TaxTMI Updates e-Newsletter
Dec 30,2021

Entitlement to bail - absence of evidence of benefit from alleged input tax credit - compoundable nature of offences under the C.G.S.T. Act - pandemic-related overcrowding of prisons as a bail consideration - conditions of bail to prevent tampering with evidence or influencing witnesses

Entitlement to bail - absence of evidence of benefit from alleged input tax credit - compoundable nature of offences under the C.G.S.T. Act - pandemic-related overcrowding of prisons as a bail consideration - conditions of bail to prevent tampering with evidence or influencing witnesses - Whether the applicant is entitled to be released on bail in Complaint No. 691 of 2021 under Section 132(1)(B)(I) of the C.G.S.T. Act. - HELD THAT: - The Court found that the prosecution record did not establish that the applicant derived any benefit from the alleged wrongful availment of input tax credit, and that the case against the applicant, at best, was that he facilitated wrongful availment. The adjudication of tax liability remained pending. The Court observed that all offences under the C.G.S.T. Act are compoundable, and noted the absence of any criminal antecedents of the applicant. The prevailing concerns about overcrowded prisons during the COVID-19 pandemic were held to be a relevant factor in considering bail. Balancing these factors and without expressing any view on merits, the Court concluded that the applicant should be released on bail, subject to conditions aimed at preventing tampering with evidence or influencing witnesses and ensuring attendance at trial.

Bail allowed; applicant released on furnishing personal bond and two sureties, subject to conditions prohibiting tampering with evidence, influencing witnesses, and ensuring appearance at trial.

Final Conclusion: The bail application is allowed and the applicant Varun Gupta is directed to be released on bail on furnishing the required bond and sureties, subject to specified conditions; prosecution may move for cancellation before this Court if any condition is breached.

Transitional credit - procedural nature of due date for claiming transitional credit - implementation of court directions - role of GSTN and Nodal Officer in operational compliance - alternative remedy of claiming credit in GSTR-3B

Implementation of court directions - transitional credit - Directions contained in Paragraph-43 of the Court's judgment dated 06.09.2019 (permitting filing of declarations in GST TRAN-1 and TRAN-2 to claim transitional credit and treating the due date under Rule 117 as procedural) must be given effect to and the respondents are obliged to take concrete steps for compliance. - HELD THAT: - The Court noted that the original writ-applicants were required to move these miscellaneous applications because respondents have not given effect to the directions recorded at Paragraph-43 of the earlier judgment. The affidavits filed by the Principal Commissioner (Central GST) and the Nodal Officer confirm communication difficulties and involvement of multiple authorities including GSTN, and pending proceedings before the Supreme Court in similar matters. The Court recorded the GSTN's position that it had performed technical analysis but lacks authority to accept TRAN-1 filings without approval of the competent authority. While the Court recognised operational constraints, it directed that meaningful compliance with Paragraph-43 is required and called for concrete action from the Nodal Officer and respondents to implement the earlier directions. [Paras 4, 5, 6, 10, 11]

Respondents are directed to take concrete and expeditious steps to implement Paragraph-43 of the judgment dated 06.09.2019 so that claimants can file TRAN-1/TRAN-2 and claim transitional credit; matter posted for further hearing on 12.01.2022 with expectation of a positive compliance statement.

Alternative remedy of claiming credit in GSTR-3B - role of GSTN and Nodal Officer in operational compliance - The Court invited consideration of an alternative, workable mechanism - permitting affected assessees to claim individual transitional credit via GSTR-3B filings - and directed the Nodal Officer/GSTN to explore this option. - HELD THAT: - Having regard to practical difficulties in opening the portal for TRAN-1 filings, the Court drew attention to a recent Calcutta High Court order which allowed assessees to claim unutilised transitional credit in GSTR-3B (with liberty for assessing officers to verify genuineness). The Court observed that such an option may be more workable than directing portal changes at district or assessing-officer level. The Court therefore asked the Nodal Officer (present in court) and GSTN to examine this alternative and explore viable solutions to ensure the substantive relief in Paragraph-43 is given effect without undue prejudice to assessees. [Paras 8, 9, 10]

Nodal Officer and GSTN to examine and explore the alternative of permitting transitional credit claims through GSTR-3B (as indicated by the Calcutta High Court) as a practicable means of implementing Paragraph-43; report progress at the next hearing.

Final Conclusion: The Court recorded non-compliance with its earlier directions and ordered respondents, the Nodal Officer and GSTN to take concrete steps to implement Paragraph-43 of the 06.09.2019 judgment; it also required exploration of an alternative mechanism (claim through GSTR-3B) and listed the matter for further hearing on 12.01.2022 with expectation of a positive compliance statement.

Claim for refund under Section 54(3) - refund of accumulated input tax credit - wrong credit due to consultant's mistake - technical glitch in GSTN/system preventing automated refund - rectification and credit to correct bank account - interest for delayed refund

Claim for refund under Section 54(3) - wrong credit due to consultant's mistake - technical glitch in GSTN/system preventing automated refund - rectification and credit to correct bank account - interest for delayed refund - Whether the respondent-authorities should be directed to credit the eligible refund to the petitioner's correct bank account notwithstanding the inadvertent credit to a third party account and system constraints - HELD THAT: - The court found that the petitioner was entitled to claim refund of accumulated ITC for the period August, 2018 to February, 2020 and that the payment order issued in RFD-05 was inadvertently credited to a third party account due to the petitioner's consultant entering incorrect bank details. The amount so credited was subsequently returned to the Government's account by DRC-03. The court accepted that a technical limitation in the GSTN/system prevented an automated re-credit to the petitioner's account and that the mistake originated with the consultant rather than with the petitioner. In view of these facts and in the absence of any effective administrative remedy having been implemented despite communications between officers, the court exercised its supervisory jurisdiction under Article 226 to direct the concerned officer to apply their mind and effect the refund directly into the petitioner's bank account already specified, without requiring any fresh manual application. The court imposed a timeline for completion and provided for interest at the rate specified in the order in the event of delay, to compensate for the period since the petitioner's second application. [Paras 6, 7, 8, 9, 10]

Respondents directed to credit the eligible refund into the petitioner's specified bank account within four weeks; no fresh manual application required; delay to attract interest at 12% from date of second application.

Final Conclusion: Writ petition allowed in part; respondents directed to ensure deposit of the eligible refund into the petitioner's bank account within four weeks and to pay interest at the rate directed in the order if the timeline is not met.

Presence of advocate during interrogation at visible but not audible distance - Recording of statement under Section 70 of the Central Goods and Services Tax Act, 2017 - Summons for examination during GST investigation - Investigative necessity to ascertain nexus or conspiracy in alleged bogus ITC transactions

Presence of advocate during interrogation at visible but not audible distance - Recording of statement under Section 70 of the Central Goods and Services Tax Act, 2017 - Whether the applicant's advocate may be permitted to be physically present during interrogation and recording of the applicant's statement called under Section 70 of the Act, and on what conditions. - HELD THAT: - The Court noted that the applicant had been summoned for questioning in an investigation into allegedly bogus input tax credit transactions and that a role was attributed to the applicant as an introducer to certain bank accounts. Having considered the investigatory need to record the applicant's explanation and the role ascribed to him, the Court exercised its supervisory jurisdiction to balance the authority's investigative interest with the applicant's right to consult counsel. The Court permitted the applicant's advocate to be present during interrogation but imposed the condition that the advocate must sit at a visible distance beyond hearing range (i.e., visible but not audible), and must be available whenever the applicant is called for interrogation. The order leaves the substance of the investigation and the authority's power to summon and record statements undisturbed, subject to compliance with the stated condition governing the advocate's presence.

Applicant's advocate allowed to be present during interrogation at a visible but not audible distance and must be prepared to attend whenever required; application disposed accordingly.

Final Conclusion: The writ application is disposed of by permitting the applicant's advocate to be present during interrogation and recording of the applicant's statement, subject to the condition that the advocate remain within visible but not audible distance and be available whenever the applicant is called for interrogation.

