TaxTMI 
TaxTMI 
2022 (3) TMI 927
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....arned counsel for the petitioner contends that the impugned notice was drawn in the form of a demand notice instead of a proper showcause notice. It is submitted that the said notice was issued in contravention of Clause 3, sub-clauses (a) and (b) of the RBI Master Circular. 3. Whereas the said sub-Clauses provide that the evidence of willful default should be examined by a committee, in the present case, there was no such independent application of mind by the Wilful Defaulter (WD) Committee for issuance of the show-cause notice. The said notice was a verbatim reproduction of a Transaction Audit Report (TAR) filed in connection with a Corporate Insolvency Resolution Proceeding (CIRP) under the Insolvency and Bankruptcy Code, 2016 (for sho....
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....al. 8. The report further mentioned that the authors thereof did not independently verify all matters discussed and consequently, have relied on certain explanations and representations provided by the management and the Resolution Professional of the company. Further, they had not received any books of accounts, records, supporting documents from the company. The audit was admittedly based on the limited information and explanations to the extent made available to the authors by the company, the Resolution Professional and from the sources indicated elsewhere in this report. 9. The said disclaimer further stipulated that the report had been prepared solely for the purpose of providing selected information on a confidential basis on which....
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....e present case, a show-cause has merely been issued and hence the challenge is premature. 15. As regards Gouri Prasad Goenka (supra), it is argued that the facts of the said case are distinguishable insofar as the allegations of the WD Committee had been challenged in the said case, whereas no such challenge has been preferred in the present writ petition. 16. It is further submitted that the TAR was merely quoted in the show-cause notice insofar as the chart appearing therein was concerned. However, the attending circumstances had also been considered, as reflected from the show-cause notice. 17. Upon hearing learned counsel for the parties, it is observed that in Maheswary Ispat Ltd. (supra), the writ petition had been preferred....
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....ill has the opportunity of making a representation before the Willful Defaulter Committee (First Committee) in reply to the said show-cause notice and, thereafter, to be heard/represented before the Review Committee. Such written representation, as per Jah Developers Private Limited (supra), can be a full representation on facts and law (if any). 21. Hence, it is reiterated that it would be premature for the writ court to adjudicate the issues involved, since such an adjudication would tantamount to prejudging the issues prior to the those being decided even at the first instance by the WD Committee. 22. Insofar as the veracity of the allegations made in the show-cause notice is concerned, although the documents relied on in the show-caus....
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....entation on all facets of the allegations of Willful Defaulter, including the question of validity of the show-cause notice. 25. As regards the argument of the petitioner as to whether the TAR was sufficient for the committee to issue a show-cause notice against the petitioner, it is evident from the materials-on-record that, although the show-cause notice quoted substantial portions of the said report, the opinion formed by the committee was only a prima facie and tentative conclusion for the purpose of giving an opportunity of representation to the petitioner on the allegations. The report (TAR), definitely, is one of the components of the entire body of circumstantial evidence relied on by the respondents and, as such, the writ petition....