and required fuller consideration by the tribunal. [Paras 6, 8]

Court rejected any approach of uncritical acceptance of certificates or preferential treatment to public sector entities and required the tribunal to consider such matters in the course of fresh adjudication.

Final Conclusion: The CESTAT order dated 9 September 2022 is set aside and Service Tax Appeal No. 85066 of 2016 (with cross-objection) is restored to the CESTAT for fresh adjudication of the specific legal questions identified by the appellant (including the scope of the exemption for premia on export insurance and the inland transit component); the remand is limited to those questions of law, other contentions are kept open, and no costs were awarded.

Claim for refund of duty - relevant date under Explanation B to Section 11B - application of Section 11B to service tax - person other than the manufacturer / service provider - relevant date as date of purchase of goods/services - limitation under Section 11B - waiver of invoice / non rendering of service

Application of Section 11B to service tax - relevant date under Explanation B to Section 11B - person other than the manufacturer / service provider - relevant date as date of purchase of goods/services - waiver of invoice / non rendering of service - limitation under Section 11B - Whether the respondent's refund claim of service tax was time barred under Section 11B as applied to service tax, and whether the relevant date for reckoning limitation is the date of payment of service tax or the date of purchase of the service in a case where the claimant is not the service provider and the service was not rendered. - HELD THAT: - Section 83 makes Section 11B of the Central Excise Act applicable to service tax 'so far as may be', requiring corresponding reading of excise terms as service tax terms (e.g., 'manufacturer' 'service provider'; 'goods' 'services'; 'payment of duty' 'payment of service tax'). Explanation B to Section 11B provides that, for a person other than the manufacturer, the 'relevant date' is the date of purchase of the goods (clause (e)), and clause (f) applies in 'any other case' as the date of payment of duty. When these terms are read in the service tax context, clause (e) equates to the date of purchase (i.e., completion of provision) of the service by a person other than the service provider. Services, being intangible, are 'purchased' when rendered; if no service is rendered and the supplier waives the charges, the sale/purchase does not occur and the relevant date for limitation has not commenced. Applying this principle to the facts, OPHJ did not render the services and waived its invoices; therefore the respondent's refund claim filed on 8 September 2014 was not barred by the one year limitation of Section 11B read with Explanation B clause (e). The Tribunal further held that the ratio in Oswal Chemicals & Fertilisers Ltd. (construing Section 11B in excise) applies equally when Section 11B is applied to service tax, and the Revenue's attempt to distinguish that precedent on the ground that it concerned excise is unsustainable. [Paras 9, 10, 12, 13, 14]

The refund claim is not time barred; the Commissioner (Appeals) was correct in holding that the relevant date is the date of purchase of the service (clause (e)) and that the limitation period had not commenced because the service was not rendered and the invoices were waived.

Final Conclusion: The impugned order allowing the refund is upheld; Revenue's appeal is dismissed and the respondent is entitled to consequential relief, if any.

Deduction for goods sold while providing the service - abatement under Notification No. 1/2006-ST - proof of bifurcation of goods and services - role of chartered accountant certificate as evidence of value split - no escapement of tax where service tax paid in excess

Proof of bifurcation of goods and services - deduction for goods sold while providing the service - role of chartered accountant certificate as evidence of value split - no escapement of tax where service tax paid in excess - Whether the demand for service tax on the value of goods sold to clients is sustainable where invoices show separate values, VAT was paid on goods, and a Chartered Accountant certificate certifies actual bifurcation with service component below the amount on which service tax was discharged. - HELD THAT: - The Tribunal found that the appellant had raised separate invoices for sale of material and for service charges and had discharged VAT on the value attributed to goods. Although the appellant applied a theoretical split of 67% for goods and 33% for service, the Chartered Accountant's certificate furnished by the appellant showed the actual service component to be less than 30%. On this factual basis the Tribunal held that the appellant had paid service tax on a service portion higher than the actual service value certified and therefore no taxable value escaped assessment. In consequence the demand confirmed by the authorities could not be sustained because there was no short payment of service tax. [Paras 4, 5]

Impugned demand set aside and appeal allowed as there is no short payment of service tax; appellant has paid service tax in excess of the actual service component.

Final Conclusion: The Tribunal set aside the demand and allowed the appeal, concluding that invoices and the Chartered Accountant certificate establish that the appellant discharged service tax on a service portion exceeding the actual service value and therefore no tax escaped assessment.