Amounts paid under protest - deposit pending adjudication - proceedings under Sections 73/74 of the CGST Act, 2017 - show cause notice to specify relied upon documents - return of seized documents - timelines for investigation, issuance of show cause and adjudication

Amounts paid under protest - deposit pending adjudication - proceedings under Sections 73/74 of the CGST Act, 2017 - The payments made by the petitioner are to be treated as amounts paid under protest and as deposits subject to final adjudication in proceedings under Sections 73/74 of the CGST Act, 2017. - HELD THAT: - The Court recorded that the sums were collected from the petitioner contemporaneously with issuance of summons, drawing of mahazar and seizure memo and that the petitioner submitted a representation thereafter. On the material presented, the Court declined to entertain the writ at this stage on merits and held that the payments are deposits pending proper adjudication. Accordingly, the amounts already paid shall be treated as paid "under protest" and will be subject to final appropriation and adjudication in the statutory proceedings under Sections 73/74 of the CGST Act, 2017. [Paras 5, 6]

Payments treated as amounts paid under protest and as deposits pending adjudication under Sections 73/74 of the CGST Act, 2017.

Show cause notice to specify relied upon documents - return of seized documents - timelines for investigation, issuance of show cause and adjudication - The respondent is directed to complete the investigation, issue a reasoned show cause notice specifying relied upon documents, return unnecessary originals and photocopies, and conclude adjudication within prescribed timelines. - HELD THAT: - The Court directed the competent officers to complete the investigation and to issue an appropriate show cause notice within six months from receipt of a copy of the order. The show cause notice must clearly spell out reasons and identify the Relied Upon Documents forming the basis of any proposed demand, and the respondent must return photocopies of seized documents (if not already returned) and originals which are not required for investigation. The petitioner is directed to file a reply within thirty days of the show cause notice. The respondent is directed to complete the adjudication and pass appropriate orders preferably within twelve months from receipt of the order. If no case is made out in the show cause proceedings, the respondent shall refund the amount in accordance with law. These directions remand the matter to the respondent for fresh consideration and adjudication in accordance with the stated procedure and timelines. [Paras 6, 7]

Respondent to investigate, issue reasoned show cause within six months, specify relied upon documents, return copied and unnecessary original documents, permit petitioner to reply within thirty days, and conclude adjudication within twelve months; refund if no case is made out.

Final Conclusion: Writ petition dismissed on merits at this stage; payments are to be treated as deposits paid under protest and the respondent directed to complete investigation and statutory adjudication under Sections 73/74 of the CGST Act, 2017 in accordance with the specified directions and timelines, with return of documents and refund if no demand is sustained.

Opportunity of hearing - personal hearing under Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - show cause notice - speaking order - furnishing relied upon documents - remittal for fresh consideration - corrigendum to show cause notice - timebound disposal

Opportunity of hearing - personal hearing under Section 75(4) of the Tamil Nadu Goods and Services Tax Act, 2017 - show cause notice - Impugned orders were passed without granting the personal hearing contemplated by Section 75(4) and such omission vitiated the orders. - HELD THAT: - The Court found that Section 75(4) requires that an opportunity of hearing be granted where an adverse decision is contemplated. The Show Cause Notices invited responses and fixed a date for personal hearing; the petitioner filed a reply belatedly on 16.08.2021. Although the petitioner did not expressly request personal hearing in that reply, once the authorities considered the reply and proposed to pass adverse orders, it was incumbent upon them to afford the petitioner a personal hearing before passing final orders. The failure to call the petitioner for personal hearing when an adverse order was being passed rendered the impugned orders unsustainable. [Paras 3, 5, 6]

Impugned orders quashed for failure to grant the personal hearing required under Section 75(4); matters remitted for fresh consideration.

Speaking order - furnishing relied upon documents - corrigendum to show cause notice - remittal for fresh consideration - timebound disposal - Court directed the respondents to furnish relied upon documents, afford hearing on the petitioner's representation, and pass a fresh speaking order within specified timelines; allowed issuance of a corrigendum and fixed a hearing date. - HELD THAT: - The Court directed that on remand the respondents must furnish copies of the documents relied upon in the Show Cause Notices before passing any order. The respondents were permitted, if desired, to issue a corrigendum to the Show Cause Notices preferably within fifteen days of receipt of this order; if a corrigendum is issued the petitioner is to file a reply within thirty days. Thereafter the respondents shall preferably pass a fresh speaking order in accordance with law within sixty days. The Court made the timelines to expedite proceedings and clarified that they do not operate to truncate any period of limitation. The petitioner was directed to appear for a first hearing on 01.03.2022. [Paras 7, 8, 9, 10]

Proceedings remitted; respondents to furnish relied documents, provide personal hearing on the petitioner's representation, and pass a fresh speaking order in accordance with the directions and timelines; corrigendum permitted; hearing fixed for 01.03.2022.

Final Conclusion: Writ petitions disposed. The impugned orders are quashed and the matters remitted to the respondents to furnish relied documents, give the petitioner a personal hearing on its representation, and thereafter pass a fresh speaking order in accordance with law (corrigendum permitted and timeframes indicated); no costs.

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - requirement to furnish returns and pay tax, interest and late fee before filing revocation application - verification of payment particulars and status of returns prior to revocation - Circular No.99/18/2019-GST clarifying first proviso to sub rule (1) of Rule 23

Revocation of cancellation of registration under Rule 23 of the CGST Rules, 2017 - requirement to furnish returns and pay tax, interest and late fee before filing revocation application - Circular No.99/18/2019-GST clarifying first proviso to sub rule (1) of Rule 23 - Whether the appellant had complied with the statutory pre conditions for seeking revocation of cancellation and whether the revocation ought to be considered. - HELD THAT: - The adjudicating authority had rejected the application for revocation on the ground that interest liability was not deposited (para 5). The appellant produced copies of GSTR 3B returns for the periods up to the date of cancellation and a Form DRC 03 evidencing payment of the stated interest liability (paras 6-7). Applying Rule 23(1) of the CGST Rules and the clarification in Circular No.99/18/2019 GST, the Commissioner (Appeals) found that the appellant had substantially complied with the proviso by filing the returns and making the payment relied upon by the adjudicating authority (para 10). On that basis the appeal was allowed to the extent that revocation may be considered by the proper officer. [Paras 5, 6, 7, 10]

The appellant has substantially complied with the conditions for filing an application for revocation and the appeal is allowed to the extent that revocation should be considered.

Verification of payment particulars and status of returns prior to revocation - authority to revoke or reject revocation application under Rule 23(2) - Whether the matter should be remitted to the proper officer for verification and final disposal of the revocation application. - HELD THAT: - Although the Commissioner (Appeals) found compliance with the statutory pre conditions, he directed that the proper officer must consider the revocation application after due verification of the payment particulars of tax, late fee, interest and the status of returns (para 10). The order thus does not itself revoke the registration but remits the matter for verification and final action by the proper officer in accordance with Rule 23(2)(a)/(b). [Paras 10, 11]

Matter remitted to the proper officer to verify payment particulars and status of returns and to decide the application for revocation accordingly.

Final Conclusion: The appeal is allowed insofar as the appellant is found to have substantially met the pre conditions for seeking revocation; the file is remitted to the proper officer to verify payment particulars and return status and to decide the revocation application in accordance with Rule 23 and the applicable circular.

Tax deduction at source on interest payable under an award of the Motor Accident Claims Tribunal - tax deduction at source under Section 194A(3)(ixa) of the Income Tax Act, 1961 - locus to challenge validity of a statutory provision - maintainability of a public interest litigation - delay as a ground for dismissal of writ petitions

Locus to challenge validity of a statutory provision - maintainability of a public interest litigation - Petition styled as public interest litigation challenging the validity of the tax provision was not maintainable because the petitioner was not personally aggrieved. - HELD THAT: - The petitioner sought to impugn the validity of the provision that mandates deduction of tax at source on interest payable under MACT awards. The Court observed that a challenge to such a provision must ordinarily be brought by a person who is personally aggrieved by the award or by the tax deduction; the petitioner is not personally affected by the MACT award. In these circumstances the Court declined to entertain a petition framed as one in public interest and accordingly refused to adjudicate the substantive question on the validity of the provision. [Paras 2]

Petition dismissed for want of locus and because a PIL styled challenge was not entertained; Court did not pronounce on the validity of the provision.

