TaxTMI Updates e-Newsletter
Dec 21,2021

Binding precedent - overruling by a larger bench - inapplicability of attempts to distinguish a binding precedent

Binding precedent - overruling by a larger bench - inapplicability of attempts to distinguish a binding precedent - Whether the High Court judgment could be sustained in view of an express overruling by a three-Judge Bench decision. - HELD THAT: - The Supreme Court held that the impugned judgment of the High Court was expressly overruled by the three-Judge Bench decision in Civil Appeal No.6520 of 2021 titled Union of India vs. Bharti Airtel Ltd. & Ors. Consequently, the respondent's attempt to distinguish that three-Judge Bench decision was not available because the later decision expressly overruled the earlier High Court view. The note filed by the respondent was taken on record but rejected. The appeal was allowed and disposed of on the same terms as in the three-Judge Bench decision.

The High Court judgment is set aside in view of the three-Judge Bench overruling; appeal allowed and disposed of on the terms of Union of India vs. Bharti Airtel Ltd. & Ors.; pending applications disposed of.

Final Conclusion: Appeal allowed; the impugned High Court order is displaced by the three-Judge Bench decision and the matter is disposed of on the same terms; pending applications, if any, are disposed of.

Anticipatory bail under Section 438 Cr.P.C. - Interim anticipatory bail - Conditions of bail - personal bond and sureties - Availability for interrogation - Prohibition on inducement, threat or promise to witnesses - Restriction on leaving India and deposit of passport - Power to move for cancellation of bail on breach of conditions - Production of order for compliance by concerned officer

Anticipatory bail under Section 438 Cr.P.C. - Interim anticipatory bail - Conditions of bail - personal bond and sureties - Availability for interrogation - Prohibition on inducement, threat or promise to witnesses - Restriction on leaving India and deposit of passport - Power to move for cancellation of bail on breach of conditions - Production of order for compliance by concerned officer - Interim anticipatory bail granted to applicant no.2 (Vipin Kumar) with specified conditions until the next date of listing. - HELD THAT: - The High Court granted interim anticipatory bail to applicant no.2 in the event of arrest pursuant to the summoning order, subject to execution of a personal bond and sureties and compliance with specified conditions. The bail is conditional upon the applicant furnishing a personal bond of the prescribed amount with two sureties of like amount to the satisfaction of the concerned officer. The court imposed conditions that the applicant shall (a) make himself available for interrogation by the concerned officer as and when required; (b) not directly or indirectly induce, threaten or promise any person acquainted with the facts so as to dissuade disclosure to the Court or any officer; and (c) not leave India without prior permission of the Court and, if holding a passport, deposit it with the concerned officer. The order further provides that in default of any condition, the concerned officer is at liberty to move for cancellation of the interim anticipatory bail. The applicant is directed to produce a copy of the order before the concerned officer within ten days, and the officer is to ensure compliance of the order. The bail is limited in duration, continuing only until the next date of hearing before the appropriate Bench.

Applicant no.2 is released on interim anticipatory bail until the next date on furnishing the prescribed bond and sureties and subject to the stated conditions; the concerned officer may seek cancellation on breach and the applicant must produce the order within ten days for compliance.

Production of order for compliance by concerned officer - Court directed the registry to place on record the counter affidavit said to have been filed and granted the applicants time to file a rejoinder, fixing the matter for fresh listing. - HELD THAT: - The Court recorded that a counter affidavit had been filed in the office but was not on record and directed the office to trace and place the same on record by the next date. The applicants were granted one week's time to file a rejoinder affidavit. The matter was listed before the appropriate Bench on the fixed future date for further consideration. These directions are procedural and concern the progress of the anticipatory bail application.

Registry to trace and place the counter affidavit on record; applicants granted one week to file rejoinder; matter listed afresh on the specified date.

Final Conclusion: Interim anticipatory bail granted to applicant no.2 on specified conditions until the next listing; registry directed to place the counter affidavit on record, applicants given time to file rejoinder, and the matter posted for fresh hearing.

Provisional attachment under section 83 of the CGST Act - objections filed under rule 159(5) of the CGST Rules - direction to decide objections within statutory time and pass order under rule 159(6) - release of debit freeze and bank attachment to enable business continuity

Objections filed under rule 159(5) of the CGST Rules - direction to decide objections within statutory time and pass order under rule 159(6) - provisional attachment under section 83 of the CGST Act - The petitioner's objections against provisional attachments filed under rule 159(5) required adjudication and an order was to be passed by the concerned authority within a short time-frame. - HELD THAT: - The Court noted that the petitioner had filed objections under rule 159(5) within the prescribed time and that an opportunity of hearing had been afforded by the Commissioner. No final order had been communicated by the authority despite the pendency of those objections. Given this position, the Court directed the authority to pass an order on the objections without further delay. The Court observed that any further actions by the parties aggrieved by the outcome would remain permissible in law, indicating that the authority's decision is to be taken on merits and that appellate or remedial rights are preserved.

The Commissioner is directed to decide the objections and pass a reasoned order within three days.

Release of debit freeze and bank attachment to enable business continuity - Interim relief concerning facilitation of service and steps to enable the petitioner to conduct business pending adjudication of objections. - HELD THAT: - While the Court did not itself order release of attachments on merits, it recognised the petitioner's grievance about inability to meet payroll and operational liabilities. The Court disposed of the petition by mandating expeditious decision on the objections and expressly permitted direct service by speed post and electronic mode so that the petitioner's application and the order reach the respondents promptly. The Court left open the legality of any subsequent actions by respondents pursuant to the order they are to pass.

Direct service by speed post and e-mode permitted; no interim modification of attachments ordered by this Court, pending the authority's decision within three days.

Final Conclusion: The petition is disposed by directing the authority to decide the petitioner's timely objections filed under rule 159(5) and to pass a reasoned order within three days; direct service by speed post and electronic mode is permitted, and parties remain free to pursue remedies available under law against the order to be passed.

Restriction on input tax credit - continuance of blocking of input tax credit beyond one year - Rule 86A(3) of the CGST Rules - principles of natural justice - reasoned order

Rule 86A(3) of the CGST Rules - continuance of blocking of input tax credit beyond one year - principles of natural justice - Petitioner's representations against continued blocking of its input tax credit were undecided and required adjudication by the respondent by a reasoned order within a specified timeframe. - HELD THAT: - The petitioner contended that the respondent blocked its input tax credit without providing reasons and that under Rule 86A(3) any restriction on the use of ITC ceases after one year from imposition. The petitioner alleged non-compliance with the principles of natural justice as no reasons or decision were communicated despite representations dated 15 June 2021 and 17 September 2021. The Court found that the representations had not been decided and, without adjudicating the merits of the underlying entitlement to ITC, directed the respondent to decide the pending representations by a reasoned order in accordance with law within four weeks. The Court left the substantive rights and contentions of the parties open for determination by the respondent.

Respondent directed to decide the petitioner's representations/letters by a reasoned order in accordance with law within four weeks; rights and contentions left open.

Final Conclusion: Writ petition disposed of by directing the respondent to decide the petitioner's pending representations regarding blocked input tax credit by a reasoned order within four weeks; the court did not decide the substantive entitlement to ITC and left all rights and contentions open.

Detention and release of goods - E-Way Bill expiry - torrential rain as cause for delay - payment of tax and penalty for release - final appropriation of amounts paid - liberty to apply for setting aside seizure

Detention and release of goods - E-Way Bill expiry - torrential rain as cause for delay - payment of tax and penalty for release - Release of the detained vehicle and goods which were seized on the ground of expiry of the E-Way Bill, having regard to the petitioner's explanation of torrential rain causing delay. - HELD THAT: - The vehicle and goods were seized on 29.11.2021 on the basis that the E-Way Bill generated on 27.11.2021 had expired. The petitioner explained that torrential rain in Chennai District and neighbouring areas prevented movement of the vehicle and caused the journey to commence after expiry of the E-Way Bill. Having regard to the prevailing torrential rain in the relevant period, the Court directed conditional release of the vehicle and goods upon payment of the tax determined on the consignment under both the Central Goods and Services Tax Act, 2017 and the Tamil Nadu Goods and Services Tax Act, 2017 and payment of 25% of the penalty imposed in the impugned order. The Court further stated that the amount so paid shall be subject to final appropriation in the appropriate proceedings and granted liberty to the petitioner to file an appropriate application for setting aside the seizure order in accordance with law. [Paras 3, 4, 5, 6]

Vehicle and goods to be released on payment of the tax under both CGST and Tamil Nadu GST and 25% of the penalty; amounts paid to be subject to final appropriation; petitioner given liberty to apply for setting aside the seizure.

Final Conclusion: Writ petition disposed by directing conditional release of the detained vehicle and goods on payment of the determined tax under both Central and State GST and 25% of the penalty; amounts paid to be finally appropriated and liberty granted to seek setting aside of the seizure.

Substantial compliance - input tax credit - technical glitches in GST portal - remedial relief by allowing filing/revision of TRAN-1 - alternative remedy of claiming credit in GSTR-3B - verification of claimed credit by assessing officer

Technical glitches in GST portal - substantial compliance - input tax credit - remedial relief by allowing filing/revision of TRAN-1 - entitlement to relief permitting filing or revision of Form TRAN-1 where claim to input tax credit had crystallized but procedural failure was due to portal/technical or connectivity issues - HELD THAT: - The Court accepted that in the batch of writ petitions the claim to input tax credit had crystallized into a vested right and that non-filing or defective filing of Form TRAN-1 was attributable to technical glitches, lack of sensitization, connectivity problems or remoteness. Applying the principle of substantial compliance as recognised in earlier decisions and having regard to the consistent relief granted by several High Courts, the Court affirmed the Single Judge's direction to facilitate the writ petitioners to file or revise TRAN-1. The Court emphasised that technical or procedural impediments beyond the assessee's control should not defeat a substantive right to input tax credit and that remedial directions in favour of the assessee were warranted.

