TaxTMI Updates e-Newsletter
Nov 10,2022

Physical verification of business premises in presence of the person - Compliance with Rule 25 of the Central Goods and Services Tax Rules, 2017 - Upload of verification report in FORM GST REG-30 within fifteen working days - Cancellation of GST registration on ground of non existence at registered address - Restoration of registration and limited time window to file returns for period of cancellation

Physical verification of business premises in presence of the person - Compliance with Rule 25 of the Central Goods and Services Tax Rules, 2017 - Upload of verification report in FORM GST REG-30 within fifteen working days - Validity of cancellation of the petitioner's GST registration where physical verification was carried out without giving the petitioner presence as required and the verification report was not uploaded in FORM GST REG-30 within the statutory period - HELD THAT: - The court held that Rule 25 mandates that where the proper officer deems physical verification necessary, such verification must be carried out in the presence of the person and the verification report together with other documents including photographs must be uploaded in FORM GST REG-30 on the common portal within fifteen working days of verification. In the present case the record showed that no notice was issued requiring the petitioner's presence at the time of verification and the verification report, though generated, was not uploaded on the portal within the stipulated period. The counter affidavit did not address compliance with Rule 25. In those circumstances, and having regard to the court's earlier decisions on the same issue, the impugned order of cancellation could not be sustained and the registration had to be restored. [Paras 9, 10, 11, 12, 13]

Impugned cancellation set aside and petitioner's GST registration restored.

Restoration of registration and limited time window to file returns for period of cancellation - Relief and consequential direction upon restoration of registration - HELD THAT: - On restoring the petitioner's registration the court directed that the revenue shall give the petitioner eight weeks' leeway to upload the returns for the period during which the registration stood cancelled. This remedial direction was incidental to the principal relief of setting aside the cancellation order. [Paras 13, 14]

Respondents to permit the petitioner eight weeks to upload returns for the period of cancelled registration.

Final Conclusion: The order cancelling the petitioner's GST registration was quashed for non compliance with Rule 25 (absence of the petitioner at physical verification and failure to upload the FORM GST REG-30 report within the stipulated period); the petitioner's registration is restored and the revenue is directed to allow eight weeks for uploading returns for the period of cancellation.

Interaction between Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - provisional release of confiscated goods and conveyance - conditional release subject to deposit and bond - power of confiscation under GST and interim relief

Provisional release of confiscated goods and conveyance - conditional release subject to deposit and bond - power of confiscation under GST and interim relief - Provisional release of the petitioner's goods and conveyance confiscated under FORM GST MOV-11 dated 21.03.2022 on conditions - HELD THAT: - The Court considered the petitioner's prayer for interim relief while the challenge to the confiscation order dated 21.03.2022 under FORM GST MOV-11 (section 130) was pending. Noting the pending Special Civil Application bearing a similar point and an earlier order in that matter, the Court granted provisional release of the goods and conveyance on specified conditions. The release was made subject to deposit of the tax amount and penalty (each the sum identified in the impugned order) and furnishing of a bond towards the amount claimed as fine. The Court directed that upon compliance with these conditions the authorities shall release the goods and conveyance, thereby balancing the claim for interim relief against statutory revenue claims and procedural adjudication. [Paras 6, 7]

The petitioner's goods and conveyance are provisionally released subject to deposit of the tax and penalty amounts and furnishing of a bond for the fine; upon such compliance the authorities shall release the goods and conveyance.

Interaction between Section 129 and Section 130 of the Central Goods and Services Tax Act, 2017 - Question of interplay between Section 129 and Section 130 identified for consideration but not finally adjudicated in the interim order - HELD THAT: - The petition raised the intra-statutory question regarding the application and inter se operation of Section 129 and Section 130 of the CGST Act. The Court recorded that this question is to be considered and noted that a related Special Civil Application (No. 8353 of 2012) is on the file to be heard together, indicating that the substantive controversy on the interaction of these provisions remains for fuller consideration on the returnable date. [Paras 3, 4]

The substantive question as to the interaction between Sections 129 and 130 is left for adjudication at the hearing of the listed matters; the present order confines itself to granting interim, conditional release.

Final Conclusion: Interim relief granted: goods and conveyance confiscated under FORM GST MOV-11 dated 21.03.2022 are provisionally released on payment of the tax and penalty amounts and on furnishing a bond for the fine; the larger question of the interplay between Sections 129 and 130 is reserved for determination at the returnable hearing.

Tax deduction at source - assessee in default - exemption under section 10(5) for leave travel concession - conditions under Rule 2B regarding shortest route and domestic travel - employer's duty under section 192(1) - consequence of failure under section 201 - purpose of the LTC scheme

Exemption under section 10(5) for leave travel concession - conditions under Rule 2B regarding shortest route and domestic travel - purpose of the LTC scheme - Whether payments made to employees as Leave Travel Concession (LTC) were exempt under Section 10(5) read with Rule 2B when the travel included a foreign leg and was not by the shortest route. - HELD THAT: - The Court held that LTC is confined to travel from one place in India to another place in India and the amount exemptible is to be determined by reference to travel by the shortest route between such domestic points. Where the employees undertook journeys that involved foreign legs or circuitous routes, those journeys fell outside the statutory scheme of LTC and could not be treated as travel "to any place in India" for the purpose of Section 10(5) and Rule 2B. The Court rejected the contention that a foreign leg may be ignored if the origin and destination are domestic or that reimbursement limited to the domestic shortest-route fare preserves the exemption. The purpose and intent of the LTC scheme-to encourage tourism within India and familiarisation with Indian culture-also militates against permitting foreign travel under the guise of LTC. [Paras 4, 10, 13, 14, 15]

Payments in respect of journeys involving foreign legs or not performed by the shortest domestic route do not qualify for exemption under Section 10(5) read with Rule 2B.

Tax deduction at source - employer's duty under section 192(1) - consequence of failure under section 201 - assessee in default - Whether the State Bank of India, as employer, was an assessee in default for AY 2013-14 for failing to deduct tax at source on LTC payments that were not exempt. - HELD THAT: - The Court affirmed the findings of the authorities below that the employer had a statutory duty under Section 192(1) to deduct tax at source on amounts chargeable under the head 'Salaries' and that failure to deduct renders the employer an assessee in default under Section 201. Given that the LTC claims in the present cases did not meet the conditions for exemption, the Bank could not lawfully treat them as non-taxable and therefore ought to have deducted TDS. The Court noted that the relevant particulars of the employees' itineraries and claims were available to the employer at the time of settlement and that the obligation to estimate income and deduct accordingly was thus enforceable. [Paras 6, 8, 9, 16, 17]

The Bank was an assessee in default for not deducting tax at source on the LTC payments which were not exempt.

Tax deduction at source - employer's duty under section 192(1) - Whether the Bank's plea of a bonafide mistake in estimating employees' income and not deducting tax could absolve it of liability. - HELD THAT: - The Court rejected the plea of bonafide mistake. It held that the employer had all relevant documents and particulars when settling LTC claims and therefore was in a position to ascertain that the claims involved foreign travel and circuitous routes not covered by the exemption. As the duty to deduct arose at the time of payment and the facts were available, ignorance or an asserted bona fide mistake did not afford a defence to deeming the employer an assessee in default. [Paras 16]

The defence of bonafide mistake in failing to deduct TDS was not accepted; the employer remained liable.

Final Conclusion: The appeal was dismissed: LTC claims involving foreign legs or non-shortest domestic routes do not qualify for exemption under Section 10(5) read with Rule 2B, and the employer was correctly held an assessee in default for AY 2013-14 for failing to deduct tax at source; the plea of bonafide mistake was rejected.