Delay as a ground for dismissal of writ petitions - The fresh writ petition challenging the CBDT decision was dismissed on the grounds of delay (and locus), with liberty to approach by way of public interest litigation if appropriate. - HELD THAT: - The High Court had earlier granted liberty to represent to the CBDT and a subsequent writ challenging the CBDT decision was dismissed on grounds including delay. This Court noted the procedural history and affirmed dismissal of the petition on those grounds, while leaving open the procedural avenue of a properly constituted public interest litigation by a person aggrieved. [Paras 1]

Writ petition dismissed on grounds of delay (and locus), with liberty to file a public interest litigation if maintainable.

Final Conclusion: The petition challenging deduction of tax at source on interest under MACT awards was dismissed for want of locus and on the ground of delay; the Court declined to pronounce on the legal validity of the provision and granted no relief, leaving procedural alternatives open as noted.

Faceless Assessment - Section 144B - procedure for faceless assessment - natural justice - right to personal hearing - quashing for non-compliance of mandatory procedure - remand for fresh assessment

Faceless Assessment - Section 144B - procedure for faceless assessment - quashing for non-compliance of mandatory procedure - Validity of the assessment order dated 17/8/2021 passed under Section 143(3) read with Section 144B of the Income Tax Act. - HELD THAT: - The Court found that the procedure prescribed by Section 144B for faceless assessments is mandatory and that neglect of the statutory procedural safeguards can render an assessment non est. Having regard to the material and the petitioner's contention that no opportunity for personal hearing was afforded in accordance with Section 144B, the Court relied on precedent treating the procedure as compulsory and concluded that the assessment dated 17/8/2021 could not be sustained for failure to comply with the mandated faceless-assessment procedure. In consequence, the assessment order was quashed and set aside and the matter remanded for compliance with Section 144B. [Paras 10, 11, 12, 13, 17]

Assessment order dated 17/8/2021 under Section 143(3) r/w Section 144B quashed and set aside; matter remanded for fresh completion in accordance with Section 144B.

Natural justice - right to personal hearing - video-conferencing personal hearing - remand for fresh assessment - Whether the petitioner must be afforded an opportunity of personal hearing (including by video-conferencing) and related procedural directions on remand. - HELD THAT: - The Court accepted the petitioner's contention that no adequate opportunity of personal hearing was granted as contemplated by Section 144B where a variation prejudicial to the assessee is proposed in the draft assessment order. The Court directed that, on remand, the respondent shall provide the petitioner an opportunity of personal hearing through video-conferencing, furnish at least 15 days' advance notice of the hearing, and thereafter complete the assessment proceedings within three months from receipt or upload of the order. These directions implement the mandatory procedural safeguards of Section 144B and ensure compliance with principles of natural justice. [Paras 16, 17]

Respondent to afford personal hearing by video-conferencing with 15 days' advance notice; assessment proceedings to be completed within three months on remand.

Final Conclusion: The assessment order dated 17/8/2021 under Section 143(3) r/w Section 144B is quashed and set aside. The matter is remanded to the assessing authority to complete the assessment in accordance with the procedure mandated by Section 144B, including provision of a personal hearing via video-conferencing after at least 15 days' notice, and to conclude proceedings within three months.

Exemption under Section 10(10C) - rectification under Section 154 - condonation of delay under Section 119(2)(b) - exercise of power to condone delay in exceptional facts - exclusion of interest on delayed refund

Condonation of delay under Section 119(2)(b) - exercise of power to condone delay in exceptional facts - exclusion of interest on delayed refund - Whether the application for condonation of delay to file a revised return should be allowed and the delayed application under Section 119(2)(b) be processed. - HELD THAT: - The assessment record showed that the Assessing Officer had noted the entitlement to exemption under Section 10(10C) and the petitioner had earlier written (18.03.2008) which could prima facie be treated as a rectification request that remained undecided. In the peculiar facts-undecided rectification request, the Assessing Officer's awareness of the exemption claim and the explanations given for the delay-the High Court held that it was a fit case to exercise the power to condone delay and permit consideration of the revised return on merits. The Court observed that the departmental circulars and limitation constraints did not preclude relief in these exceptional circumstances. While allowing condonation, the Court clarified that any refund, if ultimately found due, would not carry interest for the period excluded by the delay. The order expressly confines itself to the facts of the case and does not purport to lay down a general rule on condonation under Section 119(2)(b). [Paras 13, 17, 18, 19]

Impugned order dated 17.02.2017 set aside; delay condoned; application under Section 119(2)(b) allowed and the revised return to be processed on merits, with exclusion of interest on any delayed refund; order limited to the facts of the case.

Final Conclusion: Writ petition allowed; the order rejecting condonation of delay is quashed, delay is condoned and the revision/revised return shall be processed on merits, with the caveat that interest on any refund is excluded; the direction is given having regard to the peculiar facts and does not lay down a general principle on condonation under Section 119(2)(b).

Pre-decisional hearing under Section 263 of the Income Tax Act - powers under Section 263 to revise, enhance, modify or direct fresh assessment - violation of principles of natural justice - post-decisional hearing before the Assessing Officer cannot substitute for pre-decisional hearing by the revisional authority - requirement of joint meeting with Investigation Wing as per CBDT instructions

Pre-decisional hearing under Section 263 of the Income Tax Act - violation of principles of natural justice - post-decisional hearing before the Assessing Officer cannot substitute for pre-decisional hearing by the revisional authority - Whether the revisional order under Section 263 passed without affording the assessee a pre-decisional hearing is legally sustainable. - HELD THAT: - Section 263 empowers the Principal Commissioner to revise an Assessing Officer's order if it is found to be erroneous and prejudicial to the revenue, but before arriving at such a finding the Principal Commissioner must afford the assessee an opportunity of hearing. In the present case the Principal Commissioner passed the revisional order without granting personal hearing or adjournments, citing pandemic conditions. The court held that failure to afford the statutorily mandated pre-decisional hearing is a breach of the principles of natural justice and renders the revisional order legally fragile. A subsequent opportunity to be heard before the Assessing Officer during re-assessment cannot cure the defect because the obligation to hear arises specifically when the superior authority itself proposes to exercise revisional jurisdiction. The merits of the proposed revision do not obviate the requirement of hearing; the right to be heard must be respected irrespective of the perceived correctness or error of the impugned assessment. The court relied on the principle laid down by the Apex Court that non-compliance with the hearing requirement under Section 263 vitiates the revisional order. [Paras 6, 7, 9, 10, 11]

Impugned revisional order set aside for failure to afford pre-decisional hearing; matter remanded to the Principal Commissioner to afford hearing and pass fresh orders in accordance with law.

Final Conclusion: Writ petition allowed; impugned order under Section 263 set aside and the matter remanded to the Principal Commissioner of Income-Tax (Central), Visakhapatnam, to afford the assessee an opportunity of hearing and to pass fresh orders in accordance with law within three months; no opinion expressed on merits; no order as to costs.

Reopening of assessment - income escaping assessment - second proviso to section 147 - subject matter of appeal - assessment under section 143(3) - reassessment invalid where matter under appeal

Reopening of assessment - second proviso to section 147 - subject matter of appeal - reassessment invalid where matter under appeal - Validity of reopening assessment under Section 147 where the matters for which reassessment was initiated were the subject matter of an appeal before the CIT(A). - HELD THAT: - The Assessing Officer reopened the assessment for AY 2005-06 on the ground that income chargeable to tax had escaped assessment by reason of arithmetical errors and alleged over-assessment of business loss following the appellate order. The second proviso to Section 147 bars reassessment in respect of income "involving matters which are the subject matters of any appeal, reference or revision." The Tribunal and CIT(A) found that the reasons recorded for reopening were the very issues under appeal before the CIT(A), and therefore the proviso precluded reopening. The High Court, agreeing with those findings, rejected the Revenue's contention that a distinction can be drawn between the subject matter and mere numerical/quantum differences; the proviso does not permit reassessment where the substantive issues are pending on appeal. Consequently the notice under Section 148 and the reassessment order initiated on that basis were held invalid and the additions made in the reassessment were deleted. [Paras 4, 9]

Reopening under Section 147 was invalid as the issues were the subject matter of an appeal; reassessment order set aside and additions deleted.