Directions allowing the writ petitioners to file or revise Form TRAN-1 were upheld as appropriate to protect crystallized entitlement to input tax credit.

Alternative remedy of claiming credit in GSTR-3B - verification of claimed credit by assessing officer - appropriate practical mechanism for giving effect to the writ court's directions where reopening the portal may be unworkable - HELD THAT: - While accepting the substance of the Single Judge's order, the Court observed that reopening the central portal for each assessee may be administratively impracticable and better addressed at a higher level. Following the approach in Hans Raj Sons and similar decisions, the Court modified the relief to provide a workable alternative: writ petitioners/assessees were granted liberty to claim the unutilised transitional credit in their GSTR-3B return for the month of January 2022 (to be filed in February 2022). The Court made clear that the concerned authority or Assessing Officer would retain the power to examine and verify the genuineness and legality of such claims.

Liberty granted to claim transitional input tax credit in GSTR-3B for January 2022, subject to verification by the concerned authority/Assessing Officer; direction to reopen portal modified accordingly.

Final Conclusion: The appeals are dismissed; the Single Judge's directions facilitating filing/revision of TRAN-1 are affirmed in principle but modified to permit assessees to claim the transitional input tax credit in their GSTR-3B for the month of January 2022 (to be filed in February 2022), with the concerned authority/Assessing Officer entitled to verify the genuineness of the claim.

Input tax credit - genuine transaction - verification of supplier's identity - cancellation of registration with retrospective effect - remand for fresh consideration - speaking and reasoned order after hearing - constitutional validity of section 16(2)(c)

Input tax credit - genuine transaction - verification of supplier's identity - remand for fresh consideration - Entitlement of the petitioners to input tax credit was remanded to the respondents for fresh consideration. - HELD THAT: - The High Court did not decide the entitlement on merits but directed that the respondents shall reconsider the petitioners' claims afresh. The respondents are to examine the documents which the petitioners rely upon to establish the genuineness of the transactions, including whether payments together with GST were actually made to the suppliers, and whether the invoices and related records support the claim. The Court observed that if, upon consideration of relevant documents, the purchases and transactions are found to be genuine and supported by valid records, the petitioners shall be given the benefit of the input tax credit. The remand is for a fresh, document-based adjudication and not for pre-judging credibility or alleging collusion absent concrete material.

Matter remanded for fresh consideration of entitlement to input tax credit by examining the supporting documents and facts.

Cancellation of registration with retrospective effect - input tax credit - The respondents must ascertain whether the transactions were effected before or after cancellation of the suppliers' registrations and decide entitlement to credit accordingly. - HELD THAT: - The Court required the respondents to determine, as part of the fresh adjudication, the temporal relation between the purchases and any cancellation of the suppliers' registrations. If transactions occurred after cancellation covering the relevant period, that fact is material to entitlement; conversely, purchases made prior to cancellation, if otherwise genuine and supported, may justify grant of credit. This factual determination must be undertaken by the authority in the remand proceedings.

Respondents to consider timing of transactions in relation to cancellation and decide entitlement accordingly.

Verification of supplier's identity - input tax credit - Respondents shall consider whether the petitioners complied with statutory obligations in verifying the identity and genuineness of the registered taxable persons before transacting. - HELD THAT: - The Court directed that the authority must examine whether the petitioners exercised due diligence in verifying the suppliers' identity, including availability of registration details on the government portal at the relevant time, and whether any statutory verification obligations were complied with prior to the transactions. The assessment of compliance is a matter for the authority to record in a reasoned order during the remand.

Assessment of petitioners' compliance with verification obligations to be carried out by the respondents.

Speaking and reasoned order after hearing - The respondents were directed to pass a reasoned and speaking order after giving effective opportunity of hearing within eight weeks from communication of the order. - HELD THAT: - The High Court mandated that the remand adjudication must culminate in a reasoned, speaking order addressing the documents and authorities relied upon by the petitioners, after providing them effective opportunity of hearing. The Court emphasised that decisions should be taken in accordance with law and in light of the judgments referred to by the parties.

Respondents to decide and communicate a reasoned order after hearing the petitioners within eight weeks.

Constitutional validity of section 16(2)(c) - The constitutional challenge to section 16(2)(c) of the CGST/WBGST Act was not considered as it was unnecessary for adjudication of these petitions. - HELD THAT: - The Court observed that the refusals under challenge did not rest on the ground of non-deposit of tax by the suppliers as contemplated under section 16(2)(c), and accordingly the constitutional validity of that provision was not required to be examined in these cases. The point was therefore left undecided.

Constitutional challenge to section 16(2)(c) not adjudicated.

Final Conclusion: Writ petitions disposed by remanding the claims for input tax credit to the concerned respondents for fresh adjudication on the documentary and factual materials (including payment records, timing relative to cancellation of supplier registration, and verification compliance), to be decided by a reasoned and speaking order after hearing within eight weeks; the constitutional challenge to section 16(2)(c) was not considered.

Interim bail - conditions under Section 438(2) Cr.P.C. - cooperation with investigation - furnishing personal bond and surety - deposit of passport - voluntary deposit towards disputed liability - custodial interrogation not warranted where case rests on documentary evidence

Interim bail - conditions under Section 438(2) Cr.P.C. - cooperation with investigation - furnishing personal bond and surety - deposit of passport - voluntary deposit towards disputed liability - custodial interrogation not warranted where case rests on documentary evidence - Grant of interim bail to the petitioner on conditions of cooperation with investigation, furnishing personal bond and surety, and deposit of passport. - HELD THAT: - The petitioner volunteered to deposit half of the disputed amount with the GST authorities within ten days and offered to fully cooperate with the investigation. The prosecution case is said to be founded on documentary evidence already available with the police/SIT. In these circumstances, and in view of the petitioner's willingness to join and assist the investigation, the court concluded that custodial interrogation was not necessary and that interim bail could be granted. Release was made subject to the petitioner joining the investigation as required, furnishing personal bonds and a surety to the satisfaction of the Arresting/Investigating Officer, abiding by the conditions prescribed by Section 438(2) Cr.P.C., and depositing his passport with the SIT. The court retained liberty for the State to seek appropriate relief if any condition is violated.

Petitioner released on interim bail on the stated conditions; passport to be deposited with the SIT; matter adjourned to 11.1.2022.

Final Conclusion: Interim bail granted on conditions of cooperation with investigation, furnishing of bonds and surety and deposit of passport; voluntary offer to deposit half the disputed liability noted; State may move the court if conditions are breached.

Procedure for Registration under GST - Requirement of PAN and Aadhaar for registration - Permissible documents for proof of principal place of business (electricity bill or house tax receipt) - Application verification and notice for deficiencies under Rule 8 and Rule 9 - Rejection of registration to be for recorded reasons where deficiencies persist - Deemed approval on failure of proper officer to act within prescribed period

Requirement of PAN and Aadhaar for registration - Permissible documents for proof of principal place of business (electricity bill or house tax receipt) - Application verification and notice for deficiencies under Rule 8 and Rule 9 - Whether the rejection of the petitioner's GST registration application was lawful where PAN, Aadhaar and a house tax receipt were furnished in response to the notice which allowed either an electricity bill or house tax receipt. - HELD THAT: - Section 25 requires PAN and Aadhaar details for grant of registration and Rules 8 and 9 prescribe the application and verification process including that a notice (FORM GST REG-03) may seek clarification or documents and that the officer may approve or reject with reasons. The show cause notice sought "recent electricity bill or house tax copy or any other documents related business place." The petitioner furnished PAN, Aadhaar and copy of the house tax receipt in response and also clarified that she was the owner of the premises; these documents are reflected in the application bundle. The authorities, however, rejected the application insisting on an electricity bill without pointing out any defect in the house tax receipt or in the explanation regarding nature of possession, despite the notice offering an option between electricity bill or house tax receipt. The court found that once the petitioner complied with the requirement by submitting an acceptable document (house tax receipt) and clarified ownership, the authority ought to have considered those materials and could not arbitrarily insist on a different document or reject the application without recording any deficiency in the submitted proof. The Court also observed that the officials' conduct amounted to harassment and was contrary to the statutory scheme which mandates reasoned action on deficiencies and permits approval where documents are in order. [Paras 12, 14, 17, 18, 20]

The rejection of the registration application was unlawful and the impugned orders are quashed; respondents directed to pass appropriate order on the material on record within seven working days.

Final Conclusion: Writ petition allowed; impugned orders dated 23.09.2021 and 28.10.2021 quashed. Respondents to decide the registration application afresh on the basis of the material on record within seven working days. Petitioner awarded costs, with directions for recovery from the erring officer if appropriate.

Summary order. Petition adjourned for four weeks to enable the petitioner to register grievance on the prescribed portal as per Circular No. 131/1/2020 GST; respondent No.3 and CGST to obtain instructions as to consequential action; matter listed in the week of 17th January, 2022.

