TaxTMI Updates e-Newsletter
Dec 29,2021

Grant of bail - custodial period - offence under Jharkhand Goods and Services Tax Act, 2017 - compliance with Sections 72 and 73 - show cause notice and adjudication uploaded in Form DRC-7 - allegation of use of premises/address for fraudulent VAT/GST registration

Grant of bail - custodial period - offence under Jharkhand Goods and Services Tax Act, 2017 - allegation of use of premises/address for fraudulent VAT/GST registration - compliance with Sections 72 and 73 - show cause notice and adjudication uploaded in Form DRC-7 - Petitioner released on bail in Chaibasa Sadar P.S. Case No. 21 of 2019 subject to conditions - HELD THAT: - The Court considered rival submissions: the petitioner denied connection with M/s. Balaji Enterprises and relied on non-compliance with procedural mandates under the Jharkhand GST law (Sections 72 and 73) and on the contention that his name did not figure in the departmental recommendation for lodging an FIR; the State contended the petitioner was the mastermind and highlighted comparative material in the counter-affidavit and parallel proceedings in a related case. The Court also noted that departmental adjudication proceedings had been conducted and the final order uploaded in Form DRC-7. Having weighed the allegations, the period of custody undergone by the petitioner since 19.01.2021 and the contentions on both sides, the Court exercised its discretion to grant bail subject to security conditions. The Court did not finally determine the merits of the allegations under the Jharkhand GST law but confined its order to the bail relief stated.

Petitioner is directed to be released on bail on furnishing a bail bond of Rs. 10,000 with two sureties of the like amount each to the satisfaction of the learned Chief Judicial Magistrate, Chaibasa, in connection with Chaibasa Sadar P.S. Case No. 21 of 2019.

Final Conclusion: Bail granted to the petitioner in the stated FIR on furnishing the prescribed bail bond and sureties; the Court's order addresses interim custodial release and does not adjudicate the merits of the allegations under the Jharkhand GST law.

Assumption of jurisdiction under Section 147 of the Income Tax Act - issuance of notice under Section 148 after four years - proviso to Section 147 (failure to disclose fully and truly) - reopening assessment on the same material - mere change of opinion - treatment of non compete fees as long term capital gain vis a vis taxation as business receipt under Section 28 (V A) - reliance on information from investigation wing which is not new

Assumption of jurisdiction under Section 147 of the Income Tax Act - issuance of notice under Section 148 after four years - proviso to Section 147 (failure to disclose fully and truly) - Validity of assumption of jurisdiction under Section 147 and issuance of notice under Section 148 after expiry of four years from the end of AY 2012-13 in absence of failure to disclose fully and truly all material facts. - HELD THAT: - The Court found on the record that the non compete receipts were disclosed and offered as long term capital gains in the scrutiny assessment under Section 143(3), after requisitioning and verification of documents. The Assessing Officer could not demonstrate any omission or failure on the assessee's part to disclose material facts necessary for assessment. The proviso to Section 147, which permits reopening beyond four years where there is failure to disclose, was therefore not satisfied. Consequently the assumption of jurisdiction and the Section 148 notice dated 29.03.2019 were bad in law.

Impugned assumption of jurisdiction under Section 147 and notice under Section 148 (29.03.2019) quashed for non fulfilment of the proviso to Section 147.

Reopening assessment on the same material - mere change of opinion - treatment of non compete fees as long term capital gain vis a vis taxation as business receipt under Section 28 (V A) - Whether reopening the assessment to reclassify the non compete fees on the self same material already considered in scrutiny assessment amounts to valid reassessment or is merely a change of opinion. - HELD THAT: - The record showed that the same documents and material were before the earlier assessing authority who treated the receipts as capital gains after scrutiny. The present Assessing Officer relied on the identical material to contend the receipts qualified as business income under Section 28 (V A). The Court treated such re examination on identical material, resulting only in a contrary view, as a mere change of opinion which does not justify reopening under Section 147. Reliance asserted to have come from the investigation wing was not demonstrated to be new material distinct from that previously considered.

Reopening on the same material to take a different view is impermissible and the reassessment proceedings are unsustainable as a mere change of opinion.

Finality of scrutiny assessment under Section 143(3) where claim was examined and accepted - reopening despite prior examination, verification and acceptance of documents - Whether the Assessing Officer was justified in ignoring that the non compete fees had been examined, verified and accepted as capital gains in the scrutiny assessment and yet reopening the assessment. - HELD THAT: - The Court recorded that the scrutiny assessment involved requisitioning, examination and verification of documents on the very point of classification of the non compete receipts, and the claim was accepted as capital gains. Given that fact, the Assessing Officer could not legitimately reopen the assessment on the same factual matrix. The prior acceptance after scrutiny precluded reopening unless new material establishing failure to disclose was shown, which was not demonstrated.

Assessing Officer was not legally justified in reopening the assessment despite prior examination and acceptance of the claim as capital gains.

Reliance on information from investigation wing which is not new - reopening assessment after four years based on non new information - Whether reopening after four years on the basis of information said to be received from the investigation wing - but which is identical to material already available - is permissible. - HELD THAT: - The Assessing Officer's order of rejection did not identify or explain any fresh information from the investigation wing constituting new material. The Court found the purported investigation material to be the same as that already before the assessing authority at the time of scrutiny. Where the information relied upon is not new and merely repeats material already considered, it cannot satisfy the condition for reopening beyond four years under the proviso to Section 147.

Reopening premises on allegedly investigatory information which is not new is impermissible; the notice is invalid.

Final Conclusion: Writ petition allowed; the notice dated 29.03.2019 under Section 148 for AY 2012-13 and consequent reassessment proceedings quashed and set aside as based on the same material already considered in scrutiny assessment and not satisfying the proviso to Section 147. No order as to costs.

Binding effect of an approved resolution plan - extinguishment of claims not included in the resolution plan - operational creditor includes statutory authorities and statutory dues - prohibition on initiating proceedings in respect of pre-approval claims - retrospective/clarificatory effect of 2019 amendment to Section 31 of the IBC - overriding effect of IBC over other laws - maintainability of writ under Article 226 where proceedings are wholly without jurisdiction

Binding effect of an approved resolution plan - extinguishment of claims not included in the resolution plan - operational creditor includes statutory authorities and statutory dues - prohibition on initiating proceedings in respect of pre-approval claims - overriding effect of IBC over other laws - Validity of notice issued under Section 148 of the Income Tax Act after approval of resolution plan for assessment year 2014-15 where the claim was not part of the approved resolution plan - HELD THAT: - The Court applied the law laid down in Ghanashyam Mishra and Sons (supra) and held that once a resolution plan is duly approved by the Adjudicating Authority under Section 31, claims not included in the resolution plan stand frozen and, on the date of approval, such claims stand extinguished. This principle covers claims arising under any law for the time being in force, including statutory dues payable to the Central Government such as income-tax, because such dues fall within the ambit of 'operational debt' and statutory authorities fall within 'operational creditors' or 'other stakeholders'. The purpose of IBC to enable the Resolution Applicant to start on a clean slate and the retrospective/clarificatory effect of the 2019 amendment to Section 31 reinforce that no person may initiate or continue proceedings in respect of pre-approval claims which are not part of the resolution plan. The Court further observed that where a statutory authority failed to raise its claim at the CIRP stage despite the public announcement, the claim ordinarily stands extinguished; an exception exists only if the omission to raise a claim was due to concealment or suppression by the corporate debtor such that the claim could not reasonably have been raised during CIRP, in which event the statutory authority must explore raising the claim before the Resolution Professional or seek provision in the plan. The impugned notice was silent as to any such alleged concealment or suppression or other reason for non-inclusion, and therefore the Assessing Officer was not entitled to issue the Section 148 notice after approval of the resolution plan. The Court accordingly quashed the notice. [Paras 20, 21, 22, 24, 27]

Impugned notice under Section 148 issued after approval of the resolution plan for assessment year 2014-15 quashed as the claim was not part of the approved resolution plan and no exception (such as concealment) was shown.

Maintainability of writ under Article 226 where proceedings are wholly without jurisdiction - Whether the writ petitions were maintainable despite the alternate remedy contended by Revenue - HELD THAT: - Relying on the formulation in Ghanashyam Mishra (supra), the Court noted that alternate remedy does not bar jurisdiction under Article 226 in at least three contingencies including where the order or proceedings are wholly without jurisdiction. The Court found the impugned notice to fall within that category because it sought to initiate proceedings contrary to the binding effect of an approved resolution plan. Consequently, the preliminary objection based on existence of alternate remedy was rejected and the writ petitions were held maintainable. [Paras 25, 26, 27]

Writ petitions are maintainable; preliminary objection as to alternate remedy rejected.

Final Conclusion: Writ petitions allowed; impugned Section 148 notices dated 25.03.2021 and 24.03.2021 quashed and set aside on the ground that claims for the period prior to approval of the resolution plan which were not part of the approved plan stand extinguished and proceedings in respect thereof cannot be initiated.

Credit for tax deducted at source - Cash system of accounting - TDS claim under section 199 - Deemed receipt under section 198 - Rule 37BA - apportionment across years - Precedent of Coordinate Bench

Credit for tax deducted at source - Cash system of accounting - TDS claim under section 199 - Deemed receipt under section 198 - Rule 37BA - apportionment across years - Precedent of Coordinate Bench - Entitlement to credit of tax deducted at source in the assessment year where the assessee follows cash system of accounting and has offered the deducted amount as income, despite non-receipt of the balance amounts. - HELD THAT: - The Tribunal accepted the assessee's submission that the firm follows the cash system of accounting and that the amounts deducted as tax at source were offered as income in the return. Applying the combined effect of section 198 (which deems sums deducted under Chapter XVII-B to be income received) and section 199 (which treats deductions paid to Government as payment of tax on behalf of the deductee), the Tribunal held that credit for TDS ought to be given in the year in which the deducted amount is offered as income. The Tribunal examined Rule 37BA and observed that its provision for apportionment across years (Rule 37BA(3)(ii)) applies where the underlying income is assessable over a number of years (for example, receipt spread over years) and does not override the assessee's entitlement under the cash system of accounting. Relying on a Coordinate Bench precedent on identical facts, the Tribunal concluded that proportionate credit as directed by the lower authority was not warranted and that the entire TDS claimed and reflected as income in the relevant year must be allowed as credit, directing the Assessing Officer to grant such credit. [Paras 6, 12]

The assessee is entitled to credit of the entire tax deducted at source that was offered as income in the relevant assessment year; the order of the CIT(A) is set aside and the Assessing Officer is directed to allow the TDS credit.

Final Conclusion: Appeal allowed; the Tribunal directed the Assessing Officer to grant credit of the entire TDS claimed by the assessee for the assessment year in which the deducted amount was offered as income, following the cash system of accounting and relevant Tribunal precedent.

Deduction for bad debts in case of money lending business under section 36(1)(vii) read with section 36(2) - Requirement of prior inclusion of debt in income not applicable to business of lending - Related party lending does not preclude bad debt deduction absent evidence of collusion - Admissibility of write off where ledger and past assessments show lending and interest treated as business income - Computation of income: correct classification of long term capital gain in tax computation

Deduction for bad debts in case of money lending business under section 36(1)(vii) read with section 36(2) - Requirement of prior inclusion of debt in income not applicable to business of lending - Related party lending does not preclude bad debt deduction absent evidence of collusion - Allowability of Rs. 2 crores written off as bad debt by the assessee - HELD THAT: - The Tribunal found on the material on record - partnership deed stating financiers as part of firm's business, ledger entries showing substantial advances and interest receipts over years, past assessment treatment of interest as business income, and repayments leaving Rs.2 crores outstanding which was written off - that the assessee carried on lending in the ordinary course of business. Where lending is the business, the requirement that the debt must have been earlier taken into income is not applicable and a bona fide write off is allowable under section 36(1)(vii) read with section 36(2). The AO's reliance on contemporaneous statements of a partner for AY 2014 15, which recorded only bank interest for that year, did not outweigh the documentary ledger, accounts and partnership deed showing an ongoing money lending activity. Mere related party relationship, without evidence of collusion, does not displace the deduction. Applying these conclusions, the Tribunal reversed the disallowance and directed deletion of the Rs.2 crore addition. [Paras 12]

Rs. 2 crores written off allowed as deduction; orders of lower authorities on this point reversed.