Assessment under section 143(3) - effect of appellate order on reassessment - Whether the Tribunal was right in confirming deletion of additions (electricity duty and interest on government loan) in view of the jurisdictional High Court decision in the assessee's own case for earlier years. - HELD THAT: - The Court noted that this question was governed by the High Court's earlier decision in the assessee's own case (Kerala State Electricity Board v. Deputy Commissioner of Income Tax) which was against the Revenue. The Tribunal confirmed the CIT(A)'s deletion of additions relying on that precedent. The High Court recorded that question No.2 is covered by that earlier judgment and accordingly affirmed the deletion as against the Revenue. The pendency of any Special Leave Petition filed by the Department against the earlier decision did not alter the applicability of the precedent to the present assessment year as considered by the authorities below and by this Court. [Paras 4]

Question answered against the Revenue and in favour of the Assessee; additions deleted in conformity with the jurisdictional High Court decision.

Final Conclusion: Appeal dismissed. The reassessment under Section 147/148 for AY 2005-06 was invalid because the issues were the subject matter of an appeal, and the Tribunal's confirmation of deletion of specified additions - as governed by the High Court's earlier decision - is sustained.

Reopening of assessment - reason to believe - failure to disclose fully and truly all material facts - change of opinion - tangible material - proviso to Section 147 of the Income Tax Act, 1961

Reopening of assessment - reason to believe - failure to disclose fully and truly all material facts - tangible material - change of opinion - proviso to Section 147 of the Income Tax Act, 1961 - Validity of reopening assessment for AY 2005-06 by issuance of notice under Section 148 read with Section 147 of the Income Tax Act, 1961 - HELD THAT: - The High Court held that the Assessing Officer had 'reason to believe' that income chargeable to tax for AY 2005-06 had escaped assessment and that the reopening beyond four years was supported by tangible material. The reasons supplied referred to large exploration-related payments treated as covered by a lower rate under section 44BB whereas the Assessing Officer considered them to be fees for technical services/royalty outside that provision, and to discrepancies in the computation and treatment of amounts on assignment of participating interest, which had been netted off against depletion. The objections filed by the assessee were considered and rejected by the competent authority, which found the assessee's contentions incorrect and misleading and relied on the proviso to Section 147. The Court emphasised that it will not adjudicate disputed factual conclusions (or re-appreciate merits) that are to be examined in reassessment; where tangible material not taken into account in the original assessment exists and the statutory conditions for reopening are met, the authorities are entitled to reopen and the assessee must defend its case in reassessment proceedings. The Court accordingly found the reasons furnished to be sufficient to initiate reassessment and declined to quash the reopening on the ground of mere change of opinion. [Paras 9, 10, 11, 12, 13]

Reopening for AY 2005-06 under Section 148/147 upheld; objections rejected and writ dismissed, leaving assessment issues to be examined in reassessment proceedings.

Final Conclusion: Writ petition dismissed; reopening proceedings for Assessment Year 2005-06 sustained and the petitioner directed to participate in reassessment proceedings and defend its case before the tax authorities.

Compounding of offence under Section 279(2) of the Income-tax Act, 1961 - sanction to prosecute and prosecution under Section 279 / Section 276CC of the Income-tax Act, 1961 - reasoned consideration and opportunity of hearing before refusal to compound

Compounding of offence under Section 279(2) of the Income-tax Act, 1961 - prosecution under Section 276CC - reasoned order and opportunity to be heard - Whether the impugned order dated 03.05.2018 declining compounding should be set aside and the matter remitted for fresh consideration. - HELD THAT: - The High Court found that the impugned order consisted of a terse rejection stating that no plausible reasons were furnished for belated filing and that returns for the relevant year and later years were filed only in 2017 and 2018, but did not demonstrate any intelligible or reasoned appreciation of the explanations offered by the petitioner. The Court observed that compounding under Section 279(2) can be sought either before or after institution of prosecution and that the power to compound vests with the appropriate income-tax authority. Because the first respondent's order did not show that the petitioner's stated reasons (including family litigations and other exigencies) were considered in proper perspective, the Court considered it necessary that those reasons and any further inputs be heard and objectively considered. Consequently the Court set aside the impugned order and remitted the matter to the first respondent for reconsideration, directing that the petitioner be given an opportunity of hearing and that a reasoned order be passed within eight weeks from receipt of this order. [Paras 9, 13, 14, 15]

Impugned order dated 03.05.2018 set aside and matter remitted to the first respondent for fresh, reasoned consideration of the compounding plea with an opportunity of hearing; direction to pass order within eight weeks.

Final Conclusion: Writ petition allowed to the extent that the order refusing compounding is set aside and the matter is remitted for fresh, reasoned consideration with an opportunity of hearing; no order as to costs.

Classification of lease rentals as Profits and gains of business or profession versus Income from other sources - exploitation of commercial assets - intention to revive business under a sanctioned rehabilitation scheme - relevance of a BIFR approved rehabilitation scheme to fiscal characterisation of receipts - application of tests in Universal Plast, Vikram Cotton Mills and Shri Lakshmi Silk Mills - mixed question of law and fact

Classification of lease rentals as Profits and gains of business or profession versus Income from other sources - exploitation of commercial assets - intention to revive business under a sanctioned rehabilitation scheme - application of tests in Universal Plast, Vikram Cotton Mills and Shri Lakshmi Silk Mills - mixed question of law and fact - Whether the lease rentals received by the assessee from Apollo Tyres Ltd. for the period covered by the BIFR sanctioned scheme constitute business income or income from other sources. - HELD THAT: - The Court applied the established factual tests in Shri Lakshmi Silk Mills, Vikram Cotton Mills and Universal Plast to the admitted circumstances. The rehabilitation scheme approved by BIFR (lease of plant and machinery to ATL for eight years, obligation to utilise business assets, ATL's investment to modernise the plant, reimbursement of actuals, deployment of the assessee's workforce and ATR taking the production) was held to be integral to the assessee's continuing status as a business entity and to an intention to revive and operate the business under the statutory scheme. On that footing the assets remained business assets which were being exploited to earn income in furtherance of the assessee's business purpose; the receipt of lease rentals in the relevant period was therefore properly characterised as income from business. The Court emphasised that this conclusion is a mixed question of law and fact, to be determined year by year and on the particular scheme's operation; but on the facts before it (limited to the eight year scheme period) the Tribunal's factual findings were tenable and warranted, and the receipts were business income. The Court also noted that denying business character would frustrate the purpose of the BIFR scheme and prevent adjustment of accumulated losses and unabsorbed depreciation, which the scheme contemplated. [Paras 12, 13, 15, 16, 17]

Lease rentals from ATL for the period of the BIFR sanctioned rehabilitation scheme are business income; the Tribunal's findings are upheld.

Final Conclusion: The appeals by Revenue are dismissed; the Tribunal correctly held the lease rentals to be business income for the assessment years covered by the eight year BIFR scheme, and questions on re opening of assessment were rendered unnecessary by this conclusion.

Accommodation entries - addition under section 68 as unexplained cash credit - rate of brokerage/commission - remand for determination of rate of commission - adverse inference on failure to prove rate of commission - burden of proof - restriction on enhancement by the Tribunal - application of precedent to fix commission rate - merger of Tribunal directions with High Court order

Accommodation entries - addition under section 68 as unexplained cash credit - remand for determination of rate of commission - merger of Tribunal directions with High Court order - adverse inference on failure to prove rate of commission - Whether the Assessing Officer was justified in adding the entire deposits as unexplained cash credit under section 68 notwithstanding the Tribunal's remand and the High Court's directions confining the dispute to determination of the rate of commission. - HELD THAT: - The Tribunal had remitted the matter for fresh determination of the rate of commission after examining parties and directed that if the assessee failed to prove the rate, addition could be made but subject to the Tribunal's limitation on enhancement (restricted to the amount originally added). The High Court upheld that remand and directed the assessee to examine parties for ascertaining the exact rate of commission and held that failing proof, adverse inference could be drawn as to the rate. The Assessing Officer, however, added the entire deposits as unexplained cash credit. The Tribunal's directions, as affirmed by the High Court, confined the controversy to the rate of commission; they did not empower the Assessing Officer to treat the entire deposits as the assessee's unaccounted income in place of drawing adverse inference only regarding the rate. The Assessing Officer therefore misapplied the remand and effectively shifted the nature of the adjudication from determination of commission to blanket addition under section 68 without material to establish that the deposits represented the assessee's own unaccounted income. In that factual and legal context the CIT(A)'s conclusion that the AO was not justified in adding the entire deposits was upheld. [Paras 14, 15, 16, 17, 18]

The Assessing Officer was not justified in adding the entire deposits under section 68; the dispute was confined to determination of the rate of commission pursuant to the Tribunal's remand and the High Court's directions, and the addition could not be made in manner adopted by the AO.

