TaxTMI Updates e-Newsletter
Nov 28,2024

Right to personal hearing - principle of natural justice - failure to comply with statutory requirement under Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017 - quashing of administrative order for non-compliance with hearing mandate - remand for fresh reply, personal hearing and reasoned order

Right to personal hearing - principle of natural justice - failure to comply with statutory requirement under Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017 - Whether the impugned order could be sustained despite the officer not granting an opportunity of personal hearing as required by Section 75(4) of the Uttar Pradesh Goods and Services Tax Act, 2017. - HELD THAT: - The Court applied the ratio of the coordinate Bench in Mahaveer Trading Company vs. Deputy Commissioner State Tax and another and held that opportunity of personal hearing ought to have been granted under Section 75(4) before passing any adverse order. Non-grant of such opportunity amounted to a violation of the principle of natural justice and rendered the impugned order unsustainable. Having found that the mandatory hearing requirement was not complied with, the Court quashed the order dated 29.11.2022. [Paras 3]

Impugned order quashed for failure to grant personal hearing; violation of natural justice established.

Remand for fresh reply, personal hearing and reasoned order - quashing of administrative order for non-compliance with hearing mandate - What remedial course should follow after quashing the impugned order for non-compliance with Section 75(4). - HELD THAT: - The Court directed that the officer concerned must grant the petitioner an opportunity to file a fresh reply, fix a date for personal hearing and thereafter pass a reasoned order. The exercise was to be completed within two months from the date of the order, thereby remitting the matter for fresh consideration limited to compliance with the hearing requirement and issuance of a speaking order. [Paras 4]

Matter remitted to respondent for fresh reply, personal hearing and passing of a reasoned order within two months.

Final Conclusion: Impugned order dated 29.11.2022 quashed for non-compliance with Section 75(4) and principle of natural justice; matter remitted to the assessing authority to allow fresh reply, afford personal hearing and pass a reasoned order within two months; writ petition disposed of.

Condonation of delay in filing appeal - limitation and time-barred appeals under Section 107 of the CGST/SGST Acts - extraordinary and special circumstances - jurisdiction under Article 226 - inordinate delay and laches in invoking writ jurisdiction - applicability of Limitation Act principles

Condonation of delay in filing appeal - limitation and time-barred appeals under Section 107 of the CGST/SGST Acts - extraordinary and special circumstances - Whether the Court should, in exercise of writ jurisdiction, permit appeals filed beyond the statutory period against Ext.P1 orders by condoning delay. - HELD THAT: - The petitioner filed appeals only in February 2024 against orders issued in February 2020. The High Court observed that, as a rule, it cannot extend the statutory time for filing appeals under Section 107 of the CGST/SGST Acts and relied on authoritative precedents holding that extension beyond the prescribed period is permissible only in rare and extraordinary cases. The Court noted that Section 5 of the Limitation Act may not be applicable but that principles akin to Section 14 can be applied where extraordinary circumstances prevented timely filing. After considering the petitioner's plea of illness and the supporting medical material, the Court found no extraordinary or special circumstances sufficient to justify setting aside the Appellate Authority's orders dismissing the appeals as time barred; therefore relief by way of condonation was denied. [Paras 4]

Petitioner not granted condonation of delay; appeals remain time-barred.

Jurisdiction under Article 226 - inordinate delay and laches in invoking writ jurisdiction - applicability of Limitation Act principles - Whether the writ petition filed in 2024 against orders issued in 2020 should be entertained despite the inordinate delay. - HELD THAT: - The Court observed that although Article 226 does not prescribe a limitation period, writ jurisdiction may be declined where there is inordinate delay and laches. The orders impugned were passed in February 2020 and the writ petition was filed in 2024; the Court viewed this four year gap as an additional reason to refuse relief. The petitioner's explanation of illness (fatty liver advised bed rest) was regarded with scepticism and found insufficient to excuse the delay in approaching the High Court within a reasonable time. [Paras 5]

Writ petition dismissed for inordinate delay; petitioner's explanation held insufficient.

Final Conclusion: Writ petition dismissed. The High Court refused to condone the delay in filing appeals against the Ext.P1 orders and declined to exercise Article 226 jurisdiction in view of the absence of extraordinary circumstances and the inordinate delay in prosecuting the petition.

Stay of demand - sanctioned resolution plan extinguishes pre-existing dues - ex-parte order under Section 73(9) of the CGST/UPGST Act, 2017 - demand notice under Section 73 of the CGST/UPGST Act, 2017

Stay of demand - sanctioned resolution plan extinguishes pre-existing dues - ex-parte order under Section 73(9) of the CGST/UPGST Act, 2017 - Validity and operation of the impugned ex-parte order and demand notice dated 30.04.2024 issued against the petitioner for financial year 2018-2019 - HELD THAT: - The High Court, having regard to the ratio in Ghanshyam Mishra and Sons (P.) Ltd. and allied decisions relied upon by the petitioner, observed that where a resolution plan has been sanctioned by the National Company Law Tribunal the law recognises extinguishment of certain pre-existing liabilities as contemplated by the sanctioned plan. Applying that principle, the Court found it appropriate to stay the operation of the impugned ex-parte order and the consequential demand notice dated 30.04.2024 issued under the CGST/UPGST enactment during the pendency of the writ petition. Ancillary procedural directions were given for exchange of affidavits and for filing of counter and rejoinder within specified timeframes to enable adjudication on merits at a later date.

Operation of the impugned ex-parte order and demand notice dated 30.04.2024 is stayed during the pendency of the writ petition; affidavits to be exchanged and counter/rejoinder to be filed within the time directed.

Final Conclusion: The High Court stayed the impugned ex-parte order and demand notice dated 30.04.2024 relating to financial year 2018-2019 pending adjudication of the writ petition, directed exchange of affidavits with stipulated timelines for counter and rejoinder, and listed the matter for further hearing.

Failure of natural justice - personal hearing - reasoned order - remand for fresh consideration - costs as condition for relief - service by e-mail

Failure of natural justice - Petition entertained despite existence of alternate remedies on the ground of a failure of natural justice. - HELD THAT: - The Court observed that ordinarily the petitioner would be relegated to alternate remedies but, on the material before it, there was a procedural shortcoming amounting to a failure of natural justice. The portal showed an endorsement indicating cancellation uploaded on 10 January 2024, yet there was no evidence of a communicated, reasoned order of cancellation. The petitioner had attempted to reply and later filed a physical reply dated 2 November 2023 which was not taken into account in the portal remarks. For these reasons the Court found sufficient procedural prejudice to entertain the petition. [Paras 4, 7, 9]

Petition is entertained on the ground of failure of natural justice.

Remand for fresh consideration - personal hearing - reasoned order - service by e-mail - costs as condition for relief - Impugned remark/cancellation set aside and matter remanded to the respondent for fresh consideration with directions on hearing, disclosure and timeline subject to payment of costs. - HELD THAT: - The Court set aside the portal remark/cancellation and directed the second respondent to consider the show cause notice dated 8 June 2023 afresh taking into account the petitioner's reply dated 2 November 2023 and to afford an effective personal hearing. The respondent is required to pass a reasoned order and communicate it to the petitioner; service of the personal hearing notice must be by e-mail in addition to any portal entry. The documents relied upon in the show cause notice must be furnished to the petitioner to enable an opportunity to file an additional reply. The fresh consideration is to be completed within three months of the petitioner producing proof of payment of costs of Rs. 50,000 to Tata Memorial Hospital; failure to pay within four weeks will result in dismissal of the petition with a reduced cost directed to the same hospital. All contentions on merits were expressly left open. [Paras 12, 13, 14, 15, 16]

Impugned remark/cancellation set aside; matter remanded for fresh consideration and personal hearing, to be completed within three months upon payment of costs and compliance with directions; merits left open.

Final Conclusion: The petition is entertained on grounds of procedural unfairness; the portal remark indicating cancellation is set aside and the matter is remanded to the second respondent to consider the show cause notice afresh, afford an effective personal hearing, furnish relied-upon documents, and pass a reasoned order within three months upon proof of payment of costs to Tata Memorial Hospital; all factual and legal contentions on merits remain open.

Power to exempt subject to conditions - Validity of condition requiring purchase within State for tax exemption - Reasonableness of executive conditions on exemptions - State's fiscal interest in GST revenue as justification for local purchase condition

Power to exempt subject to conditions - Validity of condition requiring purchase within State for tax exemption - Reasonableness of executive conditions on exemptions - State's fiscal interest in GST revenue as justification for local purchase condition - Notification condition that exemption applies only to vehicles purchased and registered in Uttar Pradesh is intra vires Section 3 of the U.P. Motor Vehicle Taxation Act, 1997 and not unreasonable. - HELD THAT: - Section 3 confers on the State Government the power to exempt, wholly or partly, any motor vehicle or class of motor vehicles from payment of tax under the Act, subject to such conditions and for such period as may be specified. That statutory provision does not restrict the State from prescribing conditions for grant of exemption. The challenge that no distinction can be made between vehicles purchased within the State and those purchased outside the State on the ground that the tax is levied for plying within the State was rejected. The Court accepted the State's explanation that a local purchase condition is a permissible fiscal measure because purchase within the State yields indirect revenue benefits to the State (through its share of GST) which would not accrue where the vehicle is purchased outside the State. In these circumstances, the condition imposed by the notification is not arbitrary or unreasonable and falls within the scope of the authority conferred by Section 3. [Paras 7, 8, 9, 10]

Petition dismissed; the condition that the vehicle must have been purchased in Uttar Pradesh to avail the exemption is lawful and not liable to be quashed.

Final Conclusion: The writ petition challenging the exemption notification insofar as it conditions exemption on purchase of the vehicle within Uttar Pradesh is dismissed; the State acted within the powers conferred by Section 3 and the condition is not unreasonable.