Scope of remand - direction of higher court binding on tribunal - ITAT as last fact-finding authority - verification of distance from outskirts of city - assistance of Revenue Authority - remand to Assessing Officer contrary to specific remand

Scope of remand - direction of higher court binding on tribunal - ITAT as last fact-finding authority - verification of distance from outskirts of city - assistance of Revenue Authority - remand to Assessing Officer contrary to specific remand - Whether the ITAT erred in remanding the question of distance of the land from the outskirts of Jaipur to the Assessing Officer instead of itself verifying and recording the distance as directed by the High Court. - HELD THAT: - The High Court's earlier order dated 08.11.2017 expressly remitted the matter to the Tribunal for re-verification of whether the land lay more than eight kilometres from the outskirts of Jaipur, directing the Tribunal to take into account the notification of 06.01.1994 and, if necessary, to request the Revenue Authority not below the Deputy Collector to verify the distance. The ITAT, however, declined to itself determine the distance and instead remanded the issue to the Assessing Officer on the ground that supporting evidence for measurement was not before it. The Court held that the Tribunal, being the last fact-finding authority with powers akin to the Assessing Officer/CIT(Appeals), was required to comply with the High Court's direction in pith and substance and either record the finding itself or request measurement from the Revenue Authority as specifically permitted by the High Court. By relegating the matter to the Assessing Officer without first following the course directed by the High Court, the ITAT acted contrary to the specific scope of remand and therefore committed a manifest error. The Tribunal could have sought the assistance of the Revenue Authority or recorded the finding upon obtaining the requisite measurement, rather than remanding to the Assessing Officer in derogation of the High Court's directions. [Paras 7, 8, 9, 10, 12]

ITAT's order remanding the matter to the Assessing Officer set aside; ITAT directed to record finding on distance as per High Court's directions, if necessary after taking help of Revenue Authorities, within two months.

Final Conclusion: Appeal allowed. The ITAT's remand to the Assessing Officer was held contrary to the High Court's specific remand; the ITAT is directed to determine and record the distance of the land from the outskirts of Jaipur in conformity with the High Court's order, utilising assistance of Revenue Authorities if necessary, within the stipulated time.

Revision under section 263 - Erroneous and prejudicial to the interest of Revenue - Verification of unsecured loans - Assessment under section 143(3)

Revision under section 263 - Verification of unsecured loans - Erroneous and prejudicial to the interest of Revenue - Assessment under section 143(3) - Validity of exercise of revisionary power under section 263 to set aside the assessment on account of inadequate verification of receipt of unsecured loan from M/s. Rams Estate. - HELD THAT: - The assessment for AY 2016-17 was completed under section 143(3) after the Assessing Officer accepted the assessee's submissions regarding unsecured loans from M/s. Rams Estate. The Principal Commissioner of Income Tax issued a show-cause notice under section 263 on the ground that those receipts were not properly verified. The departmental representative produced the return of M/s. Rams Estate which, in the column for loans and advances, contained no disclosure of such loans. Having regard to that discrepancy, the Tribunal found that the Assessing Officer did not examine the matter properly and that the assessment order was therefore erroneous and prejudicial to the interest of the Revenue. Consequently, the Principal Commissioner correctly invoked revisionary jurisdiction under section 263 and directed a fresh assessment after verification and opportunity to the assessee. The Tribunal found no reason to interfere with that direction. [Paras 6]

The order passed by the Principal Commissioner under section 263 setting aside the assessment and directing fresh assessment after verification is upheld; the assessee's appeal is dismissed.

Final Conclusion: The Tribunal upholds the PCIT's exercise of powers under section 263 for AY 2016-17, finding the assessment erroneous and prejudicial for lack of proper verification of unsecured loans, and dismisses the assessee's appeal, directing a fresh assessment in accordance with law.

Deduction under section 80IC - mandatory electronic filing with digital signature - due date under section 139(1) - failure to furnish return within due date disentitles to specified deduction - following Tribunal's own earlier decision

Deduction under section 80IC - mandatory electronic filing with digital signature - due date under section 139(1) - Assessee is not eligible to claim deduction under section 80IC for AY 2012-13 as the return was filed after the due date without compliance with mandatory electronic filing requirements. - HELD THAT: - The Tribunal found that the assessee e-filed its return for AY 2012-13 on 30.03.2013, which was beyond the due date prescribed by section 139(1). Rule 12(3)(ab), as amended w.e.f. 09-07-2010, requires companies to furnish returns electronically with digital signature for AY 2010-11 and subsequent years. The Assessing Officer disallowed the claim under section 80IC on this ground, and the CIT(A) confirmed that disallowance by following the Tribunal's earlier decision in the assessee's own case for AY 2011-12 (ITA No.808/Mds/2014). The Tribunal in the present appeal accepted the authorities below, noting that no plausible or exceptional reason was shown to justify the belated filing or non-compliance with the mandatory electronic filing rule, and that the facts for AY 2012-13 were similar to those in AY 2011-12 where relief was denied. The Tribunal therefore upheld the disallowance of the deduction claimed under section 80IC. [Paras 5, 6]

Appeal dismissed; deduction under section 80IC for AY 2012-13 disallowed for failure to comply with mandatory e filing/due date requirements.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the disallowance of the section 80IC deduction for AY 2012-13 on the ground that the return was filed after the due date and did not satisfy the mandatory electronic filing with digital signature; the decision follows the Tribunal's earlier order in the assessee's own case for AY 2011-12.

Expenditure in relation to exempt income under Section 14A - Rule 8D methodology - application of Section 14A where no exempt income is received or receivable - book profit computation under Section 115JB - retrospective operation of statutory amendment (Explanation to Section 14A)

Expenditure in relation to exempt income under Section 14A - Rule 8D methodology - application of Section 14A where no exempt income is received or receivable - Deletion of disallowance under Section 14A r.w. Rule 8D in absence of any exempt income and where investments were made out of own funds - HELD THAT: - The Tribunal accepted that no dividend or other exempt income was earned by the assessee in the relevant year and that investments were made from internal own funds. Following precedents of the High Courts and the Supreme Court (as relied upon by the CIT(A)) the Tribunal held that Section 14A and Rule 8D cannot be invoked to make a disallowance where no exempt income has accrued, arisen or been received in the relevant previous year. The Assessing Officer's disallowance of the claimed expenditure (both interest and administrative expenses) under Section 14A was held to be unjustified on the facts and law of the case; the jurisprudence cited confirms that Rule 8D's mechanistic computation is not available when there is no exempt income in the year under consideration. [Paras 6]

The disallowance of Rs.21,07,73,322/- made under Section 14A r.w. Rule 8D is deleted.

Book profit computation under Section 115JB - expenditure in relation to exempt income under Section 14A - Whether the Section 14A disallowance could be sustained for computation of book profit under Section 115JB - HELD THAT: - The Tribunal applied the same reasoning to the computation of book profits under Section 115JB. Since the disallowance under Section 14A was not sustainable in the absence of exempt income for the year, the corresponding adjustment in book profits could not be justified. The CIT(A)'s deletion of the addition in the computation of book profit was therefore upheld. [Paras 6]

The addition made while computing book profit under Section 115JB is deleted.

Retrospective operation of statutory amendment (Explanation to Section 14A) - Applicability with retrospective effect of the Explanation to Section 14A inserted by the Finance Act, 2022 - HELD THAT: - The Tribunal examined the Revenue's contention that the 2022 amendment (insertion of a non-obstante clause and an Explanation) applies retrospectively. Applying settled principles (as explained in Sedco Forex and subsequent Supreme Court authority) and following the recent Delhi High Court decision referred to by the parties, the Tribunal held that an Explanation which effects a change in law cannot be presumed retrospective merely because it is framed as 'for removal of doubts' and, furthermore, the legislative memorandum expressly states the amendment takes effect from 1 April 2022. Consequently, the 2022 amendment does not apply to earlier assessment years including A.Y. 2015-16. [Paras 7]

The Explanation/Amendment to Section 14A by Finance Act, 2022 is not applicable retrospectively to A.Y. 2015-16 and is inapplicable to the present appeal.

Final Conclusion: The Tribunal dismissed the Revenue's appeal; the deletion of the Section 14A disallowance (and the related adjustment to book profit under Section 115JB) was confirmed for A.Y. 2015-16, and the Finance Act 2022 amendment to Section 14A was held not to operate retrospectively for the assessment year in question.