Rate of brokerage/commission - application of precedent to fix commission rate - burden of proof - restriction on enhancement by the Tribunal - What is the appropriate rate of commission to be applied to the transactions determined to be accommodation entries and whether the CIT(A)'s estimate is to be sustained. - HELD THAT: - On remand the question of quantification remained the core issue. The CIT(A) examined material including earlier estimation (0.75%) and followed the Tribunal's decision in JRD Stockbrokers (which supported a 0.60% rate) in the second round, applying 0.60% to quantify the taxable commission. The assessee did not appeal against the CIT(A)'s order accepting 0.60%, and coordinate decisions indicated rates ranging from 0.50% to 0.60% in similar contexts. Given the nature of the assessee's business as an accommodation entry provider and the precedents considered, the Tribunal found the CIT(A)'s application of 0.60% reasonable and declined to disturb that quantification. [Paras 9, 19, 20, 21]

The CIT(A)'s estimate of commission at 0.60% is appropriate and is upheld; the Revenue's appeal on this point is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal. The Assessing Officer's addition of the entire deposits under section 68 was held unjustified because the matter was confined by remand and the High Court's directions to determination of the rate of commission; the CIT(A)'s quantification applying a 0.60% commission rate (following precedent) was sustained.

Reopening of assessment and reason to believe - Treatment of alleged bogus long term capital gains as undisclosed income under section 69 - Remand for fresh verification of factual contentions - Requirement of opportunity of hearing before adjudication

Reopening of assessment and reason to believe - Treatment of alleged bogus long term capital gains as undisclosed income under section 69 - Remand for fresh verification of factual contentions - Requirement of opportunity of hearing before adjudication - Whether the addition of Rs. 3,83,445/- treated as undisclosed income on account of alleged bogus long term capital gains was sustainable without considering the assessee's factual contentions denying the investments and the claim, and what remediable course should be adopted. - HELD THAT: - The Tribunal found that the Assessing Officer made the addition solely on the basis of information in possession and records from agencies, without properly addressing or verifying the assessee's consistent factual contentions and documentary evidence that (a) no long term capital gain was claimed in the return and (b) the impugned investments did not pertain to the assessee. The first appellate authority likewise upheld the addition without dealing with those contentions on the merits. Because the determinative factual assertions submitted by the assessee were not considered, the Tribunal held that the matter could not be decided on the existing record. The proper course is to remit the issue to the Assessing Officer for fresh examination: the AO is directed to verify the assessee's contentions and documents, consider the relevance of the information relied upon from other agencies, and adjudicate the addition in accordance with law after giving the assessee a due opportunity of hearing.

Issue restored to the Assessing Officer for verification of the assessee's factual contentions and fresh adjudication in accordance with law, after affording opportunity of hearing; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the addition for statistical purposes and remitted the issue of the disputed addition of Rs. 3,83,445/- for A.Y. 2009-10 to the Assessing Officer to verify the assessee's factual objections and re-adjudicate the matter in accordance with law after giving the assessee an opportunity of hearing.

Deemed rental income on unsold flats held as stock-in-trade - annual value and chargeability under Income from House Property - exception in charging provision where property is used for business - prospective amendment providing moratorium for stock-in-trade - protective addition and requirement of corresponding substantive assessment

Deemed rental income on unsold flats held as stock-in-trade - annual value and chargeability under Income from House Property - exception in charging provision where property is used for business - prospective amendment providing moratorium for stock-in-trade - Addition by way of deemed rental income on unsold flats treated as stock-in-trade - HELD THAT: - The Tribunal found that the assessee is a builder/developer who treats unsold flats as inventory and offers income on sale as business income. The charging provision for annual value is subject to an exception where the property is occupied for the purposes of a business whose profits are taxable, and therefore properties used as stock-in-trade fall outside chargeability under the head 'Income from house property'. The Finance Act amendment inserting sub section (5) in section 23 (prospectively effective from AY 2018-19) granting a moratorium for stock-in-trade reinforces that until the amendment no statutory provision taxed deemed rent on unsold stock of properties held as stock-in-trade. Applying these principles and following precedents of Tribunals and High Courts favouring builders (including reliance on Neha Builders and co ordinate Tribunal decisions), the Tribunal held that no addition on account of notional rent could be made for the years under consideration and that the statutory moratorium excludes such additions from AY 2018-19 as well. [Paras 5]

Addition on account of deemed rental income on unsold flats held as stock-in-trade is deleted for A.Y.2016-17, A.Y.2017-18 and A.Y.2018-19.

Protective addition and requirement of corresponding substantive assessment - Validity of protective addition under section 69A where no substantive addition was made elsewhere - HELD THAT: - The Tribunal noted that the assessee consistently explained that the excess cash found belonged to another group company and that the assessing officer made only a protective addition in the assessee's hands. Relying on precedents which require a substantive assessment elsewhere to justify a protective addition, and on the coordinate bench decision reproduced in the order, the Tribunal held that a protective addition cannot survive in the absence of any substantive addition made in the hands of the other person. Therefore, the protective addition made under section 69A in respect of the excess cash was unsustainable and was deleted. [Paras 9]

Protective addition of Rs.13,86,600 under section 69A is struck down and deleted for A.Y.2018-19.

Chargeability of interest consequential to assessment - interest under section 234B (consequential) - HELD THAT: - The question of interest under section 234B arises only as a consequence of the primary adjustments; the Tribunal recorded that this ground is consequential in nature and did not undertake substantive adjudication in the present proceedings. [Paras 6]

Left as consequential; not adjudicated on merits at this stage.

Initiation of penalty proceedings premature - Validity of initiation of penalty proceedings under sections 271(1)(c) and 271AAB - HELD THAT: - The Tribunal observed that initiation of penalty proceedings under section 271(1)(c) (A.Y.2016-17 and A.Y.2018-19) and under section 271AAB (A.Y.2018-19) are premature for adjudication in the present appeals and therefore did not decide these matters on merits. [Paras 7, 10, 11]

Penalty matters recorded as premature and not adjudicated at this stage.

Final Conclusion: The Tribunal allowed the appeals: deletions upheld of notional rental additions on unsold flats treated as stock in trade for A.Y.2016 17 to A.Y.2018 19, the protective addition under section 69A for A.Y.2018 19 was deleted for want of any substantive addition elsewhere, while issues of consequential interest and initiation of penalty proceedings were left unadjudicated as premature.

Admissibility of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules - treatment of share premium on issue of shares as capital receipt and not taxable as income - application of section 68 - identity, genuineness and creditworthiness of share subscribers - scope of section 56(1) 'income from other sources' and requirement of 'character of income' - limitations on exercise of revisional jurisdiction under section 263 - no substitution of view and no fishing enquiries - evidentiary weight of CBI charge sheets and statements pending criminal adjudication

Admissibility of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules - evidentiary weight of CBI charge sheets and statements pending criminal adjudication - Application by Revenue to admit voluminous CBI charge sheets, witness statements and related documents as additional evidence was rejected - HELD THAT: - The Tribunal examined the scope of Rule 29 and the categories of documents filed by Revenue (CBI charge sheets, statements recorded u/s 161/164 CrPC, departmental investigation notes, government correspondence and related materials). It held that Rule 29 empowers the Tribunal to require additional evidence only where such evidence is necessary to enable it to pronounce a satisfactory judgment, for any other substantial cause, or where the Assessing Officer decided the case without giving the assessee sufficient opportunity to adduce evidence. The Revenue failed to demonstrate that the admitted material was necessary for the Tribunal to pronounce judgment or that the Assessing Officer had no opportunity to consider such material. Further, the Tribunal recorded that CBI charge sheets and related statements were allegations pending criminal adjudication and, without independent corroborative inquiry by the revenue authorities, lacked requisite evidentiary value for income tax adjudication. In these circumstances the Rule 29 application was refused and the paper books were not admitted.

