TaxTMI Updates e-Newsletter
Dec 22,2022

Liability of directors of private company under section 179 - Requirement of prior recovery efforts from the company before invoking director liability - Onus on directors to prove non-attribution to gross neglect, misfeasance or breach of duty - Inapplicability of section 179 where non-recovery is not shown to be due to directors' gross neglect

Liability of directors of private company under section 179 - Requirement of prior recovery efforts from the company before invoking director liability - Onus on directors to prove non-attribution to gross neglect, misfeasance or breach of duty - Whether the order under section 179 fixing joint and several liability on the petitioners as directors of the private company was validly passed having regard to the statutory pre-conditions and the explanations offered by the petitioners. - HELD THAT: - The Court examined section 179 and held that the Assessing Officer must first make sufficient efforts to recover the tax from the private company and must be satisfied that non-recovery is attributable to gross neglect, misfeasance or breach of duty by the directors before invoking director liability. On the material before it, the Court found that the Assessing Officer had failed to demonstrate adequate recovery steps beyond issuance of recovery notices and attachment of bank account, and had not adequately considered the petitioners' explanations that the assessment was under appeal and that they were not guilty of gross neglect or misfeasance. The Court observed that inability to deposit the percentage required for stay under CBDT guidelines does not, by itself, establish gross neglect. Because the impugned order did not lay sufficient foundation showing that non-recovery resulted from the directors' gross neglect or that the necessary antecedent recovery efforts were completed, the order was held to be without jurisdiction. The Court noted prior decisions to like effect and held that the Assessing Officer remains free to initiate fresh proceedings if sufficient material supports section 179, but the present order must be set aside. [Paras 8, 11, 12]

Impugned order under section 179 and consequential attachment and demand orders quashed for want of jurisdiction as statutory pre-conditions and requisite satisfaction were not shown to have been complied with.

Final Conclusion: The writ petition is allowed; the order dated 26.10.2017 under section 179, the consequential order dated 29.01.2018 under Rule 48 and the demand notice dated 11.01.2018 are quashed and set aside, with liberty to the Department to initiate fresh proceedings if supported by sufficient material.

Prior approval under Section 153D - Approval to draft assessment order requires application of mind - Mechanical approval vitiates assessment passed under Section 153A - Separate approval for each assessment year - In-built safeguard against arbitrary assessment

Prior approval under Section 153D - Approval to draft assessment order requires application of mind - Separate approval for each assessment year - In-built safeguard against arbitrary assessment - Requirement and legal effect of prior approval under Section 153D for assessments arising out of search under Section 153A. - HELD THAT: - The Court construed Section 153D as a mandatory pre requisite to passing an assessment or reassessment under Section 153A where the Assessing Officer is below the rank of Joint Commissioner. The approval mandated by Section 153D must reflect independent application of mind by the Approving Authority to the material and the draft assessment for "each assessment year" and "each assessee" separately. The approval is an in built protection against arbitrary or unjust exercise of power by the Assessing Officer and cannot be treated as a mere formality. Reliance on earlier judicial discussion, including the principle that prior approval must be granted on the basis of material on record and must reflect consideration of facts, supports that a mechanical or perfunctory approval defeats the legislative scheme of Sections 153A-153D. The Court therefore articulated the legal principle that mechanical approval vitiates the subsequent assessment order.

Approval under Section 153D must be granted after application of independent mind to the material and for each assessment year separately; a mechanical approval is legally impermissible and vitiates the assessment.

Mechanical approval vitiates assessment passed under Section 153A - Prior approval under Section 153D - Validity of the assessment in the present case where the Approving Authority granted approval to draft orders in 85 cases on the same day. - HELD THAT: - On the admitted facts, the draft assessment orders in 85 cases, including the present assessee's for assessment year 2014 15, were placed before the Approving Authority and approved on the same date. The Court found it humanly impossible that the Approving Authority applied independent mind to each case and to the material on record for each assessment year. The Tribunal's conclusion that the approval was a mechanical exercise and consequently vitiated the proceedings was held not to be perverse or contrary to the record. Given these factual findings, the Court declined to entertain re examination of the Assessing Officer's findings in this second appeal.

The approval granted in the manner shown on the record was mechanical; therefore the assessment framed under Section 153A/143(3) was vitiated and the Tribunal was justified in quashing the assessment.

Final Conclusion: The appeal is dismissed. The Tribunal correctly held that the prior approval under Section 153D must involve application of mind and that the mechanical approval shown on the record vitiated the assessment for assessment year 2014-15.

Requirement of satisfaction by AO of searched person that seized documents belong to another person - Jurisdictional satisfaction for assuming jurisdiction under Section 153C - Validity of assessment under Section 153C

Requirement of satisfaction by AO of searched person that seized documents belong to another person - Jurisdictional satisfaction for assuming jurisdiction under Section 153C - Validity of assessment under Section 153C - Whether the assessment and proceedings under Section 153C were valid where the assessing officer of the searched person did not record satisfaction that any seized documents, books of account or assets belonged to the respondent/assessee. - HELD THAT: - The Court accepted the concurrent findings of the CIT(A) and the Tribunal that jurisdiction under Section 153C could not be invoked merely because the assessee was closely related to the searched person. The Tribunal had recorded that the Assessing Officer of the searched person did not generate a satisfaction note indicating that any materials seized belonged to the respondent; that absence was emphasised as fatal to the revenue's case. A plain reading of Section 153C (as in force at the relevant time) requires the AO of the searched person to be satisfied that seized money, documents or assets belong to a person other than the searched person before books/documents/assets can be handed over to the AO having jurisdiction over that other person. The satisfaction note produced by the AO of the searched person, as relied on by the revenue, did not refer to any material belonging to the respondent/assessee and thus did not fulfill the statutory pre condition for assuming jurisdiction under Section 153C. For these reasons the Court declined to interfere with the Tribunal's and CIT(A)'s conclusions. [Paras 10, 11, 12, 13, 14]

Concurrent findings that the statutory satisfaction required under Section 153C was absent were upheld; the assessment under Section 153C was held invalid and the appeal dismissed.

Final Conclusion: The High Court affirmed the CIT(A) and the Tribunal that jurisdiction under Section 153C was not made out because the assessing officer of the searched person did not record the requisite satisfaction that seized documents/assets belonged to the respondent; the appeal was dismissed and no substantial question of law was found.

Leasehold interest as capital asset - transfer by way of lease treated as transfer of a capital asset - characterisation of compensation as capital receipt - compensatory payment (statutory) not taxable as income from other sources - invocation of jurisdiction under Section 263 of the Income tax Act

Leasehold interest as capital asset - transfer by way of lease treated as transfer of a capital asset - Whether the assessee's leasehold rights in the allotted plot constituted a capital asset within the meaning of Section 2(14) of the Act. - HELD THAT: - The Court found on the facts that the assessee obtained a registered lease for an initial term of 30 years with an option to extend for a further 60 years, took possession, paid a lease premium, had the right to construct and to sub lease/assign/transfer constructed buildings (subject to use restrictions), and had treated the rights as fixed assets in its books. Applying precedent that a long lease creating enduring rights and attracting premium amounts to a transfer of an interest in land and therefore falls within the definition of capital asset, the Court held that the leasehold rights created an interest in land in favour of the assessee and thus constituted a capital asset. [Paras 11, 15, 16, 19, 21]

The leasehold rights held by the assessee in the plot are a capital asset.