Deduction under section 80P(2)(a)(i) for cooperative credit societies - treatment of interest income on investments/FDRs as income eligible for 80P exemption versus income from other sources - precedent of a coordinate Bench of the Tribunal followed by the same Bench

Deduction under section 80P(2)(a)(i) for cooperative credit societies - treatment of interest income on investments/FDRs as income eligible for 80P exemption versus income from other sources - Assessee entitled to deduction under section 80P(2)(a)(i) for interest earned on fixed deposits with a nationalised bank for A.Y. 2010-11. - HELD THAT: - The Assessing Officer denied the claim treating interest on deposits made out of surplus funds as not being attributable to the activity of providing credit facilities to members and therefore taxable as income from other sources; the CIT(A) confirmed that view. The Tribunal noted that an identical question in the assessee's own case for A.Y.2008-09 was earlier decided in the assessee's favour by a coordinate Bench of the Pune Tribunal, which held that interest earned on fixed deposits with nationalised banks is eligible for deduction under section 80P(2)(a)(i). Respectfully following that coordinate Bench precedent and there being no change in the legal position, the Tribunal set aside the orders of the lower authorities and held that the interest income of Rs.1,08,53,328/- is allowable as deduction under section 80P(2)(a)(i). [Paras 6, 7]

Appeal allowed and deduction under section 80P(2)(a)(i) granted in respect of the interest income from fixed deposits with the nationalised bank.

Final Conclusion: The Tribunal allowed the assessee's appeal for A.Y. 2010-11, holding that interest income on fixed deposits with a nationalised bank is deductible under section 80P(2)(a)(i), and set aside the orders of the AO and the CIT(A).

Addition as undisclosed income based on statement recorded under section 132(4) - retraction of statement recorded under section 132(4) and its evidentiary value - burden on the Assessing Officer to establish non-disclosure of source and to verify books/accounts - payments effected through banking channels treated as accounted money - unexplained investment in jewellery and application of CBDT instructions/concessions

Addition as undisclosed income based on statement recorded under section 132(4) - retraction of statement recorded under section 132(4) and its evidentiary value - burden on the Assessing Officer to establish non-disclosure of source and to verify books/accounts - payments effected through banking channels treated as accounted money - Deletion of addition of Rs.2,42,29,375 as undisclosed income in the assessment for AY 2016-17 - HELD THAT: - The Tribunal upheld the view of the CIT(A) that the impugned addition was founded solely on an earlier sworn statement recorded under section 132(4) and that the assessee and his brother subsequently retracted and clarified the modalities of payments. The AO had not produced independent material to show that payments beyond those recorded in the books flowed to the builder. The Court emphasised that irrespective of mode of payment, the AO must investigate and establish that the source of payments is undisclosed and must verify balance-sheet entries and financials; payments through banking channels cannot be treated as unaccounted merely because an initial statement suggested otherwise. In the absence of any contemporaneous corroborative material and in view of the accounting entries and reconciliations furnished showing payments through banking channels, the addition lacked basis and was correctly deleted. [Paras 5, 6, 7, 8]

The addition was deleted and the revenue's appeal on this ground dismissed.

Unexplained investment in jewellery and application of CBDT instructions/concessions - Deletion of addition of Rs.7.67 Lacs on account of alleged unexplained investment in jewellery - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO had granted concessions under CBDT Instruction No.1916 but failed to allow applicable concessions for the assessee's minor children. Once the appropriate household concessions (including those for minor son and daughter) are taken into account, the quantity of jewellery falls within permissible limits. The assessee also discharged the onus of establishing source by filing affidavits and explanations that the jewellery was received as gifts/streedhan on family occasions. In these circumstances the AO's addition was not sustainable and deletion was proper. [Paras 10, 11]

The addition was deleted and the revenue's appeal on this ground dismissed.

Final Conclusion: Both departmental appeals are dismissed; the Tribunal affirms the CIT(A)'s deletion of the additions-the undisclosed income addition founded on a retracted search statement and the jewellery addition-on the stated evidentiary and verification grounds.

Fees for technical services (FTS) - Explanation-2 to Sec.9(1)(vii) of the Act - Deemed accrual of income of a non-resident - Deduction of tax at source under Sec.195 - Disallowance under Sec.40(a)(i) of the Act

Fees for technical services (FTS) - Explanation-2 to Sec.9(1)(vii) of the Act - Deduction of tax at source under Sec.195 - Disallowance under Sec.40(a)(i) of the Act - Whether the amounts retained by the non-resident marketing agent pursuant to the marketing agreement constitute FTS chargeable to India, thereby attracting the obligation to deduct tax under Sec.195 and permitting disallowance under Sec.40(a)(i) for failure to deduct - HELD THAT: - The Tribunal examined the scope of the marketing agreement and applied Explanation-2 to Sec.9(1)(vii), which defines FTS as consideration for rendering managerial, technical or consultancy services. The agreement authorized the non-resident partner to market, promote and distribute the assessee's software products and required the assessee to train the partner's personnel to carry out pre-sale and post-sale (implementation and support) services. The Tribunal found that pre-sale and post-sale services for software products necessarily entail technical expertise and product-specific knowledge. Having regard to the explicit contractual obligation to train partner resources and the nature of services rendered to customers, the Tribunal held that the payments retained by the marketing partner fall within the definition of FTS under Explanation-2 to Sec.9(1)(vii). Once characterized as FTS, such consideration is deemed to accrue or arise in India under the deeming provision and the assessee was under an obligation to deduct tax at source under Sec.195 when making payments to the non-resident. The assessee's failure to deduct tax accordingly justified the AO's disallowance under Sec.40(a)(i). The Tribunal also noted that the CIT(A) correctly excluded reimbursements of certain expenses from disallowance where those were properly identifiable as genuine reimbursements, but upheld the substantive finding that the service component constituted FTS and the related disallowance for non-deduction of tax. [Paras 7, 8]

Payments retained by the non-resident marketing partner are FTS as per Explanation-2 to Sec.9(1)(vii); the assessee was liable to deduct tax under Sec.195 and the AO's disallowance under Sec.40(a)(i) for failure to deduct is upheld; appeal dismissed.

Final Conclusion: The Tribunal upheld the CIT(A)'s finding that the amounts retained by the foreign marketing partner constitute Fees for Technical Services and, having failed to deduct tax under Sec.195, the assessee's appeal against disallowance under Sec.40(a)(i) is dismissed for assessment year 2016 - 17.

Applicability of Tax Collection at Source on sale of scrap - Tax Collection at Source under Section 206C and interest under Section 206C(7) - Furnishing of Form 27C as exemption mechanism for buyer-intended manufacture/processing - Interpretation of explanation to Section 206C - seller need not be original generator of scrap - Relevance of CBDT Circular No.18/2012 in construing TCS applicability on scrap transactions

Applicability of Tax Collection at Source on sale of scrap - Interpretation of explanation to Section 206C - seller need not be original generator of scrap - Relevance of CBDT Circular No.18/2012 in construing TCS applicability on scrap transactions - TCS under Section 206C is exigible on the assessee's sale of scrap despite the assessee being a trader and not the original generator of the scrap. - HELD THAT: - The Tribunal examined whether the provision for collection of tax at source on sale of scrap applies where the assessee is a trader and the scrap did not originate from the assessee's own manufacturing activity. The Special Bench authority was noted for holding that the term 'seller' in the Explanation to Section 206C does not require that the seller must have generated the scrap. The CBDT Circular No.18/2012, relied upon by the assessee, clarifies that a purchaser's declaration in Form 27C can exempt the seller where the buyer intends to use the goods for manufacture/processing and not for trading; the Circular does not impose a requirement that the scrap must have been produced by the seller. The assessee had not produced Form 27C; on the undisputed facts the assessee had scrap for sale and did not collect TCS. In absence of the prescribed exemption declaration, the statutory obligation to collect TCS on sale of scrap applies to the seller-trader as held by the Assessing Officer and affirmed by the CIT(A). [Paras 9]

The Tribunal affirmed that TCS under Section 206C applies to the assessee's sale of scrap and rejected the contention that being a trader or not being the original generator of scrap exempts the assessee.