Application under Rule 29 rejected; additional evidence not admitted.

Treatment of share premium on issue of shares as capital receipt and not taxable as income - scope of section 56(1) 'income from other sources' and requirement of 'character of income' - treatment of share premium prior to amendments (pre AY 2013 14) - Addition of share premium (large sum) as income from other sources was deleted - HELD THAT: - The Tribunal found that the AO and CIT(A) accepted that what was received were share capital and share premium and that the premium component was supported by contemporaneous valuation reports and subsequent market performance (circulation/readership) which lent credibility to projections used in DCF valuations. The Tribunal applied the legal principle that section 56(1) taxes receipts having the character of 'income' and that capital receipts (including share capital and share premium) are not chargeable to tax unless specific charging provisions apply. The amendments and deeming provisions (e.g. proviso to section 68 and section 56(2)(viib)) relied upon by Revenue were prospective w.e.f. A.Y.2013 14 and therefore not applicable to A.Y.2008 09. In absence of any finding that the receipts were not share consideration, and given binding and persuasive precedents treating share premium as capital receipt, the addition treated as 'income from other sources' was held unsustainable and deleted.

Addition of share premium as income from other sources (challenged amount) deleted.

Application of section 68 - identity, genuineness and creditworthiness of share subscribers - burden shifting under section 68 - Addition under section 68 in respect of specified eight investors was deleted - HELD THAT: - The Tribunal reviewed the material produced by the assessee (PAN, board resolutions, MOA/AOA, share application forms, bank statements, confirmations and audited financials) and noted that the AO had accepted receipt of share capital at par as genuine. For the eight disputed investors the assessee had discharged the primary onus under section 68 by proving identity, genuineness of transactions and creditworthiness to the extent of investment. The AO's reliance on investigation reports and uncorroborated statements was held inadequate to displace the documentary evidence; mere inability of departmental investigators to trace an address or adverse third party statements did not automatically render the credits unexplained. On these facts and following authoritative precedent, the Tribunal held that Revenue failed to discharge the onus to rebut the assessee's explanation and deleted the additions under section 68.

Addition of Rs. 15,00,00,000 under section 68 deleted.

Limitations on exercise of revisional jurisdiction under section 263 - no substitution of view and no fishing enquiries - doctrine of merger where appellate order has decided the issue - Revision order under section 263 directing reassessment in respect of investments from holding company (Caramel Asia) quashed - HELD THAT: - The Tribunal held that the CIT's exercise of section 263 power was impermissible. The AO had examined and accepted receipt of share capital at par (including from the holding company) and the issue raised by the CIT had been available to and considered by the CIT(A); the doctrine of merger and Explanation 1(c) to section 263 precluded revisiting issues already considered and decided by the CIT(A). Further, the CIT's direction amounted to remitting matters for fresh inquiry (fishing/roving) without holding that the original order was ex facie erroneous; the Tribunal emphasised that section 263 cannot be used to substitute the CIT's view for that of the AO where the AO took a possible view after considering material. In addition, related assessments in the hands of the holding company had been the subject of separate proceedings. On these grounds the revision was quashed.

Section 263 revision order set aside; direction to re examine investments from Caramel Asia quashed.

Final Conclusion: The Tribunal refused admission of the Revenue's additional evidence under Rule 29 and, on merits for A.Y. 2008 09, deleted (i) the addition of share premium treated as 'income from other sources' and (ii) the additions under section 68 in respect of specified investors; it also quashed the CIT's revision order under section 263 directing re examination of investments from the holding company. The assessee's appeals are allowed.

Classification of rental receipts as Income from Business and Profession versus Income from House Property - intention and course of conduct of an individual assessee as determinative of characterisation of income - allowability of bad debts/business loss where interest earlier offered as business income - deductibility of expenditure incurred on cancellation of property/bookings as loss in relation to property income

Classification of rental receipts as Income from Business and Profession versus Income from House Property - intention and course of conduct of an individual assessee as determinative of characterisation of income - Whether the rental income offered by the assessee in the revised return ought to be treated as income from business and profession instead of income from house property - HELD THAT: - The Tribunal examined the assessee's conduct over years and the documentary record. Although the assessee relied on Chennai Properties & Investment Ltd. (a corporate decision), the Tribunal held that that authority is distinguishable because corporate intention is ascertained from objects in the memorandum of association, whereas an individual's intention is to be inferred from actions. The assessee had consistently declared the receipts as income from house property in earlier years and only in the revised return sought to reclassify them as business income. On that factual matrix the Tribunal found it was not appropriate to apply the corporate precedent to the individual's case and declined to uphold the reclassification pleaded by the assessee. [Paras 12, 13]

Appeal on this point dismissed; rental income remains chargeable as income from house property.

Allowability of bad debts/business loss where interest earlier offered as business income - deduction under the general business loss/head of business expenditure where debtor has become irrecoverable - Whether the loss claimed on loans advanced to M/s. Rusam Developers Pvt. Ltd. (comprising principal and interest) is allowable as business loss/bad debt - HELD THAT: - The Tribunal found that the assessee had advanced loans to the company, had recorded the transactions in books and had previously offered interest from those loans as business income which the department had accepted. The borrower company had gone into liquidation and recovery was not possible. Given that the income from the money lending transactions had been treated as business income in earlier years and the source accepted by revenue, the Tribunal concluded that the consequent loss/bad debts are allowable as expenditure under the head of business (directing the Assessing Officer to allow the claimed bad debts/business loss). [Paras 14]

Ground allowed; Assessing Officer directed to allow the bad debts/business loss claimed.

Deductibility of expenditure incurred on cancellation of property/bookings as loss in relation to property income - Whether stamp duty and registration charges incurred on purchase and subsequent cancellation of a flat (where purchase was for leasing) are allowable as loss - HELD THAT: - The Tribunal noted the flat was purchased for the purpose of letting and was recorded in the assessee's books. On cancellation the purchase price was returned by the builder but stamp duty and registration charges were not recovered. As the property was acquired for earning property income and the unsuccessful transaction resulted in expenditure that could not be recouped, the Tribunal held that the unrecovered stamp duty and registration charges are claimable as loss relating to the property income and directed the Assessing Officer to allow the claim. [Paras 15]

Disallowance is set aside; loss on account of stamp duty and registration charges is to be allowed.

Final Conclusion: Appeal partly allowed: reclassification of rental income as business income rejected; bad debts/business loss arising from irrecoverable loans to Rusam Developers Pvt. Ltd. allowed; loss on unrecovered stamp duty and registration charges on cancelled property allowed; Assessing Officer directed to give effect accordingly.

Unexplained investment in stock - Addition under section 69 based on seized/software data - Reliance on point of sale/software records versus audited books of account - Requirement to point out defects in books before making additions - Weight of software vendor clarification in valuing inventory - Concurrent appellate precedent and its persuasive effect

Unexplained investment in stock - Addition under section 69 based on seized/software data - Reliance on point of sale/software records versus audited books of account - Deletion of the addition of Rs. 33,18,94,091/- made as unexplained investment in closing stock for A.Y. 2016-17 was correct. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the Assessing Officer's addition was founded on a presumption that the 'sale value' column in the seized Jilaba software represented the assessee's purchase cost. The authorities below and the assessee produced materials, including a letter from the Jilaba vendor, explaining that the relevant column is an approximate sale value used for tagging and inventory management and is not calculated on purchase cost; discounts, daily metal rate changes and other adjustments mean it cannot be treated as stock purchase value. The AO did not point to any quantitative discrepancy in stock or any defect in the audited books maintained in Tally ERP; books were not rejected and had been audited. In those circumstances, and having regard to the coordinate ITAT findings in the assessee's own earlier years confirming deletion of comparable additions, the Tribunal found no basis to substitute the books results with cherry picked figures from the seized software and agreed that the AO's estimate amounted to an unjustified addition. The CIT(A)'s reasoning (paras 6-6.13 of his order) and reliance on earlier appellate orders were held to be sound and sufficient to sustain deletion. [Paras 6, 11, 12]

The deletion of the addition made as unexplained investment in closing stock for A.Y. 2016-17 is upheld.