Computation of income: correct classification of long term capital gain in tax computation - Correction of the amount of long term capital gain taken in the income tax computation form - HELD THAT: - The assessing officer's computation used an incorrect figure for long term capital gain in the income tax computation form (taking a lower amount), although the assessment record reflected a different long term capital gain figure. The Tribunal observed that while total income remained unchanged, the long term capital gain figure in the computation must conform to the correct amount as recorded. The AO was directed to recompute the income tax computation by taking the long term capital gain at the correct figure stated in the order. [Paras 13]

Assessing officer directed to recompute tax computation by taking the correct long term capital gain figure.

Final Conclusion: The appeal is allowed: the Tribunal set aside the disallowance of Rs.2 crores by holding the write off allowable under section 36(1)(vii) read with section 36(2) on the facts; and directed correction of the long term capital gain figure in the tax computation.

Validity of notice under section 143(2) of the Income-tax Act - Assessment void ab initio for non-issuance of mandatory notice - Applicability of section 292BB of the Income-tax Act to non-issuance of notice - Assessment of a searched year under section 143(3) of the Income-tax Act - Protective assessment where substantive assessments in other cases are not framed - Admission of additional legal grounds by Tribunal following National Thermal Power Co. Ltd.

Validity of notice under section 143(2) of the Income-tax Act - Assessment of a searched year under section 143(3) of the Income-tax Act - Whether the assessment framed for the searched year is invalid for lack of issuance of a notice under section 143(2) after the return was filed. - HELD THAT: - The Tribunal found that the assessment year in question is a searched year and therefore the assessment should have been completed under section 143(3). The assessment record showed that the assessing officer recorded issuance of a notice under section 143(2) prior to the filing of the return, and no documentary proof of a valid notice issued after filing was placed on record by the Revenue. Relying on authoritative decisions and coordinate-bench precedents, the Tribunal held that omission to issue a notice under section 143(2) after filing of the return is not a curable procedural irregularity and vitiates the assessment. In the absence of proof that a valid notice under section 143(2) was issued within the statutory parameters, the entire assessment was held to be void ab initio. [Paras 6, 8]

The assessment is void ab initio for non-issuance of a valid notice under section 143(2) and is set aside.

Applicability of section 292BB of the Income-tax Act to non-issuance of notice - Whether section 292BB operates to preclude challenge to non-issuance of a notice under section 143(2) where no documentary evidence of issuance exists. - HELD THAT: - The Tribunal examined the Revenue's contention that the assessee had accepted issuance of the 143(2) notice before the CIT(A) and that section 292BB therefore bars the challenge. The Tribunal held that section 292BB applies where a notice has in fact been issued but there is a defect in service or timing; it does not apply where no notice has been issued at all. Because the Revenue could not produce any copy or proof of service of a 143(2) notice after filing of the return, section 292BB could not be invoked to validate the assessment. [Paras 8]

Section 292BB is not attracted where there is no documentary evidence of issuance of the requisite notice; the assessee may challenge non-issuance.

Admission of additional legal grounds by Tribunal following National Thermal Power Co. Ltd. - Whether the Tribunal should admit additional legal grounds raising the legality of notice issuance where facts are on record. - HELD THAT: - The Tribunal applied the principle in National Thermal Power Co. Ltd. to admit additional grounds that are purely legal and where the relevant facts are already on record and do not require further investigation. The additional grounds challenging issuance of the 143(2) notice were admitted because they raise a legal question amenable to first hearing before the Tribunal. [Paras 3, 5]

The Tribunal admitted the additional legal grounds of appeal.

Protective assessment where substantive assessments in other cases are not framed - Whether a protective assessment framed in the assessee's case is sustainable when substantive assessments in other related parties' cases have not been completed. - HELD THAT: - The assessment order recorded that the addition was assessed protectively in the assessee's hands pending outcomes of assessments in other entities. The Tribunal observed that where substantive assessments in the other concerned parties have not been framed, framing a protective assessment in the present case lacks legal foundation. Consequently, the protective assessment was held not to stand in law. [Paras 9]

Protective assessment in the assessee's case is unsustainable where substantive assessments in other parties are not framed; it does not stand in law.

Final Conclusion: The Tribunal allowed the appeal: it admitted the additional legal grounds; set aside and quashed the assessment for AY 2010-11 as void ab initio for non-issuance of a valid notice under section 143(2); held section 292BB inapplicable in the absence of any documentary proof of notice; and observed that the protective assessment was unsustainable where substantive assessments in other cases were not framed.

Incriminating material - scope of assessment under Section 153A - jurisdiction to reopen completed assessments - additions under Section 68 - reliance on post-search investigations and statements - right to cross-examination of third party witness

Scope of assessment under Section 153A - incriminating material - jurisdiction to reopen completed assessments - Whether assessments already completed prior to search could be reopened and additions sustained under proceedings initiated u/s 153A in absence of incriminating material seized during the search - HELD THAT: - The Tribunal examined the documents seized and the assessment records and held that where assessments for the relevant years were complete on the date of search, interference under section 153A is permissible only if there is incriminating material discovered in the search that legitimately demonstrates undisclosed income for those years. The seized material must have a direct nexus to undisclosed income of the specific assessment years; post search enquiries or external material unconnected to incriminating seized documents cannot be used to expand the scope of reassessment. Applying the Delhi High Court and coordinate decisions, the Tribunal found no seized material here that depicted undisclosed income for the completed years and emphasised that assessments which were final cannot be tinkered with in absence of such incriminating material. [Paras 16, 18, 19, 20]

Additions made in assessments framed under section 153A for the completed assessment years are beyond scope and without jurisdiction where no incriminating material was found; such assessments are quashed.

Incriminating material - reliance on post-search investigations and statements - Whether the specific documents seized (share certificates, a flowchart/email and a document from Jay Ushin Ltd.) constituted incriminating material justifying additions - HELD THAT: - The Tribunal reviewed the seized items relied upon by the AO and noted that the share certificates merely recorded transactions that were already reflected in books, the email related to restructuring plans without financial implication, and the Jay Ushin document concerned an unsecured loan accepted in assessment of the relevant company without resulting in addition. The AO had not drawn adverse inference from these documents in the respective companies' assessments. The Tribunal found these documents non incriminating because they did not reveal undisclosed income and, in several instances, the AO had not used them as the basis for additions. [Paras 14, 15, 18]

The seized share certificates, email and the Jay Ushin document are not incriminating material and cannot sustain additions under section 153A/143(3).

Reliance on post-search investigations and statements - right to cross-examination of third party witness - Whether the AO could rely on post search investigation reports and the statement of a third party (Sh. Rajesh Agarwal) without allowing cross examination or independent enquiry - HELD THAT: - The Tribunal observed that the statement of the alleged entry operator was supplied to the assessee at the fag end of assessment proceedings and the assessee's request for cross examination was not afforded; despite a remand, AO failed to provide cross examination. The AO had relied heavily on that statement and on the investigation wing's report without conducting independent inquiries or issuing summons under section 131. Citing principles of audi alteram partem and precedents, the Tribunal held that reliance on such untested third party statements is unsustainable and, absent proper opportunity to confront and test that evidence, the statement loses credibility. [Paras 26, 34, 42, 43]

The post search statement relied upon by AO cannot be acted upon without affording opportunity for cross examination; such untested statements and investigation only reports cannot form the basis for additions.

Additions under Section 68 - jurisdiction to reopen completed assessments - On the merits, whether the addition under section 68 in respect of share capital and share premium could be sustained against the assessee companies - HELD THAT: - The Tribunal considered the documentary evidence furnished by subscriber companies (PAN, bank statements, audited accounts, MOA/AOA), replies to notices u/s 133(6), and the net worth of subscriber entities. It found that AO did not meaningfully rebut the documentary proof, did not conduct adequate independent enquiries (no summons under section 131), and ignored net worth evidence showing capacity to invest. The Tribunal also noted that AO's fund trail allegation was unsupported by material and that CIT(A)'s favourable findings on credibility and documentary sufficiency were not controverted by Revenue. Consequently, the Tribunal concluded that the initial onus discharged by the assessee was not displaced. [Paras 38, 40, 44, 46, 48]

The addition under section 68 in respect of share capital/share premium is unsustainable and is deleted on merits.

Final Conclusion: The Tribunal allowed the assessee's Rule 27 applications, quashed assessments framed under section 153A for AY 2008-09 to AY 2011-12 for want of incriminating material, and, after considering merits, dismissed all revenue appeals - holding seized documents non incriminating, excluding untested post search statements, and deleting the additions made under section 68.

Estimation of income under best judgment assessment read with section 145(3) - use of presumptive benchmark under section 44AD for estimation - rejection of books of account and reliance on past accepted net profit as a guide for estimation - principle of consistency in treatment of recurring business transactions - treatment of receipts as brokerage/advance from customers versus taxable sales - addition in respect of unexplained cash credits (assessment under section 68) - onus on assessee to substantiate cash deposits and trade transactions

Estimation of income under best judgment assessment read with section 145(3) - use of presumptive benchmark under section 44AD for estimation - rejection of books of account and reliance on past accepted net profit as a guide for estimation - Appropriate net profit rate to be applied for estimating income from contract business where AO rejected expenses and framed assessment under best judgment. - HELD THAT: - The Tribunal examined the audited financials and past accepted net profit rates (A.Y. 2009-10 to 2011-12) which were in the range of 0.17%-0.25% (and estimates by AO in scrutiny below 1%). The CIT(A) had applied an 8% presumptive benchmark by reference to section 44AD; the Tribunal found application of 8% was unjustified in the facts of the case, including unchanged nature of business, audited accounts on record and precedential findings in sister concerns. Having regard to past accepted results, comparable Tribunal decisions and the need for a reasonable, non-arbitrary estimation under best judgment, the Tribunal modified the estimation and directed computation of net profit at 0.6% of contract turnover, observing that this rate would be deemed to cover all business expenses including interest and depreciation. The same approach was applied mutatis mutandis to A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2014-15. [Paras 9, 14, 16]

Net profit from contract business to be computed at 0.6% of turnover for A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2014-15; assessee granted part relief and revenue appeals on this point dismissed.

Principle of consistency in treatment of recurring business transactions - treatment of receipts as brokerage/advance from customers versus taxable sales - Whether sale consideration received in the name of the assessee for immovable property transactions executed on behalf of third parties could be added as unexplained income. - HELD THAT: - The Tribunal considered the memorandum of understanding, conveyance deeds, board resolution and that the assessee regularly carried out land consolidation/brokerage transactions and disclosed commission income in audited accounts. The AO had added gross sale consideration received via sub-registrar information without affording opportunity to verify details; CIT(A) had confirmed the addition but the Tribunal found the assessee furnished documentary evidence that the transactions were intermediary/brokerage in nature and that corresponding brokerage was offered to tax in books. Applying the principle of consistency (given acceptance in earlier year A.Y. 2011-12) and on review of the documents, the Tribunal set aside the CIT(A)'s confirmation and deleted the addition of the gross sale consideration. [Paras 10]

Addition of Rs. 2,81,70,890 (sale consideration) deleted as transactions were intermediate brokerage/agency transactions recorded and taxed as such in books.

Onus on assessee to substantiate cash deposits - estimation of income under best judgment assessment read with section 145(3) - Whether addition for unexplained cash deposit in bank could be deleted in absence of supporting cash-book evidence. - HELD THAT: - The AO added the cash deposit on the basis of bank information; CIT(A) confirmed. Before the Tribunal the assessee asserted the deposit arose from business receipts but did not produce extract of cash book or date-specific ledger evidence to substantiate availability of cash at the relevant time. In the absence of such contemporaneous books or documentary substantiation, the Tribunal found no merit in the assessee's contention and upheld the addition confirmed by the lower authorities. [Paras 11, 12]

Assessee's ground on unexplained cash deposit dismissed; addition in respect of the cash deposit sustained.

Addition in respect of unexplained cash credits (assessment under section 68) - principle of consistency in treatment of recurring business transactions - onus on assessee to prove identity, creditworthiness and genuineness - Whether advances received from M/s Trishakti Power Pvt. Ltd. were unexplained cash credits liable to be added under section 68 or bona fide trade advances. - HELD THAT: - The AO made an addition treating advances as unexplained cash credits. The assessee produced the work order, confirmations, bank evidence showing receipt of advance through banking channels, audited financial statements reflecting advances and subsequent adjustment to turnover, and evidence that the advances were passed to subcontractors. The party (Trishakti) responded to summons under section 133(6) and the transaction was supported by documentary material. The Tribunal noted the advances were reflected as trade advances in books and adjusted to turnover in the subsequent year; additionally, commission/sales arising from the contract were offered to tax. Applying the principle that where the assessee discharges onus by documentary evidence and the counterparty corroborates, addition under section 68 is not warranted, the Tribunal upheld the CIT(A)'s deletion of the addition. [Paras 19]

Addition under section 68 in respect of advances from M/s Trishakti Power Pvt. Ltd. deleted; revenue appeal dismissed on this point.