Furnishing of Form 27C as exemption mechanism for buyer-intended manufacture/processing - Tax Collection at Source under Section 206C and interest under Section 206C(7) - Failure to obtain Form 27C and not collecting TCS justified the levy of tax liability and interest under Section 206C(7). - HELD THAT: - The Tribunal considered whether the assessee's non-collection of TCS could be excused in view of the buyer's purpose or the Circular. The record showed no Form 27C was filed by the buyer to exempt the seller from collecting TCS. Given absence of the prescribed declaration, the statutory duty to collect and deposit TCS remained unfulfilled. Consequently, the Assessing Officer's determination of tax liability for non-collection and the levy of interest under Section 206C(7) were sustainable. The Tribunal found no reason to interfere with the concurrent findings of the Assessing Officer and the CIT(A). [Paras 9]

Tax liability for non-collection of TCS and interest under Section 206C(7) upheld in view of absence of Form 27C or other statutory exemption.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the Assessing Officer's and CIT(A)'s findings that TCS under Section 206C was collectible on the assessee's sale of scrap and that tax liability together with interest under Section 206C(7) is rightly sustained in absence of Form 27C.

Revision under Section 263 - Erroneous and prejudicial to the interest of revenue - Explanation 2(a) to Section 263 - Requirement of enquiry and verification in assessment proceedings - Selection for scrutiny under CASS

Revision under Section 263 - Requirement of enquiry and verification in assessment proceedings - Explanation 2(a) to Section 263 - Selection for scrutiny under CASS - Validity of the Principal Commissioner's exercise of revisionary power under Section 263 to set aside the assessment on the ground that the Assessing Officer failed to make necessary enquiry/verification regarding high value cash deposits shown from third parties during the demonetisation period. - HELD THAT: - The Tribunal upheld the PCIT's order under Section 263. The case had been selected for complete scrutiny through CASS for reasons including high value receipts of cash from third parties and low income in comparison to investments. The assessment order, however, contains no discussion or record of any enquiry into the source of cash deposits made during the demonetisation period, and deals only with disallowance under Section 80P. The assessee had replied to the revision notice asserting that cash was collected from members and provided details, but there is no material on record that the Assessing Officer conducted or recorded any verification of those deposits in the assessment proceedings. In these circumstances the Tribunal found that the AO passed the assessment without making enquiries which ought to have been made and that Clause (a) of Explanation 2 to Section 263 is attracted. On that basis the PCIT was justified in setting aside the assessment and directing a fresh assessment with a direction that the AO examine the source of cash deposits and afford the assessee a reasonable opportunity of being heard.

The PCIT's exercise of revisionary power under Section 263 was valid; the assessment order dated 07.12.2019 was set aside as erroneous and prejudicial to the revenue for want of necessary enquiry/verification, and the appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal and upheld the revisionary order under Section 263 setting aside the assessment for AY 2017-18 on the ground that the AO failed to verify high value cash receipts selected for scrutiny; the AO is directed to examine the source of such deposits and to afford the assessee a reasonable opportunity of being heard.

Prohibition on taking loans in cash exceeding Rs.20,000 under Section 269SS - prohibition on repaying loans in cash exceeding Rs.20,000 under Section 269T - penalty for contravention under Section 271D and Section 271E - person-wise aggregation of cash loans and repayments

Prohibition on taking loans in cash exceeding Rs.20,000 under Section 269SS - prohibition on repaying loans in cash exceeding Rs.20,000 under Section 269T - penalty for contravention under Section 271D and Section 271E - person-wise aggregation of cash loans and repayments - Whether penalties under Section 271D and Section 271E are attracted where cash loans taken from, or repayments made to, various persons do not exceed Rs.20,000 per person though their aggregate for the year exceeds Rs.20,000. - HELD THAT: - The Tribunal examined the language of Section 269SS and Section 269T and concluded that the statutory prohibition applies where the amount of loan taken from, or the repayment made to, an individual person (or the aggregate outstanding in relation to that person) is Rs.20,000 or more. The Bench reviewed the cash book and the statement of loans taken and repaid and found that amounts received from, and paid to, each individual person did not exceed Rs.20,000. The Revenue treated the aggregate of all loans/deposits taken or repaid in the year as the relevant threshold, but the Tribunal held that the statutory test requires person-wise aggregation rather than aggregation across all persons for the year. Applying that interpretation to the material on record, the conditions for attracting Section 269SS and Section 269T were not satisfied, and consequently the penalties under Section 271D and Section 271E could not be sustained. [Paras 2, 3]

Penalties under Section 271D and Section 271E deleted because cash loans taken from, and repayments made to, each individual did not meet the Rs.20,000 threshold under Sections 269SS and 269T.

Final Conclusion: Both appeals are allowed and the penalties imposed under Section 271D and Section 271E are deleted, the Tribunal holding that the Rs.20,000 threshold must be applied person-wise and was not met on the facts of the case.

Deeming fiction under Section 56(2)(vii)(b) as applied to immovable property - Leasehold rights vis-a -vis 'land or building' in Explanation to Section 56(2)(vii) - Treatment of difference between stamp duty value and sale consideration as income under Section 56(2)(vii)(b) - Scope and limits of deeming provisions

Leasehold rights vis-a -vis 'land or building' in Explanation to Section 56(2)(vii) - Deeming fiction under Section 56(2)(vii)(b) as applied to immovable property - Whether the difference between stamp duty value and sale consideration on acquisition of 99 year leasehold rights in a plot (with building) could be treated as income under Section 56(2)(vii)(b). - HELD THAT: - The Tribunal examined the sale deed, the allotment and lease documents and the permission letter from RIICO and found that the seller possessed only leasehold rights for a fixed term of 99 years which were transferred to the assessee. The transfer was therefore of leasehold rights and not of absolute ownership in land. The Bench adopted the reasoning of a coordinate ITAT decision which held that the statutory expression in the Explanation to Section 56(2)(vii) referring to immovable property as 'land or building or both' does not extend to leasehold rights and that the deeming fiction in Section 56(2)(vii)(b) cannot be stretched beyond the objects for which it is enacted. The RIICO permission letter, containing conditions and restrictions, demonstrated that exclusive ownership was not conferred on the transferee. On these facts and in view of the legal principle that deeming provisions are to be confined to their purpose, the Tribunal concluded that Section 56(2)(vii)(b) was not attracted to the transaction and the addition based on the difference between stamp duty value and sale consideration was not sustainable.

Addition of Rs.26,10,078/- made under Section 56(2)(vii)(b) was deleted; appeal allowed.

Final Conclusion: The Tribunal set aside the addition made under Section 56(2)(vii)(b) in respect of acquisition of 99 year leasehold rights and allowed the assessee's appeal.

Condonation of delay - reopening of assessment on third party information / borrowed satisfaction - treatment of intra day share transactions for assessment purposes - addition as unexplained income versus taxation of trading profit

Condonation of delay - Application for condonation of eight days' delay in filing the appeal before the Tribunal - HELD THAT: - The assessee furnished medical circumstances (Covid 19 positive and home quarantine) as the cause for delay. The Revenue did not oppose the condonation. Having regard to the explanation and the absence of objection from the Revenue, the Tribunal found sufficient and bona fide cause to condone the eight day delay and admitted the appeal for adjudication on merits. [Paras 8, 9, 10]

Delay in filing the appeal is condoned and the appeal is admitted for decision on merits.

Treatment of intra day share transactions for assessment purposes - addition as unexplained income versus taxation of trading profit - obligation of appellate authority to verify factual material / seek remand - Whether the addition of the entire sale consideration was sustainable where the assessee proved intra day transactions showing only trading profit - HELD THAT: - The Assessing Officer reopened the assessment on the basis of information from the Investigation Wing and treated the sale consideration as undisclosed income after the assessee failed to reply in time. Before the CIT(A) the assessee produced broker ledger, passbook entries and a day wise bifurcation showing intra day trades on specified dates and an overall net gain of Rs.1,655. The Tribunal found that the CIT(A) failed to verify or seek a remand to verify the materials and instead relied on general findings about penny stock manipulation that were not comparable on facts. On analysis of the documents placed before the authorities, the Tribunal held that the assessee had established that transactions were intra day, that no purchase consideration was paid nor sale consideration received in gross, and that only the net trading gain was reflected in the assessee's account. In view of the evidence, the Tribunal concluded that the entire sale consideration could not be treated as unexplained income and directed deletion of the addition. [Paras 15, 16, 17]

Addition of the entire sale consideration is deleted; relief granted to the assessee and the assessment adjusted to reflect the proved intra day trading outcome.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and on merits deleted the addition of the entire sale consideration, finding on the material placed before the authorities that the transactions were intra day trades reflecting only a small trading profit; accordingly the assessee's appeal is allowed.