Relevancy of statements under Section 9D - Admissibility of statements recorded during investigation - CENVAT credit admissibility on dealer invoices - Requirement of adherence to Section 9D procedure in adjudication proceedings - Scope of revenue's investigation to prove non-supply in the supplier chain

Relevancy of statements under Section 9D - Requirement of adherence to Section 9D procedure in adjudication proceedings - Admissibility of statements recorded during investigation - Statements recorded before Central Excise officers during investigation are irrelevant and inadmissible in adjudication proceedings where the procedure mandated by Section 9D(1) was not followed. - HELD THAT: - The Tribunal applied the settled principle that Section 9D prescribes the circumstances in which statements recorded before gazetted Central Excise officers become relevant for proving the truth of their contents in adjudication proceedings. Where the conditions of Section 9D(1) are absent and the procedure under that provision is not scrupulously followed, such statements lose their evidentiary value and cannot be relied upon. The show cause notice in the present case relied on five such statements recorded during investigation but the procedural safeguards of Section 9D were not complied with; accordingly those statements are rendered irrelevant and inadmissible for proving the truth of their contents in the adjudication. [Paras 12, 13, 14, 18]

All statements recorded during investigation which were not admitted in terms of Section 9D are irrelevant and inadmissible and cannot sustain the show cause notice.

CENVAT credit admissibility on dealer invoices - Scope of revenue's investigation to prove non-supply in the supplier chain - The remaining documentary letters relied upon by Revenue are insufficient to establish that the respondent did not receive goods and thus insufficient to disallow CENVAT credit availed on dealer invoices. - HELD THAT: - With the investigative statements excluded, only three letters (intelligence/alert letters from DGCEI, Dhanbad and Burdwan) remained on record. The Tribunal held that those letters by themselves do not conclusively establish non-supply to the respondent. A finding of fraudulent or non-existent manufacture and non-supply requires a thorough investigation of the supplier chain (manufacturer first stage dealer second stage dealer user) and examination of records and witnesses; the buyer/user is not required to undertake such upstream investigations as a precondition to availment of CENVAT credit. Given the insufficiency of the remaining material to prove non-supply and the absence of admissible statements under Section 9D, the adjudicating authority could not sustain the disallowance of credit. [Paras 15, 16, 17, 19]

The letters relied upon by Revenue are insufficient to prove non-supply; the disallowance of CENVAT credit cannot be sustained and the appellate order setting aside the adjudicating authority's order is upheld.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) order. Statements recorded during investigation that were not admitted in terms of Section 9D are inadmissible and, with those statements excluded, the remaining documents do not suffice to prove non-supply; Revenue's appeal is dismissed.

Interest on delayed payment of excise duty on supplementary invoices - Extended period of limitation for recovery - Fraud or suppression as condition for invoking extended limitation - Liability of interest where duty was paid on supplementary invoices - Remand for re-quantification and refund

Interest on delayed payment of excise duty on supplementary invoices - Extended period of limitation for recovery - Fraud or suppression as condition for invoking extended limitation - Liability of interest where duty was paid on supplementary invoices - Demand of interest by invoking the extended period of limitation on differential duty paid by issuing supplementary invoices - HELD THAT: - The Tribunal found that the appellant had paid the differential duty as and when supplementary invoices were issued and had deposited the interest under protest. During the relevant period there were divergent judicial views on whether interest was payable on duty paid pursuant to supplementary invoices, a position ultimately settled by the Larger Bench of the Apex Court on 08.05.2019. In the absence of any finding of fraud, collusion or willful suppression to evade duty, invoking the extended period of limitation to demand interest is not sustainable. The Tribunal relied on its own precedents and the view expressed by the Punjab and Haryana High Court that the limitation applicable to recovery of the principal applies to the claim for interest, and therefore the extended period cannot be invoked where the department does not demonstrate fraud or suppression with intent to evade payment. [Paras 11, 12]

Invoking the extended period of limitation to demand interest was set aside; the demand is not justified in the absence of fraud or suppression.

Remand for re-quantification and refund - Liability of interest where duty was paid on supplementary invoices - Quantification of interest for the normal period and return of any amount deposited in excess - HELD THAT: - Having held that the extended period could not be invoked, the Tribunal directed that the matter be remanded to the original authority solely for re-quantification of the interest liability confined to the normal period of limitation. Any amount deposited by the appellant over and above the liability computed for the normal one-year period should be refunded to the appellant, since the appellant has already paid the disputed interest under protest. [Paras 13]

Matter remanded to the original authority to re-quantify the demand for the normal period and to refund any amount deposited beyond that re-quantified liability.