Revisional jurisdiction under Section 263 of the Income Tax Act - Explanation 2 to Section 263 - reassessment where assessment is deemed erroneous and prejudicial to revenue - taxation of undisclosed income under Section 115BBE of the Income Tax Act - treatment of voluntary surrender during survey as professional receipts - requirement of inquiry and examination of survey records before invoking revisional jurisdiction - change of opinion not a valid ground for exercise of revisional jurisdiction

Revisional jurisdiction under Section 263 of the Income Tax Act - requirement of inquiry and examination of survey records before invoking revisional jurisdiction - treatment of voluntary surrender during survey as professional receipts - Validity of the Principal CIT's order under Section 263 in quashing the assessment where the Assessing Officer accepted a voluntary surrender of Rs.15,00,000 as professional receipts after survey - HELD THAT: - The Tribunal found, and this Court concurs, that the material on record showed the assessee voluntarily surrendered Rs.15 lakhs during survey as unaccounted professional receipts, disclosed the same in audited financial statements and that the Assessing Officer conducted due inquiry and accepted it as business/professional income. The Principal CIT's contrary finding of 'no inquiry' was not supported by hard facts nor did he explain how the survey records would have compelled a conclusion contrary to the Assessing Officer's plausible view. Mere assertion of non-examination of records by the Assessing Officer cannot alone establish that the assessment order was erroneous and prejudicial to revenue. Where the Assessing Officer has made inquiry and adopted a plausible view based on statements and records, the Principal CIT cannot exercise revisional jurisdiction simply by forming a different opinion. [Paras 12, 13, 14]

The Tribunal rightly quashed the order passed under Section 263; the Principal CIT's order is without valid jurisdiction and unsustainable.

Taxation of undisclosed income under Section 115BBE of the Income Tax Act - Explanation 2 to Section 263 - reassessment where assessment is deemed erroneous and prejudicial to revenue - change of opinion not a valid ground for exercise of revisional jurisdiction - Whether the Principal CIT was justified in invoking revisional jurisdiction on the ground that the Assessing Officer ought to have taxed the surrendered amount under Sections 68/69A and Section 115BBE instead of as professional receipts - HELD THAT: - The appellant contended that the surrendered amount was unexplained and therefore taxable under the special taxing provision. The Court observed, however, that the Principal CIT did not demonstrate how the survey records or other material would have negated the Assessing Officer's reasonable belief that the amount represented professional receipts. The Principal CIT could have formed a valid view only after his own examination of records and identification of error; absent any explanation showing that the Assessing Officer's conclusion was perverse or unsustainable, the exercise of revision would amount to a mere change of opinion, which is impermissible. The Tribunal correctly held that no case for invoking Section 263 was made out on the basis advanced. [Paras 14, 15]

The Principal CIT was not justified in invoking revisional jurisdiction to re-tax the surrendered amount under Section 115BBE; the assumption of jurisdiction amounted to impermissible change of opinion and was rightly quashed.

Final Conclusion: The Tax Appeal is dismissed. No substantial question of law arises: the Tribunal correctly set aside the order passed under Section 263; the Principal CIT failed to demonstrate that the assessment was erroneous or prejudicial to revenue beyond a mere difference of opinion.

Accumulated profits - deemed dividend - depreciation as deduction for computation of accumulated profits - profits in commercial sense

Accumulated profits - depreciation as deduction for computation of accumulated profits - Computation of accumulated profits under Section 2(22)(e) requires deduction of depreciation in accordance with the rates prescribed under the Income-tax Act. - HELD THAT: - The Court considered the decisions of the Bombay High Court in Navnit Lal C Javeri and Jamnadas Khimji Kothari which held that for ascertaining "accumulated profits" an allowance for depreciation should be made by way of a deduction at the rates provided by the Income-tax Act and that profits disclosed by the balance-sheet are subject to adjustment including deduction of depreciation as granted under the Act. The Supreme Court decision in P.K. Badiani was noted as addressing a different question and not dealing with the method of computing accumulated profits for the purposes of Clause (e) of Section 2(22). The High Court concurred with the view of the Bombay Division Benches that depreciation must be deducted when computing accumulated profits for deeming purposes. [Paras 9, 10, 12, 13]

Depreciation as prescribed by the Income-tax Act must be deducted in computing accumulated profits under Section 2(22)(e); the view of the Bombay High Court is followed.

Deemed dividend - accumulated profits - The loan taken by the assessee from the company is not liable to be taxed as a deemed dividend under Section 2(22)(e) after computing accumulated profits with deduction of depreciation as per the Income-tax Act. - HELD THAT: - Applying the principle that accumulated profits must be computed after allowing depreciation under the Income-tax Act, the Commissioner (Appeals)'s finding that the company's accumulated profits, so computed, did not support treating the advance as deemed dividend was restored. The Appellate Tribunal's reliance on the proposition that "accumulated profits" meant commercial profits without the statutory depreciation adjustment was rejected insofar as it displaced the Bombay High Court view which the High Court accepted. Consequently, the addition made by the Assessing Officer treating the loan as deemed dividend was set aside. [Paras 12, 13, 14]

The advance is not taxable as a deemed dividend under Section 2(22)(e) when accumulated profits are computed after deducting depreciation as per the Income-tax Act; the CIT(A)'s order in favour of the assessee is restored.

Final Conclusion: The substantial questions of law are answered in favour of the assessee; the Income-tax Appellate Tribunal's order is set aside and the Commissioner of Income-tax (Appeals)'s order restoring computation of accumulated profits after deduction of depreciation is restored; the appeal is allowed.

Pendency of appeals before Commissioner of Income Tax (Appeals) - stay of recovery during pendency of appeal - faceless appeal regime and backlog - administrative data and time bound programme for disposal of backlog - judicial direction for administrative compliance

Pendency of appeals before Commissioner of Income Tax (Appeals) - stay of recovery during pendency of appeal - judicial direction for administrative compliance - No recovery of outstanding dues from petitioners whose appeals before the CIT(A) are pending during the pendency of these petitions. - HELD THAT: - The Court took note of widespread and prolonged pendency of appeals before the Commissioner of Income Tax (Appeals), including aggregate figures filed in the respondents' affidavits, and observed that respondents had not adequately addressed the specific directions previously issued to furnish data and remedial measures. In view of the continued pendency and the respondents' failure to satisfactorily demonstrate a time bound programme to dispose of the backlog, the Court concluded that coercive recovery from petitioners with pending appeals in these petitions should be restrained. The protective relief follows the Court's assessment that systemic delay in disposal of appeals would render recovery unfair while the appeals remain undecided. [Paras 5, 6]

No recovery shall be made from the petitioners whose appeals are pending during the pendency of these petitions.

Faceless appeal regime and backlog - administrative data and time bound programme for disposal of backlog - judicial direction for administrative compliance - Respondents were required to furnish detailed data on pendency, average life of appeals, allocation per Commissioner, and remedial measures including a time bound programme to address backlog; the affidavits filed were found inadequate. - HELD THAT: - Earlier orders had directed respondents (including NFAC and CBDT authorities) to file affidavits addressing specific matters: total pendency, average life of appeals, allocation of appeals to appellate officers, and remedial measures to reduce backlog. The Court reviewed the affidavits filed and recorded that respondents largely reiterated previous statements, failed to provide average life data readily, and did not set out concrete measures such as issue wise classification, bunching of similar appeals, or a time bound disposal programme. The Court therefore recorded the inadequacy of the responses and the necessity for fuller compliance with the earlier directions so that systemic remedies can be considered. [Paras 5]

Matter stands directed for compliance with earlier orders; respondents to furnish the detailed data and measures as previously required (non compliance recorded).

Final Conclusion: The Court has restrained recovery from petitioners whose appeals before the CIT(A) are pending in these petitions, having regard to the extensive backlog and inadequate compliance by respondents with directions to furnish detailed data and a time bound programme for disposal of the appeals; Rule issued.

Rectification under section 154 of the Act - Advance Pricing Agreement - transfer pricing adjustments - deduction under section 80G - interest under section 234A - interest under section 234B - credit for Dividend Distribution Tax

Rectification under section 154 of the Act - Claim for taxation of exempt dividend income where rectification application under section 154 is pending before CPC, Bengaluru. - HELD THAT: - The assessee conceded that the claim was denied by processing the return under section 143(1) and that a rectification application under section 154 is pending. The Tribunal directed that the rectification application be disposed of at the earliest and directed that until its disposal the AO should not take any adverse action against the assessee. [Paras 3]

Rectification application to be expedited; no adverse action by the AO till rectification is disposed of.

Advance Pricing Agreement - transfer pricing adjustments - Effect of a Unilateral APA executed on 27/03/2024 and of the modified return filed on 25/06/2024 on the TP additions made for AY 2020-21. - HELD THAT: - The assessee executed a unilateral APA covering FY 2015-16 to FY 2019-20 with roll back, which the parties agreed applies to the assessment year in question. The assessee has also filed a modified return. In view of these facts the Tribunal directed the AO to re-decide the transfer pricing issue afresh, taking into account the APA and the modified return. [Paras 4]

TP issue remitted to the AO for fresh adjudication in light of the APA and modified return; Ground No. 2 allowed for statistical purposes.

Deduction under section 80G - Denial of deduction claimed under section 80G in respect of CSR-related contributions. - HELD THAT: - On the facts, a Coordinate Bench in the assessee's own case for AY 2018-19 examined identical facts and held that contributions falling under section 135(5) of the Companies Act may be eligible for deduction under section 80G if statutory conditions are satisfied, and that assessment must be remanded for verification of those conditions. Following that decision, the Tribunal directed the AO to verify entitlement under section 80G and allowed the ground for statistical purposes. [Paras 5, 6, 7]

Issue remitted to the AO for verification of conditions for allowance under section 80G; Ground No. 3 allowed for statistical purposes.

Interest under section 234A - Levy of interest under section 234A where return was contended to have been filed within extended due date issued by CBDT Notification No. 93/2020. - HELD THAT: - The Tribunal directed the AO to verify whether the CBDT had extended the due date for filing the return and whether the assessee filed the return on or before that extended date. If the return was filed within the extended due date, interest under section 234A was not to be levied. [Paras 8]

AO to verify applicability of CBDT extension and filing date; if verified, interest under section 234A should not be levied; Ground No. 4 allowed for statistical purposes.

Interest under section 234B - Levy of interest under section 234B consequential to assessment after giving effect to Tribunal's directions. - HELD THAT: - The Tribunal recorded that interest under section 234B will be levied by the AO after giving effect to the Tribunal's order and as per law. No substantive adjudication on merits was made; the matter is left to the AO to compute and levy as required. [Paras 9]

AO to levy interest under section 234B, if applicable, after giving effect to this order.

Credit for Dividend Distribution Tax - Claim for credit of Dividend Distribution Tax and consequential interest under section 115P. - HELD THAT: - The Tribunal directed the AO to verify the assessee's claim for DDT credit from the challan to be furnished and, if found correct, to allow the credit. The direction contemplates verification of documentary evidence and appropriate adjustment by the AO. [Paras 9]

AO to verify challan evidence and grant DDT credit if supported; Ground No. 6 allowed for statistical purposes.

Final Conclusion: Appeal allowed for statistical purposes; matters remitted to the Assessing Officer for expeditious disposal or fresh adjudication as directed (rectification under section 154 to be disposed and no adverse action until then; TP, section 80G, interest and DDT-credit issues to be verified and decided by the AO in accordance with the Tribunal's directions).