Tax deduction at source on salary under Section 192 - Tax deduction at source on commission under Section 194H - Disallowance under Section 40(a)(ia) for failure to deduct TDS - Timing of TDS deduction - at time of payment versus at provision - Classification of director's remuneration as salary or commission - Appellate interference and perversity of findings

Classification of director's remuneration as salary or commission - Tax deduction at source on salary under Section 192 - Timing of TDS deduction - at time of payment versus at provision - Disallowance under Section 40(a)(ia) for failure to deduct TDS - Whether the commission provision made for the Chairman and Managing Director required deduction of tax at source under Section 194H at the time of making provision and whether non-deduction called for disallowance under Section 40(a)(ia), having regard to classification of the amount as salary. - HELD THAT: - The Court recorded that the amount characterised as commission in the impugned year was shown as part of overall salary in the Form-16 of the Chairman and Managing Director for the subsequent assessment year, and that the total salary figure for the financial year included the commission provision (paragraph 6). The Court noted the distinctive feature of the TDS regime under Section 192 that tax on salary is deductible only at the time of payment and not at the time of provision (paragraph 7). The revenue did not dispute the quantum or accrual of the expense. Applying these facts to the statutory scheme, the Court accepted the view of the authorities below that the payment formed part of salary and that TDS under the salary provision operates on payment; accordingly, non-deduction at the time of making the provision did not attract disallowance under Section 40(a)(ia) in the assessment year in question (paragraphs 6-7). The Court further relied on the overarching principle that year-of-deduction disputes which do not affect tax liability substantively ought not to be elevated where the tax treatment is consistent with the statutory test (paragraph 8). [Paras 6, 7, 8]

The commission provision was treated as part of salary and, since Section 192 requires deduction on payment, non-deduction at the time of provision did not warrant disallowance under Section 40(a)(ia).

Appellate interference and perversity of findings - Whether the orders of the authorities below were perverse or based on incorrect principles, justifying interference by the High Court. - HELD THAT: - The Court examined the findings of the CIT(A) and the Tribunal in light of the accepted facts - namely, the Form-16 showing the amount as part of salary and the revenue's concession on quantum/accrual - and concluded that the lower authorities applied the correct legal test to the facts (paragraphs 6-7). The Court held there was no perversity in their conclusions and that the questions raised did not amount to substantial questions of law warranting interference (paragraph 9). [Paras 9]

No perversity or misapplication of principle by the authorities below; no substantial question of law is made out to justify interference.

Final Conclusion: The appeal is dismissed for lack of merit; the finding that the payment formed part of salary and did not attract disallowance under Section 40(a)(ia) for non-deduction of TDS at the time of provision is upheld, and the orders of the authorities below are not interfered with.

Genuineness of sale transaction - seized documents belonging to the assessee - onus of proof on the assessee to establish genuineness - corroborative evidence for receipt of payment - jurisdictional benchmark of 'belong to' under Section 153C

Genuineness of sale transaction - seized documents belonging to the assessee - onus of proof on the assessee to establish genuineness - corroborative evidence for receipt of payment - ITAT's conclusion that the seized computer-generated loose sheets found at a third party's residence did not belong to the assessee and therefore did not furnish corroborative evidence to sustain additions made in the assessment. - HELD THAT: - The High Court accepted the ITAT's reasoning that the name of the assessee did not appear on the seized computer-generated loose sheets recovered from the residence of the alleged broker, and that on bare perusal the seized material could not be inferred to belong to or have nexus with the assessee. The Tribunal noted absence of corroborative evidence or witness statements proving receipt of payment by the assessee beyond the cheque amount recorded in the sale agreement; similarities between seized entries and actual transaction (amounts, cheque particulars, square footage) were found insufficient by the Tribunal to establish that the seized documents belonged to the assessee. The High Court found the ITAT's reasons cogent and saw no error in its fact based conclusion rejecting Revenue's contention that the assessee failed to discharge its onus.

The High Court upheld the ITAT's finding that the seized documents did not establish the transaction's genuineness and affirmed the reversal of additions.

Jurisdictional benchmark of 'belong to' under Section 153C - precedential effect of earlier Division Bench decision - Whether the appeal raised any substantial question of law in view of the Division Bench decision in Pr. CIT (Central -2) v. Vinita Chaurasia and related dismissal by the Supreme Court. - HELD THAT: - The Court observed that in Vinita Chaurasia a similar appeal by Revenue was dismissed both on jurisdictional grounds and on merits, and that a Special Leave Petition against that judgment was dismissed by the Supreme Court. Having regard to that precedent and the ITAT's fact based findings on belongingness and corroboration, the High Court concluded that no substantial question of law arises in the present appeal. The Court therefore declined to entertain the challenge to the Tribunal's order.

No substantial question of law arises; reliance on the earlier Division Bench decision and its affirmance by the Supreme Court supported dismissal of the appeal.

Final Conclusion: The appeal is dismissed; the High Court upheld the ITAT's factual and legal conclusions that the seized documents did not belong to the assessee and that no substantial question of law arose for consideration.

Right to refund of tax following appellate order - processing of refund with applicable interest - effect of pending appeal before the Supreme Court on refund - principle embodied in Section 240 of the Income Tax Act

Right to refund of tax following appellate order - principle embodied in Section 240 of the Income Tax Act - Petitioner is entitled to refund of taxes paid/deposited for the assessment years 1996-97 to 2016-17 as a consequence of appellate orders accepting the returned nil income. - HELD THAT: - The Court notes that the Tribunal partly allowed the petitioner's appeals resulting in acceptance of the returned nil income, and this court later dismissed appeals thereby affirming the Tribunal's conclusion. Applying the salutary principle embodied in Section 240 of the Act, the Court recognises the assessee's right to receive refund of tax that becomes due by reason of an order passed in appeal. The factual underpinning is that appellate adjudication has accepted the petitioner's position on income for the relevant years, thereby creating an entitlement to refund under the statute. [Paras 6, 11]

Entitlement to refund acknowledged and governed by the principle in Section 240; petitioner has cause of action to seek refund for the specified assessment years.

Processing of refund with applicable interest - effect of pending appeal before the Supreme Court on refund - Respondent No.1 directed to process and refund the taxes paid/deposited for assessment years 1996-97 to 2016-17 with applicable interest within three months, subject to any order the Supreme Court may pass in the pending appeals. - HELD THAT: - The Court observed that the petitioner had applied for refund which remained undecided despite reminders, thereby entitling the petitioner to seek writ relief. Exercising supervisory jurisdiction, the Court directed respondent No.1 to process the petitioner's refund claims and refund the amounts with applicable interest in accordance with law within a stipulated period. The Court qualified the direction by clarifying that the process of refund is subject to the outcome of appeals pending before the Apex Court and expressly refrained from expressing any opinion on the quantum of refund. [Paras 10, 12, 13]

Respondent No.1 to process and refund the taxes with applicable interest within three months; refund process is subject to the Supreme Court's orders and Court has not opined on quantum.

Final Conclusion: Writ petition disposed directing respondent No.1 to process and refund taxes paid/deposited for assessment years 1996-97 to 2016-17 with applicable interest within three months, subject to the result of appeals pending before the Supreme Court; no opinion expressed on quantum of refund.

Notice under Section 148 issued to a non existent entity - Effect of sanction of scheme of amalgamation - amalgamating company ceases to exist - Curing of defects under Section 292B - Jurisdictional foundation for reopening assessments

Notice under Section 148 issued to a non existent entity - Effect of sanction of scheme of amalgamation - amalgamating company ceases to exist - Curing of defects under Section 292B - Validity of the notice dated 31st March, 2019 under Section 148 and the order dated 9th November, 2019 issued against Nirvan Holdings Pvt. Ltd., an entity which had ceased to exist on amalgamation with the petitioner - HELD THAT: - The court held that the notice under Section 148 was issued to Nirvan Holdings Pvt. Ltd., which had been amalgamated into Alok Knit Exports Limited with effect from 1st April, 2012 and whose corporate existence had ceased on the sanction and filing of the scheme. The Assessing Officer had sufficient material on file (including the court sanction order, Form No.21 and surrender of PAN) to show that the amalgamating entity no longer existed, yet issued the jurisdictional notice in its name. Reliance was placed on the principle in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd. that invoking jurisdiction on a basis that is fundamentally at odds with the legal effect of an approved scheme of amalgamation renders the notice bad in law. The Revenue's later contention in affidavit that the error could be corrected under Section 292B was treated as an afterthought; the court found that the issuance of the notice to a non existent entity could not be validated by such a post hoc curative plea where the Assessing Officer was aware of the amalgamation. The Assessing Officer's contrary factual assertions (including reliance on an extant PAN) were rejected in light of the documents on record evidencing surrender/cancellation and the sanctioned scheme. [Paras 5, 6, 7, 8, 9]

The notice dated 31st March, 2019 and the order dated 9th November, 2019 issued against Nirvan Holdings Pvt. Ltd. were quashed being issued to an entity that had ceased to exist; the petitioner's challenge is allowed.

Final Conclusion: Petition allowed; the reopening notice dated 31st March, 2019 under Section 148 and the order disposing objections dated 9th November, 2019, both addressed to the amalgamating (now non existent) entity, are quashed.

Re-opening of assessment - non-application of mind - reasons recorded - sanction under Section 151 of the Income Tax Act - adverse inference for non-production of sanction - quashing of notice under Section 148

Re-opening of assessment - non-application of mind - reasons recorded - quashing of notice under Section 148 - Validity of notice dated 26th March, 2019 issued under Section 148 in view of erroneous factual basis and non-application of mind by the Assessing Officer. - HELD THAT: - The Court found that the reasons recorded for re-opening proceeded on an incorrect factual premise-stating that the return for A.Y. 2012-13 was only processed under Section 143(1)-whereas an assessment under Section 143(3) and an assessment order dated 31st March, 2015 had in fact been passed. The reasons therefore reflected total non-application of mind by the Assessing Officer. The Assessing Officer's affidavit did not deny the factual error but merely asserted that re-opening and the order disposing objections were issued to complete reassessment in accordance with procedure. That omission and the erroneous factual foundation rendered the notice unsustainable. The Court concluded that on this basis alone the notice under Section 148 had to be set aside and the consequential order disposing objections and related notices quashed. [Paras 4, 5, 8]

Notice under Section 148 dated 26th March, 2019 and the order disposing objections dated 22nd October, 2019 were quashed for being based on erroneous facts and non-application of mind.