Characterisation of compensation as capital receipt - compensatory payment (statutory) not taxable as income from other sources - Whether the compensation (including the amount calculated at 10% per annum under the Goa legislation) received on cancellation of the allotment is a capital receipt rather than taxable as income from other sources. - HELD THAT: - The payment to the assessee was made pursuant to statutory provisions of the Goa (Rajiv Gandhi IT Habitat - Cancellation/Abolition and Regulation of Allotment of Plots) Act, 2012, which provided for refund of premium/lease rent together with simple interest at 10% per annum as compensation on cancellation. The Court held that the statutory scheme treats the 10% amount as compensatory payment and not ordinary interest; in the factual matrix where the assessee's leasehold rights were a capital asset and the allotment was cancelled, the payment constituted compensation for extinguishment of the assessee's capital interest. Consequently, the receipt bears the character of a capital receipt and is not taxable under the head 'Income from other sources'. [Paras 12, 13, 20, 23]

The compensation received (including the 10% amount) is a capital receipt and not income from other sources.

Invocation of jurisdiction under Section 263 of the Income tax Act - Whether the Principal Commissioner was justified in invoking jurisdiction under Section 263 to set aside the assessment order as erroneous and prejudicial to the interests of revenue. - HELD THAT: - Section 263 may be invoked only where the original assessment is shown to be erroneous and prejudicial. Having held that the assessee's leasehold rights were capital assets and that the compensation was a capital receipt, the Court concluded that the Assessing Officer had correctly accepted the return and made no error of law or fact warranting interference under Section 263. The PCIT's view treating the 10% amount as interest and characterising the asset otherwise was found to be incorrect in law on the material placed before the AO and subsequent proceedings. [Paras 23, 24]

The PCIT's invocation of Section 263 was not justified; the AO's assessment order was correct and did not suffer from an error justifying revision under Section 263.

Final Conclusion: The High Court dismissed the appeal, holding that the assessee's leasehold rights were capital assets, the compensation paid on cancellation (including the statutory 10% component) was a capital receipt and not taxable as income from other sources, and that the Principal Commissioner's invocation of Section 263 was unwarranted; no substantial question of law arises.

Effect of revised return filed under section 139(5) - Notice under section 143(2) and its mandate - Distinction between irregularity and illegality in assessment proceedings - Remand for re-determination of income on basis of revised return

Notice under section 143(2) and its mandate - Effect of revised return filed under section 139(5) - Distinction between irregularity and illegality in assessment proceedings - Whether non-issuance of a fresh notice under section 143(2) on a revised return filed before completion of assessment renders the assessment void ab initio or is a curable irregularity. - HELD THAT: - The Tribunal examined the operation of section 143(2) and section 139(5) and noted that a 143(2) notice issued within the statutory time on the original return set the assessment proceedings in motion. The assessee filed a revised return within the time permitted by section 139(5) and before completion of assessment, but the Assessing Officer did not take cognizance of it prior to passing the assessment order. The Tribunal observed that the authorities cited by the assessee establish that a valid revised return supersedes the original return for determination of income, but those decisions do not lay down that failure to issue a fresh 143(2) notice on the revised return in every circumstance vitiates the assessment. Given practical realities-such as a revised return being filed at the receipt counter shortly before completion of assessment-the Tribunal held that non-issuance of a separate 143(2) notice on the revised return in the facts of this case amounted to an irregularity and not an illegality which destroys the jurisdiction of the Assessing Officer. The defect was therefore curable by re-determination rather than by annulling the assessment outright. [Paras 9]

Non-issuance of a 143(2) notice on the revised return under the facts was an irregularity and not a jurisdictional illegality; the assessment is not void ab initio.

Remand for re-determination of income on basis of revised return - Effect of revised return filed under section 139(5) - What remedial course should be followed once a revised return filed within time was not taken into account in the assessment? - HELD THAT: - The Tribunal directed that the appropriate remedy was to set aside the order of the Commissioner (Appeals) and restore the matter to the file of the Assessing Officer for re-determination of taxable income after taking into account the revised return. The Assessing Officer was to be directed to obtain necessary details from the revised return and to carry out the exercise afresh after affording the assessee due opportunity of hearing. The Tribunal noted that if the Assessing Officer, upon re-determination, deems that escapement of income requires initiation of reassessment, he remains free to proceed under section 147. [Paras 10]

Matter remanded to the Assessing Officer to re-determine taxable income on the basis of the revised return, after giving the assessee an opportunity of hearing; appeal of the revenue allowed for statistical purposes.

Final Conclusion: The appellate order quashing the assessment was set aside. The matter is remitted to the Assessing Officer to re-determine the taxable income for Assessment Year 2013-14 after taking into account the revised return filed under section 139(5), with due opportunity of hearing; the Revenue's appeal is allowed for statistical purposes.

Revisionary jurisdiction under section 263 - Erroneous order prejudicial to the interests of the revenue - Requirement of prima facie material before exercising revisionary power - Assessing Officer's application of mind and verification of records - Prohibition on substitution of Commissioner's judgment for AO

Revisionary jurisdiction under section 263 - Erroneous order prejudicial to the interests of the revenue - Requirement of prima facie material before exercising revisionary power - Assessing Officer's application of mind and verification of records - Prohibition on substitution of Commissioner's judgment for AO - Whether the Principal Commissioner of Income-tax could exercise powers under section 263 to set aside the assessment framed under section 143(3) for AY 2017-18 on the ground that the assessment was alleged to be erroneous and prejudicial to the interests of revenue. - HELD THAT: - The Tribunal examined the assessment record and the AO's order and found that the AO had called for and considered the documents and explanations furnished by the assessee (including partnership deed, firm returns, VAT/GST details, ledgers and P&L accounts) and had recorded specific findings accepting the returned income after verification (extracted in the order at para. 8). The Court reiterated the twin conditions for invoking section 263 - the order must be erroneous and prejudicial to revenue - and applied the principle explained in Gabriel India that an order cannot be branded erroneous merely because the Commissioner would have taken a different view; there must be prima facie material showing that tax exigible was not imposed or that the officer acted contrary to law (para. 11). The PCIT's action was based on the view that further enquiries ought to have been made regarding cash deposits and profit declared from the liquor business, but no material was placed on record by the PCIT to demonstrate any actual error of fact or law by the AO or any adverse effect on revenue (para. 12). The Tribunal held that mere possibility or suspicion does not satisfy the statutory requirement for revision under section 263 and that the PCIT impermissibly substituted his own judgment for the considered conclusion of the AO who had applied his mind to the material before him. [Paras 8, 11, 12, 13]

The order of the Principal Commissioner under section 263 is without jurisdiction and is quashed; the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2017-18, quashed the PCIT's order under section 263 as there was no prima facie material to conclude that the AO's assessment was erroneous and prejudicial to the interests of the revenue.

Proof of purchase and burden of proof for cost of acquisition - treatment of cost of improvement where not substantiated - capital gains taxable in the previous year in which transfer is effected under section 45 - disallowance of expenses for lack of documentary evidence

Proof of purchase and burden of proof for cost of acquisition - Addition of Rs.18,79,659 made by the AO on account of shortfall in admitted cost of purchase of the Ireo Skyon flat was sustained. - HELD THAT: - The assessee declared a higher cost of acquisition than the payments evidenced before the AO. The AO accepted only the payments for which documentary proof was produced and computed short-term capital gain accordingly. On appeal the assessee furnished photocopies of receipts but failed to produce original receipts, complete purchase deed or schedule of payments to substantiate the remaining part of the claimed cost. The CIT(A) reviewed the submissions, found the supplementary documents insufficient to establish the asserted cost, and confirmed the addition. The Tribunal, after hearing the Revenue and noting absence of any contrary material from the assessee, affirmed the view that in absence of requisite evidence the AO and CIT(A) were justified in restricting the cost adopted for computing capital gain. [Paras 3, 4, 12]

Addition of Rs.18,79,659 affirmed for want of adequate proof of the claimed purchase payments.