Treatment of cash deposits as unexplained income - proof of agricultural income by production and sale of crops - capital asset test for agricultural land located beyond municipality limits - deduction under section 54F on investment of capital gains in residential house - reopening of assessment and requirement of fresh adjudication after opportunity of hearing

Treatment of cash deposits as unexplained income - proof of agricultural income by production and sale of crops - Addition of Rs. 31,58,740/- treated as unexplained cash deposits - HELD THAT: - The Tribunal noted that the assessing officer had made the addition in an ex-parte assessment on the basis of cash deposits reported by the department. The assessee contended that the deposits represented receipts from sale of agricultural produce (roses, tomato, wheat) and produced 7/12 extracts and a statistical report estimating yields and values. The Tribunal observed that the statistical report alone could not be treated as conclusive proof and that the assessee had been unable to properly place supporting evidence before the Assessing Officer because the assessment was completed ex-parte. Considering the totality of facts and in the interest of justice, the Tribunal exercised its discretion to set aside the orders and remand the matter to the Assessing Officer for fresh adjudication after affording the assessee a reasonable opportunity to substantiate the agricultural receipts, verify records (including bank entries, 7/12 extracts, production and sale evidence) and apply law to facts. [Paras 10]

Addition remanded to the Assessing Officer for fresh adjudication after providing opportunity of hearing to the assessee.

Capital asset test for agricultural land located beyond municipality limits - deduction under section 54F on investment of capital gains in residential house - change of opinion by assessing officer on determination of full value of consideration - Determination of long term capital gain on sale of agricultural land and alternative claim of deduction under section 54F - HELD THAT: - The Tribunal recorded the assessee's contention that the sold land was agricultural land not a capital asset as it was located beyond eight kilometres of the nearest municipality, and alternatively that deduction under section 54F was claimable as part of the sale proceeds were invested in constructing a residential house. The Tribunal also noted the assessing officer's shift in the remand report to adopt a higher fair market value and the assessee's objection to that change. Finding that the original assessment and first appellate orders were rendered without full participation of the assessee, the Tribunal declined to decide these contested factual and legal questions on the record before it. Instead, the Tribunal set aside the orders and remanded the matter to the Assessing Officer to determine, on facts and in accordance with law, (i) whether the land qualifies as agricultural land not being a capital asset, (ii) the correct full value of consideration to be adopted, and (iii) the entitlement to deduction under section 54F, after giving the assessee reasonable opportunity to produce evidence including certificates, sanctioned plans, completion certificates and other supporting documents. [Paras 10]

Matter remanded to the Assessing Officer for fresh decision on capital gains characterization, valuation and deduction claim after affording opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and set aside the orders of the authorities below, remitting the issues of cash deposit addition and long term capital gain / section 54F claim to the Assessing Officer for fresh adjudication after providing the assessee a reasonable opportunity of hearing; the Assessing Officer is at liberty to proceed and pass appropriate orders in accordance with law.

Exemption under section 11 - filing requirements under Section 12A(1)(ba) read with Section 139(4A) - first proviso to section 143(1) - opportunity to be heard / principles of natural justice - Rectification under section 154 - Condonation of delay in filing Form No.10B - CBDT Circulars authorising condonation up to 365 days

Exemption under section 11 - filing requirements under Section 12A(1)(ba) read with Section 139(4A) - first proviso to section 143(1) - opportunity to be heard / principles of natural justice - Rectification under section 154 - Whether the CPC/Ld. CIT(A) could deny exemption under section 11 where the assessee filed the return along with Form 10B belatedly by 32 days but before processing, and whether the rectification rejecting such claim was sustainable - HELD THAT: - The Tribunal found that the assessee, a registered public charitable trust, filed the return for AY 2020-21 along with the audit report in Form No.10B on 20.03.2021 (32 days after the due date) and that the CPC processed the return under section 143(1) on 29.11.2021 taxing the receipts. The Tribunal recorded that, having regard to the requirements of section 12A(1)(ba) read with section 139(4A), and the procedural safeguards in the first proviso to section 143(1), the CPC ought not to have denied the exemption without giving the assessee the opportunity prescribed by the proviso. The Tribunal held that denial of exemption in the circumstances amounted to a breach of natural justice since the audit report had been filed before processing; consequently the rectification order rejecting the claim could not be legally sustained. On that basis the Tribunal set aside the impugned order of the Ld. CIT(A). [Paras 5, 6]

Impugned order set aside; denial of exemption sustained to be unsustainable for want of opportunity under the first proviso to section 143(1); matter remitted for further action consistent with the order.

Condonation of delay in filing Form No.10B - CBDT Circulars authorising condonation up to 365 days - Direction as to condonation of delay in filing Form No.10B and consequent further proceedings by the CPC - HELD THAT: - The Tribunal noted CBDT instructions and circulars authorising Commissioners to condone delay (including power to condone delay up to 365 days for relevant years) and observed that the assessee should apply for condonation of the 32-day delay before the appropriate authority as per Circular No.2/2020 and related CBDT communications. The Tribunal directed that upon such application being made, the CPC should reprocess the return and pass orders after giving the assessee opportunity if any adjustments are proposed, thereby remitting the matter for exercise of the delegated condonation power and for fresh processing in accordance with law. [Paras 6]

Assessee to file application for condoning delay as per the CBDT circulars; CPC to reprocess the return afresh after allowing opportunity and pass orders in accordance with law.

Final Conclusion: Appeal allowed for statistical purposes: the Tribunal set aside the orders upholding CPC's rejection of rectification, directed the assessee to seek condonation of the brief delay in filing Form No.10B in terms of CBDT circulars, and remitted the matter to the CPC to reprocess the return and pass fresh orders after affording the assessee the opportunity required by law.

Credit for Tax Deducted at Source (TDS) on mobilization advance - Refund/credit where advance is refunded upon termination/cancellation of contract - Timing of allowance of TDS credit where amount is not offered to tax in earlier year - Interpretation and applicability of Rule 37BA regarding year of allowance of TDS credit

Credit for Tax Deducted at Source (TDS) on mobilization advance - Refund/credit where advance is refunded upon termination/cancellation of contract - Timing of allowance of TDS credit where amount is not offered to tax in earlier year - Entitlement of the assessee to claim credit of brought-forward TDS relating to mobilization advance in AY 2021-22 after contract termination and refund of advance. - HELD THAT: - The Tribunal examined the facts that TDS was deducted by the deductor on mobilization advance in an earlier year, part of that credit had been claimed in AY 2020-21, and the balance was claimed in AY 2021-22 after the contract was terminated and advances refunded. The Tribunal considered CBDT circulars and judicial precedents holding that where an amount constituting mobilization advance is not chargeable to tax and is refunded on termination, the tax deducted thereon cannot be retained by revenue and credit/refund must be allowed to the assessee. The Tribunal rejected the Revenue's reliance on Rule 37BA(3) as a bar to allowing credit in the year in which the refund/termination occurs, noting that the deductor had deposited tax to Government account and had not revised its TDS return; consequently the assessee was entitled to claim the brought-forward TDS in AY 2021-22. The Tribunal directed allowance of the brought-forward TDS as claimed, subject to verification described below. [Paras 10, 11]

Appeal allowed and the assessee entitled to credit of the brought-forward TDS as claimed for AY 2021-22.

Verification of deductor's revised TDS return / refund claim - Limited verification before allowing TDS credit - Duty of the Assessing Officer to verify whether the deductor (HPCL) has filed a revised TDS return or claimed refund before allowing the assessee's claimed credit. - HELD THAT: - Although the Tribunal held that the assessee is entitled to credit, it directed the AO to verify from the system whether HPCL had filed a revised TDS return or otherwise claimed refund of the TDS in question. This is a directed verification limited to ensuring that no duplicate refund or credit arises and does not require re-adjudication of the entitlement on merits, which the Tribunal has already decided in favour of the assessee. [Paras 10]

AO to verify whether the deductor has claimed refund/revised TDS return; subject to such verification, allow the claimed brought-forward TDS credit.

Final Conclusion: The assessee's appeal is allowed: the Tribunal directed that the brought-forward TDS on mobilization advance be credited as claimed in AY 2021-22, subject only to the Assessing Officer verifying whether the deductor has filed a revised TDS return or obtained refund, and thereafter granting the credit.

Stay of proceedings under Section 148 - Applicability of Section 50C - Related-party transfer between mother and son - Relevance of circle rate to invocation of valuation provisions

Stay of proceedings under Section 148 - Continuation of stay of further proceedings issued pursuant to notice under Section 148 of the Income Tax Act, 1961 - HELD THAT: - The Court, upon hearing counsel, directed that the interim stay of further proceedings pursuant to the notice issued under Section 148 be continued. This order was made having regard to the pendency of the petition and the respondents' issuance of the notice despite the familial relationship between vendor and vendee. No paragraph numbers recording separate findings are specified in the order.

Stay of further proceedings under the notice issued under Section 148 is continued.

Applicability of Section 50C - Related-party transfer between mother and son - Relevance of circle rate to invocation of valuation provisions - Reference to circle rate is not relevant to invoke Section 50C in a transfer between related parties (mother and son) - HELD THAT: - The Court observed that the respondents issued the notice notwithstanding that the transaction was between mother and son. In these circumstances the Court recorded that reference to the circle rate, which may be relevant for execution of a sale deed or gift deed, has no relevance for invoking Section 50C of the Act in the factual matrix before it. The observation formed part of the reasons for continuing the interim relief and for requiring further pleadings from the parties.

Circle rate reference does not justify invocation of Section 50C in the transaction between mother and son as observed by the Court.

Final Conclusion: Interim stay of proceedings under the notice issued under Section 148 is continued; the Court recorded that circle rate is not relevant for invoking Section 50C in the mother-son transaction, directed filing of counter-affidavit and rejoinder within specified timeframes and listed the matter for further hearing in the week commencing 11 November 2024.

Issuance of notice under Section 148 time-barred by the first proviso to Section 149(1) - reopening of assessment beyond prescribed limitation under the first proviso to Section 149(1) - prospective application of extended ten-year period under Section 149(1)(b) limited by proviso for assessment years 2021-22 and before - reliance on judicial pronouncements interpreting the proviso (Manju Somani; Union of India v. Rajeev Bansal)

Issuance of notice under Section 148 time-barred by the first proviso to Section 149(1) - reopening of assessment beyond prescribed limitation under the first proviso to Section 149(1) - Validity of the impugned order under Section 148A(d) and the notice issued under Section 148 in respect of AY 2017-18 - HELD THAT: - The High Court accepted the petitioner's contention that the notice for AY 2017-18 was issued beyond the period of limitation prescribed by the first proviso to Section 149(1). The Court relied on the interpretation in the recent Supreme Court decision which explains that the proviso prevents issuance of a notice under Section 148 for assessment years beginning on or before 1 April 2021 where the earlier shorter time-limit (six years) under the old regime had already expired at the time of issuance, thereby limiting the retrospective operation of the extended ten-year period. Applying that principle, the Court held that the impugned notice and the order under Section 148A(d) could not be sustained for AY 2017-18 as they were time-barred under the proviso.