Sanction under Section 151 of the Income Tax Act - adverse inference for non-production of sanction - Effect of non-production of the sanction under Section 151 and whether an adverse inference should be drawn. - HELD THAT: - Petitioner alleged that despite repeated requests the sanction under Section 151 was not produced. The respondent's affidavit did not annex or deny the non-production of such sanction. The Court observed that the failure to produce the sanction gave rise to a reasonable inference that disclosure of the sanction might be prejudicial to the Revenue's case. Further, given that the reasons for re-opening themselves displayed non-application of mind, the sanction-if obtained-would either not have been applied to with requisite care or would have been granted mechanically. On these grounds the Court drew an adverse inference against the respondent regarding the absence or mechanical grant of sanction and treated that as reinforcing the need to quash the re-opening notice and consequential orders. [Paras 6, 7, 8]

Adverse inference drawn from non-production of Section 151 sanction; sanction either not obtained or granted mechanically, reinforcing the quashing of the notice and related orders.

Final Conclusion: Writ petition allowed; notice under Section 148 dated 26.03.2019, the order disposing objections dated 22.10.2019 and related notices were quashed on grounds of erroneous factual basis, non-application of mind by the Assessing Officer and adverse inference from non-production of sanction under Section 151.

Requirement of issuance of final notice-cum-draft assessment order and opportunity of hearing under Section 144B - faceless assessment procedure and review-approval workflow - non est of assessment order for non-compliance of mandatory procedural requirement - quashing of assessment and remit for fresh compliance with statutory procedure - opportunity of personal hearing

Requirement of issuance of final notice-cum-draft assessment order and opportunity of hearing under Section 144B - non est of assessment order for non-compliance of mandatory procedural requirement - quashing of assessment and remit for fresh compliance with statutory procedure - Validity of the assessment order passed without issuance of the final notice cum draft assessment order and without giving the assessee an opportunity of hearing as mandated by Section 144B. - HELD THAT: - The court noted the admitted factual position in the departmental affidavit that only a draft assessment order was served on the assessee without fixing any date for response and that no final show cause notice providing an opportunity of hearing was served before finalizing the assessment. Applying the statutory mandate embodied in Section 144B and following the reasoning in Gandhi Realty (India) Private Limited, the Court held that where a variation prejudicial to the assessee is proposed, issuance of the final notice cum draft assessment order and an opportunity to file responses (including personal hearing if sought) are mandatory. Non compliance with these procedural requirements renders the assessment order non est. In consequence, the Court quashed the impugned assessment order and demand notice, while permitting the revenue to proceed afresh under the faceless assessment scheme after strictly following the procedure under Section 144B read with Section 144C, including issuance of the final notice cum draft assessment order, affording the assessee an opportunity to file objections and, if sought, a personal hearing, and directed that the final order be passed as far as possible within twelve weeks from receipt of the judgment.

Impugned assessment order and demand notice quashed; revenue permitted to redo the assessment process only after issuing the final notice cum draft assessment order and affording the assessee the mandated opportunity of hearing, with direction to complete the final order as far as possible within twelve weeks.

Final Conclusion: The petition is allowed: the impugned faceless assessment order and consequential demand are quashed for failure to comply with the mandatory procedural requirements of Section 144B; the revenue may proceed with fresh assessment under Section 144B read with Section 144C after issuance of the final notice cum draft assessment order and after affording the assessee an opportunity to respond (including personal hearing if sought), with the final order to be completed, as far as possible, within twelve weeks of receipt of this order; direct service permitted by speed post and e mode.

Cancellation of assessment framed under section 153C of the Income Tax Act - additional depreciation under section 32(1)(iia) - extraction/processing of minerals as production - disallowance under section 14A read with Rule 8D - investments made from own funds versus borrowed funds - remand for fresh consideration on factual verification

Cancellation of assessment framed under section 153C of the Income Tax Act - Validity of exercise of jurisdiction under section 153C in framing assessments for AYs 2007-08 to 2009-10. - HELD THAT: - The Tribunal examined the material placed before the Assessing Officer and the CIT(A) and found no indication that the seized documents were disclaimed by the person in whose case the search was conducted, nor any material establishing that the seized documents belonged to the assessee. On those factual findings the Tribunal held that the Assessing Officer was not justified in assuming jurisdiction under section 153C. The High Court observed that the matter is essentially factual and that no substantial question of law arises for interference with the Tribunal's conclusion.

Tribunal's cancellation of assessments under section 153C sustained; no substantial question of law on this issue.

Additional depreciation under section 32(1)(iia) - extraction/processing of minerals as production - Entitlement to additional depreciation for extraction/processing activities for AY 2010-11. - HELD THAT: - The Tribunal applied precedent of this Court and the Supreme Court holding that mining/extraction and processing of mineral ore constitutes 'production' for purposes of depreciation provisions. On this basis the Tribunal allowed the assessee's claim for additional depreciation. The High Court found no reason to interfere with the Tribunal's application of those authorities and affirmed the Tribunal's conclusion.

Assessee entitled to additional depreciation under section 32(1)(iia); Tribunal's order upheld.

Disallowance under section 14A read with Rule 8D - investments made from own funds versus borrowed funds - remand for fresh consideration on factual verification - Whether the addition under section 14A read with Rule 8D for AY 2010-11 was correctly made where investments were alleged to have been from own funds. - HELD THAT: - The Assessing Officer applied Rule 8D and made an addition without recording adequate particulars or reasons. The CIT(A) recorded the assessee's submissions and particulars relating to the source of funds but declined relief on the basis that the assessee had not shown shares were acquired without benefit of loans. The Tribunal, however, proceeded on a different footing by treating the investment as strategic, without resolving the central factual question whether investments were from own funds or borrowed funds. Given these divergent approaches and the absence of a clear factual finding by any authority on the source of funds, the High Court held that the issue requires fresh consideration and directed remand to the Assessing Officer to re-examine the claim after taking note of all documents placed before him.

Findings of AO, CIT(A) and Tribunal set aside; matter remanded to Assessing Officer for fresh adjudication on section 14A/Rule 8D issue for AY 2010-11.

Final Conclusion: The appeal is partly allowed: the Tribunal's cancellation of assessments under section 153C is sustained and the allowance of additional depreciation under section 32(1)(iia) is upheld; the deletion/addition under section 14A read with Rule 8D for AY 2010-11 is set aside and remanded to the Assessing Officer for fresh factual examination; appeals in respect of AYs 2007-08 and 2008-09 dismissed on low tax effect.

Eligibility of profits under section 80HHC vis-a -vis deductibility in normal computation - computation of adjusted/book profits under section 115JB for determining deduction - non-application of section 14A where disallowance arises from section 115JB computation - retrospective operation of section 234D - precedential effect of Supreme Court decisions on statutory interpretation of sections 115JA/115JB and related deductions

Eligibility of profits under section 80HHC vis-a -vis deductibility in normal computation - computation of adjusted/book profits under section 115JB for determining deduction - precedential effect of Supreme Court decisions on statutory interpretation of sections 115JA/115JB and related deductions - Whether the deduction under section 80HHC could be disallowed by reference to book profits computed under section 115JB or whether eligibility stood governed by the principles applicable to regular computation as clarified by Supreme Court decisions. - HELD THAT: - The High Court examined the ratio of the Supreme Court decisions cited by the parties (including Ajanta Pharma Ltd. and Bhari Information Tech. Sys. (P) Ltd.) and applied those precedents to the facts of the case. The Court accepted the principle that section 115JB constitutes a self-contained code for computation of book profits and that the distinction between eligibility of profits and deductibility must be maintained. Following the cited Supreme Court authorities, the Court held that the legal position favours the assessee and that the Tribunal was correct in applying those precedents to allow the claim in the circumstances of this case. The Court therefore found the substantial questions raised by Revenue on this point to be answered against the Revenue and in favour of the assessee. [Paras 5]

The deduction under section 80HHC is to be considered in the light of the statutory scheme and controlling Supreme Court precedents; the Court upheld the Tribunal's approach and decided this issue in favour of the assessee.

Non-application of section 14A where disallowance arises from section 115JB computation - Whether disallowance could be sustained under section 14A where the Tribunal had held that the disallowance arose from computation under section 115JB and not from the normal computation. - HELD THAT: - The Court recorded that the Tribunal had concluded the disallowance was part of the section 115JB computation and not a disallowance under the normal computation invoking section 14A. Applying that factual and legal conclusion, and having regard to the Supreme Court authorities relied upon which delineate the operation of section 115JB as a self-contained code, the High Court held that section 14A was not attracted in the facts of the case and therefore the Revenue's challenge on this ground failed. [Paras 4, 5]

The Tribunal's finding that the disallowance was under section 115JB (and not by operation of section 14A) is sustained; section 14A is not applicable in this case.

Retrospective operation of section 234D - Whether section 234D operates retrospectively and whether the Tribunal was right in deciding the issue relating to section 234D in favour of the assessee. - HELD THAT: - The Court noted the Tribunal's conclusion on section 234D and, without recording any contrary view, agreed with the Tribunal's decision in favour of the assessee. The appeal did not persuade the High Court to disturb the Tribunal's finding that section 234D is not retrospective in operation and that the assessee was entitled to the relief granted by the Tribunal on this point. [Paras 3, 5]

The Tribunal's conclusion that section 234D is not retrospective and its decision on that issue in favour of the assessee are upheld.