Final Conclusion: The appeal succeeds to the extent that the invocation of the extended period of limitation to demand interest on duty paid by supplementary invoices is set aside; the matter is remanded for computation of interest for the normal period and refund of any excess amount deposited by the appellant.

Limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 - extended period of limitation for suppression or misdeclaration - job worker treated as manufacturer for goods processed on job work - eligibility for benefit of Notification No. 67/95-CE in relation to intermediate products - export under bond/Letter of Undertaking (LUT) not a clearance for home consumption - invalidity of penalty on director where exemption is available

Limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 - extended period of limitation for suppression or misdeclaration - The demand was barred by limitation because there was no suppression or misdeclaration justifying invocation of the proviso to Section 11A(1). - HELD THAT: - The Tribunal found that the department had the relevant information from as early as 2003-2004, including a show cause notice dated 05.08.2004 issued by Customs (Preventive) and copies/communications forwarded to Central Excise. The appellant also furnished particulars and job worker intimations on 13.08.2004 and 11.02.2005. In the absence of a positive act of suppression or misdeclaration with intent to evade duty, the extended period under the proviso could not be invoked. Accordingly the show cause dated 10.01.2007, issued beyond the normal limitation period, could not be sustained. [Paras 16, 17, 18]

The demand is time barred and the extended period could not be invoked.

Job worker treated as manufacturer for goods processed on job work - eligibility for benefit of Notification No. 67/95-CE in relation to intermediate products - export under bond/Letter of Undertaking (LUT) not a clearance for home consumption - On merits, the appellants were entitled to the benefit of Notification No. 67/95-CE because the dyed yarn was produced by job workers and the finished goods were exported without domestic clearance. - HELD THAT: - The Tribunal recorded that the appellants had no dyeing facility and had their grey yarn processed by job workers, whose statements acknowledged manufacturing/dyeing on job work and receipt of yarn on challans. Where processing is carried out by job workers, the job worker is the manufacturer of the dyed yarn and any duty, if applicable, would lie on the job worker. Further, the finished products were exported under bond/LUT and there were no home consumption clearances; consequently the proviso to Notification No. 67/95-CE, which operates where exempt or nil rated excisable goods are cleared for home consumption without duty, was not attracted. Applying those facts, the appellants qualified for the exemption under Notification No. 67/95-CE. [Paras 19, 20, 21, 22, 23]

Appellants are entitled to exemption under Notification No. 67/95-CE on the facts found; the excisable intermediate (dyed yarn) is not subject to duty in the appellant's hands.

Invalidity of penalty on director where exemption is available - The penalty imposed on the director was unsustainable where the appellants were held entitled to the exemption. - HELD THAT: - Having found that the appellants were entitled to benefit of Notification No. 67/95-CE and that the demand itself could not be sustained, the Tribunal concluded that the consequential penalty on the director could not stand. Where no duty is payable in view of the exemption and limitation findings, the basis for imposing the director's penalty fails. [Paras 23]

Penalty on the director is set aside.

Final Conclusion: The impugned order confirming duty and imposing penalties is set aside: the demand is time barred and, on merits, the appellants are entitled to exemption under Notification No. 67/95-CE; consequential penalties, including that on the director, are quashed.

Rule 9(1)(b) of CENVAT Credit Rules, 2004 - stock transfer - sale of goods - revenue neutrality - extended period - suppression, fraud or wilful mis-statement - penalty under Section 11AC(1)(c) of the Central Excise Act - penalty under Rule 26(2) of the Central Excise Rules, 2002