The impugned order dated 01.05.2024 and the notice under Section 148 in respect of AY 2017-18 are set aside.

Final Conclusion: Petition allowed; the reassessment notice and the action under Section 148A(d) for AY 2017-18 were held time-barred by the first proviso to Section 149(1) and accordingly quashed.

Issue of notice - digital signing and completion of generation - due despatch as constitutive of issuance - reopening of assessment under Section 148/148A - limitation period for reopening where escaped income is below threshold - threshold limit for income escaping assessment

Issue of notice - digital signing and completion of generation - due despatch as constitutive of issuance - Date on which an e-notice on the ITBA portal is to be treated as issued for purposes of limitation - HELD THAT: - The Court applied the established principle that a notice is 'issued' only when the issuer, having drawn up and signed the notice, makes an overt act to ensure its despatch; mere generation on the ITBA screen prior to signing does not constitute issuance. The impugned notice was digitally signed and the system process was completed on 01.04.2023; earlier steps begun on 31.03.2023 cannot be treated as issuance on that date. The fiscal-year identifiers in the DIN/notice number also indicate issuance in 2023-24. Therefore the notice must be treated as issued on 01.04.2023 and not on 31.03.2023 (court's reasoning and finding in para. 7). [Paras 7]

The impugned notice dated 01.04.2023 is to be treated as issued on 01.04.2023 and not on 31.03.2023.

Reopening of assessment under Section 148/148A - limitation period for reopening where escaped income is below threshold - threshold limit for income escaping assessment - Validity of reopening the assessment for AY 2019-20 where alleged escaped income is below the statutory threshold and the notice was issued after the three-year period - HELD THAT: - Having held that the notice was issued on 01.04.2023, the Court compared the information in the annexure which ascertained the income alleged to have escaped assessment at an amount below the Rs.50,00,000 threshold. Clause (b) of Section 149(1) (enabling issue beyond three years) therefore did not apply. Consequently, issuance of the notice beyond the three-year period from the end of the relevant assessment year was impermissible. The Court found merit in the petitioner's contention and concluded that reassessment proceedings initiated by the impugned notices/orders were barred by limitation (court's reasoning and finding in paras. 4 and 8). [Paras 4, 8]

Reopening was time-barred and therefore invalid because the escaped income was below the threshold and the notice was issued after the three-year period.

Final Conclusion: The writ petition is allowed: the impugned notices dated 01.04.2023 and 17.04.2023 and the impugned orders dated 17.04.2023 and 01.08.2024 are set aside as the reassessment was time-barred.

Summary order. Appeal under Section 260A disposed of on the ground of low tax effect in light of Central Board of Direct Taxes Circular No.9 of 2024; the substantial questions of law raised by the revenue are left open. Stay application GA 1 of 2024 disposed of.

Authority to issue notice under Section 143(2) - Assessing Officer or the prescribed income-tax authority - authorization under Rule 12E by the CBDT - service versus issuance of statutory notice - jurisdiction of Assessing Officer to issue notice under Section 142(1)

Authority to issue notice under Section 143(2) - Assessing Officer or the prescribed income-tax authority - authorization under Rule 12E by the CBDT - Validity of the notice dated 23.06.2024 issued under Section 143(2) by the Assistant Commissioner of Income Tax/Deputy Commissioner of Income Tax (International Taxation), Circle-1(1)(1), Delhi - HELD THAT: - Section 143(2) contemplates that either the Assessing Officer or the prescribed income-tax authority may serve a notice. A plain reading permits either authority to act 'as the case may be'. Rule 12E permits the CBDT to authorise an income-tax officer not below the rank of Income-tax Officer to act as the prescribed authority for purposes of Section 143(2). The CBDT notifications dated 12.05.2022 and 28.05.2022 authorised the Assistant Commissioner/Deputy Commissioner specified in the notification to act as the prescribed income-tax authority. The impugned notice dated 23.06.2024 was issued by that authorised officer. The challenge that the officer lacked jurisdiction therefore fails. [Paras 5, 7, 8, 9, 10]

The notice dated 23.06.2024 under Section 143(2) is validly issued by the authorised prescribed income-tax authority and cannot be quashed for want of jurisdiction.

Service versus issuance of statutory notice - jurisdiction of Assessing Officer to issue notice under Section 142(1) - Validity and timeliness of the notice dated 15.07.2024 issued under Section 142(1) and whether it was time-barred because of alleged invalidity of the earlier Section 143(2) notice - HELD THAT: - The contention that a prescribed income-tax authority may only 'serve' but not 'issue' a notice under Section 143(2) was rejected as insubstantial. Having held that the earlier Section 143(2) notice was validly issued by an authorised officer, the Assessing Officer (AO) possessed jurisdiction to issue the subsequent Section 142(1) notice. The AO's power to proceed with completing the assessment is not vitiated by the contentions advanced on jurisdiction or limitation which rested on the premise that the Section 143(2) notice was invalid. The petition did not press any separate challenge under Section 144B concerning NaFAC, and that ground was not addressed. [Paras 11, 12, 13, 14]

The notice dated 15.07.2024 under Section 142(1) is not beyond the period of limitation and the AO had jurisdiction to issue it; the assessment may proceed.

Final Conclusion: The petition challenging the notices dated 23.06.2024 (Section 143(2)) and 15.07.2024 (Section 142(1)) is dismissed. The impugned notices were held to be issued by competent authority and not time barred; no other un pleaded grounds were decided.

Penalty under section 271AAC(1) - best judgment assessment under section 144 - remand to the Assessing Officer for de novo assessment - penalty unsustainable where subsequent assessment accepts returned income

Penalty under section 271AAC(1) - remand to the Assessing Officer for de novo assessment - penalty unsustainable where subsequent assessment accepts returned income - Validity of the penalty levied under section 271AAC(1) for assessment year 2017-18 - HELD THAT: - The assessee had been subjected to a best judgment assessment under best judgment assessment under section 144, whereby an addition was made on account of cash deposits. The Tribunal in the quantum appeal remanded the matter to the Assessing Officer for a fresh assessment after affording opportunity of hearing. A penalty under penalty under section 271AAC(1) was levied by the AO and sustained by the CIT(A). Subsequently, pursuant to the Tribunal's directions, the AO framed a fresh assessment in which the assessee's returned income was accepted and no addition was made. Given that the second-round assessment accepts the returned income, the penalty previously levied does not survive; while the AO may, in accordance with law, take a fresh view on levy of penalty consonant with any future assessment, the existing penalty is not sustainable and is therefore quashed. [Paras 6]

Penalty under section 271AAC(1) set aside as unsustainable in view of the subsequent assessment accepting returned income.

Final Conclusion: The appeal is allowed: the penalty levied under section 271AAC(1) for AY 2017-18 is quashed in view of the de novo assessment accepting the returned income; the AO remains free to consider penalty afresh in accordance with law if warranted by any future assessment.

Validity of initiation of revision under section 263 of the Income-tax Act - Explanation 2(a) to Section 263 - erroneous and prejudicial test - Due verification by Assessing Officer - TDS credit allocation and prejudice to Revenue - Reassessment under section 147 read with section 144B

Validity of initiation of revision under section 263 of the Income-tax Act - Explanation 2(a) to Section 263 - erroneous and prejudicial test - Due verification by Assessing Officer - TDS credit allocation and prejudice to Revenue - Whether the Principal Commissioner of Income Tax was justified in invoking section 263 by treating the assessment order dated 15.03.2022 as erroneous and prejudicial to the interests of the Revenue and setting it aside under Explanation 2(a) to section 263. - HELD THAT: - The Tribunal found as a matter of fact that the partnership firm was dissolved on conversion into an LLP w.e.f. 18.02.2015 and that income after conversion was offered to tax and returned by the LLP for A.Y. 2016-17. The AO issued notice under section 148 on the basis of TDS information appearing in the name of the erstwhile partnership firm, issued statutory notices under sections 142(1) and 143(2), considered the partnership firm's replies explaining that no income accrued to the dissolved firm and that the corresponding income and tax accounting were in the LLP, and completed reassessment under section 147 r.w.s. 144B at the returned income without making additions. The PCIT, relying on the fact that TDS credit of a certain amount was reflected in the partnership firm's name and a refund resulted, held that due verification was not made and invoked Explanation 2(a) to section 263. The Tribunal recorded that the partnership firm had specifically informed the AO of the conversion and of the TDS being reflected in the old entity; the LLP's return showed claim of TDS (with part credit allowed) and there was no double grant of TDS credit (only the partnership firm appeared to have received the particular TDS credit). Applying the two-limb test that a revision under section 263 requires the assessment order to be both erroneous and prejudicial to the Revenue, and noting the absence of prejudice because no double benefit was granted to two entities, the Tribunal concluded that the conditions for exercise of jurisdiction under section 263 were not satisfied. The Tribunal further noted and applied authority relied upon by the assessee concerning grant of TDS credit where the deductee has not availed benefit [Relcom ] and the principle in Malabar Industrial Co. Ltd. that both error and prejudice must coexist to sustain section 263. Having found that the AO had made the requisite enquiries and taken the assessee's explanation into account, and that the Revenue suffered no prejudice from the assessment order, the Tribunal held that the PCIT's order setting aside the assessment under Explanation 2(a) was unsustainable. [Paras 8, 9, 10]

Impugned order under section 263 quashed; PCIT not justified in setting aside the assessment order.

Final Conclusion: The appeal is allowed: the order passed by the Principal Commissioner under section 263 setting aside the assessment dated 15.03.2022 is quashed as the requirements of Explanation 2(a) to section 263 (error prejudicial to Revenue) were not satisfied and no prejudice to Revenue was shown.