Treatment of cost of improvement where not substantiated - Addition of Rs.20,51,232 on account of long-term capital gain in respect of Nangloi property was sustained. - HELD THAT: - The assessee claimed substantial cost of improvement which the AO rejected for lack of supporting evidence, restricting indexed cost to the original purchase price. The CIT(A) examined the records and submissions and found no documentary proof of the alleged improvement expenditure; accordingly the AO's computation of long-term capital gain was upheld. The Tribunal, with no evidence placed before it by the assessee, found no infirmity in confirming the addition. [Paras 5, 6, 12]

Addition of Rs.20,51,232 affirmed because the claimed cost of improvements was not substantiated by evidence.

Capital gains taxable in the previous year in which transfer is effected under section 45 - Addition of Rs.28,24,895 on account of capital gain arising from sale of A-3/19, Paschim Vihar was sustained as the transfer was held to have been effected in the year under consideration. - HELD THAT: - The AO relied on AIR information and the sale deed dated during the relevant financial year to treat the transaction as having been effected in that previous year and brought to tax accordingly. The assessee declared the gain in the subsequent assessment year asserting receipt of consideration in the next year; however the CIT(A) observed that transfer took place within the year on the basis of the sale deed and applied the statutory principle that profit or gain arising from transfer is taxable in the previous year in which the transfer is effected. The Tribunal, noting the material on record and absence of contrary evidence from the assessee, upheld the AO and CIT(A)'s conclusion. [Paras 7, 8, 12]

Addition of Rs.28,24,895 affirmed as the transfer was held to have been effected in the relevant previous year and taxable therein.

Disallowance of expenses for lack of documentary evidence - Disallowance of Rs.14,98,184 as unsubstantiated production expenses was sustained. - HELD THAT: - The assessee claimed production expenses but failed to produce details and supporting evidence for a portion of the claimed amount. The AO disallowed the unsubstantiated portion and the CIT(A) confirmed the disallowance after noting the admitted inability of the assessee to furnish evidence. The Tribunal, in the absence of any contrary material from the assessee despite service attempts, found no reason to interfere with the concurrent findings. [Paras 9, 10, 12]

Disallowance of Rs.14,98,184 confirmed for want of supporting evidence.

Final Conclusion: On review of the record and in absence of any material from the assessee to controvert the findings of the AO and CIT(A), the Tribunal dismissed the appeal and affirmed the impugned additions and disallowance for AY 2014-15.

Fees for technical services - Business profits - Permanent establishment - Make available test - Article 13(4)(c) India-UK DTAA - Ancillary and subsidiary services - Ejusdem generis - Consequential interest under Section 234B

Fees for technical services - Make available test - Article 13(4)(c) India-UK DTAA - Business profits - Permanent establishment - Ejusdem generis - Characterisation of amounts received for consulting engineering services as fees for technical services or as business profits and taxability in India - HELD THAT: - The tribunal applied the definition of fees for technical services under Article 13(4)(c) of the India UK DTAA and held that the phrase "or consists of the development and transfer of a technical plan or technical design" must be read in conjunction with the requirement of making available technical knowledge, experience, skill, know how or processes (applying the rule of ejusdem generis). Technology is made available only where the recipient can independently apply the technology after receipt. The technical drawings/designs supplied were project specific and did not enable the Indian recipient to use the designs independently for other projects; therefore the assessee did not make available technical knowledge, skill or know how. The Department bore the burden to prove that technical knowledge etc. was made available, which it failed to do. Consequently the receipts qualify as business profits and, in the absence of a permanent establishment in India, are not taxable in India under the Treaty. [Paras 6]

Amount received for consulting engineering services is not fees for technical services but business profits and, absent a PE in India, not taxable in India; ground allowed.

Ancillary and subsidiary services - Fees for technical services - Business profits - Permanent establishment - Taxability of management fees and common cost recharge - whether taxable as royalty or fees for technical services - HELD THAT: - The departmental treatment of cost recharges as ancillary and incidental to consulting engineering services was examined in the light of the finding on consulting engineering services. Since the primary receipts for consulting engineering services were held not to be fees for technical services, the reasoning treating cost recharges as ancillary services giving rise to fees for technical services fails. The tribunal accepted that cost recharges related to group support functions and that, in view of the finding on the main services and absence of evidence that any technical knowledge/know how was made available, the cost recharges cannot be brought to tax in India without a PE. [Paras 6]

Management fees and common cost recharge are not taxable in India as royalty or fees for technical services in the absence of a PE; ground allowed.

Tax rate under DTAA - Infructuous grounds - Applicability of concessional tax rate alleged to be erroneously not applied - HELD THAT: - The grievance as to application of a tax rate under the India UK DTAA relates solely to computation of tax if the receipts were held to be taxable. As the tribunal has held that the impugned receipts are not taxable in India, the question of the rate to be applied does not survive and is therefore rendered infructuous. [Paras 7]

Ground complaining of erroneous tax rate is dismissed as infructuous.

Consequential interest under Section 234B - Levy of interest under Section 234B - HELD THAT: - The challenge to levy of interest under Section 234B is consequential upon the assessments. The tribunal observed that the issue is consequential in nature and does not require specific adjudication in the present order. [Paras 8]

Levy of interest under Section 234B not specifically adjudicated (consequential).

Final Conclusion: Appeal partly allowed: Grounds 1 and 2 allowed (receipts held to be business profits not taxable in India in absence of PE); Ground 3 dismissed as infructuous; Ground 4 not adjudicated as it is consequential.

Book profit under Explanation 1 to section 115JB(2) - actual write off versus provision for doubtful debts - amounts set aside as provision for diminution in the value of any asset - add-back to book profits - monetary limit for filing appeals before the Tribunal (CBDT Circular No.7/2019) - application of the ratio in Vijaya Bank regarding simultaneous reduction from asset side - precedent of Yokogawa India Ltd. on treatment of bad debts/provisions

Monetary limit for filing appeals before the Tribunal (CBDT Circular No.7/2019) - Whether the revenue's appeal against deletion of adjustment to book profits towards section 14A disallowance is maintainable before the Tribunal having regard to the monetary limit prescribed by CBDT Circular No.7/2019. - HELD THAT: - The Tribunal recorded the revenue's own concession and noted that the tax effect of the revenue's appeal was below the monetary threshold of Rs.50 lakhs as prescribed in CBDT Circular No.7/2019 dated 8.8.2019. The departmental respondent raised no objection to the assessee's submission on this point. In consequence, the appeal filed by the revenue (ITA No.1029/Bang/2022) was dismissed on the ground that it was below the monetary limit for filing an appeal before the Tribunal. [Paras 5]

Revenue's appeal dismissed as below the monetary limit for filing appeal before the Tribunal.

Actual write off versus provision for doubtful debts - book profit under Explanation 1 to section 115JB(2) - amounts set aside as provision for diminution in the value of any asset - application of the ratio in Vijaya Bank regarding simultaneous reduction from asset side - precedent of Yokogawa India Ltd. on treatment of bad debts/provisions - Whether the sum debited to profit and loss account as provision for doubtful debts (and shown by the assessee as net trade receivables after reduction of provision) constitutes an actual write off and therefore is not exigible to add-back to book profits under Explanation 1(i) to section 115JB(2). - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in Vijaya Bank, which holds that a debit to profit and loss will constitute an actual write off only if there is a simultaneous reduction of loans and advances/debtors on the asset side so that the asset is reflected net of the provision at year end. The Tribunal observed that the assessee's financial statements for the year ended 31.3.2012 showed trade receivables net of provision for doubtful debts, indicating that the bad debts had been written off from the asset side. The Tribunal also relied on the view of the jurisdictional High Court in Yokogawa India Ltd. which is consistent in holding that where debts are reduced from the asset side and shown net, the Explanation to section 115JA/JB is not attracted. Applying these authorities, the Tribunal concluded that the impugned amount represented an actual write off and therefore could not be added back under clause (i) of Explanation 1 to section 115JB(2), which requires addition of amounts set aside as provision for diminution in the value of any asset. [Paras 13, 15, 16]

Assessee's appeal allowed; the addition of the disputed amount to book profits under Explanation 1(i) to section 115JB(2) is not sustainable because the amount represented an actual write off reflected by reduction on the asset side.