Reopening of assessment under section 147/148 on discovery of fresh information - Scope of assessment under section 153A and incriminating material - Prima-facie satisfaction and not a mere change of opinion - Disallowance of business expenditure for lack of documentary evidence on genuineness of services - Objections to reopening and procedural compliance with supply of reasons

Reopening of assessment under section 147/148 on discovery of fresh information - Scope of assessment under section 153A and incriminating material - Prima-facie satisfaction and not a mere change of opinion - Validity of reopening assessments by issue of notice under section 148 after earlier assessment under section 143(3) r.w.s. 153A - HELD THAT: - The Tribunal upheld the reassessment notice. The AO received a report from DDIT (Inv.) and conducted field enquiries, recorded statements and obtained the unregistered agreement whose inconsistencies and other contradictions were not earlier examined; these facts constituted fresh material. On that basis the AO formed a prima-facie satisfaction that the payments to the consultant/JIPL might not be wholly and exclusively for business purposes and required further scrutiny. The AO obtained requisite approvals and followed the procedural steps for reopening; the exercise was held to be on fresh information and not a mere change of opinion. Reliance on authorities was noted but the Tribunal found the facts here brought new tangible material justifying reopening. [Paras 16]

Reopening under section 147/148 was valid and original Ground No.1 and Additional Ground Nos.1 & 2 are dismissed.

Disallowance of business expenditure for lack of documentary evidence on genuineness of services - Sustenance of disallowance of the amount debited to WIP as professional/consultancy fees for want of substantiation - HELD THAT: - The Tribunal affirmed the AO and CIT(A) in disallowing the claimed amount. Despite repeated opportunities the assessee failed to produce any documentary deliverables-advisory reports, plans, communications or other contemporaneous evidence-though sizeable payments were made over years. Statements recorded were contradictory and did not satisfactorily establish the nature or genuineness of services. In these circumstances the claim that services were rendered was not proved and the disallowance of the expenditure debited to WIP was held justified. [Paras 17, 18]

Disallowance of the consultancy charges debited to WIP is sustained and Original Ground No.2 is dismissed.

Objections to reopening and procedural compliance with supply of reasons - Whether the assessment should be quashed because the AO did not reject objections to reopening four weeks before passing the reassessment order - HELD THAT: - The Tribunal considered the assessee's reliance on the Asian Paints decision but found distinguishing facts: the assessee had delayed responding to the reasons supplied and furnished objections only after several months; the AO issued notices under sections 142(1)/143(2), provided time and ultimately passed the assessment after affording opportunity (about 27 days after final show cause). The Tribunal also referenced the principle that procedural safeguards must be viewed in context and noted precedent on adjudicatory time and opportunity; having found no prejudice or substantive infirmity in the AO's conduct, the objection was rejected. [Paras 19, 21, 22]

Additional Ground No.3 is dismissed and the assessment order is not quashed on that ground.

Final Conclusion: All appeals filed by the assessee for A.Y. 2007-08 to A.Y. 2011-12 are dismissed: reopening under section 147/148 was held valid on the basis of fresh information and prima-facie satisfaction, the disallowance of consultancy charges debited to WIP was sustained for want of substantiation, and the procedural objection regarding rejection of objections prior to reassessment was rejected.

Rejection of books of account under Section 145(3) - estimation of income by application of gross profit ratio - appellate adjustment of an estimated gross profit rate - principle of consistency with the Tribunal's own earlier decision

Rejection of books of account under Section 145(3) - estimation of income by application of gross profit ratio - appellate adjustment of an estimated gross profit rate - principle of consistency with the Tribunal's own earlier decision - Whether the addition made by the Assessing Officer by estimating gross profit at 3% after rejecting books under Section 145(3) should be sustained or reduced by the appellate authorities. - HELD THAT: - The Assessing Officer rejected the assessee's books as verifiable evidence (books, bank statements, bills and vouchers) was not furnished despite opportunities and estimated gross profit at 3% of turnover. The CIT(A) reduced the estimate to 0.5% after considering comparable orders and the assessee's declared gross profit in adjacent years. The Tribunal examined the matter in the light of the assessee's own earlier appeal for AY 2013-14 where, on substantially similar facts and for lack of verifiable evidence, the Tribunal had upheld an appellate restriction of the AO's estimate to 1% of turnover. The Tribunal noted that the assessee had failed to place any documentary evidence before the CIT(A) or before the Tribunal in the present appeals to justify acceptance of the books. Applying the principle of consistency with its prior decision in the assessee's own case on similar facts, the Tribunal found the 0.5% reduction excessive and increased the appellate estimation to 1% of turnover, thereby partly allowing the Revenue's appeals. [Paras 9, 13]

The appeals are partly allowed by enhancing the CIT(A)'s estimated gross profit from 0.5% to 1% of turnover; the Assessing Officer's estimate of 3% is not restored.

Final Conclusion: Both revenue appeals for AY 2014-15 are partly allowed: the Tribunal, applying its earlier decision in the assessee's own case and noting absence of verifiable evidence, raised the appellate estimate of gross profit to 1% of turnover (from the CIT(A)'s 0.5%), but did not restore the AO's 3% estimate.

Restoration of interlocutory application - dismissal for non-prosecution - principles of natural justice - liberal and purposive approach in restoration matters - prohibition of hyper-technical and pedantic disposal - duty to pass reasoned and speaking orders on merits

Restoration of interlocutory application - dismissal for non-prosecution - principles of natural justice - liberal and purposive approach in restoration matters - Validity of the Adjudicating Authority's dismissal of IA(IBC) No.260/2022 in CP(IB) No.462/7/HDB/2018 as an instance of non-prosecution and whether the IA should be restored for fresh consideration. - HELD THAT: - The Tribunal found the Adjudicating Authority's dismissal unsustainable because it adopted a pedantic and hyper-technical approach despite an officer of the financial creditor logging in and seeking time. The Tribunal held that where a restoration application is dismissed at the threshold without providing an adequate opportunity, a meritorious matter may be unfairly extinguished; therefore courts and tribunals should adopt a practical, purposive and liberal approach in restoration applications. In the circumstances, the impugned order was set aside and the IA was ordered to be restored so that the principles of natural justice are observed. The Adjudicating Authority was directed to afford the other side opportunity to file replies, allow rejoinder, and thereafter decide the IA on merits by a reasoned and speaking order, uninfluenced by the observations in the appeal.

Impugned dismissal set aside; IA(IBC) No.260/2022 in CP(IB) No.462/7/HDB/2018 restored for fresh hearing with directions to afford opportunity to file pleadings and to dispose the IA on merits by a reasoned order within the timelines specified by the Tribunal.

Final Conclusion: The appeal is allowed; the Adjudicating Authority's order dismissing the interlocutory application is set aside and the application is restored for fresh consideration with directions to permit filing of replies and rejoinder and to decide the matter on merits by a reasoned speaking order within the timelines prescribed by the Tribunal.

Priority of provident fund dues under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 - exclusion of provident fund dues from the liquidation estate under the Insolvency and Bankruptcy Code - compliance of a resolution plan with statutory priority requirements and Section 30(2)(e) of the Code - commercial wisdom of the Committee of Creditors vis-a -vis statutory priority - extension of limitation period for filing appeals

Priority of provident fund dues under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 - exclusion of provident fund dues from the liquidation estate under the Insolvency and Bankruptcy Code - compliance of a resolution plan with statutory priority requirements and Section 30(2)(e) of the Code - commercial wisdom of the Committee of Creditors vis-a -vis statutory priority - Provident fund dues admitted by the Resolution Professional are payable in full and the Successful Resolution Applicant must make the balance payment to the Provident Fund authority to save the resolution plan from invalidity. - HELD THAT: - The Tribunal held that the present facts are covered by its earlier three member decision in the appeals concerning the Regional Provident Fund Commissioner, which concluded that provident fund dues (including amounts determined under the 1952 Act) are not assets available for distribution under Section 53(1) of the Code and are entitled to priority payment. Reliance was placed on the Supreme Court's exposition of the scope of Section 11 of the 1952 Act to include amounts determined as damages under Section 14B, and the Tribunal reasoned that a resolution plan which does not satisfy admitted provident fund dues in full would breach the statutory priority and the requirement under Section 30(2)(e). The commercial wisdom of the Committee of Creditors cannot override the statutory entitlement to full payment of provident fund dues; accordingly the Successful Resolution Applicant was directed to pay the balance of the admitted claim. [Paras 6, 8, 9, 11, 12]

The Respondent (Successful Resolution Applicant) is directed to pay the balance amount of the admitted provident fund dues to the Appellant to preserve validity of the resolution plan.