Transfer pricing - arm's length price - comparability analysis - turnover filter (10 times / 1/10th) - related party filter - deferred receivables as international transaction - interest on delayed receivables at SB rate of 6% with 60 days credit - remand to TPO/Assessing Officer for fresh examination

Comparability analysis - remand to TPO/Assessing Officer for fresh examination - Remand for reconsideration of exclusion of six comparable companies from the comparable set for determination of ALP. - HELD THAT: - The Tribunal noted that an identical contention succeeded in the assessee's own appeal for A.Y. 2016-17 where the matter was remitted to the TPO to examine whether the disputed companies appear in the search matrix and are functionally comparable after applying applicable filters. Observing identical facts and circumstances for A.Y. 2017-18, the Tribunal remitted the issue of rejection of six comparables to the Assessing Officer/TPO for fresh examination of functional comparability and, if comparable, to include them for computing the ALP. The remand directs application of the applicable filters by the TPO/Assessing Officer on reconsideration. [Paras 10]

Issue remanded to the Assessing Officer/TPO for fresh examination of the six disputed comparables and determination of ALP accordingly.

Turnover filter (10 times / 1/10th) - comparability analysis - Application of turnover filter to exclude comparables having turnover disproportionate to the assessee. - HELD THAT: - The Tribunal held that once turnover is used as a filter, it must be applied consistently on both sides. Relying on its earlier decision in the assessee's own case, the Tribunal directed that comparables having turnover more than ten times the assessee or less than onetenth of the assessee be excluded. The Tribunal set aside the matter to the TPO to apply the said '10 times' upper and '1/10th' lower turnover filters to the entire set of comparables (not selectively) and carry out the necessary inclusion/exclusion for ALP computation. [Paras 16]

Matter remitted to the TPO to apply the tentimes and onetenth turnover filters across the whole comparable set and redetermine ALP.

Related party filter - Assessee did not press challenge to related party filter; ground dismissed as not pressed. - HELD THAT: - The assessee chose not to press its ground challenging the TPO's application of a 25% relatedparty filter in place of the assessee's 15% filter. The Department raised no objection to dismissal. The Tribunal accordingly dismissed this ground as not pressed. [Paras 17]

Ground dismissed as not pressed.

Deferred receivables as international transaction - interest on delayed receivables at SB rate of 6% with 60 days credit - Remand for application of interest on deferred receivables at SB rate of 6% with 60 days credit period. - HELD THAT: - The Tribunal observed that an identical issue was decided in the assessee's A.Y. 2016-17 and that the assessee agreed to the SB rate of 6% with a 60day standard credit period. For consistency, the Tribunal remitted the matter to the Assessing Officer/TPO to apply the savings bank rate of 6% on deferred receivables after allowing a 60day credit period. The issue was thereby partly allowed subject to computation by the AO/TPO. [Paras 21]

Issue remitted to the AO/TPO to apply SB rate of 6% with 60 days credit on deferred receivables.

Foreign exchange fluctuation - Assessee did not press challenge regarding classification of foreign exchange fluctuation gain/loss; ground dismissed as not pressed. - HELD THAT: - At hearing the assessee declined to press its ground challenging the TPO's characterization of foreign exchange fluctuation gain/loss as operating in nature. The Department raised no objection to dismissal. The Tribunal dismissed this ground as not pressed. [Paras 22]

Ground dismissed as not pressed.

Final Conclusion: Appeal allowed for statistical purposes; issues relating to inclusion/exclusion of specified comparables and application of the turnover filter remitted to the Assessing Officer/TPO for fresh examination and recomputation of ALP; deferred receivables to be benchmarked by AO/TPO at SB rate of 6% with 60 days credit; other challenged grounds dismissed as not pressed.

Treatment of cancelled allotments under corporate insolvency resolution process (CIRP) - duty of the resolution professional to collate and verify claims from corporate debtor's records - limited adjudicatory power of the resolution professional - commercial wisdom of the committee of creditors and limited judicial review of an approved resolution plan - preCIRP cancellation of allotments and its nonjusticiability in CIRP proceedings - effect of acceptance of partial refund under RERA on status of allotment - information memorandum reflecting corporate debtor's recorded position

PreCIRP cancellation of allotments and its nonjusticiability in CIRP proceedings - treatment of cancelled allotments under corporate insolvency resolution process (CIRP) - Whether the appellants' preCIRP cancelled allotments could be restored by directing amendment of the Information Memorandum and by treating them at par with other allottees in the approved Resolution Plan. - HELD THAT: - The Tribunal found on the material presented that the Corporate Debtor had cancelled the allotments prior to initiation of CIRP and the Information Memorandum correctly recorded that status after verification from the corporate records. The RP's role is confined to collating and verifying claims from the corporate debtor's records and it lacks power to reverse preCIRP corporate actions. The cancelled allotments were considered by the CoC and specific treatment for such categories was incorporated in the Resolution Plan (Clause 3.9(11)(C)), which was approved by the CoC. In view of these facts and the RP's limited powers, the relief sought to restore allotments and to direct amendment of the IM to alter their preCIRP status was not warranted. [Paras 35, 36, 37, 38, 49]

Prayer to restore allotments and to amend the Information Memorandum to treat appellants at par was rejected; appeal dismissed on this ground.

Duty of the resolution professional to collate and verify claims from corporate debtor's records - limited adjudicatory power of the resolution professional - Whether the RP breached duty or had adjudicatory authority to overturn preCIRP cancellations when verifying and admitting the appellants' claims. - HELD THAT: - The Tribunal reiterated that the RP is obliged to collate claims and verify them from the corporate debtor's books. Verification showed the allotments were cancelled preCIRP. The RP admitted the balance amounts and placed appellants in a separate category; however, the RP does not possess adjudicatory power to reverse actions taken by the corporate debtor before CIRP. Consequently, no fault was found in the RP's conduct in verification and admission of claims. [Paras 35, 36]

No breach by the RP; RP could not reverse preCIRP cancellations and acted within its role in collating and verifying claims.

Effect of acceptance of partial refund under RERA on status of allotment - information memorandum reflecting corporate debtor's recorded position - Whether acceptance of partial payments pursuant to UPRERA decrees and nonchallenge of the cancellation amounts to acquiescence in cancellation and affects appellants' entitlement. - HELD THAT: - The Tribunal observed that appellants had obtained UPRERA decrees and accepted partial payments from the erstwhile management before CIRP. Acceptance of refund payments was held to indicate that the allottees had, by their conduct, accepted cancellation of allotments; the IM recorded these facts and the CoC acted on that information. The NCLT/NCLAT cannot be called upon, in CIRP proceedings, to undo preCIRP actions which were not challenged earlier despite opportunities to do so. [Paras 40, 41, 43, 44]

Acceptance of part payments and failure to earlier challenge preCIRP cancellation justified treating appellants as cancelled allotments for purposes of CIRP.

Commercial wisdom of the committee of creditors and limited judicial review of an approved resolution plan - Whether the Resolution Plan could be set aside on the ground that the Information Memorandum contained incorrect facts and that the CoC's commercial wisdom was thereby vitiated. - HELD THAT: - The Tribunal held that the Resolution Plan was prepared after considering claims collated by the RP and was approved by the CoC with 100% voting share. The plan provided express treatment for cancelled allotments. The scope of judicial review of a resolution plan approved by the CoC is limited under the Code; absent a demonstrable infirmity in the IM or the approval process, the Tribunal will not interfere with the CoC's commercial wisdom. The record did not disclose such infirmity. [Paras 21, 38, 39]

No interference with the CoC's approval; challenge to the plan on alleged incorrect IM was rejected.

Principles of natural justice in CIRP participation and Information Memorandum disclosures - Whether appellants were denied principles of natural justice by not being informed of cancellation until receipt of the IM and whether that vitiates the process. - HELD THAT: - The Tribunal noted appellants had opportunities to raise objections earlier-when receiving partial payments, at the time of CIRP and during CoC participation-and by participating in CoC meetings were deemed to have knowledge of the IM contents. The RP had taken up their grievance in CoC meetings and the CoC deliberated the issue. On these facts the Tribunal found no denial of natural justice that would invalidate the process. [Paras 42, 43]

No violation of natural justice; appellants' plea on this ground was rejected.

Final Conclusion: The appeal is dismissed; the Resolution Plan and the process of verification and classification of the appellants' claims stand affirmed and no relief is granted to restore the cancelled allotments or to amend the Information Memorandum.

Service tax on reverse charge - salary exclusion from "service" under the negative list - employer-employee relationship as determinative of taxability - definition of "service" under Section 65B(44) of the Finance Act, 1994 - TDS under the Income-tax Act as indicia of employment

Salary exclusion from "service" under the negative list - employer-employee relationship as determinative of taxability - TDS under the Income-tax Act as indicia of employment - definition of "service" under Section 65B(44) of the Finance Act, 1994 - service tax on reverse charge - Whether monthly remuneration paid to the Director is exigible to service tax on reverse charge or is excluded as salary under the negative list - HELD THAT: - The Tribunal found on the facts that the Director received monthly remuneration paid and recorded by the appellant as 'salary', with TDS deducted under the head of salary and Form-16 issued; statutory indicia such as contributions to statutory funds and filings under the Companies Act further established the Director as a whole-time director in employment of the company. Applying the exclusion in the negative list embedded in the definition of "service" under Section 65B(44), which excludes "a provision of service by an employee to the employer in the course of or in relation to his employment", the Tribunal held that amounts paid as salary to a whole-time director do not constitute a taxable service. The Tribunal also relied on consistent judicial precedents dealing with identical facts, and rejected the Revenue's contention that absence of day-to-day supervision precludes an employer-employee relationship, observing that the nature of the company-director relationship and statutory controls suffice to characterize the director as an employee. Consequently the demand for service tax under reverse charge could not be sustained. [Paras 4, 5]

Impugned order set aside; appeal allowed and demand of service tax on the Director's remuneration disallowed.

Final Conclusion: The Tribunal allowed the appeal, holding that remuneration paid to the whole-time Director and treated as salary (with TDS under salary and statutory filings) is excluded from "service" by the negative list and is not exigible to service tax under the reverse charge mechanism for the period 01.08.2012 to September 2014.

Reverse charge mechanism - double taxation - payment by service provider treated as discharge of tax (not deposit) - admissibility of Cenvat credit where tax on the service has been paid - no recovery of tax twice on the same service

Reverse charge mechanism - double taxation - payment by service provider treated as discharge of tax (not deposit) - admissibility of Cenvat credit where tax on the service has been paid - Liability of the service recipient to pay service tax on reverse charge basis where the service provider has already paid 100% of the service tax and entitlement to Cenvat credit of that tax - HELD THAT: - The Tribunal accepted that, as a matter of law, the appellant (service recipient) is prima facie liable under the reverse charge mechanism for manpower supply and security services. However, on the undisputed factual position that the service provider discharged 100% of the service tax and the department has accepted that payment, demanding the same tax again from the recipient would amount to double taxation. The Tribunal applied the established principle that once service tax on a particular service has been accepted by the revenue as paid by the provider, the same tax cannot be recovered again from the recipient; the payment made by the provider is a payment of service tax and not merely a deposit. On that basis the Tribunal held that denial of Cenvat credit to the recipient was not sustainable where the tax has already been paid by the provider. The Tribunal relied on its earlier decisions, including Shah Foods Limited , and a consistent line of precedents which hold that acceptance of payment by the revenue from the provider precludes a second demand from the recipient and permits Cenvat credit to the recipient when the tax has been paid on the service.