Final Conclusion: The Tribunal dismissed the revenue's appeal as below the monetary threshold and allowed the assessee's appeal for AY 2012-13, holding that the disputed bad-debt amount was an actual write off (reflected by netting on the asset side) and therefore was not liable to be added back to book profits under Explanation 1(i) to section 115JB(2).

Registration under Section 12AA - deemed registration - retrospective registration - date of application as effective date of registration - binding precedent in Harshit Foundation on non-existence of deemed registration

Registration under Section 12AA - date of application as effective date of registration - retrospective registration - deemed registration - Whether the assessee is entitled to registration under Section 12AA from the earlier date of alleged application/inception (i.e. retrospectively) instead of from the date of the application on 13/12/2018. - HELD THAT: - The Tribunal recorded that the assessee filed an application before the CIT(E) on 13/12/2018 and registration was granted effective from that date. The assessee claimed an earlier application dated 29/12/2011 and sought registration from Financial Year 2011-12. The Tribunal found no evidence that the 2011 application was received, acknowledged or acted upon by the CIT(E); one sided correspondence without acknowledgment could not be treated as an application pending with the authority. Reliance placed by the assessee on earlier decisions allowing retrospective registration was examined and held not to be on all fours with the facts of the present case. The Tribunal further applied the binding decision of the Supreme Court in Harshit Foundation, which holds that the Income Tax Act does not provide for deemed registration where the registering authority fails to decide an application within a prescribed period; that ratio is directly applicable. In view of the absence of proof of a pending/accepted 2011 application and the binding precedent negating deemed retrospective registration, the Tribunal upheld registration from the date of the 2018 application. [Paras 6, 7, 8, 9]

Claim for retrospective registration from Financial Year 2011-12 is rejected; registration is valid only from the date of the 2018 application (13/12/2018).

Final Conclusion: The appeal is dismissed: registration under Section 12AA granted by the CIT(E) from the date of the 2018 application is in order and the assessee is not entitled to deemed or retrospective registration from 2011 or from the trust's inception in view of lack of evidence of an earlier pending application and the binding Supreme Court precedent.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Explanation (1) and Explanation (1B) to section 271(1)(c) - burden of proof and rebuttable presumption - Excess depreciation as basis for deeming concealment or inaccuracy - Obligation to substantiate explanation to rebut presumption and avoid penalty

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - Excess depreciation as basis for deeming concealment or inaccuracy - Explanation (1) and Explanation (1B) to section 271(1)(c) - burden of proof and rebuttable presumption - Whether penalty under section 271(1)(c) could be sustained for the assessment year 2009-10 on account of excessive depreciation claimed by the assessee. - HELD THAT: - The AO disallowed excessive depreciation claimed on certain vehicles and machinery and initiated penalty proceedings under section 271(1)(c), treating the addition as indicative of furnishing inaccurate particulars of income. The CIT(A) upheld the levy, applying Explanation (1) and Explanation (1B) to section 271(1)(c) which cast on the assessee the onus to furnish a bona fide explanation and substantiate it; absent such substantiation, the addition is to be deemed to represent concealed income. The assessee submitted written explanations and case law references asserting entitlement to higher depreciation and that higher/wrong claims do not automatically attract penalty, but the Tribunal found that the assessee failed to substantiate the explanation or controvert the findings of the lower authorities. In view of the inability to rebut the statutory presumption and the absence of cogent material to support the claim, the authorities were justified in concluding that inaccurate particulars were furnished and in imposing the penalty. The Tribunal accordingly concurred with the conclusions of the AO and CIT(A) and dismissed the appeal.

Penalty under section 271(1)(c) confirmed for AY 2009-10; appeal dismissed.

Final Conclusion: The Tribunal upheld the penalty levied under section 271(1)(c) for assessment year 2009-10 on the ground that the assessee claimed excessive depreciation and failed to substantiate a bona fide explanation to rebut the statutory presumption; the appeal is dismissed.

Condonation of delay - rectification under section 154 - mistake apparent on record - deduction under section 40B - mechanical rejection of rectification - assessment of real income

Condonation of delay - Collector, Land Acquisition v. Katiji principle - Whether the delay of 15 days in filing the appeal before the Tribunal should be condoned. - HELD THAT: - The assessee filed an affidavit explaining that the appeal was filed online on the due date but the physical filing was delayed by 15 days owing to continuous ill health. The Revenue opposed condonation. Having considered the explanation and material on record the Tribunal found sufficient cause for the delay and, applying the test in Collector, Land Acquisition v. Katiji, condoned the delay of 15 days and admitted the appeal. [Paras 2]

Delay of 15 days in filing the appeal is condoned and the appeal is admitted.

Rectification under section 154 - mistake apparent on record - deduction under section 40B - mechanical rejection of rectification - assessment of real income - Whether the additions disallowing salary and interest to partners should be sustained where those amounts were wrongly shown as 'inadmissible' in Form 3CD due to a typing error and the rectification application was rejected. - HELD THAT: - The Tribunal examined the audited partners' capital accounts, the computation of total income, and the CA's certificate placed on record which showed that amounts claimed as salary and interest to partners were in fact paid and should be allowable under section 40B. The AO had proceeded on the basis of amounts wrongly entered in the 'inadmissible' column of Form 3CD and denied the deductions. The rectification application was dismissed by CPC without considering these documents, which the Tribunal characterised as a mechanical rejection. Applying the principle that assessment must reflect the real income, and finding the error to be a clerical/typing error apparent from the documents (capital accounts, audit certificate and computation), the Tribunal held that the additions could not stand and directed deletion of the disallowance. [Paras 3, 4]

Additions disallowing interest and salary to partners under section 40B are deleted; the assessee's appeal is allowed.

Final Conclusion: Delay in filing the appeal is condoned; on merits the Tribunal found that the disallowance of salary and interest to partners arose from a clerical/typing error in Form 3CD, that the assessee produced supporting audited records and a CA certificate, and the rectification was mechanically rejected, and therefore directed deletion of the additions and allowed the appeal.

Credit for tax deducted at source under Rule 37BA and section 199 - Carry forward of TDS credit - Matching of TDS credit with income assessable in the relevant assessment year - Expenditure wholly and exclusively for business - Allowability under section 37(1) of the Income tax Act - Onus on assessee to substantiate business expenditure - Remand for verification by Assessing Officer

Credit for tax deducted at source under Rule 37BA and section 199 - Carry forward of TDS credit - Matching of TDS credit with income assessable in the relevant assessment year - Remand for verification by Assessing Officer - Credit for TDS carried forward from AY 2017-18 to AY 2018-19 claimed by the assessee - HELD THAT: - The Tribunal considered Rule 37BA (credit to be given on basis of deductor's information, for the assessment year for which such income is assessable) and the assessee's filing of ITR 6 for AY 2017 18 showing the TDS amount as carried forward. The CIT(A) had held that TDS credit cannot be allowed unless the deductor's TDS return is revised; the assessee urged that sub rule (3) of Rule 37BA requires credit for the AY in which the income is assessable and that the amount was duly disclosed in the assessee's return for AY 2017 18. The Revenue did not dispute the factual claim but sought verification. Having regard to the law and the evidence placed before it (ITR showing carry forward) and the Revenue's readiness to have factual aspects verified, the Tribunal held that the carry forward TDS credit should be allowed in AY 2018 19 provided the amount carried forward corresponds with the income offered in that year and subject to verification by the jurisdictional Assessing Officer. [Paras 10, 11]

Assessee's claim for TDS credit of the carried forward amount is allowed subject to verification by the Assessing Officer that the carried forward TDS corresponds to the income offered in AY 2018 19.