Final Conclusion: Having applied the relevant Supreme Court authorities and upheld the Tribunal's findings, the High Court answered the substantial questions against the Revenue and dismissed the appeal, leaving the Tribunal's order in favour of the assessee intact.

Reason to believe - reopening of assessment - reasons recorded - escapement of income - standalone examination of reasons - distinction between reason to suspect and reason to believe - notice under section 148 - jurisdictional requirement for reassessment

Reason to believe - reasons recorded - distinction between reason to suspect and reason to believe - standalone examination of reasons - reopening of assessment - jurisdictional requirement for reassessment - Validity of the Assessing Officer's assumption of jurisdiction to reopen the assessment for AY 2014-15 by issuance of notice under section 148 on the basis of the reasons recorded. - HELD THAT: - The Tribunal examined the reasons recorded by the AO on a standalone basis and applied settled principles that the AO must have a reason to believe - a rational nexus between the material before him and the belief of escapement of income - before issuing a notice under section 148. The reasons relied upon were information received from the Investigation Wing concerning a third-party entry operator and a general admission by that operator that he provided accommodation entries through certain entities. The recorded reasons did not specifically record any adverse statement by the entry operator identifying the assessee as a beneficiary, nor did they incorporate the list of beneficiaries into the reasons. The Tribunal held that such information, at best, gave rise to a reason to suspect which would justify preliminary inquiry but did not, without further material, establish the requisite reason to believe that the assessee's income had escaped assessment. Mere transactions with a company alleged to be controlled by an entry operator, evidenced through bank payments, were insufficient by themselves to establish a cause-and-effect nexus to escapement. On this foundation the AO had jumped to a conclusion to reopen; the jurisdictional requirement for reassessment was therefore not met and the reopening was quashed. [Paras 25, 26]

The reopening of assessment was invalid for want of reason to believe; the reassessment proceedings are quashed and consequential additions cannot be sustained.

Final Conclusion: The Tribunal quashed the reopening of assessment for AY 2014-15 for lack of the requisite reason to believe, dismissed the revenue's appeal and allowed the assessee's cross-objection, with the consequence that the additions made on reassessment fail.

Disallowance under section 14A - Rule 8D - requirement of recording objective satisfaction by the Assessing Officer - Application of parity/precedent in assessee's own case - Deduction under section 80IB/80IC on sale of scrap as business income

Disallowance under section 14A - Rule 8D - requirement of recording objective satisfaction by the Assessing Officer - Application of parity/precedent in assessee's own case - Whether the disallowance made under section 14A read with Rule 8D is sustainable where the Assessing Officer did not record his satisfaction as required by section 14A(2). - HELD THAT: - The Tribunal held that sub-section (2) to section 14A requires the Assessing Officer to record an objective satisfaction regarding the correctness of the assessee's claim before invoking the formulae in Rule 8D. Where the Assessing Officer proceeded to compute disallowance under Rule 8D without examining or recording reasons demonstrating why the assessee's suo moto disallowance was incorrect, the invocation of Rule 8D was in breach of the statutory pre-condition. The Tribunal applied the ratio of the Jurisdictional High Court and its own earlier orders in assessee's case (AYs. 2008-09 to 2011-12 and subsequent years) holding that absent recorded satisfaction and reasons by the AO, the disallowance under Rule 8D is not sustainable. As the facts and material circumstances for AY 2016-17 were not different, the Tribunal followed its prior decisions and the High Court precedent and deleted the disallowance. [Paras 4, 6, 7, 9, 14]

Disallowance under section 14A read with Rule 8D deleted as the AO did not record the objective satisfaction required under section 14A(2); Revenue's grounds on this point dismissed.

Deduction under section 80IB/80IC on sale of scrap as business income - Application of parity/precedent in assessee's own case - Whether income from sale of scrap generated from the manufacturing process is eligible for deduction under section 80IB/80IC. - HELD THAT: - The Tribunal noted that in the assessee's earlier years it had accepted that profit on sale of scrap, being generated out of the manufacturing process and having a direct nexus with the industrial undertaking, constituted business income eligible for deduction under section 80IB (and by parity, section 80IC where applicable). The Tribunal relied on its own precedents (including reliance on the Madras High Court decision in Fenner India Ltd.) and found no change in facts or circumstances for the year under appeal. The Revenue failed to distinguish those precedents. Consequently, the Commissioner (Appeals) order allowing the deduction was sustained and the Revenue's grounds challenging the allowance were dismissed. [Paras 10, 11, 13]

Deduction under section 80IB/80IC in respect of sale of scrap allowed; Revenue's grounds on this point dismissed.

Final Conclusion: On the facts and following its own earlier orders and the relevant High Court authority, the Tribunal dismissed the Revenue's appeal for AY 2016-17: (i) the section 14A/Rule 8D disallowance was deleted for failure to record the required satisfaction, and (ii) the claim of deduction under section 80IB/80IC on sale of scrap was upheld.

Disallowance of rate difference and trade discount - consistency of treatment across assessment years - mechanical adoption of predecessor's assessment findings - appellate reliance on earlier orders and coordinate bench precedents

Disallowance of rate difference and trade discount - consistency of treatment across assessment years - appellate reliance on earlier orders and coordinate bench precedents - Deletion of the addition of Rs. 4,23,51,335 made by the AO on account of rate difference and discount was justified and must be upheld. - HELD THAT: - The AO made the addition by merely following assessment orders for earlier years without independent appraisal of the evidence. The assessee consistently claimed discounts/rate differences, supported by ledger entries, trade circulars and a steady ratio of discount to turnover across prior years. The first appellate authority had considered identical claims for earlier assessment years and found the payments to be business expenditures, noting absence of any adverse inference or evidence of non-genuineness. In the present year the CIT(A) applied the same reasoning and deleted the disallowance. There was nothing on record to show the claim in the year under appeal was not genuine or unsupported; consequently the AO's mechanical rejection was not sustainable. In view of coordinate-bench decisions and consistent treatment, the Tribunal found no reason to interfere with the deletion. [Paras 6, 7]

Revenue's appeal is dismissed and the deletion of the disallowance is upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against the CIT(A)'s deletion of the addition relating to rate difference and discount for Asstt. Year 2016-17, holding that the AO's mechanical reliance on earlier assessment orders was unsustainable and that the assessee's consistent, evidenced claim justified deletion.

Disallowance under section 43B - contract account and treatment of direct expenses - prior period expenses in contract account - interest on client funds credited to client accounts - mercantile system of accounting - collecting agency doctrine

Disallowance under section 43B - contract account and treatment of direct expenses - collecting agency doctrine - Deletion of addition of Rs. 2,15,56,614/- made under section 43B in respect of provisions for labour cess. - HELD THAT: - The Tribunal found that the labour cess formed part of the contract account and was not debited to the assessee's profit & loss account; the assessee acted only as a collecting agency, recovering cess from Government clients pursuant to government notifications and circulars, and the provision did not affect the corporation's centage (gross profit). Following the Tribunal's earlier decisions in the assessee's own case for prior assessment years where identical facts and accounting treatment were accepted, the addition under section 43B was not sustainable in the assessee's hands and was therefore deleted. [Paras 10]

The assessee's appeal is allowed in respect of the addition under section 43B and the addition of Rs. 2,15,56,614/- is deleted.

Prior period expenses in contract account - contract account and treatment of direct expenses - mercantile system of accounting - Deletion of addition of Rs. 88,61,308/- representing prior period expenses claimed in the contract account. - HELD THAT: - The Tribunal upheld the finding that the liability for the items in question arose in the year under consideration (as evidenced by the bills) and that the amounts pertained to the contract account. Relying on the accounting treatment accepted in the assessee's own earlier years and the principle that any disallowance in the cost debited to the contract account would require a corresponding reduction in work-in-progress (contra entries), the deletion of the addition was confirmed. [Paras 16]

The Revenue's ground attacking deletion of prior period expenses is rejected and the addition of Rs. 88,61,308/- remains deleted.

Interest on client funds credited to client accounts - mercantile system of accounting - contract account and treatment of direct expenses - Deletion of addition of Rs. 37,35,99,000/- (interest on client interest account) treated as income of the assessee. - HELD THAT: - The Tribunal accepted that the balance shown as accrued interest on deposits represented interest on clients' funds in running accounts. The assessee, maintaining books on the mercantile basis, credited such interest to respective client accounts in accordance with a government order; the interest on unutilised funds therefore constituted income of the clients and not of the assessee. Following the Tribunal's prior orders in the assessee's own case on identical facts, the deletion of the addition was confirmed. [Paras 20]

The Revenue's appeal on account of interest on client funds is rejected and the deletion of the addition is confirmed.

Final Conclusion: Following the Tribunal's consistent earlier decisions in the assessee's own case for preceding years, the Tribunal allowed the assessee's appeal deleting the addition under section 43B and dismissed the Revenue's appeals challenging deletion of prior period expenses and interest on client funds; overall the assessee's appeal is allowed and the Revenue's appeal is dismissed.