Final Conclusion: Tribunal partly allowed the assessee's appeals by directing estimation of net profit at 0.6% of contract turnover for A.Y. 2012-13, 2013-14 and 2014-15; deleted the addition of sale consideration treated as unexplained income and the addition under section 68 relating to advances from M/s Trishakti Power Pvt. Ltd.; upheld the addition for unexplained cash deposit where the assessee failed to produce corroborative cash-book evidence. Appeals disposed as indicated.

Revision under section 263 - erroneous and prejudicial to the interest of the revenue - non-application of mind by the Assessing Officer - acceptance of unsecured loans and genuineness of creditors - adequacy of enquiries under section 133(6) - reassessment under section 147 and scope to assess other escaped income

Revision under section 263 - erroneous and prejudicial to the interest of the revenue - non-application of mind by the Assessing Officer - acceptance of unsecured loans and genuineness of creditors - adequacy of enquiries under section 133(6) - Validity of the Pr. CIT's revision under section 263 in respect of A.Y. 2007-08 - HELD THAT: - The Tribunal held that the assessment completed u/s.143(3) r.w.s.147 for A.Y.2007-08 was erroneous and prejudicial to the revenue because the AO, though issuing notices u/s.133(6), either received no replies from many purported creditors or received replies that prima facie required deeper scrutiny, yet recorded only perfunctory verification and accepted the genuineness of large unsecured loans without confronting the assessee or drawing logical conclusions. The AO's brief recital that information was called for and verified did not disclose any meaningful enquiry in view of multiple indicia of suspect transactions-loans from distant penny-stock companies with large share premiums, identical addresses for different lenders, absence of prior business relations, absence of interest on large advances and non-response to notices. Citing precedents on non-application of mind, the Tribunal concluded that the facts fall within situations amenable to revision u/s.263 and that the Pr. CIT rightly set aside the assessment directing fresh verification and framing of assessment after affording opportunity to the assessee. Since the revision was sustained on this ground, other grounds noted by the Pr. CIT were not separately adjudicated. [Paras 17, 20, 22, 23, 24]

Revision under section 263 upheld; assessment set aside for fresh adjudication in respect of unsecured loans for A.Y. 2007-08.

Revision under section 263 - erroneous and prejudicial to the interest of the revenue - non-application of mind by the Assessing Officer - acceptance of unsecured loans and genuineness of creditors - adequacy of enquiries under section 133(6) - reassessment under section 147 and scope to assess other escaped income - Validity of the Pr. CIT's revision under section 263 in respect of A.Y. 2010-11 - HELD THAT: - For A.Y.2010-11 the Tribunal found facts materially similar to A.Y.2007-08: the assessee showed large unsecured loans from various parties, confirmations were filed but many lenders did not reply to notices u/s.133(6), and those who did respond presented facts (nominal profits, large investments/share premium, absence of interest, nondeduction of TDS) that prima facie warranted further probe. The AO accepted the creditors as genuine without adequate inquiry or drawing logical conclusions from the material on record. On these grounds the Tribunal held the assessment order to be erroneous and prejudicial to the revenue and sustained the Pr. CIT's revision directing reframing of the assessment after proper verification and opportunity to the assessee. The Tribunal noted that section 147 empowers enquiry into other escaped income arising during reassessment proceedings and rejected the contention that revision was confined to matters shown in AIR or to matters strictly within the original reassessment issue. [Paras 33, 34, 36, 37, 38]

Revision under section 263 upheld; assessment set aside for fresh adjudication in respect of unsecured loans for A.Y. 2010-11.

Final Conclusion: Both appeals are dismissed. The Tribunal upheld the Pr. CIT's exercise of revisionary power under section 263 for A.Y. 2007-08 and A.Y. 2010-11, finding that the AO failed to apply his mind to the genuineness of large unsecured loans and that the assessments were therefore erroneous and prejudicial to the interest of the revenue; the matters are remitted to the AO for fresh assessment and verification after affording opportunity to the assessee.

Deduction under section 35AD - building and operating a new hotel of two-star or above - meaning of "building" - investment-linked tax incentive - leasehold improvements

Deduction under section 35AD - building and operating a new hotel of two-star or above - meaning of "building" - leasehold improvements - Entitlement of the assessee to claim deduction under section 35AD for capital expenditure incurred in establishing and operating a new five star hotel on leased premises where the lessor had provided a bare shell and the assessee carried out substantial construction, interiors and installation of plant and machinery. - HELD THAT: - The Tribunal examined the nature of the expenditure and the lease deed obligations and held that section 35AD does not require that the assessee must have constructed the entire building or own the land. The words in the statute were to be given their ordinary meaning; "building" includes erection, assembly and construction activities beyond mere core shell. The lease deed expressly obliged the assessee to carry out extensive interior civil works, plant and machinery installation, elevators, STP, air conditioning, firefighting, plumbing and electrical works and any other works necessary to complete the hotel for commencement of operations. Those works constituted capital expenditure wholly and exclusively for setting up and operating the specified business of a hotel. The Tribunal further noted the purposive and beneficial object of the investment linked incentive in section 35AD and that allowing the deduction does not cause revenue loss in substance because depreciation under section 32 would not be available once section 35AD is claimed. Applying these principles to the material on record, the Tribunal concluded that the assessee's capital expenditure in completing and equipping the leased premises amounted to establishing the specified hotel business and therefore fell within section 35AD. [Paras 8, 9, 10, 11]

The assessee is entitled to the deduction under section 35AD in respect of the capital expenditure incurred for establishing and operating the specified hotel on the leased premises; the AO is directed to allow the deduction claimed.

Final Conclusion: The appeal is allowed: the Tribunal held that the capital expenditure incurred by the assessee in completing and equipping the leased bare shell to set up and operate the specified hotel falls within the scope of section 35AD and directed the assessing officer to allow the deduction claimed for the expenditure.

Penalty under section 271D and section 271E - reasonable cause within the meaning of section 273B - transactions recorded by journal entries and provisions of section 269SS and section 269T - limitation under section 275(1)(c) - commencement of limitation from the date when action for imposition of penalty is initiated (assessment order/reference to Addl. CIT) - rational construction favourable to assessee in case of doubt in fiscal enactments

Penalty under section 271D and section 271E - reasonable cause within the meaning of section 273B - transactions recorded by journal entries and provisions of section 269SS and section 269T - rational construction favourable to assessee in case of doubt in fiscal enactments - Whether penalties under sections 271D and 271E could be sustained for loans/deposits accepted or repaid by journal entries where the Assessing Officer/CIT(A) found the transactions genuine and a reasonable cause was shown for non-compliance. - HELD THAT: - The Tribunal held that journal entries, though capable of bringing transactions within the embargo of sections 269SS/269T, do not automatically attract penalty if the assessee establishes reasonable cause under section 273B. The CIT(A)'s factual findings that the journal entries were passed in the normal course of business, reflected genuine commercial purposes (assignment of debts/receivables, on behalf payments, consolidation/squaring up, operational efficiencies, rectifications) and were not shown to involve unaccounted cash, were not controverted. The Tribunal accepted that (i) journal entries are a recognised mode of accounting and may legitimately be used for mutual extinguishment/assignment of liabilities; (ii) bona fide belief based on prevailing judicial precedents prior to the Bombay High Court decision in Triumph International could constitute reasonable cause for entries made prior to 12/06/2012; and (iii) where reasonable cause is established, section 273B bars imposition of penalty under sections 271D/271E despite contravention of sections 269SS/269T. The Tribunal further endorsed a liberal, purposive construction of the statutory provisions in favour of the assessee where interpretation is open to doubt.

Penalties under sections 271D and 271E were deleted because the assessee established reasonable cause within the meaning of section 273B; appeals of the Revenue on this issue were dismissed.

Limitation under section 275(1)(c) - commencement of limitation from the date when action for imposition of penalty is initiated (assessment order/reference to Addl. CIT) - Whether penalty orders passed by the Addl. CIT were barred by limitation under section 275(1)(c) where the Assessing Officer had recorded findings in the assessment order and had referred the matter to the Addl. CIT. - HELD THAT: - The Tribunal followed precedent holding that where during assessment proceedings the AO considers the matter, records findings rejecting the assessee's explanations and makes a reference to the Addl. CIT (or otherwise takes steps in the assessment order), those acts constitute the "action for imposition of penalty" for the purpose of section 275(1)(c). Consequently the period of limitation runs from the time such action is initiated (as recorded in the assessment or by the AO's reference) and not only from the date of the Addl. CIT's show cause notice. Applying that principle to the cross objections, the Tribunal found that the Addl. CIT's penalty orders in the concerned matters were passed beyond the permissible period and therefore were time barred. The Tribunal relied on High Court and Coordinate Bench authorities to support this approach and quashed the penal orders as barred by limitation.

Cross objections by the assessee were allowed: penalty orders passed by the Addl. CIT were quashed as barred by limitation under section 275(1)(c).

Final Conclusion: The Tribunal dismissed all Revenue appeals challenging the deletion of penalties under sections 271D and 271E and held that the assessee had established reasonable cause under section 273B so as to preclude imposition of penalty in the facts of these group cases; further, in the cross objections the Tribunal held that where the AO, in the assessment order, initiated action for imposition of penalty by recording findings and referring the matter to the Addl. CIT, the limitation under section 275(1)(c) runs from that initiation and several impugned penalty orders were quashed as time barred.

Condonation of delay - allowability of administrative and direct business expenditure - deemed transfer under joint development agreement - date of transfer and chargeability of capital gains in JDA transactions - determination of consideration for deemed transfer - actual consideration versus guidance value - power of attorney and part performance under section 53A (Transfer of Property Act) as feeding into deemed transfer - assessment under section 153C - jurisdictional objections - entitlement to depreciation where no business activity carried on

Condonation of delay - Whether the delay of 79 days in filing the appeal was to be condoned. - HELD THAT: - The Tribunal examined the explanation and affidavit showing medical incapacity of the company director and, in the interest of justice, found the reason for delay to be genuine. The application for condonation of delay was allowed and the delayed appeal was admitted for hearing.

Delay of 79 days in filing the appeal condoned; appeal admitted.

Allowability of administrative and direct business expenditure - Allowability of administrative expenses of Rs. 30,87,571 (disallowance of Rs. 15,87,571) and direct expenses of Rs. 46,60,463. - HELD THAT: - The Tribunal upheld the first appellate authority's restriction of administrative expenditure to a reasonable amount (Rs. 15 lakh allowed by CIT(A)) given prior years' treatment and absence of work-in-progress in the balance sheet for the year under consideration; hence no reason to allow the entire administrative claim. Separately, the Tribunal examined the nature of the direct expenses (transfer-related payments and demolition loss) and, having regard to the memorandum empowering the company to undertake construction activities and to the expenditures being in furtherance of the JDA development, concluded those direct expenses pertained to activities of the assessee and are allowable as business expenditure.

Disallowance of administrative expenses of Rs. 15,87,571 upheld; disallowance of direct expenses of Rs. 46,60,463 set aside and those expenses allowed as business expenditure.

Deemed transfer under joint development agreement - date of transfer and chargeability of capital gains in JDA transactions - determination of consideration for deemed transfer - actual consideration versus guidance value - Whether transfer of rights under the JDA amounted to a transfer chargeable to capital gains in assessment year 2010-11, and the correct consideration for such transfer. - HELD THAT: - On examining the JDA, power of attorney and subsequent supplemental agreements, the Tribunal agreed with the CIT(A) that the terms evidenced transfer of control/rights in the developer's undivided share and part performance by payment of consideration, bringing the transaction within the scope of deemed transfer. The Tribunal accepted the factual finding that Rs. 19.30 crores was actually received by the assessee in the relevant year and that this amount exceeded the guidance value; accordingly the actual consideration of Rs. 19.30 crores was held to be the appropriate sale consideration for computing capital gains for the year, while any future gains on the built-up area to be taxed when those areas are actually transferred. Revenue grounds challenging the CIT(A) on these points were dismissed.

Transfer under the JDA held to have occurred in the relevant year; consideration accepted at Rs. 19.30 crores for computing capital gains; revenue's challenges dismissed.