Expenditure wholly and exclusively for business - Allowability under section 37(1) of the Income tax Act - Onus on assessee to substantiate business expenditure - Remand for verification by Assessing Officer - Allowability of sales promotion/business promotion expenses claimed by the assessee and disallowance made by AO under section 37(1) - HELD THAT: - The Assessing Officer made a lump sum disallowance (restricting sales promotion expenses to 25% of turnover) after observing a marked increase in the ratio of such expenses to receipts and finding inconsistencies in client wise expense patterns and supporting documents. The CIT(A) deleted the addition on the basis that doubts alone do not justify an addition and that no specific instances of bogus entries were pointed out; the Revenue challenged that approach, emphasising the assessee's failure to furnish complete details called for and arguing that further investigation or a remand was warranted. The Tribunal found that the Assessing Officer had not been able to verify various aspects due to inadequate details on record and that those details are material to decide allowability under section 37(1). Rather than adjudicating on the merits without full examination, the Tribunal set aside the CIT(A)'s deletion and directed the Assessing Officer to verify the particulars called for (client wise linkage, purpose and nature of each expense, supporting agreements/purchase orders, TDS compliance, persons attending events, etc.) and to decide the claim in accordance with law. [Paras 23]

Departmental appeal allowed to the extent that the matter is set aside to the Assessing Officer for verification of the supporting details; Assessing Officer directed to examine the claimed sales promotion expenses and decide their allowability under section 37(1) after giving the assessee an opportunity to produce the required particulars.

Final Conclusion: The assessee's appeal is allowed in part by permitting the carried forward TDS credit to be granted in AY 2018 19 subject to verification by the Assessing Officer; the Revenue's appeal is allowed to the extent that the deletion of the disallowance of sales promotion expenses is set aside and the issue remitted to the Assessing Officer for verification and fresh decision in accordance with law.

Deductibility of expenditure incurred pursuant to an uncompleted agreement - deductibility of rent expenses where agreement and rent-lease obligations remain in third party's name - treatment of reimbursements as other income and adjustment against corresponding expenses - disallowance of unexplained expenditure

Deductibility of rent expenses where agreement and rent-lease obligations remain in third party's name - deductibility of expenditure incurred pursuant to an uncompleted agreement - disallowance of unexplained expenditure - Disallowance of rent paid to M/s. DRS Industries Ltd. debited as rent in profit and loss account. - HELD THAT: - The Tribunal found that the purported agreement dated 30.06.2010 between the assessee and M/s. DRS Industries Ltd. did not materialise and the dealership was never transferred to the assessee. The rent agreement for the premises remained between M/s. DRS Industries Ltd. and the landlord, and there was no agreement or arrangement on record showing that the assessee was contractually obliged to pay rent to the landlord or that M/s. DRS Industries Ltd. received and passed on such rent. In absence of any agreement between the assessee and the landlord or evidence that payments were made pursuant to a binding arrangement, the Assessing Officer rightly treated the payments as not deductible and disallowed the rent debited to the profit and loss account. The CIT(A)'s confirmation of that disallowance was upheld. [Paras 7]

Addition disallowing rent paid to M/s. DRS Industries Ltd. is sustained and the grounds challenging that disallowance are rejected.

Treatment of reimbursements as other income and adjustment against corresponding expenses - deductibility of expenditure incurred pursuant to an uncompleted agreement - Disallowance (confirmation) of net advertisement expenditure of Rs.13,62,695 after allowing reimbursement of Rs.22,16,664. - HELD THAT: - The Tribunal noted that the alleged agreement for takeover did not materialise and was not acted upon; consequently the assessee could not rely on that unimplemented arrangement to claim full deductibility of advertisement expenses. The AO disallowed the advertisement expenditure for lack of a valid agreement; the CIT(A) allowed the amount of reimbursement received (credited as other income) but sustained the balance net expenditure. The Tribunal agreed with the CIT(A) that, in the factual matrix where the takeover did not occur and no binding arrangement justified the expenditure, the net advertisement expense could be sustained as disallowed to the extent confirmed by the CIT(A). [Paras 9]

Balance of advertisement expenditure of Rs.13,62,695 is sustained and the assessee's grounds in respect thereof are rejected.

Final Conclusion: Both the disallowance of rent paid to M/s. DRS Industries Ltd. and the sustained net disallowance of advertisement expenditure are upheld; the assessee's appeal is dismissed.

Taxation of builders' unsold units as business income not income from house property - stock-in-trade characterization of unsold units - deemed rent / deemed let out - application of Section 23(5) proviso on annual value for property held as stock in trade

Stock-in-trade characterization of unsold units - taxation of builders' unsold units as business income not income from house property - deemed rent / deemed let out - application of Section 23(5) proviso on annual value for property held as stock in trade - Whether addition treating unsold, ready-to-use units (post BU permission) as income from house property by applying deemed rent was permissible where those units were held as stock in trade by the builder-assessee - HELD THAT: - The Tribunal accepted the factual position that the assessee is a real estate developer, that unsold constructed units were shown as closing stock, and that building use (BU) permission was obtained during the year. Applying the settled principle that where property is held as stock in trade it partakes the character of stock, the Tribunal held that any income attributable to such stock would be taxable as business income and not under the head 'income from house property'. Consequently the concept of 'deemed rent' or 'deemed let out' (which is a device for taxing property income) cannot be applied to property properly characterised as stock in trade. The Tribunal noted that Section 23(5) (as relied on by the assessee) provides for limited relief where property is stock in trade, and observed that the CIT(A) correctly deleted the addition because the unsold units were treated as stock in trade and thus not amenable to deemed-rent treatment. The Tribunal found the decision of the Gujarat High Court in CIT v. Neha Builders to be applicable on the identical issue and distinguished the Delhi High Court decision relied upon by Revenue on its facts. The Tribunal therefore concluded that the Assessing Officer erred in making the addition under the head 'income from house property'. [Paras 8, 9]

Addition treating unsold units held as stock in trade as income from house property by applying deemed rent is deleted; such income is taxable as business income.

Final Conclusion: Revenue's appeal dismissed; the Tribunal upheld the CIT(A)'s deletion of the addition and confirmed that unsold units held as stock in trade of a developer are taxable as business income and not as income from house property.

Bill of Entry - Country of Origin Certificate - BCD exemption for import from Malaysia - recall and amendment of Bill of Entry under Section 149 - verification of supporting documents - remand for de novo speaking order

Country of Origin Certificate - Bill of Entry - verification of supporting documents - Whether the first appellate authority was correct in recording non-submission of the Country of Origin Certificate and in not verifying the Bill of Entry and supporting documents. - HELD THAT: - The Tribunal examined the impugned order and the materials on record. The first appellate authority had recorded in paragraph 7 that the appellant did not submit the Country of Origin Certificate at either the assessment or appellate stage. The appellant contended that the Bill of Entry itself recorded the country of origin as Malaysia and that supporting document details (IRN numbers) evidencing the Country of Origin Certificate were uploaded and available for verification. The Tribunal concluded that the first appellate authority did not adequately verify the Bill of Entry and the supporting documents before recording the finding of non-filing. Given this failure of verification, the Tribunal found the impugned finding to be unsustainable. [Paras 5]

Finding of non-submission of the Country of Origin Certificate by the first appellate authority set aside for lack of proper verification of the Bill of Entry and supporting documents.

Remand for de novo speaking order - recall and amendment of Bill of Entry under Section 149 - Relief to be granted in consequence of the inadequate verification and the appellant's request to recall/amend the Bill of Entry. - HELD THAT: - On recognising that the matter was not decided on merits by the lower authority and that supporting documents required consideration, the Tribunal held that the appropriate course was to restore the matter to the first appellate authority for fresh consideration. The Tribunal directed the first appellate authority to pass a de novo speaking order after considering the Bill of Entry and any supporting documents that the appellant may file, and after affording reasonable opportunities to the appellant. The Tribunal thereby provided the appellant an opportunity to press for recall/amendment under Section 149 and to produce the Country of Origin Certificate if necessary. [Paras 5, 6]

Impugned order set aside and matter remanded to the first appellate authority to pass a fresh speaking order in accordance with law after affording the appellant reasonable opportunity to produce documents.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is restored to the first appellate authority for a de novo speaking decision after verification of the Bill of Entry and supporting documents and after affording reasonable opportunities to the appellant.