Extension of limitation period for filing appeals - The Appeal is not time barred as limitation was extended by the Suo Moto Writ Petition No. 03/2022 and the Appeal filed on 28th February, 2022 was within the extended period. - HELD THAT: - The Tribunal accepted the Appellant's contention that the period of limitation was extended by the Suo Moto writ extending limitation till 28th February, 2022 with further time to file, thereby rendering the appeal filed on 28th February, 2022 maintainable despite being filed after 30 days from the impugned order dated 3rd January, 2022. The Respondents' limitation objection was accordingly rejected. [Paras 10]

Limitation objection is overruled and the Appeal is held to be maintainable.

Final Conclusion: The Appeal is allowed to the extent that the Successful Resolution Applicant is directed to pay the balance of the admitted provident fund dues to the Appellant; the Appeal is otherwise disposed of accordingly.

Financial debt and default for initiation of CIRP - assignment of financial debt and status as financial creditor - summary adjudication of default under Section 7 - appointment of Interim Resolution Professional on proposed nomination - moratorium and its consequences under Section 14 - public announcement and duties of the Interim Resolution Professional

Assignment of financial debt and status as financial creditor - financial debt and default for initiation of CIRP - The applicant is a financial creditor by virtue of deed of assignment and there exists a financial debt along with default by the corporate debtor. - HELD THAT: - The Tribunal found that Section 5(7) defines a financial creditor to include a person to whom a financial debt has been legally assigned. The Deed of Assignment dated 30.09.2021 executed between the original lender and the applicant transferred the rights in the loan to the applicant. The counsel for the corporate debtor admitted the debt and default as recorded in the daily order dated 22.07.2022. The documents on record, including the MoU, assignment deed and communications demanding payment after expiry of the agreed term, substantiate that the corporate debtor had availed credit facilities and defaulted in repayment. The Tribunal applied the summary adjudication standard under the Code to ascertain occurrence of default and concluded that default had occurred. [Paras 5, 6, 7, 12, 13]

The applicant is entitled to be treated as a financial creditor and the corporate debtor had committed default in repayment of the financial debt.

Summary adjudication of default under Section 7 - appointment of Interim Resolution Professional on proposed nomination - The Section 7 petition is complete and is admitted; the proposed nominee is fit to be appointed as Interim Resolution Professional. - HELD THAT: - Having recorded satisfaction that the application under Section 7 is complete and that a default has occurred, the Tribunal admitted the petition and initiated CIRP. The applicant complied with the requirement under sub-section (3)(b) of Section 7 by proposing a name for Interim Resolution Professional. The proposed nominee submitted the declaration in Form 2 confirming eligibility and absence of pending disciplinary proceedings and agreed to accept appointment. The Tribunal noted the statutory scheme which mandates appointment of the proposed resolution professional if no disciplinary proceedings are pending and therefore appointed the nominated person as IRP. [Paras 9, 10, 11, 14, 15]

The Section 7 application is admitted, CIRP is initiated, and the nominated Interim Resolution Professional is appointed.

Moratorium and its consequences under Section 14 - public announcement and duties of the Interim Resolution Professional - Moratorium is declared and directions are issued regarding public announcement and duties of the Interim Resolution Professional. - HELD THAT: - On admission of the Section 7 petition the Tribunal declared the moratorium under Section 14 and identified its statutory consequences including prohibition on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property in possession of the corporate debtor. The Tribunal directed immediate public announcement by the Interim Resolution Professional in accordance with the Code and Regulations and outlined the IRP's duties to perform functions under the Code, protect and preserve assets, and seek appropriate orders in case of violations by the management. [Paras 16, 17, 18, 19]

Moratorium is imposed with the specified prohibitions; public announcement shall be made and the Interim Resolution Professional shall discharge statutory duties.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the assignee financial creditor, held that a financial debt and default existed, initiated CIRP, appointed the nominated Interim Resolution Professional, directed immediate public announcement and declared the moratorium with its statutory consequences.

Twin conditions for grant of bail under Section 45 of the Prevention of Money Laundering Act, 2002 - exception for sick or infirm accused under the proviso to Section 45 - medical unfitness as a ground for release in non-bailable offences - complicity inferred from electronic evidence and bank transactions - likelihood of flight as a factor under the bail test - Supreme Court rulings on validity and scope of Section 45 post-amendment

Twin conditions for grant of bail under Section 45 of the Prevention of Money Laundering Act, 2002 - complicity inferred from electronic evidence and bank transactions - likelihood of flight as a factor under the bail test - Application of the twin conditions in Section 45(1) PMLA to the petitioner in light of investigative material and flight risk - HELD THAT: - The Court examined the amended twin conditions in Section 45(1) PMLA and the evidence collected during investigation, including material retrieved from the petitioner's laptop and bank-account transactions showing substantial unexplained receipts to the petitioner and his relatives. The court noted that the petitioner, though initially cited as a witness, was found to have benefited from the alleged Ponzi scheme and that the investigative material left no doubt about his complicity. Having regard to the magnitude of funds involved and prior issuance of a Look-Out Notice apprehending possible flight, the Court held that the conditions prescribed by Section 45(1) - namely, that the Public Prosecutor be given opportunity to oppose bail and that the court be satisfied there are reasonable grounds to believe the accused is not guilty and is not likely to commit an offence while on bail - were not satisfied in the petitioner's case. [Paras 13, 14, 15, 16, 17]

Twin conditions under Section 45(1) were not satisfied on the material before the Court.

Exception for sick or infirm accused under the proviso to Section 45 - medical unfitness as a ground for release in non-bailable offences - Whether the proviso to Section 45 permitting bail for a person who is 'sick or infirm' applies to the petitioner and warrants his release - HELD THAT: - The Court considered the jail medical certificate and hospital records which established that the petitioner is severely obese with multiple comorbidities including Coronary Artery Disease, uncontrolled hypertension and diabetes, and that his physical condition was deteriorating despite treatment. The Court observed that obesity with such comorbidities reduces resilience and may require monitoring and care not ordinarily available in jail. Applying the proviso to Section 45, which permits bail where the accused is 'sick or infirm', the Court concluded that the petitioner falls within that exception. The Court also noted that the petitioner had been in custody for about eight months, that supplementary complaint had been filed and there was no occasion for further custodial interrogation at this stage, and that co-accused had been released on bail when they appeared pursuant to summons. [Paras 18, 19, 20, 21, 22]

Petitioner falls within the 'sick' exception to Section 45 and is entitled to be released on regular bail subject to furnishing bail/surety bonds.

Final Conclusion: Despite material indicating complicity and an unfulfilled general test under Section 45(1), the petitioner's documented serious medical condition brings him within the statutory proviso for release of a 'sick' accused; the petition for regular bail is allowed and the petitioner is directed to be released on furnishing bail/surety bonds to the satisfaction of the trial court, without the observations affecting the merits of the case.

