TMI Tax Updates - e-Newsletter
March 7, 2025

Case Laws in this Newsletter:

GST Income Tax Benami Property Customs Corporate Laws Securities / SEBI PMLA Service Tax Central Excise Indian Laws

TMI Short Notes

1. Understanding Insurance Premium Deductions: Clause 30 of the Income Tax Bill, 2025 vs. Section 36 of Income-tax Act, 1961

  Bill:

2. Employee welfare expenses: Clause 29 of the Income Tax Bill, 2025 vs. Sections 36 and 40A of the Income Tax Act, 1961

  Bill:

3. Business Income Deductions - Employee Welfare Contributions: A Legal Perspective on Clause 29 and Section 40A

  Bill:

4. Site Restoration Fund: Clause 49 and Schedule X of the Income Tax Bill, 2025 vs. Section 33ABA of the Income Tax Act, 1961

  Bill:

5. Tax Incentives for Agricultural and Skill Development Projects: Clause 47 of Income Tax Bill, 2025 vs. Sections 35CCC and 35CCD

  Bill:

6. Incentivizing Investment in Specified Businesses: Clause 46 vs. Section 35AD

  Bill:

7. Amortization of Preliminary Expenses in the Income Tax Bill, 2025: Clause 44 vs. Section 35D

  Bill:

8. Clause 52 of the Income Tax Bill, 2025 Explained: Amortisation of expenses and Tax Implications for Telecommunications and Corporate Restructuring

  Bill:

9. Tax Incentives for Scientific Research: Clause 45 of the Income Tax Bill, 2025 vs. Section 35

  Bill:

10. Clause 33 vs. Section 32: A Comparative Analysis of Depreciation Provisions

  Bill:

11. Business income deductions against Rent, repairs etc.: Clause 28 of the Income Tax Bill, 2025 Compared with Sections 30 and 31 of the Income-tax Act, 1961

  Bill:

12. Business Income: Comparative Analysis of Clause 26 of the Income Tax Bill, 2025 and Section 28 of the Income-tax Act, 1961

  Bill:

Articles

1. Why Startups Should Use an Online Trademark Registration Service?

   By: Ishita Ramani

2. BORROWER OF A PROJECT LOAN – A CONSUMER?

   By: DR.MARIAPPAN GOVINDARAJAN

3. Guatemala - India Trade Relations: An Overview

   By: YAGAY andSUN

4. Risks Associated with International Trade

   By: YAGAY andSUN

5. Role of Logistics and Documentation in International Trade.

   By: YAGAY andSUN

6. FTAs (Free Trade Agreements) - Unlocking Global Opportunities

   By: YAGAY andSUN

7. Applications and Usage of Artificial Intelligence (AI) in India's EXIM Trade

   By: YAGAY andSUN

8. Export of Leather: Inspection Measures and Regulations

   By: YAGAY andSUN

News

1. TMC to raise voter ID duplication issue in Parliament's Budget Session: Derek O'Brien

2. Haryana Assembly's budget session to begin from Mar 7

3. Arunachal: Guv urges MLAs to drive state’s growth, highlights budget vision

4. WCD minister highlights digital innovations, nutrition goals in post-budget webinar

5. Modi govt trying to make India surveillance state through new I-T law: Congress

6. International conference focuses on role of PLI Schemes, India’s green transition and inclusive sustainability in shaping India’s industrial policy

7. Union Finance Minister and MoS, Finance launch the New Credit Assessment Model for MSMEs as announced in Union Budget 2024-25

8. Verdict upholding ED powers: SC to decide on its reconsideration in April

9. Mizoram sees remarkable growth, structural transformation over decade: Economic Survey

10. South Korea signs security agreement with Poland to boost economic, defence cooperation

11. Brewers' body urges Karnataka govt to apply rules uniformly, flags frequent tax hike

12. China sticks to an economic growth target of 'around 5%' despite a looming trade war with US

13. PM Modi meets Japanese business delegation, vows to deepen economic collaboration

Circulars / Instructions / Orders

Customs

1. 07/2025 - dated 5-3-2025

Regulation of import of pet dog and pet cat under the Live- stock Importation Act, 1898: Facilitation for final Quarantine Clearance