Requirement to point out defects in books before making additions - Weight of software vendor clarification in valuing inventory - Concurrent appellate precedent and its persuasive effect - The AO could not rely solely on the seized Jilaba data to make additions without identifying defects in the books of account and in the face of vendor clarification and prior appellate deletions. - HELD THAT: - The Tribunal agreed with the CIT(A) that the AO had relied upon prior working and the Jilaba data but failed to demonstrate any material defects in the audited books maintained in Tally ERP or to point to unrecorded sales/purchases or quantitative mismatches in stock. The assessee had furnished a vendor letter explaining limitations of the Jilaba 'sale value' column; earlier appellate orders (including the coordinate ITAT) had deleted substantially similar additions for prior years after considering the same evidentiary matrix. Given the absence of rejection of books under the relevant provision and lack of cogent contrary evidence from the Department, the Tribunal found the AO's approach unsustainable and endorsed the view that software data, in such circumstances, cannot supplant accepted audited book results. [Paras 6, 10, 11]

AO's reliance on Jilaba data without pointing out defects in books and despite vendor clarification and prior appellate deletions is untenable; findings of CIT(A) on this aspect are affirmed.

Final Conclusion: The Revenue's appeal is dismissed; the order of the CIT(A) deleting the addition in respect of unexplained investment in closing stock for A.Y. 2016-17 is upheld.

Incriminating material requirement for assessments following search under Section 153A - Prohibition on estimation by AO in absence of incriminating material; inadmissibility of extrapolation and multiplication - Verifiability and corroboration of seized documents before relying upon them for additions - Primacy of primary books and statutory vouchers over loose/seized papers - Duty of AO to make independent inquiry before making additions

Incriminating material requirement for assessments following search under Section 153A - Prohibition on estimation by AO in absence of incriminating material; inadmissibility of extrapolation and multiplication - Verifiability and corroboration of seized documents before relying upon them for additions - Primacy of primary books and statutory vouchers over loose/seized papers - Duty of AO to make independent inquiry before making additions - Whether the addition made by the AO on the basis of the seized printout B/4, without independent verification and in the absence of any other incriminating material, was sustainable. - HELD THAT: - The Tribunal examined the materials seized and the records produced by the assessee, noting that primary voucher books and ledger accounts (B/1 and B/2) and the assessee's licensed money lending registers showed interest charged at rates of 12%-15% per annum. The AO relied solely on a seized printout (B/4) purportedly showing higher interest, applied an assumed rate (36%) by extrapolation to average debtors and made additions without any independent inquiry to verify B/4 against primary records or other incriminating material. The Tribunal followed the principle that assessments completed under the search regime should be founded on incriminating material discovered in the search (books/documents or undisclosed income/property discovered) and that estimation by extrapolation/multiplication is impermissible where no such material exists. The Tribunal also emphasised that a seized loose paper must be cross checked and corroborated before being used to infer suppression, and that the AO failed to discharge the burden of independent enquiry to establish the authenticity and applicability of B/4. Reliance was placed on the consistent line of authority disallowing estimation in the absence of incriminating material. Applying these principles to the facts, the Tribunal concluded that the additions based solely on B/4 were unsustainable. [Paras 9, 10, 11, 12, 13]

The addition made by the AO based on the seized document B/4 without independent verification or other incriminating material was deleted and the CIT(A)'s order deleting the addition is upheld.

Final Conclusion: The Revenue's appeals are dismissed; the Tribunal upholds the deletion of the additions for the assessment years in question on the ground that the AO's estimation based solely on an unverified seized document, without corroborative incriminating material or independent enquiry, was unsustainable.

Right to claim refund accrues on subsequent sale - time-bar limitation for refund of Special Additional Duty (SAD) - interpretation of the expression "so far as may be" in the context of applicability of Customs Act provisions to the Customs Tariff Act - applicability of the limitation under Section 27 of the Customs Act to SAD refund claims

Right to claim refund accrues on subsequent sale - time-bar limitation for refund of Special Additional Duty (SAD) - applicability of the limitation under Section 27 of the Customs Act to SAD refund claims - Whether the refund claim of Special Additional Duty (SAD) could be rejected as time barred where the claim was filed after one year from payment of SAD, or whether the right to claim refund accrues only upon subsequent sale so that limitation does not commence from date of payment. - HELD THAT: - The Tribunal accepted the determinative findings of the Hon'ble Delhi High Court in Sony India that the exemption/refund under the Notification is conditional upon subsequent sale and therefore the right to claim refund of SAD accrues only when that sale occurs. The expression "so far as may be" applying provisions of the Customs Act to duties under the Customs Tariff Act must be given a limited reading; procedural mechanisms may apply "to the extent possible" but a pre-existing statutory limitation cannot be rigidly imposed where the substantive right to refund has not yet arisen. The Tribunal noted that the Bombay High Court's contrary view did not distinguish those specific findings of the Delhi High Court concerning accrual of the right on sale and the limited operation of Section 27. Because the appellant's right to claim arose on sale after import, the one year limitation calculated from date of payment (as introduced subsequently by circular and amending notification) could not be applied to bar the claim which accrued later. Following Sony India, the Tribunal held the appellant entitled to refund and consequential relief. [Paras 10, 11]

The appellant's refund claim for SAD is maintainable notwithstanding filing beyond one year from date of payment; appeal allowed and impugned order set aside with consequential benefits.

Final Conclusion: The Tribunal, following the Delhi High Court in Sony India, held that the right to claim refund of SAD accrues only on subsequent sale and therefore the one year limitation counted from date of payment cannot be applied to defeat such claims; the appeal was allowed and the order rejecting the refund as time barred was set aside.

Interest on pre-deposit/refund - Section 129EE - interest on pre-deposit till refund - Section 27A - interest on delayed refund after three months - Sandvik Asia Ltd.

Interest on pre-deposit/refund - Section 129EE - interest on pre-deposit till refund - Sandvik Asia Ltd. - Entitlement to interest on excess customs duty deposited under protest from the date of deposit until the date of refund. - HELD THAT: - The Commissioner (Appeals) applied the provision relating to interest after delayed refund contained in Section 27A, treating the date of filing the refund claim as the relevant starting point. The Tribunal found this approach incorrect because an amount deposited provisionally under protest while the matter was sub judice partakes the character of a pre-deposit. In view of Section 129EE, read with the ruling of the Supreme Court in Sandvik Asia Ltd. , interest is payable on such pre-deposit from the date of deposit until the date of grant of refund. Applying that principle, the appellant is entitled to interest on the excess duty from the date of deposit up to the date the refund is granted at the prescribed rate. The Tribunal accordingly allowed the appeal, set aside the impugned approach of limiting interest to three months after the refund claim, and directed payment of interest at the prescribed rate. [Paras 8]

Appeal allowed; appellant entitled to interest on the excess duty from date of deposit till refund @6% p.a. (prescribed rate) and directed payment within 45 days.

Final Conclusion: The Tribunal allowed the appeal, holding that duty provisionally deposited under protest is a pre-deposit attracting interest under Section 129EE (as applied in Sandvik Asia Ltd. ) from the date of deposit until refund; interest to be paid at the prescribed rate and disbursed within 45 days.