Pre-deposit requirement for entertaining appeals - waiver of pre-deposit - condition precedent to exercise the statutory right of appeal - application of section 35F of the Central Excise Act to service tax by section 83 of the Finance Act - removal of appellate discretion to dispense with pre-deposit by statutory amendment

Pre-deposit requirement for entertaining appeals - waiver of pre-deposit - condition precedent to exercise the statutory right of appeal - removal of appellate discretion to dispense with pre-deposit by statutory amendment - application of section 35F of the Central Excise Act to service tax by section 83 of the Finance Act - Whether the Tribunal can waive or reduce the mandatory pre-deposit required under section 35F (as made applicable to service tax by section 83 of the Finance Act) so as to entertain the appeal filed by the appellant. - HELD THAT: - The Court held that section 35F, as amended with effect from 06.08.2014, makes pre-deposit a condition precedent to entertaining an appeal and removed the earlier discretionary power of the appellate forum to dispense with or scale down the deposit. The statutory scheme, which limits the appellate authority to the specific relaxations contained in the provisos, cannot be overridden by the Tribunal or the courts. Reliance is placed on the principle that when a statute confers a right of appeal, conditions attached by the legislature must be complied with and the appellate body cannot grant a complete waiver beyond what the statute permits. Earlier decisions applying the same reasoning to comparable pre-deposit provisions were examined and applied to the facts: since the appellant has not made the mandatory pre-deposit, the plea for waiver on grounds of financial hardship cannot be accepted and the application for waiver must be rejected. [Paras 12, 13, 15, 16, 17]

Application for waiver of pre-deposit is rejected and the appeal cannot be entertained in the absence of the mandatory pre-deposit.

Pre-deposit requirement for entertaining appeals - Procedure and interim direction as to further course after rejection of the waiver application. - HELD THAT: - Although the application for waiver is rejected, the Tribunal exercised its ordinary listing and administrative power to allow time for compliance. The appellant is given a limited period to make the mandatory pre-deposit, failing which the statutory bar to entertainment of the appeal will operate. The Tribunal directed issuance of intimation by speed post and fixed a listing date for the appeal after the prescribed period to enable the appellant to comply with the pre-deposit requirement. [Paras 17, 18]

Appellant granted six weeks' time to make the pre-deposit; intimation to be sent by speed post and appeal listed on 15.11.2022.

Final Conclusion: The Tribunal rejected the appellant's plea for waiver of the mandatory pre-deposit (as required under section 35F applied to service tax by section 83) because the statutory amendment removed appellate discretion to waive or reduce the pre-deposit; however, the appellant was granted six weeks to make the required pre-deposit and the appeal was listed for hearing on 15.11.2022.

Revision of VAT/CST returns - rectified C-Forms - verification of entitlement on merits - not on the ground of limitation - suspension pending decision of Supreme Court

Revision of VAT/CST returns - rectified C-Forms - verification of entitlement on merits - not on the ground of limitation - suspension pending decision of Supreme Court - Direction to issue rectified C-Forms to enable revision of VAT/CST returns for the specified periods, subject to verification of entitlement on merits and without being precluded by limitation, with the direction suspended pending the outcome of civil appeals before the Supreme Court. - HELD THAT: - The Court, following the approach adopted by coordinate benches and consent of parties, directed that the revenue shall issue rectified C-Forms to enable the petitioner to revise its VAT/CST returns for Financial Years 2016-2017 and 2017-2018. The relief is conditional: entitlement must be verified on merits by the authorities and the relief is not to be denied on the ground of limitation. However, consistent with prior orders, the operation of this direction is suspended until the civil appeals pending before the Supreme Court (referred to in preceding decisions) are finally adjudicated; compliance is to be effected in accordance with the Supreme Court's decision in those appeals. The Court disposed of the petition on these terms with the parties' consent. [Paras 4, 5, 6, 7]

Petition disposed directing issuance of rectified C-Forms for the stated financial years, subject to merits verification and not barred by limitation, but with the direction suspended until the Supreme Court decides the pending civil appeals.

Final Conclusion: Writ petition disposed by directing issuance of rectified C-Forms to enable revision of returns for Financial Years 2016-2017 and 2017-2018, subject to verification on merits and not to be defeated by limitation; the direction is suspended pending adjudication of the cited civil appeals in the Supreme Court and compliance shall follow that decision.

Voluntary payment to secure interim relief - setting aside of assessment subject to condition - procedure for reconciliation of mismatch - show cause notice with opportunity of personal hearing - right to cross-examine third party dealer - time-bound completion of reassessment within 180 days - consequences of non-compliance with court-ordered condition

Voluntary payment to secure interim relief - setting aside of assessment subject to condition - consequences of non-compliance with court-ordered condition - Impugned assessment order to be set aside upon the petitioner making the volunteered payment of 15% of the disputed tax within the time fixed by the Court, failing which the order shall stand confirmed. - HELD THAT: - The Court accepted the petitioner's affidavit volunteering payment of 15% of the disputed tax and, with no objection from the Revenue, granted a four-week period for payment. Upon payment within that period the impugned assessment dated 20.07.2021 shall stand set aside. The Court further declared that if the volunteered amount is not remitted within the stipulated time, the interim interference will be treated as not having been made and the assessment order will stand confirmed. These directions effectuate conditional setting aside of the assessment tied to the petitioner's compliance with the volunteered payment. [Paras 5, 11]

Payment of 15% within four weeks to result in setting aside of the assessment; failure to pay will result in confirmation of the assessment.

Procedure for reconciliation of mismatch - show cause notice with opportunity of personal hearing - right to cross-examine third party dealer - time-bound completion of reassessment within 180 days - Assessment proceedings arising from a computer-generated mismatch are to proceed in accordance with the Circular No.5/2021, including issuance of show cause notice, opportunity of hearing and cross-examination, and completion of assessment within 180 days. - HELD THAT: - Noting the long-standing problem of mismatch and the detailed procedure set out in Circular No.5/2021, the Court directed that the Circular's verification and procedural safeguards be followed in the present matter. The Assessing Authority is to issue a show cause notice with all necessary enclosures within four weeks, afford the petitioner adequate opportunity of personal or virtual hearing, provide for cross-examination of the other-end dealer where appropriate, and complete the assessment in accordance with law within 180 days of the show cause notice. The Court emphasised adherence to the Circular's reconciliation steps and time limits in conducting the reassessment. [Paras 6, 7, 8, 9, 10]

Show cause notice to be issued within four weeks and assessment to be completed in accordance with Circular No.5/2021 and within 180 days after hearing.

Final Conclusion: The Writ Petition is disposed by setting aside the impugned assessment on condition of the petitioner remitting 15% of the disputed tax within four weeks; irrespective of that conditional relief, the matter is directed to proceed under the mismatch reconciliation procedure in Circular No.5/2021 with a show cause notice to be issued within four weeks and reassessment concluded within 180 days; failure to remit the volunteered amount will result in confirmation of the assessment.

Section 138 of the Negotiable Instruments Act - dishonour of cheque and criminal liability - Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof under Sections 118 and 139 of the Negotiable Instruments Act - Standard of rebuttal - preponderance of probabilities - Inconsistent defence and its effect on rebuttal of statutory presumption - Composite scheme of punishment and compensation under the Negotiable Instruments Act - Applicability of Money Lenders Act to interest-free transactions

Section 138 of the Negotiable Instruments Act - dishonour of cheque and criminal liability - Presumption under Section 139 of the Negotiable Instruments Act - Burden of proof under Sections 118 and 139 of the Negotiable Instruments Act - Conviction under Section 138 was sustainable on the evidence and the statutory presumptions were not rebutted by the accused. - HELD THAT: - The trial Court and the appellate Court rightly found that the cheque Ex.P1 was drawn by the petitioner and that prior money transaction and privity between the parties stood proved from the statutory notice, reply and re-joinder read with oral evidence. Once the complainant discharged the initial burden of proving issuance of the cheque towards a lawful debt, the legal presumption under Sections 118 and 139 shifted the burden to the accused. The accused's inconsistent contentions - advising the bank that the cheque was lost, lodging a police complaint alleging forcible taking, and then suggesting the liability lay with a third person - did not discharge that burden. Inconsistent pleas and absence of cogent evidence or production of the alleged third party to substantiate the defence made the rebuttal improbable. On the material placed before the Courts below, the statutory presumption remained un-rebutted and conviction under Section 138 was justified. [Paras 10, 11, 15, 16]

Conviction under Section 138 of the Negotiable Instruments Act is upheld.