Rule 9(1)(b) of CENVAT Credit Rules, 2004 - stock transfer - sale of goods - revenue neutrality - extended period - suppression, fraud or wilful mis-statement - Whether CENVAT credit on supplementary invoices issued by the supplier is denyable under Rule 9(1)(b) where goods were transferred to the recipient as returnable stock for job work (not a sale). - HELD THAT: - The Tribunal held that the prohibition in Rule 9(1)(b) applies where the supplier's clearance is in the nature of a sale and the additional duty became recoverable from the supplier on account of non levy or short levy by reason of fraud, collusion or wilful mis statement or suppression of facts with intent to evade duty. The present transactions involved returnable transfers for job work; ownership remained with the supplier and no consideration was paid, therefore the transfers were not 'sale' as defined. Prior decisions of this and other Benches were followed to the effect that where there is merely a stock transfer (including inter unit transfers or transfers to a job worker) and the duty subsequently paid by the supplier is available as credit to the recipient, the exercise is revenue neutral and Rule 9(1)(b) does not bar the recipient from availing credit even if the supplier paid differential duty for an extended period. Applying this settled principle to the facts, the appellants were entitled to take CENVAT credit on the supplementary invoices issued by Hindustan Unilever Ltd.

Credit on supplementary invoices admissible to the job worker/recipient because the transfers were not sales; Rule 9(1)(b) does not apply.

Penalty under Section 11AC(1)(c) of the Central Excise Act - penalty under Rule 26(2) of the Central Excise Rules, 2002 - aid or abet - Whether penalties imposed on the appellant under Section 11AC(1)(c) and on Hindustan Unilever Ltd. under Rule 26(2) are sustainable in view of the availability of credit and the nature of the transactions. - HELD THAT: - Having held that the recipient was entitled to CENVAT credit because the transfers were not sales and the differential duty paid by the supplier made the overall exercise revenue neutral, the Tribunal found that the imposition of penalties could not be sustained. The record showed that Hindustan Unilever Ltd. issued legitimate supplementary invoices to discharge differential duty and there was no evidence that Hindustan Unilever aided or abetted any wrongful availment of credit by the recipient. Consequently, neither the penalty on the appellant under Section 11AC(1)(c) nor the penalty on Hindustan Unilever Ltd. under Rule 26(2) could be upheld.

Penalties on both the recipient and Hindustan Unilever Ltd. set aside as unsustainable.

Final Conclusion: The impugned order is set aside; the appeals are allowed - CENVAT credit on the supplementary invoices is admissible for the period in question and the confirmed demands and penalties against the appellant and Hindustan Unilever Ltd. are vacated.

Duty on DTA clearance by 100% EOU equal to aggregate customs duties (charging under Section 3(1)(b)(ii)) - Applicability of Central Excise exemption notifications to calculation of additional/customs-derived duty for EOU DTA clearances - Interpretation of the proviso to Section 5A(1) and the meaning of "specifically provided" in relation to exemption notifications - Effective rate of excise under area-based or general exemption notifications to be used for computing duty payable by EOUs

Duty on DTA clearance by 100% EOU equal to aggregate customs duties (charging under Section 3(1)(b)(ii)) - Applicability of Central Excise exemption notifications to calculation of additional/customs-derived duty for EOU DTA clearances - Effective rate of excise under area-based or general exemption notifications to be used for computing duty payable by EOUs - Interpretation of the proviso to Section 5A(1) and the meaning of "specifically provided" in relation to exemption notifications - Appellant, being a 100% EOU, is entitled to claim the benefit of Notification No.2/2008-CE dated 01.03.2008 and Notification No.4/2006-CE dated 01.03.2006 for DTA clearances of LABSA and Spent Sulphuric Acid respectively. - HELD THAT: - The Tribunal held that the charging provision for DTA clearances by a 100% EOU is the special levy that equals the aggregate of customs duties which would be leviable if like goods were imported, and the value for such levy is to be determined under the Customs statutory scheme. In computing that aggregate duty the effective rate of excise applicable to domestic manufacturers (including any rate made effective by an exemption notification) must be considered. The proviso to Section 5A(1) and the expression "specifically provided" do not prohibit using a Central Excise exemption notification to determine the effective excise rate for calculating the customs-equivalent duty payable by an EOU; where an exemption notification results in a nil or reduced effective excise rate for like goods, that rate governs the computation of the aggregate customs duty for EOU clearances. The Tribunal relied on the reasoning in Satya Metals (and the authorities discussed therein) to conclude that EOUs may avail effective rates under relevant notifications when computing their liability, and accordingly the appellant was entitled to duty treatment under Notification No.2/2008-CE and Notification No.4/2006-CE for the clearances in question. Applying that principle to the facts, the impugned orders denying the notifications' benefit were unsustainable. [Paras 9, 13]

Impugned orders set aside and appellant held entitled to the benefits of Notification No.2/2008-CE and Notification No.4/2006-CE for the DTA clearances.