Assessment under section 153C - jurisdictional objections - Validity of assessment made under section 153C read with section 143(3) as challenged by the assessee. - HELD THAT: - The assessee raised a contention that conditions for making assessment under section 153C were not satisfied. The Tribunal noted that this ground had not been pressed for adjudication before the earlier appellate authority and that the same point had been dismissed by the CIT(A). The additional ground before the Tribunal was therefore dismissed.

Assessee's jurisdictional ground under section 153C dismissed (not pressed / dismissed by CIT(A)).

Entitlement to depreciation where no business activity carried on - Whether depreciation could be allowed where the assessee did not carry on business during the relevant previous year. - HELD THAT: - The Tribunal applied the settled test that entitlement to depreciation requires carrying on of a business (the activity must be of a nature calculated to yield profits), not that the business actually yields profit. As the CIT(A) himself had found that the assessee did not carry on any business in the relevant year, the Tribunal held that the partial allowance of depreciation by the CIT(A) was incorrect and that depreciation was not allowable.

Partial allowance of depreciation set aside; claim for depreciation disallowed as no business was carried on in the relevant year.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and, on merits, dismissed the assessee's challenge to the restricted administrative expenditure while allowing the direct expenses. It upheld the CIT(A)'s conclusion that the deemed transfer under the JDA occurred in the relevant year and accepted Rs. 19.30 crores as the consideration for capital gains purposes, dismissing the revenue's challenge on those points. The assessee's jurisdictional ground under section 153C was dismissed, and the Tribunal allowed the revenue's appeal on depreciation by disallowing depreciation where no business activity was carried on. The appeals were thus partly allowed and partly dismissed.

Revisional jurisdiction under Section 263 - Erroneous and prejudicial to the revenue - Requirement to confront the assessee with specific grounds and to grant opportunity of hearing - Duty to drop proceedings when the jurisdictional fact on which revision was initiated is found to be non existent - Analogous application of principles governing reopening under Section 147

Revisional jurisdiction under Section 263 - Duty to drop proceedings when the jurisdictional fact is absent - Validity of the PCIT's exercise of revisional jurisdiction in setting aside the assessment order dated 12.12.2018. - HELD THAT: - The Tribunal found that the PCIT initiated revision by issuing a show cause notice alleging an erroneous carry forward of loss, but the assessee replied and established that no such carry forward had been allowed by the AO and that the assessee had not carried forward the loss. The PCIT nevertheless proceeded to set aside the assessment without dropping the revision or confronting the assessee afresh with any other specific defect. Applying the principle that a revisional authority must base its exercise of jurisdiction on the jurisdictional fact invoked and, if that fact is found absent, should drop the proceedings (a principle recognised in analogous decisions on reopening under Section 147), the Tribunal held that the PCIT usurped revisional power and therefore lacked jurisdiction to pass the impugned order setting aside the assessment. [Paras 7]

The PCIT's order setting aside the AO's assessment is quashed for want of jurisdiction.

Requirement to confront the assessee with specific grounds and to grant opportunity of hearing - Violation of principles of natural justice - Whether failure to confront the assessee with any new defects and to give opportunity rendered the revisional order unsustainable. - HELD THAT: - The Tribunal noted that although service of a formal notice is not strictly required in Section 263 proceedings, the revisional authority must afford the assessee an opportunity to rebut or explain the grounds on which revision is proposed. The PCIT had limited the show cause notice to the carry forward issue and did not confront the assessee with any other alleged defects nor afford fresh notice or hearing on any new ground before setting aside the assessment. This omission made the revisional exercise legally fragile for violation of natural justice and reinforced the finding that the impugned order could not stand. [Paras 6, 7]

The revisional order is legally fragile for failure to afford the requisite opportunity and for not confronting the assessee with any new grounds prior to setting aside the assessment.

Final Conclusion: The appeal is allowed; the order of the PCIT dated 08.03.2021 setting aside the assessment for AY 2016-17 is quashed for want of jurisdiction and for failure to afford the assessee appropriate opportunity, and the assessment order dated 12.12.2018 is restored.

Revisionary jurisdiction under section 263 - Error and prejudice to the revenue - Deemed application under section 11(2) - Application of income for capital expenditure and exemption under section 11(1A) - Assessing Officer's omission and scope of interference in revisional proceedings

Revisionary jurisdiction under section 263 - Error and prejudice to the revenue - Deemed application under section 11(2) - Application of income for capital expenditure and exemption under section 11(1A) - Whether the CIT(Exemptions) rightly exercised revisionary jurisdiction under section 263 in holding that the assessing officer's order was erroneous and prejudicial to the revenue by allowing the application of Rs. 4,50,172 as charitable application for AY 2017-18. - HELD THAT: - The Tribunal found that the contention of the CIT(Exemptions) rested on a factual misunderstanding arising from an incorrect entry in column 4 of Schedule I of the return. The assessee filed a revised Schedule I and documentary material (Schedule EC and computation) showing that the sum of Rs. 4,50,172 was applied in the relevant year as capital application (not as an amount set apart under section 11(2) in an earlier year). The AO, on considering the records, did not draw an adverse inference and treated the matter accordingly. The CIT(Exemptions) assumed, without resolving the factual inconsistency, that the amount had been previously treated as deemed application under section 11(2) and therefore alleged double exemption; that assumption was not borne out by the documents relied upon by the assessee. On the material before it the Tribunal concluded there was no omission or error in the AO's assessment requiring exercise of revisional power under section 263, and that the exercise of jurisdiction by the CIT(Exemptions) was therefore erroneous and unsustainable. [Paras 10, 11]

CIT(Exemptions) wrongly invoked revisionary jurisdiction under section 263; the revisional order is quashed.

Final Conclusion: The appeal is allowed; the order passed by the CIT(Exemptions) under section 263 is quashed and the assessment order of the AO stands affirmed on this issue.

Deductibility of employees' contribution to provident fund and ESI under Section 36(1)(va) - non-application of Section 43B to employees' contribution - prospective operation of Finance Act, 2021 amendment (Explanation to Section 36(1)(va) and Explanation 5 to Section 43B) - due date for deposit - statutory due date under PF/ESI Acts versus due date of filing return under Section 139(1) - legislative intent and Notes on Clauses as test for retrospectivity - binding effect of jurisdictional High Court precedents

Deductibility of employees' contribution to provident fund and ESI under Section 36(1)(va) - due date for deposit - statutory due date under PF/ESI Acts versus due date of filing return under Section 139(1) - binding effect of jurisdictional High Court precedents - Employees' contribution remitted by the assessee before the due date of filing the return of income for AY 2019-20 is allowable as deduction under Section 36(1)(va). - HELD THAT: - The Tribunal examined the facts that the assessee deposited employees' contributions to PF/ESI before filing the return under Section 139(1) for AY 2019-20. It noted that prior to the Finance Act, 2021 amendment the prevailing view of the jurisdictional Calcutta High Court and several Tribunal decisions held that employee contributions paid before filing the return are deductible. Applying those binding authorities and the principle favouring the assessee where co-ordinate decisions conflict, the Tribunal found no legal basis to sustain the addition. The Tribunal thus directed deletion of the disallowance and restoration of the deduction for amounts remitted before filing the return for the assessment year in issue. [Paras 4, 5]

Addition disallowing employees' contribution for AY 2019-20 deleted; deduction allowed where remittance made before filing return under Section 139(1).

Prospective operation of Finance Act, 2021 amendment (Explanation to Section 36(1)(va) and Explanation 5 to Section 43B) - non-application of Section 43B to employees' contribution - legislative intent and Notes on Clauses as test for retrospectivity - The amendment effected by Finance Act, 2021 (inserting Explanation to Section 36(1)(va) and Explanation 5 to Section 43B) is prospective and applies from AY 2021-22 onward, not to earlier assessment years including AY 2019-20. - HELD THAT: - The Tribunal applied the test of legislative intent endorsed by the Supreme Court, giving weight to the Notes on Clauses of the Finance Bill, 2021. The Notes explicitly stated that the amendments take effect from 1 April 2021 and apply to AY 2021-22 and subsequent years. On that basis the Tribunal held the amendment to be prospective (not a retrospective clarificatory change) and therefore not operative for the assessment year under appeal. Consequently, the later statutory clarifications do not justify disallowance for years prior to applicability. [Paras 4, 5]

Amendment by Finance Act, 2021 held prospective in operation and not applicable to AY 2019-20; will apply from AY 2021-22.

Final Conclusion: The Tribunal allowed the appeal, deleted the disallowance of employees' contribution for AY 2019-20 because the payments were made before filing the return, and held that the Finance Act, 2021 amendment operates prospectively from AY 2021-22 and therefore does not affect the assessment year under appeal.

Revisional jurisdiction under section 263 of the Income Tax Act - Requirement that Assessing Officer's order be erroneous and prejudicial to Revenue - Enquiry into genuineness of sundry creditors - Plausible view doctrine - Acceptance of books of account and consequential bar to interference under section 263

Revisional jurisdiction under section 263 of the Income Tax Act - Requirement that Assessing Officer's order be erroneous and prejudicial to Revenue - Plausible view doctrine - Enquiry into genuineness of sundry creditors - Acceptance of books of account and consequential bar to interference under section 263 - Whether the Principal Commissioner (PCIT) rightly exercised revisional jurisdiction under section 263 in setting aside the assessment for A.Y. 2015-16 on the ground that the Assessing Officer did not examine the genuineness of sundry creditors. - HELD THAT: - The Tribunal examined whether the Assessing Officer had made enquiries and taken a plausible view on the issue of large sundry creditors. The assessment record shows the AO issued notices, called for books, ledger details and Form 26AS, examined the profit & loss account, balance sheet and sundry creditors and debtors ledgers and, after hearing the assessee, accepted the explanation that outstanding sundry creditors arose from labour-supply contracts and would be discharged upon receipt of dues reflected as sundry debtors. The AO did not reject the books or disturb gross receipts and cost of contracts; he accepted the trading results. In these circumstances the AO's acceptance of the sundry creditors was held to be a plausible view. The PCIT's objection that the AO did not independently verify the genuineness of the creditors was held insufficient to invoke section 263 because the statutory test requires that the AO's order be erroneous and prejudicial to the revenue, and interference is not warranted where the AO has taken a reasonable, supportable view after examining records. Reliance was placed on the principle that once sales, purchases and gross profits are accepted, sundry creditors cannot be treated as bogus without rejecting the books or disturbing trading results. Consequently the PCIT's action to quash the assessment on this ground was without jurisdiction. [Paras 5, 6]

The PCIT's exercise of revisional jurisdiction under section 263 in respect of sundry creditors for A.Y. 2015-16 was without jurisdiction and is quashed; the assessee's appeal is allowed.

Final Conclusion: The Tribunal quashed the PCIT's order initiated under section 263 as the Assessing Officer had examined records, accepted the books and taken a plausible view on the sundry creditors for A.Y. 2015-16; interference under section 263 was therefore not justified.

Nature of disputed title (ancestral versus exclusive ownership) - Benami Transactions (Prohibition) Act, 1988 - bar under Section 4 on raising defence of real ownership - Admissibility of benami defence in suits instituted after commencement of the Act where transaction predates the Act - Concurrent findings of fact versus substantial question of law

Nature of disputed title (ancestral versus exclusive ownership) - Concurrent findings of fact versus substantial question of law - Second appeal admitted and question framed whether the suit property is ancestral or the exclusive ownership of defendant No.1; adjudication of that question left for determination in the second appeal. - HELD THAT: - Both trial and first appellate Courts found the property to be ancestral and decreed the plaintiff's suit. The appellant contended that documentary evidence and other materials placed before the trial Court showed the property was purchased and developed by the defendant out of his own funds (including loans and financial assistance), and that the lower Courts failed to appreciate that evidence. The High Court held that while factual findings of the lower Courts on fabrication and documentary reliability were not, at this stage, held to raise a substantial question of law, the core legal question as to the character of the property (ancestral or exclusively owned by defendant) properly admits second appeal. That question involves evaluation of surrounding circumstances, relationship between parties and motives, and therefore required final adjudication in the second appeal. [Paras 5, 8, 9]

Question on whether the suit property is ancestral or defendant's exclusive property is admitted for determination in the second appeal; appeal expedited for hearing.