Highlights / Catch Notes

GST

• Bank's Challenge to GST Show Cause Notice Rejected as Premature Since Administrative Remedies Not Yet Exhausted

  Case-Laws - HC : HC dismissed petition challenging SCN issued by Commissioner CGST. Court found SCN contained detailed justification for invoking IGST Act 2017, CGST Act 2017, and J&K GST Act 2017 against petitioner-Bank. Court held Bank retains right to respond to SCN, raise jurisdictional objections, and demonstrate transactions fall outside scope of relevant GST legislation. Court determined premature intervention unnecessary as adequate administrative remedy exists through response to SCN. Bank can present defense regarding transaction's taxability under respective GST laws during response proceedings. Petition dismissed allowing statutory process to proceed.
  Visit to Get Source

  ---

• Provisional Attachment Under GST Section 83 Automatically Lapses After One Year, Cannot Be Extended Beyond Time Limit

  Case-Laws - HC : Provisional attachment order under Section 83 of WBGST/CGST Act 2017 challenged before HC. Court determined that provisional attachment automatically lapses after one year from date of order under Section 83(1). The attachment order dated April 13, 2023, expired through efflux of time and cannot be enforced against petitioner. However, authorities retain right to proceed against petitioner based on independent cause of action or enforce demand through other legal means. Court's ruling specifically addresses temporal limitation of provisional attachment while preserving revenue authorities' broader enforcement powers under applicable law. Petition disposed of accordingly.
  Visit to Get Source

  ---

• GST Demand Order Quashed: Adjudicating Authority Failed to Consider Binding Departmental Circulars 200/12/2023-GST and 236/30/2024-GST

  Case-Laws - HC : HC set aside GST demand order dated 21.11.2024 for non-consideration of binding departmental circulars (No.200/12/2023-GST and No.236/30/2024-GST). Matter remanded to adjudicating authority for fresh consideration specifically accounting for these clarificatory circulars. Petitioner granted leave to file additional application demonstrating applicability of circular benefits to their case. The court determined that appellate remedy would be futile since the fundamental issue was non-consideration of binding administrative guidelines. Authority directed to pass fresh order after evaluating circular benefits as claimed by petitioner.
  Visit to Get Source

  ---

• Petition Dismissed: GST Department Witness Summons Upheld for Evidence Gathering Despite Records Access Challenge

  Case-Laws - HC : HC dismissed petition challenging lower court's order allowing respondent to summon GST Department witness. Court held that since GST records were not in respondent's possession, they could rightfully request witness testimony, subject to Rs. 3,000/- costs. The principle of plaintiff's burden of proof was upheld, affirming their discretion to determine necessary witnesses and documentation. While irrelevant evidence would be disregarded, the Court maintained that plaintiffs cannot be denied their right to present their case as they deem appropriate during the evidentiary stage. The ruling emphasizes procedural fairness in evidence gathering despite potential relevancy concerns.
  Visit to Get Source

  ---

• Government Notices Under Section 168A of CGST Act Challenged Over Limitation Period and Jurisdictional Issues

  Case-Laws - HC : HC reviewed challenges to Garnishee Notice, Show Cause Notice, and notifications issued under Section 168A of CGST Act, 2017. Multiple similar petitions were pending across jurisdictions, with Gauhati HC striking down the contested notifications. While Telangana HC ruled favorably based on SC's limitation extension order, that decision faces appeal in SC. Given the complex jurisdictional landscape and pending matters before SC, HC determined petitioner established grounds for both admission and interim relief. The substantive questions regarding validity of notifications and limitation period remain subject to final determination by SC. Petition disposed of with interim protection granted.
  Visit to Get Source

  ---

• CGST Summons Valid Despite Ongoing State GST Case: Search Operations Not Barred Under Sections 73-74