Registration under section 12AA - objects of the trust - genuineness of activities - application of income premature at registration stage

Registration under section 12AA - objects of the trust - genuineness of activities - application of income premature at registration stage - Whether the Commissioner (Exemptions) was justified in refusing registration under section 12AA on the ground that donations received earlier were not offered to tax and were reflected in the balance sheet instead of income and expenditure account. - HELD THAT: - The Tribunal held that denial of registration under section 12AA solely on the premise that receipts/donations for earlier years had not been treated as income was not justified. The proper enquiry at the stage of registration is limited to whether the objects of the trust are charitable and whether the activities are genuine or proposed; questions regarding taxation or application of income are premature and are to be examined at assessment proceedings. The CIT(E) had not pointed to any defect in the stated objects nor had he doubted the genuineness of the trust's activities; instead he rejected registration on the basis that taxes were not paid on donations, which the Tribunal found to be an inappropriate ground for refusal. The Tribunal relied on prior judicial observations that registration requires satisfaction as to objects and genuineness, while assessment proceedings deal with tax liability and application of income. Applying this principle to the facts, the Tribunal concluded that the requirements for registration under section 12AA had been met and that the CIT(E) had failed to exercise the correct limited enquiry mandated at the registration stage.

Registration under section 12AA cannot be denied for non-payment or non-assessment of tax on earlier receipts; in absence of any doubt as to objects or genuineness, the application for registration is to be allowed and CIT(E) directed to grant registration.

Final Conclusion: Appeal allowed; order of the CIT(Exemptions) set aside and CIT(E) directed to grant registration under section 12AA to the trust within 60 days from receipt of this order.

Ad-hoc disallowance - genuineness and authenticity of expenses - books of account and vouchers - burden on assessing officer to point out specific defects - drawing adverse inference from unexplained abnormal rise in expenses

Ad-hoc disallowance - genuineness and authenticity of expenses - books of account and vouchers - burden on assessing officer to point out specific defects - Sustainability of the ad-hoc disallowance of Rs. 12.50 lakhs made by the assessing officer out of various expenses claimed by the assessee. - HELD THAT: - The Tribunal examined whether the assessing officer (A.O.) had justified the ad-hoc disallowance by identifying specific defects in the assessee's books, vouchers or particular items of expenditure. The record shows that the A.O. relied on generalized observations (hand written vouchers, cash payments, absence of log books) without pointing to any particular bill or expenditure claim which was not genuinely incurred wholly and exclusively for business. The CIT(A) upheld the A.O.'s ad hoc disallowance by reference to his predecessor's order for the preceding year; however, that earlier order of the Tribunal in the immediately preceding year had vacated a similar ad hoc disallowance where no specific defect was pointed out. The Tribunal held that an ad hoc disallowance cannot be sustained de hors identification of specific disallowed items or concrete material showing ineligibility. The Tribunal also noted that there was no abnormal rise in the expenses in the year under consideration compared to prior years to warrant drawing adverse inferences. Reliance was placed on earlier Tribunal decisions to the same effect. In view of these factors, the ad hoc disallowance was set aside. [Paras 8, 9]

The ad hoc disallowance of Rs. 12.50 lakhs is vacated and the CIT(A)'s order upholding it is set aside.

Final Conclusion: The appeal is allowed; the ad hoc disallowance of Rs. 12.50 lakhs made by the assessing officer for A.Y 2014-15 is vacated as the assessing officer failed to point out specific defects in the books or vouchers and no abnormal rise in expenses justified an adverse inference.

Reopening of assessment - reasons to believe - scope of reasons recorded for reopening - limitations on additions beyond recorded reasons - estimation of income - assessment set aside

Reopening of assessment - scope of reasons recorded for reopening - limitations on additions beyond recorded reasons - Whether additions made by the Assessing Officer on grounds not forming part of the reasons recorded for reopening are valid. - HELD THAT: - The Tribunal examined the reasons recorded by the AO under which assessment for AY 2010-11 was reopened (cash deposits in bank leading to a belief that income had escaped assessment). The AO, however, did not make any addition on account of the bank cash deposit; instead he made an estimated addition by applying a 12% profit rate on turnover and treated certain income as from other sources without discussing that basis in the assessment order. Relying on the principle that an AO, after reopening, must make additions only in respect of matters which form part of the reasons recorded for reopening, and noting the decisions of the High Courts referred to in the order (CIT vs Mohmed Juned Dadani ; CIT vs Jet Airways ; Ranbaxy Laboratories Ltd. vs CIT ), the Tribunal held that making additions on grounds not forming part of the recorded reasons is impermissible. In consequence, the AO's additions could not be sustained where they did not flow from the reasons that justified reopening. The Tribunal therefore concluded that the assessment made on such basis was liable to be set aside.

Additions sustained by the AO on grounds not forming part of the recorded reasons for reopening are invalid; the assessment is set aside.

Final Conclusion: The assessment order for Assessment Year 2010-11 is set aside because the Assessing Officer made additions that did not arise from the reasons recorded for reopening; the assessee's appeal is allowed.

Finality of appellate order - limitation barring adjudication on merits - maintainability of writ to reopen merits after dismissal for delay - instalment facility for payment of tax demand

Finality of appellate order - maintainability of writ to reopen merits after dismissal for delay - limitation barring adjudication on merits - Whether the writ court could go into the merits of the show cause notice after the appellant's statutory appeal was dismissed as time barred and the order attained finality. - HELD THAT: - The Court held that the appellant's statutory appeal against the show cause notice was not filed within the period prescribed under the Act and was therefore dismissed by the appellate authority on the ground of limitation. That order was later confirmed and attained finality before the apex court. As a consequence, the merits of the case were not and could not be examined by the appellate authority, and the writ court could not entertain a fresh attempt to reopen the merits which had been finally disposed of by the appellate process. The Single Judge correctly declined to go into the merits because the question was foreclosed by the finality of the appellate orders; the writ petition was therefore not maintainable as a vehicle to relitigate merits already concluded by the statutory fora and the appellate process. [Paras 6, 7]

Writ petition dismissed insofar as it sought adjudication on the merits which are foreclosed by the final appellate orders.

Instalment facility for payment of tax demand - Whether the Single Judge's grant of an instalment facility to discharge the demand could be interfered with on appeal. - HELD THAT: - Although the Single Judge did not entertain the writ petition on merits, discretion was exercised to permit the appellant to pay the liability in twelve monthly instalments beginning May 2018. The High Court found no reason to interfere with the learned Single Judge's exercise of discretion in granting the instalment facility; the availability or availing of that facility by the appellant was not established before this Court, but the order granting instalments was left undisturbed. [Paras 3, 6, 7]

The grant of instalment facility by the Single Judge stands and is not interfered with.

Final Conclusion: The Writ Appeal is dismissed: the Single Judge rightly refused to reopen merits foreclosed by final appellate orders, and the instalment facility granted to discharge the demand is left undisturbed.

Penalty under Sections 114 and 114AA of the Customs Act, 1962 - mens rea requirement for imposition of penalty - liability of a customs broker for facilitation of smuggling - presumption arising from mention of IE Code in the shipping bill - confiscation liability requires a deliberate act or omission - burden on Revenue to establish direct or circumstantial evidence - custodian responsibility where container tampering is shown

Penalty under Sections 114 and 114AA of the Customs Act, 1962 - mens rea requirement for imposition of penalty - liability of a customs broker for facilitation of smuggling - presumption arising from mention of IE Code in the shipping bill - burden on Revenue to establish direct or circumstantial evidence - Whether the penalties imposed on the customs broker under Sections 114 and 114AA could be sustained in the absence of proof that the broker had prior knowledge or otherwise facilitated the smuggling. - HELD THAT: - The Tribunal upheld the First Appellate Authority's conclusion that Revenue failed to establish that the customs broker had the requisite culpability or had directly or indirectly facilitated the smuggling. The adjudicating authority imposed penalties for alleged failure to verify antecedents and for turning a blind eye, but the Revenue did not produce direct or even circumstantial evidence attributing prior knowledge or deliberate acts/omissions to the broker. The Tribunal relied on the reasoning that where the shipping bill records an IE Code, there exists a presumption that appropriate background checks by Customs have been made; absent evidence showing the broker knew that the shipping documents were false or that the broker created false documents, mens rea could not be imputed. The Tribunal also noted factual material pointing to possible tampering of the container and observations implicating custodial lapses, which the Revenue did not investigate further to connect the broker to the offence. Applying these considerations, the Tribunal found the statutory penalties could not be sustained on the record before it. [Paras 8, 9, 10]

Penalties under Sections 114 and 114AA set aside; Revenue failed to prove broker's involvement or requisite culpability.

Final Conclusion: The appeal filed by the Revenue is dismissed for lack of merit; the penalties imposed on the customs broker are deleted and the cross-appeal is treated as allowed.

Reduction of share capital - Section 66 of the Companies Act, 2013 - Tribunal confirmation of reduction - cancellation of paid-up shares unrepresented by assets - selective reduction permissible - compliance with arbitral award without payout

Reduction of share capital - Section 66 of the Companies Act, 2013 - cancellation of paid-up shares unrepresented by assets - compliance with arbitral award without payout - Confirmation of the proposed reduction of paid-up share capital by cancelling 92,00,000 equity shares pursuant to the special resolution and the arbitral award - HELD THAT: - The Tribunal examined the petition under Section 66 read with the NCLT Rules, noting that the Board and the shareholders (by special resolution at the AGM) approved cancellation of the specified paid-up shares and that the cancellation arises from an arbitral award which provided for annulment/cancellation without any payout. The Tribunal observed the settled position that where shareholders do not object and the proposal is bona fide and commercially motivated, the Tribunal will generally admit and confirm reduction after considering merits and connected facts. The Registrar of Companies/Regional Director's observations regarding past non-compliances, CSR shortfall, alleged contraventions and other regulatory concerns were noted, and the Company's replies and undertakings were considered. Having regard to the award, the shareholders' resolution, the absence of any bar such as outstanding deposits, and the principle that selective reduction is permissible within law where it is not shown to be inequitable, the Tribunal concluded that the proposed cancellation is confirmable under Section 66. [Paras 24, 25]

Reduction of paid-up share capital by cancelling 92,00,000 equity shares is confirmed and approved.