Penalty for abetment and facilitation of fraudulent import - penalty under Section 112(a), 112(b) and 114AA of the Customs Act, 1962 - applicability of Section 114AA where supporting documents are not authenticated under Section 138C - judicial reduction of penalty quantum for excessiveness

Penalty for abetment and facilitation of fraudulent import - penalty under Section 112(a), 112(b) and 114AA of the Customs Act, 1962 - Liability of the appellant for penalty for his alleged active participation in operations regarding clearance of fraudulently imported vehicles. - HELD THAT: - The Tribunal accepted the findings recorded by the Adjudicating Authority and the Commissioner (Appeals) that the appellant actively participated in the clearance operations, arranged finances and facilitated customs clearance with the assistance of others, and thereby aided the fraudulent import of cars. The appellate discussion records that in some cases the appellant's involvement could not be denied and that he had admitted aspects of involvement in statements, supporting the conclusion that he was liable to be penalized under the provisions invoked. The Tribunal rejected the appellant's contention that he was merely a conduit unaware of the contents of documents and that penalties were imposed solely on CHA statements, finding the record sufficient to sustain liability. [Paras 6, 7, 11, 12]

Liability to penalty under the invoked provisions sustained.

Applicability of Section 114AA where supporting documents are not authenticated under Section 138C - authentication under Section 138C - Whether penalty under Section 114AA could be sustained when the appellant contended that documents were not authenticated as required under Section 138C. - HELD THAT: - The appellant argued that Section 114AA could not be invoked because the documents on which the charge was based were not authenticated in the manner prescribed by Section 138C. The Tribunal considered this submission but did not accept it as sufficient to negate liability. The appellate record and statements were held adequate to support the invocation of the penal provisions despite the appellant's contention regarding formal authentication under Section 138C. [Paras 10, 11]

Contention that absence of authentication under Section 138C precluded application of Section 114AA rejected.

Judicial reduction of penalty quantum for excessiveness - Whether the quantum of penalty imposed on the appellant was excessive and required judicial reduction. - HELD THAT: - While upholding liability, the Tribunal found force in the appellant's submission that the penalties were excessive. Having regard to the overall facts and circumstances, the Tribunal exercised its corrective power to moderate the punishment and reduced the quantum of penalty in each case to ten per cent of the penalty originally imposed by the Adjudicating Authority. [Paras 12, 14]

Quantum of penalty reduced to 10% of the penalty originally imposed in each case.

Final Conclusion: The Tribunal upheld the appellant's liability for penalties in respect of facilitation of fraudulent import but rejected the contention that lack of formal authentication under Section 138C precluded invocation of Section 114AA; however, finding the original penalties excessive, the Tribunal reduced the quantum of penalty in each appeal to 10% of the amount imposed by the Adjudicating Authority.

Restoration of company name - striking off and dissolution for non compliance under section 248 - appeal under section 252 - requirement to file statutory returns and pay fees upon restoration - Registrar's liberty to initiate punitive steps for non filing

Restoration of company name - striking off and dissolution for non compliance under section 248 - appeal under section 252 - Whether the striking off of the appellant company's name from the Register was justified and whether the NCLT erred in dismissing the application for restoration. - HELD THAT: - The Tribunal examined the ROC notice which relied solely on non compliance of statutory filing requirements and absence of business for two preceding financial years, and noted that the appellant produced copies of annual returns, balance sheets and income tax returns for the relevant years which the NCLT failed to consider on merits. The statutory scheme permits striking off for non compliance but also provides a remedy under Section 252 to restore a name where striking off is not supported by sufficient grounds or where restoration is warranted after considering the material and affording opportunity. Applying that statutory framework, the Tribunal found that removal of the company's name was not justified on the material before the NCLT and that the NCLT's dismissal lacked sound basis; accordingly the impugned order was set aside and the appeal allowed. [Paras 17, 18, 19, 20, 21]

The NCLT order is set aside and the appellant company's name is to be restored to the Register.

Requirement to file statutory returns and pay fees upon restoration - Registrar's liberty to initiate punitive steps for non filing - Conditions upon which restoration is to be effected and the Registrar's powers after restoration. - HELD THAT: - The Tribunal directed restoration of the company's name subject to compliance conditions to be fulfilled within specified timeframes: payment of costs to the ROC, filing of all outstanding annual returns and balance sheets and payment of requisite charges/late fees after restoration. The Tribunal also expressly left open the ROC's statutory liberty to initiate any other punitive or consequential steps under the Companies Act for continued non filing or late filing of documents against the company and its directors. [Paras 22]

Restoration is ordered subject to payment of costs, filing of outstanding statutory documents with requisite fees and without prejudice to the ROC's power to take further action for non compliance.

Final Conclusion: The impugned NCLT order dismissing the restoration application is set aside; the Tribunal directs restoration of the appellant company's name on the Register subject to payment of costs, filing of outstanding statutory returns and payment of applicable fees, while preserving the ROC's authority to take further action for non compliance.

Restoration of company name - striking off under Section 248 - non-filing of annual returns and financial statements - evidence of carrying on business - conditional restoration subject to compliance and costs

Restoration of company name - striking off under Section 248 - non-filing of annual returns and financial statements - evidence of carrying on business - conditional restoration subject to compliance and costs - Whether the Tribunal and Registrar were justified in refusing restoration of the company's name on the ground that the company was not carrying on any business or operations. - HELD THAT: - The Appellate Tribunal examined the material relied upon by the appellant, including sale deeds executed in favour of the company, audited balance sheets for the financial years up to 2018-19 and income-tax returns for later years. The Tribunal found that these documents demonstrate the existence of substantial movable and immovable assets and past business activity, and therefore the factual premise that the company was not carrying on any business or operations was not established. While non-filing of statutory returns constitutes a default under the Companies Act and the Registrar had issued notices under the removal provisions, the Appellate Tribunal concluded that the consequence of striking off the company's name was not sustainable in the light of the evidence showing assets and business activity. The Tribunal nonetheless imposed conditions: payment of costs to the Registrar, filing of all outstanding annual returns and balance sheets with requisite fees and late fees within specified periods, and preserved the Registrar's right to initiate any other punitive steps under the Act for non-filing or late filing. [Paras 5, 6]

Impugned orders set aside; company's name to be restored to the Register subject to payment of costs and compliance with filing and fee requirements, with Registrar's rights preserved.

Final Conclusion: The appeal is allowed to the extent that the order striking off the company's name is set aside and the company's name is restored to the Register of Companies, subject to the appellant paying costs to the Registrar, filing all outstanding annual returns and balance sheets with requisite fees and late fees within the specified time, and without prejudice to the Registrar taking further action under the Companies Act for non-compliance.

Limitation for offences punishable with fine under Section 468 Cr.P.C. - commencement of limitation from date of actionable knowledge - exclusion of time taken by administrative authority in computing limitation - non-speaking order of cognizance - binding effect of a co-ordinate Bench decision

Non-speaking order of cognizance - The order of the learned ACMM taking cognizance which does not assign reasons is liable to be set aside. - HELD THAT: - The learned ACMM's order of taking cognizance merely recorded that the complaint prima facie disclosed an offence without assigning any reason or sufficient reasons. Reliance on the principle in Lalit Kumar Singh & Ors. v. State of Maharashtra establishes that a non-speaking order of cognizance deserves to be set aside. Although the court observed that the matter could be remanded to the ACMM for a speaking order, in view of the long pendency and parity with other orders from the same inspection report the court proceeded to decide the matter on merits and ultimately set aside the impugned summoning order and consequential proceedings. [Paras 7]

The non-speaking order of cognizance dated 10.07.2014 is set aside; the court proceeded to decide the matter on merits and quashed the summoning order and consequential proceedings.