Demand of service tax from the appellant on reverse charge basis set aside and Cenvat credit held admissible where service tax on the same services was already paid by the service provider.

Final Conclusion: Impugned orders confirming service tax demand and denying Cenvat credit are set aside; appeal allowed on the ground that tax already paid by the service provider cannot be recovered again from the service recipient and the recipient is entitled to Cenvat credit.

Reimbursement of actual expenses - cost sharing arrangement - absence of consideration / no service - Business Support Services under Section 65(104c) of the Finance Act, 1994 - business auxiliary services - pure agent - service tax - revenue neutrality / Cenvat credit

Reimbursement of actual expenses - cost sharing arrangement - absence of consideration / no service - Business Support Services under Section 65(104c) of the Finance Act, 1994 - Whether reimbursement of common administrative and maintenance expenses recovered by the appellant from group/associate companies under a cost sharing arrangement constitutes consideration for provision of Business Support Services taxable to service tax. - HELD THAT: - The Tribunal found as an undisputed fact that the appellant merely collected from fellow group companies their share of actual common expenditures without any markup or additional consideration. Applying the principle in the decision involving GSFC and the subsequent Tribunal authorities relied upon, the arrangement is in the nature of joint sharing of costs for common facilities and not the rendition of a service by the appellant to its associates. The appellant procured services from third party service providers and allocated actual costs among participating companies; such receipts are reimbursements of costs rather than consideration for a taxable service. The Tribunal noted that no specific service falling within the inclusive description of 'Business Support Services' was established by the Revenue and that treating cost sharing receipts as service consideration contradicts the factual finding that the appellant only acted to incur and allocate common costs. Consequently the demand under the Business Support Services classification fails.

Reimbursement of shared common expenditure does not constitute consideration for Business Support Services and is not taxable as service tax.

Business auxiliary services - pure agent - service tax - revenue neutrality / Cenvat credit - Whether the activity could alternatively be classified as business auxiliary services or taxed because the appellant acted as service provider rather than as a pure agent, and whether any service tax (if payable) would be neutralised by Cenvat credit. - HELD THAT: - The Tribunal held that even by hypothetical extension the activity could not be sensibly classified as business auxiliary services because there was no evidence of any of the specific activities envisaged by the definition being provided by the appellant. The appellant at best performed an agency/managerial function in procuring and allocating costs for common services; no additional fees, profit or separate consideration (other than actual cost recovery) was received. The Tribunal also observed the contention on revenue neutrality and availability of Cenvat credit but treated the primary legal point as the non existence of a taxable service; accordingly there was no sustainable basis to fasten service tax liability.

The activities are not classifiable as business auxiliary services; the appellant acted as a pure agent/manager for cost sharing and no service tax demand can be sustained (notwithstanding submissions on Cenvat/revenue neutrality).

Final Conclusion: Following precedent that joint cost sharing for common facilities between public sector/group companies constitutes sharing of expenditure and not provision of service, the Tribunal set aside the service tax demand and allowed the appeals.

Intermediary services - export of services - extended period of limitation - Place of Provision of Services Rules (POPS) - intermediary treated as location of service provider - remand for fresh adjudication

Extended period of limitation - remand for fresh adjudication - SNQS International Socks precedent - Whether the show cause notice dated 06.09.2016 is barred by limitation and whether the matter requires fresh adjudication on that question - HELD THAT: - The Tribunal found that material and documents bearing on the limitation question were not before the Adjudicating Authority at the time of original adjudication and that the department had earlier issued show cause notices for overlapping earlier periods which were subsequently dropped. The appellant produced additional documents and relied upon this Tribunal's decision in M/s. SNQS International Socks Pvt. Ltd., which has been endorsed by the Apex Court, indicating a similar controversy on limitation. In these circumstances the Tribunal concluded that the Adjudicating Authority must re-examine whether the extended period under the relevant law is invokable in view of earlier notices and the newly produced material, and must consider the SNQS decision while doing so. The Tribunal therefore did not decide the merits of the service-tax demand on the substantive question of whether the appellant's activities constituted export of services or intermediary services for the tax periods in issue; instead it required a fresh, reasoned determination on applicability of the extended period of limitation and related factual findings by the Adjudicating Authority. [Paras 4, 5]

Matter remanded to the original Adjudicating Authority for fresh consideration and specific findings on the applicability of the extended period of limitation, with directions to consider the SNQS International Socks decision and the additional documents filed by the appellant

Final Conclusion: Appeal allowed to the extent of remand: the adjudicating authority is directed to re-open and decide, after considering the additional material and relevant precedent, whether the demand is barred by limitation; no final decision was rendered on the substantive tax liability.

Appeal disposed as not pressed - monetary limit for filing appeal before the Supreme Court - questions of law kept open

Appeal disposed as not pressed - monetary limit for filing appeal before the Supreme Court - Appeals were not pressed and disposed of in view of the monetary limit fixed by the Board's circular. - HELD THAT: - The Supreme Court recorded that, having heard counsels for the parties and noting the Circular dated 2-11-2023 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes & Customs which fixes the monetary limit up to Rs.2 Crore for filing appeals before the Supreme Court, the appeals were not pressed by the parties. Consequently, the Court disposed of the appeals as not pressed in light of the monetary limit fixed by the Board. The Court's order is confined to disposal of the appeals on that basis and does not adjudicate any contested question of law.

Appeals disposed of as not pressed due to the monetary limit fixed by the Board's circular.

Questions of law kept open - Whether questions of law arise was not finally decided; such questions of law, if any, are left open by the Court. - HELD THAT: - Although the appeals were disposed of as not pressed because of the Board's monetary limit, the Court expressly refrained from finally deciding any question of law. The order preserves the petitioners' right to contend questions of law notwithstanding the dismissal as not pressed, leaving those legal issues undetermined for potential future consideration.

Questions of law, if any, are kept open.

Final Conclusion: The appeals have been disposed of as not pressed in view of the Central Board's circular fixing the monetary limit for filing appeals before the Supreme Court; the Court has left any questions of law, if they exist, open for future determination.

Refund of unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - clearances to an export warehouse under Rule 20 treated as export for refund purposes - limitation on adjudication to the scope of the show cause notice / no order beyond notice - beneficial construction of taxing statutes in favour of export promotion

Refund of unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 - clearances to an export warehouse under Rule 20 treated as export for refund purposes - beneficial construction of taxing statutes in favour of export promotion - Entitlement to refund of unutilised CENVAT credit for goods cleared to an export warehouse which were subsequently exported - HELD THAT: - The Tribunal held that Rule 5 of the CCR, 2004 does not distinguish between deemed exports and physical exports and that Board Circular No. 581/18/2001 and the CBEC Supplementary Instructions recognize supplies to export warehouses as eligible for refund. Since the subsequent physical export of the goods from the export warehouse under ARE 1 was not disputed, the DTA supplier's clearance to the export warehouse satisfies the export condition for refund. Applying the principle that taxing provisions with a beneficial object for export promotion should be construed liberally, the Tribunal allowed the refund claims and set aside the rejection on merits insofar as it denied refund solely because the physical export was not executed by the supplier itself. [Paras 6, 7]

Refund under Rule 5 allowed for clearances to the export warehouse where ultimate export under ARE 1 is established; impugned denial on this ground set aside.

Limitation on adjudication to the scope of the show cause notice / no order beyond notice - Validity of adjudication by the Original Authority and Commissioner (Appeals) on a ground not raised in the show cause notice (that the appellant did not engage in manufacture) - HELD THAT: - The Tribunal applied the settled principle that an authority cannot travel beyond the bounds of the notice by adjudicating on grounds not specifically and unambiguously raised in the show cause notice. Relying on the Supreme Court's statement of that principle, the Tribunal found that the finding that the appellant had not engaged in manufacturing activity was not within the SCN and therefore that part of the impugned order was impermissible. Consequently, the appraisal and rejection of the refund on that ground were set aside. [Paras 5]

Adjudication beyond the scope of the SCN (denial for lack of manufacture) quashed; that part of the impugned order set aside.

Final Conclusion: Impugned order set aside and the appeals allowed; refunds granted as per law and appeals disposed of with consequential relief if any.

Exemption notification - parts and components - integral part / essential feature - scope of 'parts' and 'components' vis-a -vis external coatings - applicability of exemption to finished goods with coatings

Parts and components - integral part / essential feature - applicability of exemption to finished goods with coatings - Whether paints applied/coated on wind mills qualify for exemption under Notification No. 12/2013-CE (Sr. No. 332 read with List 8) as parts or components of the wind operated electricity generator - HELD THAT: - The Tribunal examined the nature and function of paint when applied to the wind operated electricity generator and concluded that paint, though applied externally, performs an essential protective and finishing function that makes it an integral feature of the finished goods. The court distinguished between constituent mechanical members that make up the internal functioning of the unit and external coatings, but held that such a distinction is artificial for the purpose of exemption: paint operates as a protective 'skin' that is applied at the completion of the manufacturing and finishing processes and thus forms part and parcel of the exempted goods. Consequently, painted wind mills are to be treated as the exempted wind operated electricity generator irrespective of coloration or coating, and the benefit of the exemption notification extends to paints applied to such goods. The Tribunal noted that a prior writ jurisdiction order of the High Court which confined itself to limited power did not affect the appellate determination and accordingly declined to follow the Authority for Advance Ruling's observation that paint is not a part, as that observation was not decisive in this appellate context. [Paras 4]

Paints applied to wind mills are an integral part of the wind operated electricity generator for the purpose of exemption and therefore qualify for benefit under the cited exemption notification.

Final Conclusion: The appeal is allowed; the order of the Commissioner confirming duty and penalty is set aside and the exemption is held applicable to paints applied on wind mills for the period November, 2015 to June, 2017, with consequential relief as appropriate.