Final Conclusion: Both appeals allowed; impugned orders set aside and the appellant held entitled to the relief claimed under the specified exemption notifications, with consequential relief, if any.

Vera Samadhan Yojna, 2019 (Amnesty Scheme-2019) - cut off dates and scope - Submission and verification of 'C' Forms - deadline of 10.01.2020 and verification on TINXSYS - Finality of orders under Amnesty Scheme - requirement of order by 15.02.2020 - Rectification for error apparent on the face of the record

Vera Samadhan Yojna, 2019 (Amnesty Scheme-2019) - cut off dates and scope - Submission and verification of 'C' Forms - deadline of 10.01.2020 and verification on TINXSYS - Whether the appellate authority erred in not admitting or considering the certificate dated 17.02.2020 and in partly allowing the petitioners' Amnesty Scheme applications where 'C' forms were produced after the scheme cut off dates - HELD THAT: - The Scheme expressly required dealers to furnish details of 'C' Forms by 10.01.2020 and authorised verification of such forms on the TINXSYS website or on the basis of reports from the State issuing the form; the appellate authority was to pass orders latest by 15.02.2020. The authority had verified the 'C' Forms available on record prior to passing the order of 15.02.2020 (including state verifications and other communications) and allowed some 'C' Forms while disallowing others after such verification. The certificate of the Tamil Nadu authority dated 17.02.2020 became available only after the Scheme cut off for passing orders and after the deadline for submitting 'C' Forms. Accepting that certificate would have required extending the Scheme beyond the expressly prescribed dates. The court held that permitting post cut off material would be contrary to the Scheme's temporal limits and that the authority did not err in declining to act on the 17.02.2020 certificate when passing its order on 15.02.2020.

The order of 15.02.2020 was lawful; material furnished after the Scheme deadlines (including the certificate dated 17.02.2020) could not be taken into account and there was no illegality in partially allowing the application.

Finality of orders under Amnesty Scheme - requirement of order by 15.02.2020 - Vera Samadhan Yojna, 2019 (Amnesty Scheme-2019) - appeals and finality - Whether the appellate authority complied with the Scheme's requirement to complete verification and pass the order by 15.02.2020 and whether the procedure adopted fell within the Scheme's scope - HELD THAT: - Clause 5.1(4) and 5.1(5) of the Scheme contemplate verification (principally via TINXSYS or state reports) and disposal by 15.02.2020. The authority undertook verification by accessing TINXSYS and by other measures (including enquiries to other States) and passed the order on 15.02.2020. Given the Scheme's limited temporal operation and specified verification modes, the court found the authority acted within the Scheme's mandate and timeline; therefore, the order passed pursuant to the Scheme was not vitiated for failure of procedure or premature finality.

The authority complied with the Scheme's verification and timing requirements; the order dated 15.02.2020 is not illegal for being passed on the prescribed date after available verification.

Rectification for error apparent on the face of the record - Whether the rejection of the rectification application dated 29.05.2020 was erroneous insofar as it purported to correct an alleged error apparent on the face of the record - HELD THAT: - The rectification application sought to place reliance on the certificate dated 17.02.2020 and contended that the certificate demonstrated an error in the order passed under the Scheme. The court examined the temporal and procedural matrix of the Scheme and the record of verification available to the authority when it passed the order on 15.02.2020. Since the certificate relied upon was not part of the material available before the authority within the Scheme timelines, there was no inherent, self evident error on the face of the record warranting rectification. The appellate authority thus legitimately concluded that no error apparent on record required rectification.

The rectification application was rightly rejected; no error apparent on the face of the record was shown to justify rectification.

Final Conclusion: The writ petitions are dismissed. The orders dated 15.02.2020 and 29.05.2020 were validly passed within the temporal and procedural limits of the Vera Samadhan Yojna, 2019; post cut off material could not be admitted and the rectification plea did not disclose an error apparent on the record.