Limitation for offences punishable with fine under Section 468 Cr.P.C. - commencement of limitation from date of actionable knowledge - exclusion of time taken by administrative authority in computing limitation - binding effect of a co-ordinate Bench decision - The complaint based on the inspection report was time-barred as limitation commenced on the date of actionable knowledge and time taken by the Regional Director to decide could not be excluded. - HELD THAT: - The offence alleged is punishable only with a fine; therefore Section 468 Cr.P.C. prescribes a six month limitation period. Actionable knowledge of the alleged offence was obtained when the inspection report was filed on 24.06.2013. The time taken thereafter by the Regional Director to direct prosecution cannot be excluded for computation of limitation. The co ordinate Bench decision in Kavi Arora (which addressed the same inspection report and held that limitation commenced on 24.06.2013 and the intervening administrative delay cannot be excluded) is binding on this Bench. Applying those conclusions, the complaint filed on 10.07.2014 was beyond the prescribed period and hence barred by limitation. In consequence, proceedings founded on that complaint cannot be sustained. [Paras 9, 10, 11, 12, 14]

The complaint was time barred as limitation ran from 24.06.2013 and the impugned summoning order and consequential proceedings are quashed.

Final Conclusion: Petition allowed; the summoning order dated 10.07.2014 and all consequential proceedings are quashed as the complaint was time barred and the order of cognizance was non speaking.

Approval of resolution plan under Section 31 - Corporate Insolvency Resolution Process (CIRP) - public announcement and claim submission under the Regulations - effect of amendment to Regulation 12 requiring claim with proof - information memorandum (IM) and duties of the resolution professional - binding effect of an approved resolution plan and extinguishment of unadmitted claims - priority/first charge claimed by municipal authority

Information memorandum (IM) and duties of the resolution professional - public announcement and claim submission under the Regulations - Whether the approval of the resolution plan could be invalidated on the ground that the Resolution Professional failed to examine the corporate debtor's books and omitted the municipal claim from the information memorandum. - HELD THAT: - The Tribunal found that the CIRP was duly initiated and that the RP made the statutory public announcement and also sent a specific letter intimating the Appellant about the IRP/RP's appointment and control of assets. The Appellant did not submit any claim to the RP despite the public announcement and the letter. After the 04.07.2018 amendment to Regulation 12, a creditor was required to submit a claim with proof and filing of the claim became a sine qua non; being a statutory authority the Appellant could not feign ignorance. Consequently, the RP was not obligated to include an unsubmitted claim in the IM and omission of such a claim does not vitiate the approval of the resolution plan where the creditor had the opportunity to submit its claim but failed to do so. [Paras 11, 13]

The challenge to the resolution plan on the ground of alleged failure by the RP to examine books and include the municipal claim in the IM is rejected; the plan's approval is not invalidated on that basis.

Approval of resolution plan under Section 31 - binding effect of an approved resolution plan and extinguishment of unadmitted claims - effect of amendment to Regulation 12 requiring claim with proof - Whether the decisions in Rainbow Papers Ltd. and the doctrine that government statutory dues enjoy a first charge prevent extinguishment of municipal claims not part of an approved resolution plan. - HELD THAT: - The Tribunal held Rainbow Papers Ltd. inapplicable because in that case the State had filed a belated claim (albeit under different regulatory provisions applicable before the amendment) whereas here the Appellant never filed any claim after the public announcement made post-amendment. The Tribunal relied on the three-judge pronouncement in Ghanashyam Mishra and Sons that once a resolution plan is approved under Section 31, claims not part of the resolution plan stand extinguished and cannot be proceeded with. Given the amendment to Regulation 12 making submission of a claim with proof mandatory and the Appellant's failure to submit any claim despite notice, the municipal claim could not survive the approved resolution plan. [Paras 12, 13]

Rainbow Papers does not assist the Appellant; statutory dues not included in the approved resolution plan stand extinguished and the municipal authority's claim cannot be revived.

Final Conclusion: The appeal is dismissed for lack of merit: the Appellant failed to file its claim during CIRP despite due notice; the RP's conduct and IM did not vitiate the approved resolution plan; legal precedents and the amended Regulations support extinguishment of unadmitted claims upon approval of the resolution plan.

Binding nature of a Committee of Creditors approved Resolution Plan once submitted to the Adjudicating Authority - Withdrawal or modification of a CoC-approved Resolution Plan after submission and the prohibition on reopening CIRP beyond statutory timelines - Commercial wisdom of the Committee of Creditors and its limited non justiciability - Residuary jurisdiction of the Adjudicating Authority constrained by the text and objectives of the Insolvency and Bankruptcy Code - Maximisation of value of assets subject to the time bound framework of the Code

Binding nature of a Committee of Creditors approved Resolution Plan once submitted to the Adjudicating Authority - Withdrawal or modification of a CoC-approved Resolution Plan after submission and the prohibition on reopening CIRP beyond statutory timelines - Maximisation of value of assets subject to the time bound framework of the Code - Whether the Committee of Creditors could, more than two years after approving a Resolution Plan and after submission for approval, seek direction to reconsider and admit a Resolution Plan of a third party who did not participate in the CIRP. - HELD THAT: - The Tribunal held that once a Resolution Plan approved by the CoC is submitted to the Adjudicating Authority it is binding and irrevocable as between the CoC and the successful Resolution Applicant, except where the plan is vitiated by material irregularity or contravenes the provisions of the Code. Reliance was placed on the ratio in Ebix Singapore Pvt. Ltd. which emphasises that the Adjudicating Authority's residuary powers are defined and limited by the Code and that permitting withdrawals or modifications after submission would create an unregulated tier of negotiations, undermine statutory timelines and frustrate the IBC's objective of time bound resolution and maximisation of value. The Tribunal observed that permitting the CoC to reopen consideration of fresh plans long after approval would have the same deleterious effect as allowing withdrawals or modifications and would effectively restart the CIRP beyond permitted timelines. Prior orders of this Tribunal (setting aside the Adjudicating Authority's earlier direction allowing a non participant to be entertained) have attained finality; therefore no fresh consideration of proposals from non participants in the CIRP can be entertained at this stage. The judgments cited by the respondents dealing with earlier scenarios of CoC conduct were distinguished on facts and as pre dating the binding ratio in Ebix. Accordingly, the Adjudicating Authority exceeded its limited jurisdiction in directing fresh consideration of third party plans after the expiry of the permissible timelines and after the earlier CoC approval had been placed before it. [Paras 5, 6, 7, 8, 9]

The CoC cannot, after more than two years of its approval and after submission of the plan for sanction, direct reconsideration of a plan of a third party who did not participate in the CIRP; such reopening would contravene the time bound framework of the IBC and the Adjudicating Authority lacked jurisdiction to permit it.

Final Conclusion: Appeal allowed; the Impugned Order dated 26.07.2021 is set aside. No order as to costs.