Cenvat credit on outward Goods Transport Agency (GTA) services - freight included in assessable value - FOR (destination) sale / point of sale at buyer's premises - place of removal versus point of sale - beneficial Board Circulars and retrospective withdrawal - limitation / extended period demands where law was unsettled

Cenvat credit on outward Goods Transport Agency (GTA) services - freight included in assessable value - FOR (destination) sale / point of sale at buyer's premises - place of removal versus point of sale - Appellant entitled to Cenvat credit on service tax paid on outward GTA where freight formed part of assessable value and goods were cleared on FOR (destination) basis with delivery to customer's premises. - HELD THAT: - The Tribunal found as an established fact that the appellant delivered goods to the customer's premises and did not separately collect freight; freight was therefore included in the assessable value on which excise duty was discharged. Applying the principle that where sale is on FOR/destination basis and ownership/risk remains with the seller until delivery at buyer's premises, the outward freight forms part of input services used up to the point of removal (delivery) and qualifies as Cenvat credit. The Tribunal relied on its decision in Ultratech Cement Ltd and the explanatory Board Circular to distinguish place of removal from point of sale and to hold that where delivery obligation/transport liability remained with the manufacturer, service tax on outward GTA is admissible as input service. On these determinative facts the impugned orders denying credit were set aside and the appeals allowed. [Paras 4, 5]

Cenvat credit of service tax on outward GTA allowed in the facts where freight was included in assessable value and goods were cleared on FOR/destination basis.

Beneficial Board Circulars and retrospective withdrawal - limitation / extended period demands where law was unsettled - Benefit of beneficial Circulars available to appellant for the relevant period and extended-period demands not sustainable where the legal position was long in controversy. - HELD THAT: - The Tribunal accepted the appellant's submission that they acted pursuant to then-operative Board Circulars and that beneficial circulars cannot be withdrawn retrospectively. Given the persistent litigation and lack of settled law on admissibility of outward GTA credit since the inception of the Cenvat scheme, the Tribunal found no mala fide on the part of the appellant and held that demands for extended periods would not be sustainable on limitation grounds. Consequently, the appellant was held entitled to the benefit of the Circulars for the material period and protected from time-barred recovery for the extended period where appropriate. [Paras 4, 5]

Appellant entitled to benefit of earlier beneficial Circulars; extended-period demands not sustained in view of unsettled legal position.

Final Conclusion: Impugned orders denying Cenvat credit on outward GTA were set aside; appeals allowed. The appellant is entitled to claim Cenvat credit where freight was included in assessable value and goods were delivered on FOR/destination basis, and is entitled to benefit of the relevant beneficial Circulars with protection against extended-period demands arising from the long-standing litigation on the issue.

Exemption under Notification No. 12/2012 (Sr. No. 203) - Interpretation of description 'Pattis and pattas when subjected to any process other than cold rolling' - Scope of exemption to processes prior to cold rolling - Binding effect of Board clarification / circular

Exemption under Notification No. 12/2012 (Sr. No. 203) - Interpretation of description 'Pattis and pattas when subjected to any process other than cold rolling' - Scope of exemption to processes prior to cold rolling - Binding effect of Board clarification / circular - Whether Pattis and Pattas which have not undergone cold rolling (including hotrolled Pattis and Pattas) are eligible for exemption under Sr. No. 203 of Notification No. 12/2012-CE - HELD THAT: - The Tribunal held that the exemption entry at Sr. No. 203 covers Pattis and Pattas that have not undergone cold rolling. The Board's clarification (Instruction F. No. 96/85/2015-CX.I dated 07.12.2015) and the Central Excise Tariff Conference make clear that all processes prior to cold rolling are eligible for exemption under Sr. No. 203. Hotrolled Pattis and Pattas, which do not undergo cold rolling, therefore fall within the exemption. The Tribunal relied on its earlier decision in Multi Metal Industries adopting the Board circular and concluded that the identical issue is directly applicable to the present appeals; consequently the excise demand based on denial of exemption cannot be sustained.

Hotrolled Pattis and Pattas that have not undergone cold rolling are eligible for exemption under Sr. No. 203 of Notification No. 12/2012-CE; impugned orders denying exemption are set aside and the assessee's appeals are allowed.

Final Conclusion: The Tribunal allowed the assessee's appeals by applying the Board's clarification and its earlier decision in Multi Metal Industries, holding that Pattis and Pattas not subjected to cold rolling (including hotrolled goods) are exempt under Sr. No. 203 of Notification No. 12/2012-CE; the revenue's appeal is dismissed.

Classification of activity as manufacture or service - limitation / time-barred demand - absence of suppression and malafide intention - penalty under Section 11AC - Cenvat Credit treatment under Rule 4(5)(a) - payment of service tax under business auxiliary service

Limitation / time-barred demand - absence of suppression and malafide intention - Whether the excise demand raised after the normal period is barred by limitation and therefore not sustainable. - HELD THAT: - The Tribunal found the core controversy - whether the job-work activities amount to manufacture - to be the subject of conflicting decisions and a debatable question of law. The appellant had, in bona fide belief, characterised the activities as service and discharged service tax, filed ST-3 returns regularly, and there was no concealment or deliberate evasion. The department could have raised a show cause within the normal period if it disputed the classification; issuance of the notice only after 3-4 years rendered the demand beyond the normal period. In view of absence of suppression or malafide intention and the highly debatable nature of the classification issue, the demand for the period 2011-2013 was held to be hit by limitation and therefore unsustainable. [Paras 4]

Demand set aside as time-barred; entire demand for 2011-2013 not sustainable on limitation grounds.

Penalty under Section 11AC - absence of suppression and malafide intention - Whether penalty under Section 11AC is imposable on the appellant. - HELD THAT: - Having held that there was no suppression of facts or malafide intention - the appellant having paid service tax under a bona fide belief and regularly filed returns - the Tribunal concluded that the conditions for invoking penalty under Section 11AC were not made out. The penalty was therefore not sustainable in the facts of this case. [Paras 4]

Penalty under Section 11AC held not imposable.

Classification of activity as manufacture or service - Cenvat Credit treatment under Rule 4(5)(a) - payment of service tax under business auxiliary service - Determination of whether the activities of cutting, welding, bending etc. carried out by the appellant amount to manufacture. - HELD THAT: - The Tribunal expressly declined to decide the substantive question on merits because there exists a catena of conflicting decisions and the issue is highly debatable; a larger bench decision (Mahindra & Mahindra) cannot be mechanically applied without examining the specific activity in each case. Consequently, the Tribunal did not give any conclusive finding on whether the job-work amounts to manufacture, nor on related contentions about Cenvat credit treatment under Rule 4(5)(a) or the revenue-neutrality argued by the appellant. The matter was disposed of on limitation grounds only.

Merits left undecided; no conclusive finding on whether the activity amounts to manufacture - not adjudicated and thereby left open for consideration if limitation does not bar future proceedings.

Final Conclusion: Impugned order set aside and appeals allowed by the Tribunal on the sole ground of limitation for the period 2011-2013; penalty under Section 11AC held not imposable, while the substantive question whether the job-work activities constitute manufacture remains undecided.

Extended period of limitation - Classification under Chapter Heading 8704 versus Chapter Heading 8707 - Benefit of exemption under Notification No.6/2006-CE as amended - Filing of ER-1 returns

Extended period of limitation - Filing of ER-1 returns - Extended period of limitation is not invokable against the appellant. - HELD THAT: - The Tribunal accepted the appellant's submission that ER-1 returns were regularly filed classifying the products under Chapter Heading 8707 and claiming the exemption under the notification relied upon. On that factual and procedural basis the Tribunal held that the department could not invoke the extended period of limitation. The cases cited by the appellant were examined but distinguished on the ground that, unlike those decisions, the present appellant had itself classified under Chapter 8707 in ER-1 returns. Consequently the demand relating to the extended period was dropped. [Paras 6, 7]

Demand relating to the extended period of limitation is dropped.

Classification under Chapter Heading 8704 versus Chapter Heading 8707 - Benefit of exemption under Notification No.6/2006-CE as amended - Merit of classification - appellant had misclassified final products under Chapter Heading 8707 instead of Chapter Heading 8704, and the departmental demand within limitation is confirmed. - HELD THAT: - On merits the Tribunal found that the goods in question did not qualify for classification under Chapter Heading 8707 and that the correct classification was Chapter Heading 8704. The Tribunal further held that the precedents relied on by the appellant were distinguishable because, in those cases, the assessees had classified under Chapter Heading 8704 and claimed the exemption, whereas here the appellant had admittedly classified under 8707. Having dropped the extended-period demand, the Tribunal nonetheless confirmed the demand that was within limitation and directed payment with interest. [Paras 6, 8]

Demand within the period of limitation is confirmed and shall be paid with interest.

Penalty imposable - Extended period of limitation - No penalty is imposable on the appellant in the facts and circumstances of the case. - HELD THAT: - Since the Tribunal held that the extended period could not be invoked, and having considered the facts and conduct of the appellant (including filing of ER-1 returns), it concluded that imposition of penalty was not warranted. The Tribunal accordingly set aside the penalty confirmed by the lower authority. [Paras 7, 8]

No penalty is imposable on the appellant.

Final Conclusion: The appeal is disposed of by dropping the demand relating to the extended period of limitation and by confirming the departmental demand within limitation (to be paid with interest). No penalty is imposable on the appellant.

Eligibility to avail CENVAT credit of input services distributed via ISD under the CENVAT Credit Rules - integral unity of captive mines and manufacturing unit for purpose of input credit - distribution of CENVAT credit by captive mines as ISD under Rule 7(b) and Rule 3 of the CENVAT Credit Rules, 2004 - nexus between services used at captive mines and manufacture of dutiable goods - precedential effect of earlier Tribunal decision on identical facts (res integra)

Eligibility to avail CENVAT credit of input services distributed via ISD under the CENVAT Credit Rules - integral unity of captive mines and manufacturing unit for purpose of input credit - nexus between services used at captive mines and manufacture of dutiable goods - Entitlement of the appellant to avail CENVAT credit of input services paid and received at captive mines and distributed to the manufacturing unit through ISD invoices. - HELD THAT: - The Tribunal held that both the mines and the manufacturing unit belong to the same legal entity (SAIL) and that the captive mines are set up primarily to serve the manufacturing units, thereby forming an integral part of the manufacturing activity. Services such as security, mining and transportation availed at the mines bear a direct nexus with the appellant's manufacture of dutiable goods and thus fall within the scope of 'input services'. Rule 3 of the CENVAT Credit Rules does not require services to be received within the physical premises of the manufacturer, but only that they be used in or in relation to the manufacture of final products. The Tribunal also rejected the Commissioner's conclusion that distribution of credit by the mines contravened Rule 7(b), holding that distribution of credit by captive mines as an ISD is in accordance with law. The Tribunal further relied on its earlier decision on identical facts (Steel Authority of India Ltd. v. Commissioner of CGST & CE, Bolpur 2023 (12) TMI 1062 - CESTAT Kolkata) and other Tribunal precedents, treating the issue as no longer res integra and following the same conclusion for the covered period. [Paras 5, 6, 7]

Appellant entitled to avail CENVAT credit of input services relating to captive mines distributed via ISD; demands, interest and penalty set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the demands of service tax with interest and penalty and held that credit distributed by captive mines as ISD to the appellant's manufacturing unit is permissible under the CENVAT Credit Rules for the period 2006-07 to 2011-12 (up to June 2012).