Benami Transactions (Prohibition) Act, 1988 - bar under Section 4 on raising defence of real ownership - Admissibility of benami defence in suits instituted after commencement of the Act where transaction predates the Act - Second appeal admitted and question framed whether defendant could be allowed to assert that though the property was in his mother's name, he was the real owner (benami defence) in view of the bar under Section 4 of the Benami Transactions (Prohibition) Act, 1988; this legal question is to be decided in the second appeal. - HELD THAT: - The trial Court and the first appellate Court did not consider in depth whether Section 4 of the Benami Act precludes the defendant from asserting that he was the real owner where the purchase occurred in 1982 but the suit was filed in 2011. The High Court observed that R. Rajagopal Reddy and other precedents address retrospective operation and the effect on suits pending, and that the distinction and applicability of categories under Section 4 require interpretation in the facts of this case. Because the availability of the benami defence, if barred, would defeat the defendant's entire defence, the High Court treated this as a substantial question of law fit for admission and appellate decision rather than being resolved on concurrent factual findings below. [Paras 6, 7, 9]

Question whether the defendant may raise a benami defence despite Section 4 is admitted for determination in the second appeal; issue remitted for hearing on merits in the appeal.

Interim relief - stay of decree pending appellate adjudication - Interim stay granted over the decrees and execution proceedings until final disposal of the second appeal in respect of the reliefs claimed in the listed civil applications. - HELD THAT: - Given the limited legal questions framed for appellate consideration and the pendency of final decree/execution proceedings, the High Court granted stay of the impugned decrees in terms of the specific prayer clauses of Civil Application Nos.3345 of 2017 and 8155 of 2021 until the second appeal is heard and finally disposed. The Court also directed expedition of the second appeal and dispensed with printing of the paperbook, while permitting respondents to apply for early hearing if desired. [Paras 11, 12, 14]

Civil Application Nos.3345 of 2017 and 8155 of 2021 disposed of by granting stay in the terms prayed until final disposal of the second appeal.

Final Conclusion: The High Court admitted the second appeal, framed two substantial questions of law - (i) whether the suit property is ancestral or the exclusive property of defendant No.1, and (ii) whether the defendant can invoke a benami defence notwithstanding the bar under Section 4 of the Benami Transactions (Prohibition) Act, 1988 - directed expedited hearing of the appeal, and granted interim stay of the impugned decrees and execution proceedings until final disposal of the appeal.

Validity of a duly registered sale deed - unilateral cancellation of a registered instrument - burden of proof in allegations of fraud and coercion - effect of non-reading of document to an illiterate party - applicability of the Benami Transactions (Prohibition) Act to purchases in the name of wife or unmarried daughter - proof and scope of adverse possession - maintainability of a suit where the sale deed contains clear identification of the property

Validity of a duly registered sale deed - unilateral cancellation of a registered instrument - The legal effect of the registered sale deed dated 17th May, 1965 and of a subsequent unilateral cancellation executed by the purported vendor. - HELD THAT: - The Court upheld the concurrent finding that the registered sale deed was duly executed and conveyed title to the purchaser. The notion that a registered sale deed can be unilaterally cancelled by the vendor without adjudication or proof was rejected as legally unsanctioned. The Court noted that cancellation lacking judicial determination or probative evidence cannot extinguish a duly registered transfer; the proper course is to challenge execution or validity by leading evidence in a civil court. Having found no admissible evidence to vitiate the deed, the courts below correctly treated the registered sale deed as effective to pass title. [Paras 11, 17, 18, 19]

The registered sale deed was valid and not rendered ineffective by the subsequent purported unilateral cancellation; the cancellation lacked legal sanctity and the sale deed stands.

Applicability of the Benami Transactions (Prohibition) Act to purchases in the name of wife or unmarried daughter - Whether the Benami Transactions (Prohibition) Act, 1988 prohibited the property having been purchased in the name of the ostensible owner's wife. - HELD THAT: - The Single Judge's conclusion, endorsed by this Court, was that Section 3(2) of the Benami Transactions (Prohibition) Act did not proscribe property being purchased in the name of the ostensible owner's wife or unmarried daughter. The Court accepted the view that such ostensible ownership by a wife does not, per se, attract prohibition under the cited provision as applied on the facts. [Paras 13]

The Benami Transactions (Prohibition) Act did not operate to invalidate the purchase in the name of the wife in the circumstances before the Court.

Burden of proof in allegations of fraud and coercion - effect of non-reading of document to an illiterate party - Whether the sale deed was vitiated by fraud, coercion or because it was not read over and explained to the illiterate vendor. - HELD THAT: - The trial court's and Single Judge's findings that the defendant's assertions of having not understood the deed and of being coerced were not supported by evidence were affirmed. Reliance was placed on precedent considering non-reading alone insufficient where coercion or fraud is not proved. The Court noted that although the defendant was illiterate, she was not shown to be a Pardanashin lady and the allegation of coercion was disbelieved for want of evidentiary foundation. Consequently, the burden upon the defendant to prove invalidity of execution was not discharged. [Paras 14, 15, 16, 18]

Allegations of fraud, coercion and non-reading were not established on evidence; the sale deed was not vitiated on those grounds.

Proof and scope of adverse possession - maintainability of a suit where the sale deed contains clear identification of the property - Whether the defendant had perfected title by adverse possession and whether the suit was maintainable given the particulars in the registered sale deed. - HELD THAT: - The Trial Court's rejection of the plea of adverse possession was affirmed: the defendant failed to establish the necessary factual foundation for adverse possession. Separately, the courts found the registered sale deed contained detailed and definite particulars of the land (boundaries, plot number, khata, area), so there was no misdescription or vagueness to defeat maintainability. On these bases the suit for declaration and possession was properly maintainable and decreed in favour of the plaintiff. [Paras 12]

The plea of adverse possession was not established; the suit was maintainable because the registered sale deed adequately identified the property.

Final Conclusion: Concurrent findings of the Trial Court and Single Judge that the registered sale deed validly passed title to the plaintiff, that the purported unilateral cancellation lacked legal effect, that allegations of fraud or coercion were not proved, that the Benami Act did not invalidate the purchase in the wife's name on these facts, and that adverse possession was not established are upheld; the appeal is dismissed and the decree for declaration and possession is affirmed.

Provisional release under Section 110A of the Customs Act - bond as security in lieu of bank guarantee - valuation for applicability of import prohibition - quantification of duty and security before provisional release - adjudication to proceed unaffected by provisional release

Bond as security in lieu of bank guarantee - provisional release under Section 110A of the Customs Act - Modification of the writ court's condition requiring a bank guarantee and permitting execution of a bond of equivalent value for provisional release. - HELD THAT: - The learned Single Judge had directed the petitioner to furnish a bank guarantee equivalent to the amount quantified for interest, penalty and charges as condition for provisional release. The appellants contended that a bond should suffice, relying on earlier practice in a coordinate bench decision where only a bond was directed. Having considered that provisional release is being sought prior to adjudication and that the appellant was willing to remit duties and furnish security, this Court modified the condition so that a bond to the same value as the quantified security may be furnished instead of a bank guarantee. The Court recorded that the modification does not express any opinion on the merits of adjudication and that the bond is to be to the satisfaction of the respondents. [Paras 6, 7, 12]

The condition to furnish a bank guarantee is modified and the appellant may furnish a bond of equal value as security for provisional release.

Quantification of duty and security before provisional release - valuation for applicability of import prohibition - adjudication to proceed unaffected by provisional release - Direction to the respondents to quantify duty and security and to provisionally release the goods upon payment and execution of bond, while allowing the departmental adjudication to continue independently. - HELD THAT: - The Court observed that the final adjudication on valuation and prohibition is pending. In view of the appellants' willingness to remit statutory duty and furnish security, the Court directed respondents to quantify the duty and the amount of bond/security to be furnished and to communicate the same to the appellant. Upon remittance of the duty (if not already paid) and execution of the bond to the quantified amount, the respondents are directed to release the goods within one week. The Court emphasised that adjudication must proceed without being influenced by this order and that the departmental determination on whether the goods are prohibited under the relevant trade notification remains open. [Paras 9, 10, 11, 12]

Respondents to quantify duty and bond amount and release the goods within one week upon payment of duty and execution of the bond; adjudication to continue unimpaired.

Final Conclusion: Writ appeal allowed in part: the Single Judge's direction to furnish a bank guarantee is modified to permit a bond of equal value; respondents directed to quantify duty and security and to provisionally release the goods on remittance of duty and execution of the bond within one week, while adjudication proceeds unaffected. No costs.

Appeal under Section 130 of the Customs Act - eligible order for appeal - foreign-going vessel - Section 87 exemption for imported stores consumed on board - determination of rate of duty or value for assessment excluded from Section 130 - jurisdictional fact

Appeal under Section 130 of the Customs Act - eligible order for appeal - foreign-going vessel - Section 87 exemption for imported stores consumed on board - determination of rate of duty or value for assessment excluded from Section 130 - jurisdictional fact - Whether the Final Order of the CESTAT dated 18.02.2020 is an eligible order for appeal to the High Court under Section 130 of the Customs Act. - HELD THAT: - The Court identified the jurisdictional fact as whether the vessel C S Asean Explorer qualifies as a foreign-going vessel within the meaning of the Act. Section 87 grants exemption from duty for imported stores consumed on board during the period the vessel is a foreign-going vessel; therefore the primary question is the vessel's status rather than determination of the rate of duty or the value of goods for assessment. Section 130 excludes from High Court appeals orders relating to determination of rate or valuation for assessment, but does not exclude orders whose determinative factual issue is the statutory status of a vessel (a jurisdictional fact) that attracts or denies exemption under Section 87. Applying the statutory definitions in Section 2 (including Sections 2(2), 2(15), 2(21) and 2(38)) and the scheme of appeals, the Court held that deciding whether the vessel is a foreign-going vessel is a matter falling within the High Court's jurisdiction under Section 130 and is not covered by the exception for rate/value determinations. Consequently the CESTAT's Final Order is an order eligible for appeal under Section 130, and the preliminary objection to maintainability was overruled. [Paras 7, 9]

Objection to maintainability is overruled; the Final Order dated 18.02.2020 is an eligible order for appeal under Section 130 of the Customs Act.

Final Conclusion: The High Court held that the determinative jurisdictional fact is whether C S Asean Explorer is a foreign-going vessel; that question does not fall within the Section 130 exception relating to rate or value for assessment, and therefore the appeal against the CESTAT order dated 18.02.2020 is maintainable before the High Court. The objection on maintainability is overruled and the appeal is posted for hearing after three months.

Transaction value - condition of sale - inclusion of royalty/licence fees and other payments in assessable value under Rule 9 - services rendered post import not includible in transaction value - additions to price on the basis of objective and quantifiable data - time and place of importation - extended period of limitation under proviso to section 28(1)

Transaction value - condition of sale - inclusion of royalty/licence fees and other payments in assessable value under Rule 9 - services rendered post import not includible in transaction value - Whether payments for technical know how and technical assistance payable to the overseas supplier were rightly includible in the transaction value of the imported reactor set under Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. - HELD THAT: - The Tribunal found that Rule 9 permits additions to the price actually paid or payable only where amounts are a condition of sale and are objectively quantifiable, and that the relevant test is the utility to the importer at the time and place of importation. Applying those principles to the facts, the licence agreement and the purchase order were separate contracts and the payments for technical know how and technical assistance fell due well after import. The contractual obligation to render the services was contingent upon issuance of a certificate of conformity and readiness of the existing facility; the services were to be rendered in India and were effectively post import activities that impacted the plant only after delivery and installation. Consequently, those payments did not qualify as a pre import condition of sale of the imported reactor set and could not be added to the transaction value under Rule 9. The Tribunal emphasised the settled jurisprudence limiting Rule 9 to services integral to the import transaction and rejected an expansive construction that would subsume all commercial dealings between related parties into the assessable value. [Paras 24, 26, 28]

Payments for technical know how and technical assistance which were post import, contingent on post import certification and to be rendered in India, were not includible in the transaction value of the imported reactor set under Rule 9; the demand for addition therefore fails.

Extended period of limitation under proviso to section 28(1) - suppression and applicability of penalty provisions - additions to price on objective and quantifiable basis - Whether the facts established suppression justifying invocation of the extended period of limitation and whether the alternative penalty under section 114A (as sought by Revenue) was sustainable. - HELD THAT: - Because the Tribunal held that the impugned payments were not includible in the transaction value (they were post import and not a condition of sale), the foundational premise for treating the non declaration as wilful suppression of dutiable consideration failed. The demand itself was therefore not sustainable, and the related exercise of invoking the proviso to section 28(1) for extended limitation could not be justified on the basis of suppression of amounts that were not properly assessable at import. In that factual and legal matrix the appeal of Revenue against certain aspects of the adjudicating order (including imposition or non imposition of particular penalties) lacked merit. [Paras 27]

Extended period of limitation could not be invoked on the present facts and Revenue's appeal in relation to penalties is without merit; the adjudication asserting suppression and imposing the disputed demand fails.