Default bail under Section 167(2) CrPC as a fundamental right under Article 21 - filing of chargesheet/supplementary chargesheet to defeat statutory bail - completion of investigation prior to filing chargesheet - limits on remand during pendency of investigation - abuse of process by filing piecemeal chargesheets

Completion of investigation prior to filing chargesheet - filing of chargesheet/supplementary chargesheet to defeat statutory bail - A chargesheet or prosecution complaint cannot be filed piecemeal while the investigation is still incomplete for the purpose of depriving an arrested person of the right to default bail. - HELD THAT: - The Court traced the legislative history and purpose of Section 167(2) CrPC, noting that the provision was enacted to prevent the prior practice of filing preliminary or incomplete reports that permitted indefinite remand. A supplementary chargesheet filed while investigation remains pending, if used to scuttle the right to default bail, defeats the statutory and constitutional purpose. The Court held that the question of resort to a supplementary chargesheet arises only after a main chargesheet is filed following completion of investigation, and that filing incomplete chargesheets to prolong custody is an abuse of process incompatible with the object of Section 167(2). [Paras 24, 25, 32]

Filing a chargesheet or prosecution complaint piecemeal without completing the investigation with the object of depriving an accused of default bail is impermissible.

Default bail under Section 167(2) CrPC as a fundamental right under Article 21 - filing of chargesheet/supplementary chargesheet to defeat statutory bail - A chargesheet filed without completion of the investigation does not extinguish the accused's statutory right to default bail under Section 167(2) CrPC. - HELD THAT: - Relying on the object of Section 167(2) and relevant precedents, the Court reiterated that the right to default bail is an indefeasible right flowing from Article 21 and that the mere presentation of an incomplete or preliminary chargesheet, which itself records that investigation is pending, cannot be allowed to negate that right. The Court distinguished authorities cited by the respondent as not dealing with misuse of supplementary chargesheets to defeat default bail and affirmed that such practice would frustrate the legislative scheme. [Paras 21, 24, 26, 32]

A chargesheet filed without completing the investigation will not extinguish the accused's right to default bail under Section 167(2) CrPC.

Limits on remand during pendency of investigation - abuse of process by filing piecemeal chargesheets - The trial court cannot continue remand of an arrested person beyond the maximum statutory period without offering default bail merely because supplementary chargesheets have been filed while investigation remains incomplete. - HELD THAT: - The Court observed that Section 167(2) prescribes fixed maximum remand periods (60/90 days depending on gravity) and places a constitutional duty on investigating agencies and courts to complete investigation within those timeframes. Where the investigating agency files incomplete supplementary chargesheets timed to precede expiry of the statutory period, the trial court must not mechanically accept them to prolong remand; doing so amounts to arbitrary action violative of fundamental rights. In the present facts the trial court's mechanical acceptance of incomplete chargesheets and continuation of remand was found to be arbitrary. [Paras 23, 27, 33]

A trial court cannot extend remand beyond the statutory maximum during ongoing investigation without offering default bail; continued remand on the basis of incomplete chargesheets is impermissible.

Final Conclusion: The writ petition was allowed: the interim bail granted to the accused was made absolute because the Investigating Agency and trial court had allowed incomplete supplementary chargesheets filed to frustrate the accused's statutory and constitutional right to default bail; the continuation of remand beyond the prescribed period without offering default bail was held arbitrary and violative of Article 21.

Inordinate delay vitiating disciplinary proceedings - disciplinary inquiry under Section 21 of the Chartered Accountants Act, 1949 - requirement of recorded reasons for quasi judicial decision - relevance of criminal acquittal and comparative standards of proof

Inordinate delay vitiating disciplinary proceedings - disciplinary inquiry under Section 21 of the Chartered Accountants Act, 1949 - Whether the prolonged delay in initiating and concluding disciplinary proceedings against the respondent vitiated the Reference and required its dismissal. - HELD THAT: - The Court found that the complaint arose from incidents alleged to have occurred in 1992-1994 but the Council and Disciplinary Committee took an aggregate period of about 19 years to complete the disciplinary process and to file the Reference. No satisfactory explanation for this inordinate delay was offered by the Institute. Applying established principles that unexplained and abnormal delay causes prejudice to the charged person and undermines fairness of disciplinary proceedings, the Court held that the prolonged delay rendered continuation of the proceedings unfair and constituted a ground for terminating the Reference. The Court thereby concluded that the Institute's casual and negligent conduct in protracting the process disentitled it to the relief sought. [Paras 12, 13, 16]

The Reference was vitiated by inordinate delay and therefore had to be dismissed on that ground.