Tribunal confirmation of reduction - alteration of memorandum - regulatory filing under NCLT Rules - Directives as to consequential filings and alteration of the memorandum following confirmation of reduction - HELD THAT: - The Tribunal directed that the necessary alteration be made in the Memorandum of Association to reflect the reduced paid-up capital and that the copy of the altered memorandum and the approved minutes together with the order be delivered to the Registrar of Companies by filing the prescribed e-form within the time stipulated under the Rules. The Registry was directed to prepare FORM No. RSC-6 in accordance with the National Company Law Tribunal (Procedure for Reduction of Share Capital of the Company) Rules, 2016 and issue it to the applicant. [Paras 26]

Petitioner to alter the Memorandum accordingly and file the altered memorandum, approved minutes and required e-forms (including FORM RSC-6/INC) with the ROC within the prescribed period.

Final Conclusion: The Tribunal confirmed the company's reduction of paid-up share capital effected by cancellation of the specified shares in compliance with Section 66 and the arbitral award, and directed consequential alteration of the memorandum and statutory filings with the Registrar of Companies in accordance with the NCLT Rules.

Commercial wisdom of the Committee of Creditors - material irregularity in the procedure of the Resolution Professional - approval of a resolution plan by the Adjudicating Authority after CoC approval - equal opportunity to prospective resolution applicants - completion of CIRP within the prescribed timeline under the IBC - limited judicial interference in commercial decision-making of CoC

Commercial wisdom of the Committee of Creditors - material irregularity in the procedure of the Resolution Professional - approval of a resolution plan by the Adjudicating Authority after CoC approval - equal opportunity to prospective resolution applicants - completion of CIRP within the prescribed timeline under the IBC - Validity of the NCLAT's interference with the CoC's decision and the NCLT's approval of the successful resolution applicant. - HELD THAT: - The Court examined the minutes of the CoC meeting and the conduct of the RP and found that all prospective resolution applicants had been given opportunity to submit and rectify their plans, that the CoC evaluated the plans transparently and adopted an open bidding process which resulted in the appellant being declared H1, and that the CoC and RP legitimately declined to further adjourn the process in view of the looming CIRP timeline. The Court reiterated that the CoC's commercial wisdom enjoys primacy and is not open to judicial review except on narrow grounds (for example, material irregularity in the process). Applying that principle, the Court held there was no material irregularity in the manner in which the RP/CoC conducted the evaluation or bidding: PPIPL had been given chances to rectify its plan, had requested adjournment and time which the CoC refused because of timeline constraints, and subsequently sought to submit a revised offer after exclusion. The Court further observed that permitting the absent applicant to participate contrary to the CoC's communicated decision would itself have been irregular. The Court also noted that the CIRP's dominant purpose of revival had been achieved (financial creditors paid and corporate debtor an ongoing concern), and that the NCLAT erred in setting aside the NCLT's approval of the resolution plan in the absence of any material irregularity. [Paras 32, 34, 35, 37, 38]

The NCLAT's interference was erroneous; there was no material irregularity in the RP/CoC process and the NCLT's approval of the appellant's resolution plan is upheld.

Final Conclusion: The appeals are allowed; the impugned NCLAT order dated 19th October, 2020 is quashed and set aside, and the NCLT's approval of the successful resolution applicant is restored; no order as to costs and all pending applications are disposed of.

Refund claim time-barred - application of limitation under Section 11B to refund of tax paid by mistake - tax paid by mistake - refund not barred by limitation - Article 265 - tax can be levied or collected only by authority of law - finality of appellate order by withdrawal of appeal

Refund claim time-barred - application of limitation under Section 11B to refund of tax paid by mistake - tax paid by mistake - refund not barred by limitation - Article 265 - tax can be levied or collected only by authority of law - finality of appellate order by withdrawal of appeal - Rejection of the appellant's refund claim as time-barred was unsustainable. - HELD THAT: - The Tribunal examined conflicting precedents and followed the binding decision of the jurisdictional High Court in M/s. 3E Infotech holding that a claim for refund of service tax paid by mistake cannot be defeated merely because the limitation period under Section 11B has expired, since permitting the Revenue to retain such amounts would run counter to Article 265 of the Constitution. The Order-in-Appeal dated 22.10.2012 in favour of the appellant had become final on withdrawal of the Revenue's appeal, indicating the tax was collected without authority of law. Given that the service tax liability for the service in question was held to arise only from 01.07.2010, the amounts collected for the period 11/2005 to 03/2007 were paid under a mistake of law and thus refundable. For these reasons the Tribunal held the First Appellate Authority's decision to reject the refund as time-barred to be unsustainable and restored the Adjudicating Authority's refund sanction. [Paras 4, 5]

Impugned order of the First Appellate Authority set aside; order of the Adjudicating Authority restoring the refund upheld; appeal allowed with consequential benefits as per law.

Final Conclusion: The Tribunal allowed the appeal, restored the Adjudicating Authority's order sanctioning the refund, and held that the refund claim for the period 11/2005 to 03/2007 could not be rejected as time-barred where the tax was paid by mistake and the appellate order in favour of the assessee had attained finality.

Calculation of differential service tax - right to disclosure of departmental working and documents - principles of natural justice - remand for fresh adjudication after providing clarification and personal hearing

Calculation of differential service tax - right to disclosure of departmental working and documents - principles of natural justice - Adjudicating Authority failed to explain and support the computation of the differential service tax and thereby breached principles of natural justice by not furnishing clarifications or relevant documents despite requests by the appellant. - HELD THAT: - The Tribunal found a demonstrable discrepancy between figures shown in the appellant's ST-3 return and the departmental statement of bank receipts used to compute the demand (example: ST-3 showing gross receipt and resulting taxable amount for April 2009 vis-a -vis a different bank-receipt figure in the departmental calculation). The appellant had repeatedly sought clarification from the Adjudicating Authority by letters dated 06.11.2015, 22.03.2016, 05.04.2016 and 23.04.2016 but no explanation of the calculation or supporting documents was furnished; the Adjudicating Authority relied on the fact that computations were made in the presence of the appellant and considered that sufficient. The Tribunal rejected that approach: when a show cause notice and a demand are based on specific computations, the department must disclose the data and working relied upon (such as bank statements/ledgers and ST-3 returns) so that the noticee can meaningfully reply. Failure to give clear clarification of the working amounts to denial of a fair opportunity and infracts the principles of natural justice. For these reasons the Tribunal concluded that the matter could not be properly adjudicated on the record before it and required reconsideration after disclosure and hearing. [Paras 3, 4]

Impugned order set aside and matter remanded to the Adjudicating Authority to pass a fresh order after providing the requested clarifications and documents, granting personal hearing, and permitting the appellant to produce bank statements/ledgers in support of its claim of discrepancy.

Final Conclusion: The appeal is allowed by way of remand: the impugned adjudication is set aside and the Adjudicating Authority is directed to reconsider the demand after furnishing the computations and supporting documents relied upon, affording the appellant an opportunity of personal hearing and permitting production of bank statements/ledgers.

Denial of CENVAT Credit on GTA services - place of removal - stock transfer versus sale - modus operandi of assessee and establishment of RDCs/WSDCs - remand for factual re-examination - application of precedent in light of differing facts

Denial of CENVAT Credit on GTA services - place of removal - stock transfer versus sale - modus operandi of assessee and establishment of RDCs/WSDCs - remand for factual re-examination - application of precedent in light of differing facts - Whether the impugned orders denying CENVAT credit on transportation from RDCs/Corporate Office to retail outlets can be sustained without the factual examination directed by the High Court and whether the matter should be remanded for fresh adjudication. - HELD THAT: - The High Court had specifically directed that the Adjudicating Authority first examine and record the assessee's modus operandi - including existence and functioning of RDCs/WSDCs and whether goods are removed to RDCs without any sale - before applying legal principles. The Commissioner did not undertake the specific factual enquiry mandated by the High Court but applied legal conclusions (including reliance on Ultra Tech Cement Ltd.) by collating earlier findings. The Tribunal found that the facts of the present case differ from those in Ultra Tech Cement Ltd., where clearance at the premises constituted place of removal. In the absence of a thorough factual exposition supported by documents and an opportunity to be heard, the Tribunal could not endorse reconfirmation of the demand. Consequently, the impugned orders were set aside and the matter remitted to the Adjudicating Authority to examine afresh in accordance with the High Court's directions and the Tribunal's observations, afford reasonable hearing, and pass a fresh speaking order applying law to the ascertained facts. All contentions were left open for consideration on remand. [Paras 11, 12, 13, 14]

Impugned orders set aside and matter remanded to the Adjudicating Authority for fresh adjudication in accordance with the High Court's directions and the Tribunal's observations; appeals allowed by way of remand.

Final Conclusion: The Tribunal set aside the impugned Orders in Original denying CENVAT credit and remitted the matter to the Adjudicating Authority for fresh, fact based adjudication in accordance with the Madras High Court's directions; appeals allowed by way of remand.