Final Conclusion: The Tribunal allowed the appellant's appeal and dismissed Revenue's contention: payments for technical know how and technical assistance, being post import services contingent on post import certification and to be rendered in India, cannot be added to the transaction value of the imported reactor set under Rule 9; accordingly the demand and related invocation of extended limitation and penalty were unsustainable.

Scheme of Amalgamation - Sanction under Section 230-232 of the Companies Act, 2013 - Fairness, justness and reasonableness - Vesting of assets and liabilities on amalgamation - Transfer of pending proceedings - Deemed transfer of employees on amalgamation - Statutory compliance and preservation of enforcement rights

Scheme of Amalgamation - Sanction under Section 230-232 of the Companies Act, 2013 - Fairness, justness and reasonableness - Vesting of assets and liabilities on amalgamation - Transfer of pending proceedings - Deemed transfer of employees on amalgamation - Approval and sanction of the Scheme of Amalgamation and consequential vesting, dissolution and transfer effects - HELD THAT: - Having considered the affidavits of service, statutory reports including those of the Regional Director, Official Liquidator and Income Tax authorities, the approvals accorded by members and creditors, and the certificates of the statutory auditors regarding accounting treatment, the Tribunal found no impediment to sanctioning the Scheme. The Tribunal applied the limited judicial role of a company court - confined to ascertaining the fairness, justness and reasonableness of the scheme - and observed that shareholders and creditors, being the best judges of their commercial interests, had approved the Scheme. Consequential effects were directed: all Transferor Companies to stand dissolved without winding-up; all properties, rights and powers to vest in the Transferee Company; all liabilities and duties to transfer to the Transferee Company; all pending proceedings to continue by or against the Transferee Company; and employees in service immediately prior to the effective date to become employees of the Transferee Company on not less favourable terms, without break. The Tribunal therefore sanctioned the Scheme under the Companies Act, 2013, subject to compliance with statutory requirements. [Paras 25, 27]

Scheme sanctioned; transferors dissolved; assets, liabilities, proceedings and employees to transfer to the transferee in terms of the Scheme.

Statutory compliance and preservation of enforcement rights - Sanction under Section 230-232 of the Companies Act, 2013 - Conditions attached to sanction preserving statutory compliance and rights of authorities - HELD THAT: - The Tribunal expressly attached conditions to the sanction. Petitioners remain bound to comply with statutory requirements. The sanction does not bar action, in accordance with law, against concerned persons, directors or officials if any deficiency or violation of enactments is found. The order was clarified not to grant any exemption from payment of stamp duty, taxes or other charges and not to relieve parties from obtaining any permission or compliance required under any law. The Income Tax Department's consent was recorded subject to preservation of its power and jurisdiction to recover any pending dues or penalties. [Paras 19, 26]

Sanction granted subject to conditions preserving compliance obligations and enforcement rights of statutory authorities; no exemption from taxes or duties.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the Transferor Companies and the Transferee Company under Sections 230-232 of the Companies Act, 2013, directing dissolution of the transferors and transfer/vesting of assets, liabilities, proceedings and employees in favour of the transferee, while preserving statutory compliance obligations and the enforcement rights of authorities.

Scheme of Amalgamation - sanction of scheme - Appointed Date - dissolution without winding up - presumption of no objection by Income-Tax Department under Section 230(5) of the Companies Act, 2013 - accounting treatment in conformity with Accounting Standards under Section 133 of the Companies Act, 2013 - filing/registration with the Registrar of Companies - no exemption from payment of stamp duty or taxes

Scheme of Amalgamation - sanction of scheme - Appointed Date - Sanction of the Scheme of Amalgamation and its operative effect from the Appointed Date. - HELD THAT: - The Tribunal considered the joint petition under the Companies Act, 2013 and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the board approvals dated 09.04.2021, the auditors' certificate stating that the accounting treatment conforms with Accounting Standards and the statutory notices and publications. Having considered the reports and representations filed by the Regional Director and the Official Liquidator and noting the absence of objection from the Income-Tax Department, the Tribunal found no reservation to sanctioning the Scheme. The Scheme annexed to the petition is therefore approved and sanctioned and shall be binding on all shareholders and creditors with effect from the Appointed Date, namely 1st day of April, 2020. [Paras 8, 9, 11, 12, 13]

The Scheme of Amalgamation is sanctioned and shall operate with effect from the Appointed Date 1st April, 2020.

Dissolution without winding up - Effect of sanction on the corporate existence of the transferor companies. - HELD THAT: - While sanctioning the Scheme, the Tribunal clarified that the Petitioner Transferor Companies shall stand dissolved without undergoing the process of winding up, pursuant to the terms of the sanctioned Scheme. This dissolution follows the sanction and is an operative consequence of the amalgamation order. [Paras 14]

The transferor companies shall stand dissolved without undergoing winding up.

Presumption of no objection by Income-Tax Department under Section 230(5) of the Companies Act, 2013 - Status of Income-Tax Department's objections to the Scheme. - HELD THAT: - The Tribunal noted that the Income-Tax Department did not file any representation within thirty days of service of notice. Accordingly, and in terms of the statutory provision relied upon in the petition, it is presumed that the Income-Tax Department has no objection to the Scheme of Amalgamation. This presumption formed part of the basis for sanctioning the Scheme. [Paras 11]

No objection by the Income-Tax Department is presumed in respect of the Scheme.

Accounting treatment in conformity with Accounting Standards under Section 133 of the Companies Act, 2013 - Conformity of the Scheme's accounting treatment with applicable accounting standards. - HELD THAT: - The petition contained a statement, certified by the auditors of the petitioner companies, that the accounting treatment proposed by the Scheme is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. The Tribunal recorded this certification as part of the material placed before it and proceeded to sanction the Scheme on that basis. [Paras 4]

The accounting treatment proposed in the Scheme is recorded as being in conformity with applicable Accounting Standards.

Filing/registration with the Registrar of Companies - Requirement to file the certified copy of the sanction order with the Registrar of Companies and ancillary directions. - HELD THAT: - The Tribunal directed that within thirty days of receipt of the order the petitioner companies shall cause a certified copy of the order to be delivered to the Registrar of Companies, Uttar Pradesh for registration. The Tribunal further granted leave to file the Schedule of Assets of the Transferor Company in the prescribed form within three weeks from receipt of the order and directed regulatory authorities to act on an authenticated copy of the order. [Paras 15, 16, 17]

Petitioners must deliver a certified copy of the order to the Registrar of Companies within thirty days; leave granted to file the Schedule of Assets within three weeks; regulatory authorities to act on authenticated copies.

No exemption from payment of stamp duty or taxes - Clarification regarding liability for stamp duty, taxes and other statutory permissions. - HELD THAT: - In sanctioning the Scheme the Tribunal expressly clarified that the order does not grant any exemption from payment of stamp duty, taxes (including Income Tax, GST) or other charges nor does it obviate the need for any permission or compliance required under any other law. This clarification was made to ensure that the sanction does not be construed as relieving the parties from statutory obligations. [Paras 14]

The sanction does not exempt the parties from payment of stamp duty, taxes or compliance with other statutory requirements.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation of the three petitioner companies, effective from the Appointed Date 1st April, 2020; directed requisite filings and deliveries to the Registrar of Companies and regulatory authorities, recorded conformity of accounting treatment with applicable Accounting Standards, presumed no objection from the Income Tax Department, clarified that transferor companies shall be dissolved without winding up, and affirmed that the order does not exempt statutory duties such as stamp duty or taxes.

Operational debt - Pre-existing dispute - Dishonour of cheque as evidence of liability - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Moratorium under Section 14 - Appointment of Interim Resolution Professional

Operational debt - Pre-existing dispute - Dishonour of cheque as evidence of liability - Maintainability of the petition under Section 9 by the applicant for recovery of alleged unpaid GST and whether a pre-existing dispute bars admission. - HELD THAT: - The Tribunal found the assignment agreement silent on GST but recorded that the corporate debtor had issued a separate cheque for the GST amount, indicating acceptance of liability to pay GST additionally to the consideration. The corporate debtor's assertion of a pre-existing dispute was not supported by documentary evidence and was held to be a prima facie untenable defence. Applying the test articulated in Mobilox Innovative Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the adjudicating authority must reject spurious or illusory disputes at the admission stage; it need only determine whether a plausible contention requiring further investigation exists. On the facts, the issuance of the cheque for GST and lack of documentary proof of a genuine dispute led the Tribunal to conclude that no pre-existing dispute prevented admission of the Section 9 petition and that the claim qualified as an operational debt. [Paras 9, 10, 11, 12]

Section 9 petition admitted and claim of operational debt for unpaid GST allowed; plea of pre-existing dispute rejected.

Appointment of Interim Resolution Professional - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Moratorium under Section 14 - Incidental reliefs and directions consequent to admission: appointment of IRP, deposit by applicant and commencement of moratorium. - HELD THAT: - Having admitted the Section 9 petition, the Tribunal appointed an Interim Resolution Professional and directed the applicant to deposit a specified amount with the IRP to meet initial expenses, subject to adjustment by the Committee of Creditors and accounting by the IRP. The order also declared that the moratorium under Section 14(1) follows automatically upon admission, with the provisions of Sections 14(2) to 14(4) applicable during the moratorium. Administrative directions were given for communication of the order to the parties, IBBI and ROC, and for provision of the paper book to the IRP. [Paras 13, 14, 15, 16]

IRP appointed; applicant directed to deposit funds with IRP; moratorium under Section 14 to operate; consequential administrative directions issued.

Final Conclusion: The Section 9 petition was admitted: the Tribunal held that the claim for unpaid GST constituted an operational debt, the corporate debtor's plea of a pre-existing dispute was rejected as not bona fide, an Interim Resolution Professional was appointed and the statutory moratorium under Section 14 was declared, with directions regarding deposit for IRP expenses and communication of the order.

Approval of Resolution Plan under Section 30(6) of IBC, 2016 - Compliance with Section 30(2) and Regulations 36 to 39 of CIRP Regulations, 2016 - Eligibility under Section 29A of IBC, 2016 - Performance Bank Guarantee under Regulation 36B(4A) - Extinguishment of claims on approval of Resolution Plan - Ceasing of moratorium upon approval of Resolution Plan - Reliefs and concessions permissible by the Adjudicating Authority

Approval of Resolution Plan under Section 30(6) of IBC, 2016 - Compliance with Section 30(2) and Regulations 36 to 39 of CIRP Regulations, 2016 - Resolution Plan submitted by Shreenathji Rasayan Pvt. Ltd. approved by the Adjudicating Authority. - HELD THAT: - The Tribunal recorded that the Committee of Creditors, with one hundred percent voting rights in the 18th meeting, approved the Resolution Plan. The Resolution Professional placed on record the Resolution Plan and the documents/compliance certificates required under Section 30(2) read with Regulations 36 to 39 of the CIRP Regulations, 2016. On perusal of the material on record the Adjudicating Authority was satisfied that the Plan complied with the statutory requirements and contained provisions for effective implementation, including formation of monitoring and supervisory committees. Accordingly, the Tribunal approved the Resolution Plan and directed it to become effective from the date of the order.

Resolution Plan is approved and shall become effective from the date of this order.

Eligibility under Section 29A of IBC, 2016 - Performance Bank Guarantee under Regulation 36B(4A) - Eligibility of the Successful Resolution Applicant and provision of performance security held sufficient for approval. - HELD THAT: - The Resolution Applicant filed affidavits regarding its eligibility under Section 29A. The Resolution Applicant also furnished the performance bank guarantee as required under sub-regulation (4A) of Regulation 36B. The Tribunal noted that the Resolution Applicant was not a related party of the Corporate Debtor, had filed the requisite eligibility affidavit(s), and had provided the performance security. These compliances supported the onward approval of the Plan.

The Resolution Applicant's eligibility and provision of performance security are accepted for the purpose of approving the Resolution Plan.