Requirement of recorded reasons for quasi judicial decision - relevance of criminal acquittal and comparative standards of proof - Whether the Council's acceptance of the Committee's report and its recommendation for removal was supported by independent reasons and whether the criminal acquittal impacted the disciplinary outcome. - HELD THAT: - The Court observed that the Council merely reproduced the Committee's report without recording its own independent analysis or reasons justifying the recommended punishment. Given the gravity of the penal recommendation and the absence of cogent, unrebutted evidence, the Court noted a cloud of doubt over the disciplinary finding, especially in view of the respondent's subsequent acquittal in the criminal trial where charges arising from the same allegations were rejected after application of the criminal standard of proof. Although the standard of proof in disciplinary proceedings is lower than in criminal prosecutions, the combination of insufficient independent reasoning by the Council, the absence of substantial unrebutted evidence, and the criminal acquittal strengthened the conclusion that the Council's recommendation could not be sustained. [Paras 9, 10, 16, 17]

The Council's recommendation lacked independent recorded reasons and, taken with the acquittal and evidentiary doubts, could not be sustained; no further action was warranted and the proceedings were to be filed.

Final Conclusion: The Reference filed by the Institute was dismissed: the Court held that the inordinate and unexplained delay in prosecuting disciplinary proceedings, the absence of independent reasons by the Council, and the evidentiary doubts in the light of the criminal acquittal rendered the recommendation unsustainable and directed that the proceedings be filed.

Insanity as defence under Section 84 of the Indian Penal Code - Standard of proof for plea of insanity - reasonable doubt - Legal insanity distinct from medical insanity - Appellate interference with an acquittal limited to perversity - Acquittal to be maintained where Trial Court's view is plausible

Insanity as defence under Section 84 of the Indian Penal Code - Standard of proof for plea of insanity - reasonable doubt - Legal insanity distinct from medical insanity - Whether the Appellant-Accused was entitled to benefit of the exception under Section 84 IPC on the basis of available medical and circumstantial evidence. - HELD THAT: - The Court examined the material placed before the Trial Court and the medical evidence including the discharge summary from the Central Referral (Manipal) Hospital and the psychiatric reports by CW 1, which indicated treatment for acute and transient psychotic disorder and symptoms such as perceptive auditory hallucinations and partially impaired judgment. Contemporaneous behaviour at the scene - statements by PW 1 and PW 13 that the Accused appeared not to know what he had done, his failure to flee, and medically observed influence of psychotropic substances - were treated as corroborative of unsoundness of mind at the time of the act. The Court applied the settled legal standard that the accused bears the burden under Section 105 Evidence Act to place material making the existence of legal insanity sufficiently probable that a prudent man would act upon it, and that the standard to be met need only raise a reasonable doubt. The Court emphasised that the inquiry is into legal insanity (capacity to know the nature of the act or that it was wrong or contrary to law), not merely medical diagnosis. Having considered the Trial Court's detailed findings accepting insanity and the supporting evidence, the Court found that the Trial Court's conclusion that the accused was incapable of knowing the nature of his act or that it was wrong or contrary to law was supported by evidence and raised at least a reasonable doubt on criminal culpability under Section 84 IPC. [Paras 21, 22, 23, 26, 27]

The Accused was within the exception of Section 84 IPC on the evidence; the Trial Court's acquittal on that ground is sustainable.

Appellate interference with an acquittal limited to perversity - Acquittal to be maintained where Trial Court's view is plausible - Whether the High Court rightly reversed the Trial Court's acquittal in the absence of perversity in the Trial Court's findings. - HELD THAT: - The Court reiterated the principle that an appellate court may set aside an acquittal only if the Trial Court's conclusion is perverse and not merely because an alternative view on reappreciation of evidence is possible. The High Court reversed the acquittal principally on reappreciation without recording perversity of the Trial Court's conclusion. Given that the Trial Court's view was plausible and supported by medical records, eyewitness evidence and observed behaviour, the appellate interference was held to be impermissible. Accordingly, the High Court's conviction and sentence were set aside and the Trial Court's acquittal restored. [Paras 24, 25, 26, 27]

The High Court erred in reversing the acquittal absent a finding of perversity; its conviction and sentence are set aside and the Trial Court's acquittal is affirmed.

Final Conclusion: The appeals are allowed; the judgment of conviction and sentence of the High Court is set aside, the Trial Court's judgment of acquittal is affirmed and the Appellant-Accused is acquitted of the charge Under Section 302 IPC and shall be released forthwith if not required in any other case.