Maintainability of Section 7 application against a financial service provider - financial service provider excluded from the definition of corporate person - corporate guarantor must be a corporate person - jurisdiction of the Adjudicating Authority to initiate CIRP - effect of RBI registration of an NBFC on insolvency proceedings - prospective cancellation of registration and its irrelevance to maintainability on filing date

Maintainability of Section 7 application against a financial service provider - financial service provider excluded from the definition of corporate person - corporate guarantor must be a corporate person - jurisdiction of the Adjudicating Authority to initiate CIRP - effect of RBI registration of an NBFC on insolvency proceedings - Application under Section 7 of the Insolvency and Bankruptcy Code filed against Sungrowth was not maintainable and the Adjudicating Authority lacked jurisdiction to initiate CIRP proceedings. - HELD THAT: - The Tribunal examined the statutory definitions and factual timeline. Section 3(7) excludes a financial service provider from the statutory concept of a corporate person, and a corporate guarantor under Section 5A must be a corporate person. Sungrowth held a valid RBI registration as an NBFC (a financial service provider) on the date the Section 7 application was filed (08.06.2018). Because a registered financial service provider is not a corporate person, proceedings under Section 7 against Sungrowth were not permissible on that date. The Tribunal held that initiation of CIRP by the Adjudicating Authority under Section 7 in those circumstances was without jurisdiction and therefore a nullity. The Tribunal relied on the principle that want of jurisdiction vitiates the proceedings and may be raised at any stage, applying settled precedent on nullity of orders passed without jurisdiction. In consequence, the impugned admission order was set aside, leaving the respondent free to pursue remedies in accordance with law. [Paras 10, 11, 12, 13]

Appeal allowed; impugned order dated 04.09.2019 set aside as the Section 7 application was not maintainable and the Adjudicating Authority lacked jurisdiction.

Final Conclusion: The admission of the Section 7 petition against Sungrowth was quashed because Sungrowth was a registered financial service provider (NBFC) on the filing date and thus not a corporate person or corporate guarantor for purposes of Section 7; the Adjudicating Authority's order is set aside and the respondent may initiate proceedings as permissible under law.

Benefit of Form C - seller's limited duty to verify purchasing dealer's registration and certificate - non-liability of selling dealer for misapplication by purchasing dealer - verification or mismatch of commodities not a ground to deny benefit of Form C - claim for refund to be processed

Benefit of Form C - seller's limited duty to verify purchasing dealer's registration and certificate - verification or mismatch of commodities not a ground to deny benefit of Form C - Denial of benefit of Form C to the petitioner on the ground that the C Forms could not be verified or that there was a mismatch in the goods stated in the C Forms. - HELD THAT: - The Court held that under the statutory scheme the selling dealer's duty is confined to satisfying himself that the purchaser is a registered dealer and that the goods purchased are specified in the purchaser's registration certificate, and that once these conditions are met and a declaration in Form C is produced the selling dealer is under no further obligation to enquire into the purchaser's subsequent application of the goods. The Court relied on the principle in State of Madras v. M/s Radio and Electrical Ltd & Anr. that any misapplication or fraudulent representation by the purchasing dealer attracts penalty on the purchasing dealer and cannot be visited upon the selling dealer. This reasoning was reinforced by reference to the decision in Pentex Sales Corporation v. Commissioner of Sales Tax, Delhi, which confirmed that a dealer claiming concessional treatment must verify the purchaser's registration and that verification suffices. Applying these principles to the present case, the Court noted there was no dispute that the purchasing dealers were duly registered for the relevant goods, that the C Forms were genuine and not alleged to be forged, and that invoices and other material established the sales. The assessing officer's reliance on non-verification and alleged product mismatch was therefore not a valid ground to deny the benefit of Form C. Consequently the impugned assessment orders denying the benefit were set aside. [Paras 17, 18, 19, 20, 21]

Impugned assessment orders denying the benefit of Form C were set aside and the petitioner entitled to the benefit of the Form C on the sales in question.

Claim for refund to be processed - Direction to the respondents to process the petitioner's refund claim. - HELD THAT: - Having set aside the impugned assessment orders and found that the petitioner was entitled to the benefit of Form C, the Court directed the respondents to process the petitioner's refund claim in accordance with law and as expeditiously as possible. The Court observed that one refund order had already been passed but not credited, and further ordered processing consistent with the legal entitlement established by the judgment. [Paras 21, 22, 23]

Respondents directed to process the petitioner's refund claim in accordance with law expeditiously; the petition allowed.

Final Conclusion: The writ petition is allowed: the assessing orders denying the benefit of Form C were quashed on the ground that the petitioner had complied with the limited statutory duty of verifying the purchasers' registration and the genuineness of the C Forms, and the respondents are directed to process the petitioner's refund claim in accordance with law as expeditiously as possible.

Rectification of VAT returns under Section 74B of the DVAT Act - issue of rectified C and F-Forms - verification of entitlement on merits without limitation bar - application of Vodafone Idea Ltd. precedent - suspension of directions pending disposal of civil appeals in the Supreme Court

Rectification of VAT returns under Section 74B of the DVAT Act - issue of rectified C and F-Forms - verification of entitlement on merits without limitation bar - application of Vodafone Idea Ltd. precedent - Direction to respondents to issue rectified C and F-Forms to the petitioner subject to verification of entitlement on merits, without being burdened by the question of limitation. - HELD THAT: - The court, following the decision in M/s Vodafone Idea Limited v. Government of NCT of Delhi & Ors., disposed of the writ petition by directing the respondents to grant the relief of rectification of returns in respect of the specified quarters, namely issuance of rectified C and F-Forms, subject to verification of the petitioner's entitlement on merits. The court expressly ordered that the respondents should not be impeded by the limitation defence when conducting the verification and determining entitlement, and directed compliance in line with prior coordinate-bench directions, including the judgment in Samsung C&T Pvt. Ltd. The direction is procedural and contingent upon a merits-based verification by the revenue, applying the precedent identified by the court. [Paras 6]

Respondents to issue rectified C and F-Forms after verifying entitlement on merits, without being impeded by limitation, in line with the Vodafone Idea Ltd. judgment.

Suspension of directions pending disposal of civil appeals in the Supreme Court - compliance to follow Supreme Court decision - The direction to issue rectified forms is stayed until the pending civil appeals in the Supreme Court are adjudicated, and compliance is to follow the Supreme Court's decision. - HELD THAT: - Although the court granted the direction for rectification subject to merits, it suspended operation of that direction until the civil appeals noted in the Samsung C&T Pvt. Ltd. matter are decided by the Supreme Court. The court required that further action and compliance be governed by the outcome of those appeals, thereby temporally restraining implementation of the relief ordered at the High Court level. [Paras 6]

The High Court's direction to issue rectified forms shall remain suspended pending adjudication of the related civil appeals in the Supreme Court; subsequent compliance will follow the Supreme Court's decision.

Final Conclusion: Writ petition disposed by directing respondents to issue rectified C and F-Forms for the 2nd, 3rd and 4th quarters of 2015-2016 after merits-based verification without reference to limitation, but the direction is stayed until the Supreme Court disposes of the related civil appeals; compliance to be in accordance with the Supreme Court's decision.

Anticipatory bail - economic offence - conspiracy to evade tax - illicit migration of PAN - representation under Section 264 of the Income Tax Act - seriousness of offence outweighing privilege of pre arrest bail

Anticipatory bail - conspiracy to evade tax - economic offence - Whether the petitioners are entitled to the privilege of anticipatory bail in RC AC1 2018 A 0007 - HELD THAT: - The Court examined the material on record and rival submissions and found allegations that the petitioners, in different capacities (chartered accountant, authorised representative, controllers/directors), participated in a conspiracy to migrate PANs from Kolkata to Ranchi, Hazaribag and Koderma so as to obtain favourable revision orders while CIT appeals were pending. The record, including the chargesheet and submissions by the CBI, indicated active roles: preparation and filing of petitions under Section 264, representation before PCITs, arranging fake addresses, use of dummy directors, and intercepted communications suggesting participation in the conspiracy and wrongful gain. The Court treated the alleged misconduct as an economic offence of serious character and held that the nature and gravity of the allegations, together with the incriminating material and the objective of securing favourable orders during pendency of appeals, weigh against granting pre arrest relief. Applying these considerations, the Court declined to exercise its discretion in favour of anticipatory bail. [Paras 18, 19]

Petitions for anticipatory bail dismissed.

Final Conclusion: On the materials and submissions, the Court concluded that the petitioners are not entitled to anticipatory bail in respect of RC AC1 2018 A 0007 and dismissed the bail applications.