Extinguishment of claims on approval of Resolution Plan - Ceasing of moratorium upon approval of Resolution Plan - Reliefs and concessions permissible by the Adjudicating Authority - Extent of reliefs and consequential effects of approval: extinguishment of claims, cessation of moratorium and other specified directions. - HELD THAT: - The Tribunal, while approving the Plan, specified the permissible reliefs and concessions that it was empowered to grant. It directed that upon approval and payment as per the Plan, liabilities of secured creditors, unsecured creditors and operational creditors shall stand extinguished; other claims including those of governmental/statutory authorities and contingent/unconfirmed dues shall also stand extinguished. The moratorium under Section 14 was directed to cease from the date of the order. The Tribunal further ordered that suspended managements' claims, pre-plan encumbrances (subject to procedural formalities), revocation of prior powers of attorney, reconstitution of the board in accordance with the Plan, deemed shareholder approvals for capital reduction and issuance of CCPS, and deemed grant of statutory approvals for implementation shall follow as set out in the order. For reliefs such as waiver of stamp duty or tax, the Tribunal directed the Resolution Applicant to approach the concerned authorities for decision. The Tribunal clarified that personal guarantees shall not be released by this order and that proceeds, if any, from pending applications shall be distributed among creditors after allowable costs.

Specified reliefs and concessions are granted to the extent set out in the order; moratorium ceases and claims stand extinguished in the manner directed.

Filing of records with the Insolvency and Bankruptcy Board of India - Obligation to forward records of CIRP and approved Plan to IBBI and to communicate the order to participants. - HELD THAT: - The Tribunal directed the Resolution Professional to forthwith send copies of the order to participants and the Resolution Applicant and to forward all records relating to conduct of the CIRP and the Resolution Plan to the Insolvency and Bankruptcy Board of India for entry in its database. This was treated as a compliance direction incidental to the approval of the Plan.

RP to communicate the order to concerned parties and to forward CIRP records and the approved Plan to IBBI.

Final Conclusion: The Tribunal allowed the application under Section 30(6) IBC, 2016, approved the Resolution Plan submitted by Shreenathji Rasayan Pvt. Ltd. (as approved by the CoC), directed its implementation with specified reliefs and concessions, ordered cessation of the moratorium from the date of the order, and issued consequential directions for communication, statutory formalities and filing of records with the IBBI.

Corporate Insolvency Resolution Process - default - operational debt - pre-existing dispute - moratorium - appointment of Interim Resolution Professional - Section 9 of the Insolvency and Bankruptcy Code - Section 14 of the Insolvency and Bankruptcy Code

Corporate Insolvency Resolution Process - default - operational debt - Section 9 of the Insolvency and Bankruptcy Code - Application under Section 9 of the IBC admitted and Corporate Debtor admitted into CIRP on finding of default in payment of operational debt. - HELD THAT: - The Tribunal found that the Operational Creditor supplied goods and issued invoice which remained partly unpaid. The Corporate Debtor, by its own pleadings, admitted payment of a part of the claimed sum and repeatedly stated that a balance sum remained payable, while failing to make payment in response to the demand notice under Section 8 of the Code. The defence that the goods were defective was raised belatedly and was unsupported by return of goods or contemporaneous complaint; there was also an email promising payment within days. On these materials the Tribunal concluded that no sustainable pre-existing dispute was shown which would defeat the claim of default. Consequently the Tribunal allowed the application under Section 9 and admitted the Corporate Debtor into the Corporate Insolvency Resolution Process. [Paras 8, 9, 11]

The petition under Section 9 is allowed and M/s. Superchem Coatings Pvt. Ltd. is admitted into CIRP.

Pre-existing dispute - dispute under Section 9 - Alleged pre-existing dispute concerning quality of goods held feeble and insufficient to bar initiation of CIRP. - HELD THAT: - The Tribunal examined the Corporate Debtor's contention that the furnace was defective and that a dispute existed prior to the demand notice. It observed that the alleged defect was raised many months after installation, the purportedly defective goods were not returned, and the Corporate Debtor had itself admitted payment of a major portion and readiness to pay a specified balance. The Tribunal concluded that the plea of pre-existing dispute lacked contemporaneous substantiation and could not prevail to defeat the claim under Section 9. [Paras 6, 8, 9, 10]

The plea of a pre-existing dispute is rejected and does not preclude admission of the Section 9 petition.

Moratorium - appointment of Interim Resolution Professional - Section 14 of the Insolvency and Bankruptcy Code - On admission, moratorium declared and an Interim Resolution Professional appointed with directions for conduct of CIRP and preservation of assets. - HELD THAT: - Following admission, the Tribunal declared the moratorium in terms of the Code to prohibit suits, transfer or enforcement actions against the Corporate Debtor and directed its continuance until completion of CIRP or earlier final orders. The Tribunal appointed the proposed insolvency professional as IRP to manage the Corporate Debtor as a going concern, make the public announcement, call for claims and perform statutory functions; it also directed that supply of goods/services shall not be interrupted during moratorium and required the Operational Creditor to deposit interim funds for conduct of the CIRP. These operational directions flowed from the admission order.

Moratorium imposed and Mr. Arun Chadha appointed as Interim Resolution Professional with ancillary directions for conduct of CIRP.

Final Conclusion: The Section 9 petition is allowed: the Tribunal held that default in payment of an operational debt was established, rejected the plea of a pre-existing dispute, admitted the Corporate Debtor into CIRP, declared the moratorium and appointed an Interim Resolution Professional with directions for carrying out the CIRP.

Early dissolution under Section 54 of the Insolvency and Bankruptcy Code, 2016 - Regulation 14 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - realizable assets insufficient to cover the cost of liquidation - affairs of the corporate debtor do not require further investigation - just and equitable dissolution

Early dissolution under Section 54 of the Insolvency and Bankruptcy Code, 2016 - realizable assets insufficient to cover the cost of liquidation - affairs of the corporate debtor do not require further investigation - Application for early dissolution of the corporate debtor under Section 54 of the Code read with Regulation 14 of the Liquidation Regulations was allowed. - HELD THAT: - The liquidator applied for early dissolution after preparing the Preliminary Report, stating that there were no realizable assets, no books, records or personnel of the corporate debtor, and that forensic audit and continuation of liquidation were impossible. The Tribunal noted that Regulation 14 permits early dissolution where the realizable properties are insufficient to cover liquidation costs and the affairs do not require further investigation. Finding that further CIRP costs are nil and that continuation would serve no purpose, the Tribunal concluded that the statutory tests for early dissolution were met and that it was just and equitable to dissolve the company.

The application for early dissolution was allowed and the corporate debtor was declared dissolved from the date of the order.

Just and equitable dissolution - directions following dissolution - Consequential directions on closure of proceedings and notification to statutory authorities were issued. - HELD THAT: - Having declared the company dissolved, the Tribunal directed the Registry to close the case file and consign it to records, and ordered that a copy of the order be forwarded to the concerned authorities and the Registrar of Companies for updating the master data and any further action required by law. These directions follow as necessary administrative steps consequent to dissolution.

Registry to close the file and notify the concerned authorities and the Registrar of Companies for updating records.

Final Conclusion: The Tribunal allowed the liquidator's application for early dissolution under Section 54 read with Regulation 14, finding no realizable assets and no need for further investigation, declared the corporate debtor dissolved with immediate effect and directed administrative steps to close the file and notify the Registrar of Companies.

Liquidation under section 33(1) of the Insolvency and Bankruptcy Code, 2016 - order for liquidation in terms of section 33(2) of the Code - appointment of liquidator and requirement of valid Authorisation for Assignment - cessation of powers of board and vesting of powers in the liquidator - cessation of earlier moratorium and commencement of fresh moratorium under section 33(5) - liquidator's duty to issue public notice and file order with Registrar of Companies - liquidator's obligations to submit preliminary and quarterly reports under the Liquidation Process Regulations - liquidator's remuneration and distribution in order of priority under section 53

Liquidation under section 33(1) of the Insolvency and Bankruptcy Code, 2016 - order for liquidation in terms of section 33(2) of the Code - Corporate Debtor ordered to be liquidated. - HELD THAT: - The Adjudicating Authority, on the application filed by the Resolution Professional on instructions of the Committee of Creditors, found that no resolution plan had been approved by the CoC and that CIRP timelines and extension chronology had been followed. Consequently, the Authority allowed the application and ordered liquidation of the Corporate Debtor in terms of section 33(1) read with section 33(2) of the Code. [Paras 9, 10]

The Corporate Debtor, Leel Electricals Limited, is ordered to be liquidated.

Appointment of liquidator and requirement of valid Authorisation for Assignment - Insolvency Professionals Regulations - regulation 7A - The Resolution Professional appointed as liquidator subject to possession of a valid Authorisation for Assignment (AFA). - HELD THAT: - The Authority appointed Mr. Ganga Ram Agarwal, the then Resolution Professional, as liquidator but made the appointment conditional upon his possessing a valid Authorisation for Assignment issued by his Insolvency Professional Agency in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2019. The Liquidator had given consent to act and appropriate authorisation was required to be in place. [Paras 9, 10]

Mr. Ganga Ram Agarwal is appointed as liquidator, subject to possession of the required AFA.

Cessation of powers of board and vesting of powers in the liquidator - cessation of earlier moratorium and commencement of fresh moratorium under section 33(5) - Effect of liquidation on corporate governance and moratorium. - HELD THAT: - On liquidation, all powers of the Board of Directors and key managerial personnel cease to exist and vest in the liquidator as provided under the Code. The earlier moratorium under section 14 ceases to have effect as a consequence of the order, and a fresh moratorium under section 33(5) commences from the date of the liquidation order. [Paras 10]

Board and KMP powers cease and vest in the liquidator; earlier moratorium ends and fresh moratorium under section 33(5) commences.

Liquidator's duty to issue public notice and file order with Registrar of Companies - Public notice and statutory filing directions in liquidation. - HELD THAT: - The Authority directed that public notice be issued in the same newspapers that carried earlier advertisements, stating that the Corporate Debtor is in liquidation. Further, in terms of the Code the liquidator shall file a copy of the liquidation order with the Registrar of Companies, Kanpur, and the Registry shall forward a copy to the Registrar, as required by the statute. [Paras 10]

Public notice to be issued and the liquidation order to be filed with the Registrar of Companies, Kanpur.

Liquidator's obligations to submit preliminary and quarterly reports under the Liquidation Process Regulations - liquidator's remuneration and distribution in order of priority under section 53 - Directions regarding liquidator's reporting obligations and remuneration/priority of distribution. - HELD THAT: - The liquidator was directed to initiate the liquidation process in accordance with the Code and the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016. He is to submit a Preliminary Report within seventy-five days from the liquidation commencement date as per Regulation 13 and to file quarterly progress reports before the Adjudicating Authority. The liquidator shall be paid fees in accordance with the Regulations (as amended) and in the order of priority prescribed under section 53 of the Code. [Paras 10]

Liquidator to initiate liquidation, file Preliminary Report within 75 days and quarterly reports; remuneration to be as per Regulations and distributed in order of priority under section 53.

Final Conclusion: Application IA No. 356/2021 is allowed; Leel Electricals Limited is ordered to be liquidated, Mr. Ganga Ram Agarwal is appointed liquidator subject to required authorisation, statutory steps (public notice, ROC filing), cessation and vesting of corporate powers, commencement of fresh moratorium, and the liquidator is directed to comply with reporting and remuneration provisions of the Code and Regulations.

Financial debt - financial creditor - disbursal against the consideration for time value of money - novation of contract - verification of claims by interim/resolution professional - scope of the resolution professional - verification not adjudication - constitution of Committee of Creditors requires admitted claims and voting shares

Financial debt - financial creditor - disbursal against the consideration for time value of money - novation of contract - The claim of BMW India Pvt. Ltd. qualifies as a financial debt and the applicant is a financial creditor entitled to submit Form C. - HELD THAT: - The Tribunal examined the definition of 'financial debt' and the requirement of 'disbursal' against the consideration for time value of money, following the Supreme Court authorities. It held that the applicant's claim, arising from the term loan agreement, falls within the ambit of financial debt as defined under Section 5(8) since it involves disbursal of money for the time value of money. The Tribunal rejected the Resolution Professional's conclusion that the term loan was novated by the settlement deed such that the original debt lost its character as a financial debt. The Tribunal found that the RP erred in treating the merger/settlement as determinative of the character of the claimed debt and that such a factual/contractual contention could not be used to deny the status of financial creditor at the claim verification stage. [Paras 11, 16, 17]

Applicant is a Financial Creditor; its Form C claim pertains to a financial debt and cannot be rejected on the basis stated by the Resolution Professional.