Inconsistent defence and its effect on rebuttal of statutory presumption - Standard of rebuttal - preponderance of probabilities - The accused failed to rebut the presumptions under Sections 118 and 139 because his inconsistent statements and lack of corroborative evidence rendered the defence improbable. - HELD THAT: - The Court explained that rebuttal of the presumption under Sections 118 and 139 does not require the prosecution standard of proof; a preponderance of probabilities suffices. However, where the accused takes inconsistent stands - claiming loss of the cheque to the bank, alleging forcible taking to the police, and suggesting a third party's liability at trial - such inconsistency undermines the credibility of the defence. Further, the accused's failure to examine the alleged third party (A.K. Govindarajan), whose involvement was central to his suggested defence, deprived him of a reasonable avenue to probabilise that defence. Consequently, the rebuttal standard was not satisfied. [Paras 11, 15]

Rebuttal not established; presumption under Sections 118 and 139 remains operative.

Applicability of Money Lenders Act to interest-free transactions - The complainant's status as an unregistered money lender did not bar prosecution under Section 138 where the transaction was stated to be interest-free. - HELD THAT: - Although the complainant admitted engagement in money lending and lack of registration, the statutory notice and pleadings specifically averred that the advance in question was given by the complainant to the petitioner as a long-time friend free of interest. The Court held that the Tamil Nadu Money Lenders Act would not apply to an interest-free transaction; non-compliance with registration requirements or other regulatory norms does not operate as a shield for the drawer of a cheque to avoid repayment. Any regulatory or contraventional issues arising out of methods of lending are matters for the competent authorities and do not negate the enforceability of the cheque in criminal proceedings under Section 138. [Paras 13]

Being interest-free, the transaction is not governed by the Money Lenders Act; lack of registration does not bar prosecution under Section 138.

Composite scheme of punishment and compensation under the Negotiable Instruments Act - The sentence of one year imprisonment and compensation equal to the cheque amount was not excessive and did not warrant interference. - HELD THAT: - The Court distinguished precedents relating to compensation under Section 357 Cr.P.C. and noted that the Negotiable Instruments Act itself contemplates imprisonment up to two years and compensation/fine up to twice the cheque amount. Given the statutory framework, the appellate Court correctly exercised the sentencing jurisdiction, and the quantum of imprisonment together with compensation awarded (equivalent to the cheque amount) was held to be reasonable in the circumstances of the case. [Paras 14]

Sentence and compensation awarded under the Negotiable Instruments Act are reasonable and sustained.

Final Conclusion: The revision is dismissed and the convictions, sentence and compensation order under Section 138 of the Negotiable Instruments Act as affirmed by the appellate Court are confirmed.

Premature complaint filed before expiry of 15 days is no complaint in law - cause of action under clause (c) of the proviso to Section 138 of the Negotiable Instruments Act - cognizance under Section 142(b) of the Negotiable Instruments Act - requirement of expiry of fifteen days after receipt of statutory notice for Section 138 offence - power to condone delay and file complaint beyond one month under proviso to Section 142(b)

Requirement of expiry of fifteen days after receipt of statutory notice for Section 138 offence - premature complaint filed before expiry of 15 days is no complaint in law - cause of action under clause (c) of the proviso to Section 138 of the Negotiable Instruments Act - Maintainability of a complaint under Section 138 filed one day before the expiry of the fifteen day period after receipt of statutory notice - HELD THAT: - The Court applied the ratio of Yogendra Pratap Singh which holds that the cause of action under clause (c) of the proviso to Section 138 arises only after the fifteenth day following receipt of the statutory notice, and that a complaint filed before that period is not a complaint in law. Conjoint reading of Section 138 and Section 142(b) shows that all the eventualities in the proviso to Section 138 must be satisfied before an offence can be said to have been committed and before cognizance can be taken. In the present case the statutory notice was received on 05/02/2019, the fifteenth day expired on 21/02/2019, but the complaint was presented on 20/02/2019. Following the cited Supreme Court precedent and the five essential ingredients of Section 138, the Court held that the complaint did not disclose the cause of action as required by clause (c) and therefore was legally non existent. [Paras 5, 11, 12, 14]

The complaint filed on 20/02/2019 being premature (filed before expiry of fifteen days) is not maintainable and is quashed.

Cognizance under Section 142(b) of the Negotiable Instruments Act - power to condone delay and file complaint beyond one month under proviso to Section 142(b) - Whether the complainant may file a fresh complaint or seek condonation after the quashing of the premature complaint - HELD THAT: - The Court noted that Section 142(b) requires a written complaint to be made within one month from the date the cause of action arises (i.e., after expiry of the fifteen day period), but also permits courts to take cognizance beyond that period if the complainant satisfies the court of sufficient cause for delay. While quashing the premature complaint, the Court observed that the statutory scheme allows the complainant to present a fresh complaint within the one month period following the accrual of cause of action and to seek condonation if necessary under the proviso to Section 142(b). The observation was made as a matter of law and procedure without deciding any specific condonation application. [Paras 13]

Complainant may file a fresh complaint within the period prescribed by Section 142(b) and may seek condonation of delay under the proviso to that provision if necessary.

Final Conclusion: Criminal Original Petitions allowed; the complaints in S.T.C.No.410/2019 and S.T.C.No.411/2019 are quashed as having been filed prematurely before the expiry of fifteen days from receipt of the statutory notice; the complainant remains entitled to file a fresh complaint within the statutory period and to apply for condonation where appropriate.

Revisional jurisdiction under Sections 397/401 Cr.P.C. - scope of interference with concurrent findings - presumptions under Sections 118 and 139 of the Negotiable Instruments Act - burden to rebut presumption by preponderance of probabilities - confirmation of conviction and sentence in cheque dishonour prosecution

Revisional jurisdiction under Sections 397/401 Cr.P.C. - scope of interference with concurrent findings - High Court's revisional power is supervisory and not appellate; interference with concurrent findings of trial and appellate courts is restricted. - HELD THAT: - The court held that the revisional jurisdiction under Sections 397 and 401 Cr.P.C. is supervisory and does not permit reappreciation of evidence as would an appellate court. Interference is justified only where the impugned order is perverse, wholly unreasonable, based on no material, involves non-consideration of relevant material, palpable misreading of records or would otherwise result in gross miscarriage of justice. Mere possibility of an alternative view is not a ground for interference. [Paras 10, 11, 12]

Revisional interference was not warranted as no glaring feature or perversity was shown in the concurrent findings of the trial and appellate courts.

Presumptions under Sections 118 and 139 of the Negotiable Instruments Act - burden to rebut presumption by preponderance of probabilities - Once the complainant proved execution and delivery of the cheque, statutory presumptions under Sections 118 and 139 applied and the accused bore the onus to rebut them on the preponderance of probabilities. - HELD THAT: - The court found that the complainant discharged the initial burden by establishing the transaction and the cheque (supported by oral evidence and exhibits). Thereupon the reverse onus under Section 139 operated to presume existence of a legally enforceable debt or liability. This presumption is rebuttable but the accused must raise a probable defence on the preponderance of probabilities, either by adducing independent evidence or by relying on the complainant's record. The accused in this case did not discharge that burden. [Paras 14, 15, 16, 17, 18]

Presumptions under Sections 118 and 139 applied and were not successfully rebutted by the accused; therefore the prosecution case stood proved.

Confirmation of conviction and sentence in cheque dishonour prosecution - Concurrent conviction and sentence imposed by the trial and appellate courts were maintained; revision petition dismissed with limited modification as to time for payment and deferment of execution. - HELD THAT: - On appreciation of the record and applying the principles governing revisional jurisdiction and the statutory presumptions under the Negotiable Instruments Act, the High Court found no merit to disturb the conviction and the sentence as modified by the appellate court. The court refused to reappreciate evidence and confirmed the appellate court's order while granting a limited period for compliance with the fine and deferring execution until the specified date. [Paras 19]

Revision petition dismissed; four months' time granted to pay the fine and execution of sentence deferred until the stipulated date with direction to appear before the trial court thereafter.

Final Conclusion: Revision petition dismissed; concurrent conviction and sentence in the cheque dishonour prosecution are upheld, with limited indulgence in time to pay the fine and deferment of execution as directed by the High Court.