Pre-arrest bail - prima facie incrimination - offences under the Wild Life (Protection) Act, 1972 - seizure and relocation of seized animals - conditions to prevent tampering with evidence or influencing witnesses

Pre-arrest bail - prima facie incrimination - conditions to prevent tampering with evidence or influencing witnesses - seizure and relocation of seized animals - Whether the applicant should be granted pre-arrest bail in connection with Forest Offence Report No.WL-08-2024 (also registered as WL-61-2024). - HELD THAT: - The Court found that the material on record does not prima facie incriminate the applicant. The applicant was not present at the time of the raid, was neither the owner nor the licensee of the premises and had merely attested the leave and license agreement as a witness; such attestation by itself does not indicate involvement in the offence. The seizure of the animals has been effected and it is reported that they have been relocated in accordance with law. Although the offences under the Act are serious, the prosecution's apprehension of possible tampering with evidence or influencing witnesses can be addressed by imposing suitable conditions. Balancing these factors and exercising discretion, the Court inclined in favour of bail while prescribing protective conditions to safeguard the investigation. [Paras 6]

Applicant granted pre-arrest bail on executing a PR bond and surety, subject to attendance when required and a prohibition (personal or through others) against tampering with evidence or influencing witnesses; matter disposed of accordingly.

Final Conclusion: Pre-arrest bail granted to the applicant in respect of Forest Offence Report No.WL-08-2024 (also registered as WL-61-2024) on conditions including bond and surety, attendance for investigation, and prohibition against tampering with evidence or influencing witnesses; application disposed of.

Interim injunction - prima facie case - balance of convenience - irreparable loss - appointment of sole arbitrator - undertaking accepted as court undertaking - ad-interim arrangement - Section 17 applications before the Arbitral Tribunal

Appointment of sole arbitrator - Section 12(1) disclosure - Appointment of Mr Justice D. G. Karnik (Retd.) as Sole Arbitrator and recordal of his disclosure - HELD THAT: - The parties placed on record a written Arbitration Agreement dated 18 November 2024 by which they mutually agreed to appoint Mr Justice D. G. Karnik (Retired) as Sole Arbitrator and to have the seat and venue of arbitration in Pune. A statement of disclosure under Section 12(1) from the proposed arbitrator indicating absence of circumstances giving rise to justifiable doubt was received. On that basis, and with the parties' consent, the Court took the Arbitration Agreement on record and appointed Mr Justice D. G. Karnik as the arbitrator to resolve the disputes between the parties. [Paras 28, 29, 30]

Mr Justice D. G. Karnik (Retd.) is appointed as Sole Arbitrator and his Section 12(1) disclosure is recorded.

Interim injunction - prima facie case - balance of convenience - irreparable loss - Whether interim injunctions granted by the District Court should be disturbed - HELD THAT: - The Court reviewed the three classical requisites for interlocutory injunctions-prima facie case, balance of convenience and irreparable injury-and recognised that while aspects of the prima facie case (notably enforceability of development/construction agreements) required detailed examination in arbitration, the District Judge had addressed all three aspects. Given substantial progress of construction (Towers A and B complete; Tower C up to 6th floor; substantial work on Tower D), the RERA character of the project, registered sale agreements and the interest of purchasers, the balance of convenience and risk of irreparable prejudice weighed in favour of allowing construction to proceed. The Court found no perversity in the trial Court's exercise of discretion and therefore declined to grant the injunctive relief sought by WMPL while sustaining, with modifications, the interim relief in favour of M/s AC. [Paras 43, 44, 47, 48, 50]

The District Court's interim reliefs in favour of M/s Atria Construction are sustained with modifications; WMPL's plea for injunction to stall construction is dismissed.

Undertaking accepted as court undertaking - Acceptance and content of the undertaking furnished by M/s Atria Construction regarding minimum sale price - HELD THAT: - In response to WMPL's contention about market rates and possible below-threshold sales, M/s AC furnished an undertaking that it would not sell the remaining flats below Rs. 9,500 per sq.ft. (on the RERA saleable basis) and would inform WMPL and give 30 days' notice to enable WMPL to match any higher offer. The Court accepted this affidavit/undertaking as an undertaking to the Court and held that M/s AC shall not agree to sell any apartments at a rate less than Rs. 9,500 per sq.ft., notwithstanding that certain agreements refer to a rate of Rs. 8,000 per sq.ft. [Paras 60, 61, 62, 63]

The undertaking by M/s AC not to sell apartments below Rs. 9,500 per sq.ft. (RERA saleable basis) is accepted as an undertaking to the Court and is made binding as part of the ad interim arrangement.

No restraint on execution of earlier allotments - notice to allottees of pendency of disputes - Whether execution of registered/allotted agreements for 17 apartments or other purchasers should be restrained or equities claimed by M/s AC enforced - HELD THAT: - The Court found no case to restrain execution of formal agreements concerning the 17 allotments which were entered into earlier but not formally executed due to status quo directions; similarly no blanket restriction was warranted against other purchasers. The Court directed that M/s AC shall not claim any equities regarding sale of apartments and must inform the 17 allottees about the pendency of disputes and arbitration so that purchasers are aware of the legal position. [Paras 64, 65]

No restraint is imposed on execution of the earlier allotments; M/s AC shall not claim equities and must inform the concerned allottees about the pendency of disputes.

Ad-interim arrangement - Section 17 applications before the Arbitral Tribunal - Interim arrangement pending constitution of the Arbitral Tribunal and avenue for fresh consideration of interim reliefs by the Tribunal - HELD THAT: - The Court directed that the interim arrangement indicated in its order would operate as an ad interim arrangement until the Arbitral Tribunal disposes of any applications under Section 17 filed by the parties. The parties were granted leave to file Section 17 applications within four weeks. The Tribunal was required to decide such applications without being influenced by observations in the impugned District Court orders or the present judgment. The Court declined to convert the pending Section 9 applications into Section 17 applications directly, preferring leave to file fresh Section 17 applications before the Tribunal to avoid practical complications. [Paras 67, 68, 69, 70, 71]

The Court's ad interim arrangement shall operate until the Arbitral Tribunal disposes of any Section 17 applications; parties are granted leave to file Section 17 applications within four weeks and the Tribunal must decide them independently.

Final Conclusion: The appeals are disposed by (i) appointing Mr Justice D. G. Karnik (Retd.) as Sole Arbitrator and recording his disclosure; (ii) sustaining the District Court's interim relief in favour of M/s Atria Construction with modifications, refusing WMPL's request to stall construction; (iii) accepting M/s AC's undertaking not to sell flats below Rs. 9,500 per sq.ft. as an undertaking to the Court; (iv) refusing to restrain execution of the 17 allotments while requiring notice to allottees; and (v) directing an ad interim arrangement to operate until the Arbitral Tribunal adjudicates any Section 17 applications which the parties may file within four weeks.

Professional misconduct - gross negligence - duty of verification by a chartered accountant - standard of proof in disciplinary proceedings - procedure in inquiries relating to misconduct of members of Institute under Section 21

Professional misconduct - gross negligence - clause (7) of Part I of the Second Schedule - duty of verification by a chartered accountant - Respondent was guilty of professional misconduct under clause (7) of Part I of the Second Schedule to the Chartered Accountants Act, 1949. - HELD THAT: - The Court analysed the Disciplinary Committee's and Council's findings that the respondent issued two Utilisation Certificates without adequate verification. The first certificate relied upon a Receipt and Payment Account and bank statement which the respondent did not expressly disclose as his basis in the certificate; the relied-upon certificate was later found to be forged in a related matter. As to the second certificate, the respondent failed to produce invoices, vouchers, bank statements or road permits to substantiate the claim that machinery worth a larger amount was returned and a lesser amount purchased, and he did not assign reasons for the second certificate superseding earlier ones. Applying the test of clause (7), the Court held that a chartered accountant must exercise reasonable skill, care and caution and verify accuracy of figures certified; omission to seek or retain documentary support and to record reliance amounts to lack of due diligence. On the material before it the Court concluded that, particularly in relation to the second certificate and in light of the purpose of the certificates (to secure disbursement), the respondent's conduct amounted to gross negligence and professional misconduct. [Paras 61]

Charges proved; respondent held guilty of professional misconduct under clause (7).

Standard of proof in disciplinary proceedings - preponderance of probabilities - higher degree of proof than civil but less than criminal - The standard of proof in disciplinary proceedings under the Act is a degree higher than ordinary civil preponderance but does not require proof beyond reasonable doubt. - HELD THAT: - The Court surveyed authoritative sources and precedents and observed that disciplinary proceedings, though affecting a professional's right to practise, are not criminal prosecutions. The proper standard is a convincing preponderance or a degree higher than balance of probabilities yet short of the criminal standard; allegations must be established with reasonable certainty appropriate to the seriousness of the charge. Applying this standard, the Court found the material established the charges against the respondent to the required degree. [Paras 50, 51, 60]

Standard articulated as higher than civil preponderance but below criminal; charges satisfied to that standard.

Mitigation for delay in disciplinary proceedings - severe reprimand as alternative to removal from register - The recommendation of removal from the register for one year was modified to a severe reprimand in view of long delay in proceedings and the respondent's unblemished record. - HELD THAT: - The Court noted that the proceedings had been pending for about 19 years and that the respondent had been a member for nearly three decades without prior complaints. Citing precedent where lengthy pendency attracted lighter punishment, the Court held that the ends of justice would be met by imposing a severe reprimand under Section 21(6)(b) rather than removal for one year. Accordingly the Council's recommendation was modified to reflect this mitigated punishment. [Paras 62, 65, 66]

Council's recommendation of one-year removal modified to a severe reprimand.

Final Conclusion: The reference is disposed of: the Court affirms that the respondent committed professional misconduct by gross negligence (clause (7)), articulates the applicable standard of proof as higher than ordinary preponderance but below criminal standard, and in view of the prolonged pendency and clean record reduces the proposed one-year removal to a severe reprimand.