False representation in purchasing goods on strength of certificate of registration - misuse/misutilisation of goods purchased on Form C for job work - liability under clause (d) of Section 10 for failure to use goods for specified purpose - penalty in lieu of prosecution under Section 10A - mens rea for penalty under Section 10(b) read with Section 10A - no estoppel against law for wrongful issuance of Form C

Mens rea for penalty under Section 10(b) read with Section 10A - penalty in lieu of prosecution under Section 10A - false representation in purchasing goods on strength of certificate of registration - Existence of requisite guilty intention (mens rea) to impose penalty under Section 10A for offences under clause (b) of Section 10. - HELD THAT: - The Tribunal found that the assessee had made deliberate misrepresentations in procuring the Offset Printing Machine and other equipment on the strength of Form 'C' and the registration certificate, describing the conduct as done "knowing fully well" that he was not entitled to such purchases and as demonstrating an "unscrupulous intention." While the Tribunal did not repeatedly use the term 'mens rea', its findings record deliberate suppression and misrepresentation. The Court noted the Supreme Court's ruling in Commissioner of Sales Tax, U.P. v. M/s. Sanjiv Fabrics requiring proof of mens rea for penalty under Section 10A read with Section 10(b), and held that the factual findings of deliberate misrepresentation satisfy that requirement. On this basis the Court upheld the Tribunal's finding that the threshold for imposition of penalty under Section 10A was met.

Findings that the assessee acted with guilty intention are affirmed and are sufficient to attract penalty under Section 10A for offences under Section 10(b).

Misuse/misutilisation of goods purchased on Form C for job work - liability under clause (d) of Section 10 for failure to use goods for specified purpose - no estoppel against law for wrongful issuance of Form C - Whether use of goods purchased on Form 'C' exclusively for job work and for printing a newspaper amounted to an offence under clause (d) of Section 10 and justified imposition of penalty. - HELD THAT: - The Tribunal applied the definitions in Section 8(2)(b), (c) and (d) and concluded that goods purchased on Form 'C' must be used for resale or in the manufacture or processing of goods for sale, and not to be exclusively used for job work. The Tribunal found that after procuring the machinery on Form 'C' the assessee ceased the business for which registration was granted and used the equipment to carry out printing of a daily newspaper and job work, thereby misutilising the goods contrary to the permitted purposes. The Tribunal also rejected any notion that the wrongful issuance of Form 'C' by authorities could estop the law, observing there is "no estoppel against law." The Court accepted these findings and the legal conclusion that the misuse attracted liability under clause (d) of Section 10 and justified the penalty under Section 10A.

Misutilisation of goods purchased on Form 'C' for job work and printing is held to constitute an offence under clause (d) of Section 10, supporting imposition of penalty under Section 10A.

Final Conclusion: The Court affirmed the Tribunal's findings that the assessee deliberately misrepresented entitlement to purchase on Form 'C' and misutilised the goods for job work; accordingly the requisite mens rea was found and the penalties imposed under Section 10A are upheld. The Revision Petitions are dismissed.

Exhaustion of alternative remedy - judicial review under Article 226 - jurisdictional error - remand for fresh adjudication - appellate remedy and powers of appellate authorities - application of amended provision to earlier assessment years

Exhaustion of alternative remedy - appellate remedy and powers of appellate authorities - application of amended provision to earlier assessment years - jurisdictional error - judicial review under Article 226 - Whether the writ petitions could be entertained without exhausting the statutory appellate remedy where assessment orders for assessment years 2011-12 to 2014-15 allegedly applied an amendment to Section 19 post facto and thus involved jurisdictional error. - HELD THAT: - The Court held that the statutory scheme of the TNVAT Act provides an established multi-tier appellate mechanism (including appeals/revisions) which ordinarily must be exhausted before invoking writ jurisdiction. Dispensing with the appellate remedy is an exception and may be permitted only in exceptional circumstances such as imminent or irreparable injury, gross injustice, violation of fundamental rights, proceedings ultra vires, or breach of principles of natural justice. Where the challenge is that the Assessing Officer applied an amended provision to earlier assessment years, the appellate authorities are competent to examine and correct such legal or jurisdictional infirmities since the appeal provisions themselves empower them to consider legal grounds and to confirm, reduce, enhance, annul, set aside or direct fresh assessment. Jurisdictional errors are generally technical and rectifiable; they do not automatically lead to exoneration of liability and ordinarily warrant quashing and remand for fresh adjudication rather than bypassing the appellate fora. The High Court emphasized institutional respect for the appellate process and that Article 226 review is to scrutinise the legality of the process followed, not to re-adjudge mixed questions of fact and law which require appraisal of records by the appellate fact-finding authorities. Consequently, the petitioners were directed to approach the prescribed appellate authorities, with the appellate authorities being empowered to condone any delay and adjudicate the appeals on merits. [Paras 11, 12, 15, 16, 18]

Petitioners must exhaust the statutory appellate remedy under the TNVAT Act (appeal/revision) in respect of the assessment years 2011-12 to 2014-15; writ petitions are disposed of with liberty to approach the appellate authorities and with directions that any delay in filing appeals may be condoned.

Final Conclusion: Writ petitions dismissed insofar as entertaining them without first availing the statutory appellate remedy; petitioners granted liberty to file appeals/revisions before the appropriate appellate authorities for assessment years 2011-12 to 2014-15, with directions that delay, if any, may be condoned and appeals adjudicated on merits.

Conviction under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - award of sentence and compensation in proceedings under the Negotiable Instruments Act

Conviction under Section 138 of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act - Validity of the conviction of the petitioner for the offence under Section 138 of the Negotiable Instruments Act. - HELD THAT: - The court examined the trial court's findings and the appellate affirmation and found that the petitioner did not lead any evidence to rebut the statutory presumption under Section 139 that the cheque was issued for discharge of debt. The cheque bearing the petitioner's signature was produced as Exhibit-1 and evidence established dishonour and service of demand notice. The learned Magistrate therefore correctly concluded guilt under Section 138, and the Additional Sessions Judge properly affirmed that finding. [Paras 8, 9, 10]

The conviction under Section 138 was upheld as legally sound because the presumption under Section 139 remained unrebutted and essential ingredients of the offence were established.

Award of sentence and compensation in proceedings under the Negotiable Instruments Act - Whether the sentence of imprisonment and the compensation awarded were legally impermissible or required interference. - HELD THAT: - The court noted the statutory sanction under Section 138 permitting imprisonment up to two years and fine up to twice the cheque amount. Having regard to that statutory spectrum and the facts found by the courts below, the impugned substantive sentence of three months' simple imprisonment and a compensation order equivalent to twice the cheque amount were within the permissible limits and raised no illegality or impropriety warranting interference. [Paras 6, 11]

The sentence of three months' imprisonment and the compensation (made recoverable as fine) were affirmed as not illegal or excessive.

Final Conclusion: Criminal revision dismissed; the concurrent findings of guilt under Section 138 and the sentence (three months' imprisonment and compensation twice the cheque amount) were held free from illegality and the interim order, if any, was vacated.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal on preponderance of probabilities - legally enforceable debt or other liability - appellate restraint in interfering with acquittal where two views are possible - probative value of seizure list and official acts under Section 114 Evidence Act

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal on preponderance of probabilities - Whether the accused successfully rebutted the statutory presumption under Section 139 so as to defeat conviction under Section 138. - HELD THAT: - The Court applied the settled test that an accused need only raise a probable defence on the preponderance of probabilities to rebut the reverse presumption under Section 139. Having examined the evidence and competing inferences, the Court found that the accused adduced circumstances and relied on materials (including entries in the CBI Seizure List and the complainant's own records) that created reasonable doubt as to issuance and custody of the cheques and as to the existence of a legally enforceable debt. The Court held that those probabilities were sufficient to displace the statutory presumption and that the accused's defence was reasonably probable for the purpose of rebuttal under the standard laid down by the Supreme Court. [Paras 68, 69, 73, 74, 83]

The accused rebutted the presumption under Section 139 on the standard of preponderance of probabilities; the presumption was displaced.

Legally enforceable debt or other liability - probative value of account records and balance sheet - Whether the complainant proved existence of a legally enforceable debt or liability in respect of which the cheques were drawn. - HELD THAT: - The Court observed that the Explanation to Section 138 requires a legally enforceable debt or liability. On the evidence, no valid documentary proof (loan agreement, clear entries in the balance sheet or corroborative witnesses) established such an enforceable liability. The balance sheet did not reflect the alleged debt under 'cheques in hand', and the account records and surrounding circumstances (mode of transactions, finances of the complainant) gave rise to plausible alternative inferences. In consequence, on a balance of probabilities the prosecution failed to establish the existence of a legally enforceable debt as required for conviction under Section 138. [Paras 76, 77, 78, 79, 80]

The existence of a legally enforceable debt or liability was not proved; the requirement for conviction under Section 138 was not satisfied.

Appellate restraint in interfering with acquittal where two views are possible - probative value of seizure list and official acts under Section 114 Evidence Act - Whether the High Court should interfere with the Sessions Court's judgment of acquittal. - HELD THAT: - The Court reiterated the principle that an appellate court should not reverse an acquittal merely because a second view is possible. Having considered that the trial judge had thoroughly examined the materials and reached conclusions that were consistent with the preponderance-of-probabilities standard applicable to rebuttal of Section 139, and that bona fide, opposing inferences (particularly concerning the status of the seized cheque leaves) could be drawn from the same evidence, the High Court found no infirmity or illegality warranting interference. Although Section 114 affords a presumption of regularity to official acts (such as seizure lists), the document itself disclosed facts that permitted opposing, equally probable inferences-thus preserving the trial court's conclusion. [Paras 71, 74, 75, 84, 85]

No interference with the Sessions Court's acquittal; the judgment of acquittal is affirmed.

Final Conclusion: The appeals are dismissed and the Sessions Court's judgments of acquittal are affirmed: the accused successfully raised a probable defence on the preponderance of probabilities, the prosecution failed to prove a legally enforceable debt, and there was no occasion for the High Court to disturb the acquittals.