Verification of claims by interim/resolution professional - scope of the resolution professional - verification not adjudication - The Interim Resolution Professional exceeded his jurisdiction by adjudicating disputed facts and rejecting the claim instead of limiting himself to verification. - HELD THAT: - Relying on Regulations 13 and 14 of the CIRP Regulations and precedent, the Tribunal held that the IRP/RP's role is to verify the claims - establish truth, accuracy or validity - and to estimate amounts where imprecise. The RP is not an adjudicating authority to determine rights and liabilities on disputed factual issues. In this case the IRP went beyond verification, entered into an hour-long adjudicatory inquiry and rejected the claim without performing the limited verification duty required under the Regulations. [Paras 19, 20, 21]

The claim rejection by the IRP was improper because he acted as an adjudicator rather than performing claim verification.

Constitution of Committee of Creditors requires admitted claims and voting shares - verification of claims by interim/resolution professional - The Committee of Creditors formed and decisions taken without proper verification and admission of claims are vitiated and the CoC must be reconstituted to include the applicant. - HELD THAT: - The Tribunal observed that admission and verification of claims is a precondition for assigning voting shares to creditors; without verified and admitted claims the CoC cannot validly be constituted. Because the IRP failed to verify and admit claims properly and assigned voting shares and CoC decisions followed, the entire CIRP process was vitiated. Consequentially, with the liquidation petition having been rejected and a fresh IRP appointed, the Tribunal directed that the applicant's claim be placed before the IRP for verification and that the CoC be reconstituted to include the applicant. [Paras 22, 23]

Formation of the CoC was a nullity; IRP must reconstitute the CoC after verifying and admitting the applicant's claim.

Final Conclusion: The claim verification order of the IRP was set aside to the extent it rejected BMW India Pvt. Ltd.'s Form C; the applicant is declared a financial creditor and may place its claim before the (fresh) IRP for verification, admission and inclusion in a reconstituted Committee of Creditors; IA disposed accordingly.

Twin conditions for grant of bail under Section 45 of the Prevention of Money Laundering Act - constitutional invalidity of Section 45(1) insofar as it imposed twin conditions (Nikesh Tarachand Shah) - amendment to Section 45(1) does not revive provisions struck down as unconstitutional - application of Section 439 of the Code of Criminal Procedure for grant of bail - right to speedy trial under Article 21 of the Constitution

Twin conditions for grant of bail under Section 45 of the Prevention of Money Laundering Act - constitutional invalidity of Section 45(1) insofar as it imposed twin conditions (Nikesh Tarachand Shah) - amendment to Section 45(1) does not revive provisions struck down as unconstitutional - Validity and applicability of the twin pre-conditions in Section 45(1) of the PML Act after the Supreme Court's decision in Nikesh Tarachand Shah and subsequent legislative amendment. - HELD THAT: - The Court accepted the declaration in Nikesh Tarachand Shah that the twin conditions in Section 45(1) - requiring the Public Prosecutor be heard and the court to be satisfied of reasonable grounds for believing the accused is not guilty and not likely to offend while on bail - are violative of Articles 14 and 21 and are to be treated as void. The Court held that those twin conditions are inoperative from inception and cannot be resurrected merely by a subsequent amendment substituting the words 'under this Act' without either a validating retrospective statute or an express revival of the struck down conditions. The Court relied on consistent decisions of other High Courts which have rejected the contention that the 2018 amendment revived the twin conditions, and concluded that the amendment does not cure the constitutional defect or restore the twin pre-conditions. [Paras 12, 13, 14, 15, 16]

The twin conditions in Section 45(1) remain void and are not revived by the subsequent amendment; they have no legal force and the provision cannot be applied to deny bail.

Application of Section 439 of the Code of Criminal Procedure for grant of bail - right to speedy trial under Article 21 of the Constitution - Whether the petitioner should be released on bail under Section 439 Cr.P.C. in view of prolonged pre-trial detention and the pendency of trial proceedings. - HELD THAT: - The Court noted the petitioner's prolonged custody of about eight years without commencement of trial in the PMLA matter and emphasised the constitutional right to a speedy trial as an integral facet of Article 21. Taking into account that the twin conditions in Section 45(1) are inoperative, the Court proceeded to consider bail under Section 439 Cr.P.C. in the exercise of judicial discretion. Balancing the right to personal liberty and the interests of justice, and having regard to the petitioner's detention period, prior convictions and need to prevent tampering with evidence, the Court directed release on bail subject to stringent conditions to ensure attendance and non-interference with the prosecution case. [Paras 21, 23, 24, 25, 26]

Petitioner granted bail under Section 439 Cr.P.C. on terms and conditions to be imposed by the trial court, including personal attendance on each posting, abstention from similar activities, and no tampering with prosecution evidence; breach to entail cancellation of bail.

Final Conclusion: The High Court held that the twin conditions in Section 45(1) of the PMLA struck down by the Supreme Court remain void and are not revived by the subsequent amendment; accordingly the petitioner, who had been detained for an extended period, was directed to be released on bail under Section 439 Cr.P.C. subject to specified conditions and cancellation on breach.

CENVAT Credit admissibility - evidentiary value of third party records - clandestine manufacture and removal - corroborative evidence requirement - burden of proof on Revenue - principles of natural justice - cross-examination under section 9D - Rule 9 of Cenvat Credit Rules - invoice compliance under Rule 11 of Central Excise Rules

CENVAT Credit admissibility - Rule 9 of Cenvat Credit Rules - invoice compliance under Rule 11 of Central Excise Rules - burden of proof on Revenue - The denial and recovery of CENVAT credit from the appellant could not be sustained where the appellant produced duty-paid invoices, ledger entries, RG-23A/registers and other records showing receipt and accounting of inputs in compliance with the Cenvat Credit Rules. - HELD THAT: - The Tribunal found on the record that the appellant had produced purchase invoices, purchase registers, Cenvat credit ledger and bilties and had accounted for the inputs and availed credit in accordance with the requirements of Rule 9 of the Cenvat Credit Rules; there was no positive evidence to disprove physical receipt of inputs corresponding to the impugned invoices. Once the appellant established documentary compliance and physical entry of inputs in its records, the burden lay on the Revenue to prove that the transactions were merely paper transactions and that goods were not received. The Tribunal relied on earlier decisions holding that where an assessee acts with reasonable diligence and complies with invoicing and record-keeping formalities, denial of credit is impermissible absent contrary tangible evidence from the Revenue. The adjudicatory order confirming demand therefore could not be sustained on the existing record. [Paras 6, 9, 10]

Demand for recovery of CENVAT credit confirmed against the appellant set aside for lack of evidence falsifying the appellant's documents and compliance.

Evidentiary value of third party records - clandestine manufacture and removal - corroborative evidence requirement - burden of proof on Revenue - Findings of clandestine manufacture or fraudulent paper transactions cannot be based solely on third party documents or statements without independent and corroborative evidence. - HELD THAT: - The Tribunal emphasized established law that third party records or statements, by themselves, are insufficient to prove clandestine manufacture or clandestine removal unless supported by clinching corroborative material such as evidence of excess production, excess raw material consumption, dispatch particulars from regular transporters, realization of sale proceeds, finished product receipts from buyers, or abnormal power consumption. The Revenue's case relied principally on statements and documents recovered from third parties and lacked such independent corroboration. Consequently, the reliance on third party evidence to deny Cenvat credit was held to be legally inadequate. [Paras 7, 8, 11]

Findings based solely on third party evidence are unsustainable in absence of corroborative material; the confirmation of demand cannot stand on that basis.

Principles of natural justice - cross-examination under section 9D - Failure to permit cross examination of departmental witnesses, in breach of the statutory procedure under section 9D, vitiates the adjudicatory order. - HELD THAT: - The Tribunal observed that the Department's case rested on statements of witnesses who were not made available for cross examination by the appellants. Denial of the opportunity to cross examine those witnesses amounted to violation of principles of natural justice and the procedural mandate of section 9D of the Central Excise Act. The Tribunal noted authority holding that non compliance with section 9D (and section 33) nullifies an order confirming demand, and treated this procedural lapse as an independent ground for setting aside the impugned orders. [Paras 12, 13]

Adjudication is vitiated for non compliance with section 9D and denial of cross examination; the order confirming demand is liable to be quashed on this ground.

Final Conclusion: For the reasons stated - absence of positive evidence contradicting the appellant's records, insufficiency of third party evidence without corroboration, and violation of the right to cross examination under section 9D - the impugned order confirming recovery is set aside and the appeals are allowed.

Suo moto Cenvat Credit - proviso to Section 11A of the Central Excise Act, 1944 - extended period of limitation - fraud, collusion and wilful mis-statement - bona fide belief / bona fide availment - conflicting / divergent judicial views

Suo moto Cenvat Credit - proviso to Section 11A of the Central Excise Act, 1944 - extended period of limitation - fraud, collusion and wilful mis-statement - conflicting / divergent judicial views - bona fide belief / bona fide availment - Whether the proviso to Section 11A could be invoked to extend the period for issuance of show cause notice in respect of suo moto Cenvat credit availed by the appellant for October 2005 - HELD THAT: - The Tribunal found that availment of suo moto Cenvat credit for the period in question (October 2005) was a highly disputed question at the material time with divergent views being taken by different benches, a controversy later resolved by the Larger Bench in BDH Industries Ltd. Accordingly, the proviso to Section 11A - which permits initiation of proceedings beyond the normal limitation only upon occurrence of fraud, collusion, wilful mis-statement etc. - could not be validly invoked in the absence of evidence establishing such culpable conduct. The appellant had entertained a bona fide belief in entitlement to the credit; the department did not adduce specific evidence of fraud, collusion or wilful mis-statement. Reliance was placed on authority of the Hon'ble Delhi High Court in Commissioner of C. Ex. v. Wonderax Laboratories (2010) holding that where conflicting views existed on interpretation, the proviso cannot be invoked to justify extended limitation. Applying these principles, the Tribunal held that initiation of show cause proceedings after the normal period was not sustainable. [Paras 3, 4]

Extended period under the proviso to Section 11A cannot be invoked; impugned order dismissed below is set aside and the appeal is allowed on limitation grounds.

Final Conclusion: The appeal is allowed on the sole ground of limitation: in absence of evidence of fraud, collusion or wilful mis-statement and given that the entitlement to suo moto Cenvat credit was a genuinely disputed question at the material time, the proviso to Section 11A could not be invoked to sustain issuance of show cause notice for October 2005.

Compounding of offence - Section 138 Negotiable Instruments Act - Section 147 Negotiable Instruments Act - Revisional jurisdiction - Priority of compensatory over punitive remedy - Guidelines in Damodar S. Prabhu

Compounding of offence - Section 138 Negotiable Instruments Act - Section 147 Negotiable Instruments Act - Revisional jurisdiction - Priority of compensatory over punitive remedy - Compounding of the offence under Section 138 of the Negotiable Instruments Act by the High Court in revision after conviction, on the basis of compromise between the parties. - HELD THAT: - The Court held that Section 147 being an enabling and non-obstante provision permits compounding of offences under Section 138 even at later stages of litigation. Applying the ratio in Damodar S. Prabhu, the Court gave precedence to the compensatory aspect of the remedy over the punitive aspect where compromise has been effected between the parties. Exercising revisional jurisdiction for effectuating real and substantial justice, the Court compounded the offence under Section 138 by resort to Section 147 in view of the filed compromise and recorded that compounding entails acquittal of the petitioner. The order set aside the trial and appellate convictions and sentences in consequence of the compounding.

Offence under Section 138 is compounded under Section 147 on account of compromise; convictions and sentences set aside and petitioner acquitted.

Guidelines in Damodar S. Prabhu - Guidelines for costs in compounding - Delayed compounding - graded costs - Imposition of costs pursuant to delayed compounding in terms of the guidelines in Damodar S. Prabhu. - HELD THAT: - Relying on the graded-scheme of costs framed in Damodar S. Prabhu for discouraging undue delay in compounding cheque-bouncing offences, the Court observed that the petitioner had caused undue delay in seeking compounding. Applying those guidelines to the present stage of litigation, the Court ordered deposit of 15% of the cheque amount with the District Legal Services Authority, Bhilwara within one month as a condition for release (if not required in any other case). The Court directed that failure to deposit the cost would invite listing of the revision petition for appropriate orders.

Petitioner to deposit 15% of the cheque amount with the District Legal Services Authority within one month as condition for release; non-deposit to result in further listing.

Final Conclusion: Revision allowed; trial and appellate judgments confirming conviction under Section 138 are set aside and offence compounded under Section 147 in view of compromise; petitioner acquitted, subject to deposit of 15% of the cheque amount with the District Legal Services Authority within one month as per Damodar S. Prabhu guidelines.