Dispensation of meetings of shareholders and creditors - Consent of shareholders by way of affidavits - NIL secured and unsecured creditors verified by auditor's certificate - Service of notice under Section 230(5) of the Companies Act, 2013 - Filing of affidavit proving service and compliance - Disposal of Company Application (CAA)

Dispensation of meetings of shareholders and creditors - Consent of shareholders by way of affidavits - NIL secured and unsecured creditors verified by auditor's certificate - Meetings of the classes of equity shareholders and of secured and unsecured creditors for the proposed Scheme of Amalgamation were dispensed with. - HELD THAT: - The Tribunal examined the applicants' record that all equity shareholders of the three applicant companies had given consent to the Scheme by affidavits annexed to the application, and that there were no secured or unsecured creditors or other liability holders as verified by the auditors' certificates. On that basis, the Tribunal concluded that convening meetings of those classes was unnecessary and dispensed with the meetings accordingly. [Paras 6]

Meetings of all equity shareholders dispensed; meetings of secured and unsecured creditors dispensed because no creditors or liability holders exist.

Service of notice under Section 230(5) of the Companies Act, 2013 - Statutory notice of the Scheme and accompanying documents to specified regulatory and governmental authorities was directed to be served. - HELD THAT: - The Tribunal directed that notice under Section 230(5) together with the Scheme and statement be served on the Regional Director (Eastern Region), Registrar of Companies (West Bengal), Official Liquidator, High Court Calcutta, Income Tax Department having jurisdiction and the Reserve Bank of India by hand delivery, post or email within three weeks. The notice must inform those authorities that any representation should be filed before the Tribunal within 30 days of receipt and a copy sent to the applicants' authorised representative. If no representation is received within that period, it will be presumed the authorities have no representation to make. [Paras 7]

Applicants to serve statutory notice and accompanying documents on the specified authorities in the manner and within the time directed; representation period fixed at 30 days.

Filing of affidavit proving service and compliance - Applicants were required to file an affidavit proving service of notices and compliance with the Tribunal's directions. - HELD THAT: - The Tribunal ordered the applicants to file an affidavit evidencing service of the notices and compliance with the directions contained in the order to enable further proceedings on the Scheme to proceed on record. [Paras 8]

Applicants to file an affidavit proving service and compliance as directed.

Disposal of Company Application (CAA) - The Company Application (CAA) No. 189/KB/2021 was disposed of subject to the directions given. - HELD THAT: - After dispensing with the meetings where appropriate and directing service of statutory notices and subsequent compliance steps, the Tribunal disposed of the instant company application while allowing the applicants to obtain certified copies on compliance with formalities. [Paras 9, 10]

CAA No. 189/KB/2021 disposed of in accordance with the orders and directions contained in the judgment.

Final Conclusion: The Tribunal allowed the first-stage application under Sections 230 and 232 of the Companies Act, 2013: meetings of equity shareholders and of creditors were dispensed with where consent or absence of creditors was established; statutory notice and accompanying documents must be served on specified authorities within the time directed; applicants to file proof of service; and CAA No. 189/KB/2021 was disposed of subject to these directions.

Application of precedent - disposal of petition in light of prior decision - no further relief required

Application of precedent - disposal of petition in light of prior decision - Petition disposed of by applying and following the decision rendered in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. - HELD THAT: - The Court held that, in view of the decision dated 24.03.2021 in Civil Appeal No. 3395 of 2020 (Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors.), no further adjudication was required in the present petition. The operative effect of the earlier ruling governs the resolution of the matters raised by the petitioner, and accordingly the petition is disposed of on that basis.

Petition disposed of in light of the cited earlier decision; pending applications, if any, are disposed of.

Final Conclusion: The petition is disposed of by applying the decision in Jaypee Kensington Boulevard Apartments Welfare Association & Ors. v. NBCC (India) Ltd. & Ors. dated 24.03.2021; all pending applications are similarly disposed of.

Extended period of limitation / time-bar of show cause notice - Cenvat credit on input services - Penalty under Rule 15 of the Cenvat Credit Rules read with Section 78(1) of the Act

Extended period of limitation / time-bar of show cause notice - Cenvat credit on input services - Whether the extended period of limitation for issuance of the show cause notice was invokable in respect of the cenvat credit taken for the periods 2012-13 and 2013-14. - HELD THAT: - The Tribunal found as a fact that the appellant had maintained proper books of account and filed statutory returns (ST-3) regularly, and there was no allegation in the show cause notice of suppression of facts or non-maintenance of records. The Commissioner (Appeals) had relied on conjecture that detection during audit justified extended limitation. The Tribunal held that, in the absence of any clear finding of suppression, mis-statement or filing of incomplete returns leaving relevant columns blank, the extended period of limitation could not be invoked. The finding that substantial part of the proposed demand had been dropped and significant amounts had been reversed prior to issuance of the show cause notice supported the conclusion that there was no justification for invoking extended limitation in the circumstances of the case.

Extended period of limitation / time-bar not invokable; show cause notice could not be sustained on the ground of extended limitation for 2012-13 and 2013-14.

Penalty under Rule 15 of the Cenvat Credit Rules read with Section 78(1) of the Act - Cenvat credit on input services - Whether the penalty imposed in respect of the disallowed cenvat credit should be sustained. - HELD THAT: - Given the Tribunal's conclusion that extended limitation could not be invoked and that substantial proposed demand had already been dropped while a large amount had been reversed prior to issuance of the show cause notice, the Tribunal found that the imposition of penalty lacked justification. The Commissioner (Appeals) had recorded reversals and allowed certain credits (for jetty/plant usage) while disallowing others; however, because the foundational premise for invoking extended limitation and penal liability was absent, the penalty could not stand. The Tribunal therefore set aside the penalty imposed under the relevant provisions.

Penalty imposed was set aside.

Final Conclusion: The appeal is allowed: the Tribunal held that the extended period of limitation could not be invoked for the periods 2012-13 and 2013-14, set aside the penalty imposed, and granted the appellant consequential benefits in accordance with law.

Availability of efficacious statutory remedy and prohibition on interference by writ jurisdiction - Condonation and extension of limitation for filing appeal due to Covid-19 indulgence - Right to personal hearing and requirement of reasoned order by Appellate Authority

Availability of efficacious statutory remedy and prohibition on interference by writ jurisdiction - Whether the High Court should exercise writ jurisdiction to interfere with the assessment orders or require the petitioner to first avail the statutory appellate remedy. - HELD THAT: - The Court held that an efficacious statutory remedy of appeal is available to the petitioner and therefore the High Court should not, in the first instance, entertain the writ petition. The Court observed that the petitioner had filed revised returns and had not paid tax shown therein, and these foundational facts distinguish the present case from earlier decisions relied upon by the petitioner. In view of these circumstances and the availability of the appellate forum capable of adjudicating the contentions, the Court declined to interfere with the assessment orders and directed the petitioner to invoke the statutory appellate remedy. [Paras 10, 11]

Writ petition not entertained; petitioner directed to first avail the statutory appeal remedy before the Appellate Authority.

Condonation and extension of limitation for filing appeal due to Covid-19 indulgence - Whether indulgence should be granted in respect of the limitation for filing the statutory appeal in light of Covid 19 extensions. - HELD THAT: - Relying on the Supreme Court's extensions of limitation during the Covid 19 pandemic, the Court granted indulgence with respect to the time for filing the appeal. Noting that the petitioner had approached the High Court within 60 days from the last extension date, the Court permitted the petitioner to file the appeal within three weeks from the date of the order and indicated that the Appellate Authority has the power to condone delay under the statute. This direction was given without expressing any opinion on the merits of the assessment. [Paras 12]

Liberty granted to file the appeal within three weeks; appellate authority to consider condonation and hear the appeal on merits.

Right to personal hearing and requirement of reasoned order by Appellate Authority - Whether the petitioner is entitled to opportunity of personal hearing and a reasoned decision by the Appellate Authority. - HELD THAT: - The Court directed that upon filing of the appeal, the Appellate Authority shall consider all contentions raised by the petitioner, both on facts and in law, give the petitioner an opportunity of personal hearing and pass a reasoned order in accordance with law. The direction requires the appellate forum to re-examine the matters argued before the High Court and to decide the appeal on merits after affording the statutory hearing. [Paras 12]

Appellate Authority to give personal hearing and pass a reasoned order considering all contentions raised by the petitioner.

Final Conclusion: Writ petition disposed of without adjudication on merits; petitioner granted liberty to file appeal against the impugned assessment orders within three weeks, with the Appellate Authority to consider condonation (if necessary), afford personal hearing and pass a reasoned order on merits.