  Case-Laws - HC : Central GST authorities issued summons following a search operation, despite ongoing State GST proceedings. The HC held that statutory prohibition against parallel proceedings under Sections 73 and 74 specifically pertains to assessment proceedings, not investigative actions. Search-based summons are distinct from assessment proceedings as they aim to gather information potentially unavailable during original assessment. The Court distinguished between assessment proceedings and investigative measures, noting that Section 6(2)(b) applies to interrelated events in a particular chain. Since the search occurred after previous assessments, it constitutes a separate proceeding. The summons were deemed valid as investigative tools that may lead to future proceedings. Petition challenging the validity of CGST summons dismissed.
  Visit to Get Source

  ---

• Healthcare Provider's Diamond Plan Service Tax Exemption Denied Due to Insufficient Documentation Under Notification 12/2017-Central Tax

  Case-Laws - AAAR : AAAR rejected appellant's appeal concerning service tax exemption for a 20-year "Diamond Plan" healthcare service package under Sr. No. 74 of Notification No. 12/2017-Central Tax. The appellant provided insufficient documentation, submitting only a basic plan outline and single bill of supply No. 3/2021-22 dated 12.8.2021. The authority determined these documents were inadequate to properly evaluate the exemption claim for the lump-sum healthcare services agreement. Without comprehensive documentation demonstrating the nature and scope of services, the appeal was dismissed on procedural grounds.
  Visit to Get Source

  ---

• Treatment Plant's Water Classified as Demineralized Under GST, Losing Exemption Status Despite Lab Certificate Challenge

  Case-Laws - AAAR : AAAR upheld that treated water from Common Effluent Treatment Plant (CETP) constitutes demineralized water, making it ineligible for GST exemption under Notification No. 02/2017-Integrated Tax (Rate). The appellant's laboratory certificate was rejected as it was introduced at appellate stage, lacked accreditation details, and failed to specify sample collection methodology. While circulars exempt drinking water for public purposes (if unsealed) and treated sewage water under heading 2201, the subject water was classified differently. The AAAR maintained that the appellant failed to effectively challenge the original ruling's classification of the treated water as demineralized, thereby sustaining GST liability. Appeal dismissed.
  Visit to Get Source

  ---

• Lumpsum EPC Contract Including High Seas Sale Goods Must Be Taxed As Single Transaction Under GST Section 15

  Case-Laws - AAAR : AAAR ruled that in a lumpsum turnkey EPC contract between Company A and Company B, the contract cannot be legally divided into separate parts despite high seas sale (HSS) of goods. The contract was deemed indivisible as the appellant was contractually obligated to provide both goods and services. While HSS transactions are neither supply of goods nor services under Schedule III of CGST Act, the value of imported goods sold on HSS basis must be included in the transaction value for GST calculation under Section 15. The AAAR rejected appellant's reliance on BSNL and Gannon Dunkerley precedents, affirming that the contract's integrated nature requires inclusion of HSS goods value in overall GST computation. Appeal dismissed.
  Visit to Get Source

  ---

Income Tax

• Income Tax Reassessment Under Section 148 Quashed As Search Seizures Were Already Known During Original Assessment

  Case-Laws - HC : HC invalidated reassessment proceedings initiated under Section 148 of Income Tax Act for AY 2014-15. The discovery of cash and gold during search operations on 03.09.2013 from assessee and related parties did not constitute valid "reason to believe" for reopening assessment. AO was already aware of search proceedings and seizures when passing original assessment order under Section 143(3). No failure to disclose material facts was established by revenue. Mere recovery of amounts cannot justify reopening without establishing direct nexus between undisclosed income and seized assets. Court emphasized need for tangible material and live link between information and escaped income for valid reopening. Original assessment could have been revised under Section 263 if found erroneous and prejudicial to revenue interests.
  Visit to Get Source

  ---

• Depreciation on Goodwill Post-Demerger Allowed as Fifth Proviso to Section 32 Only Applies in Succession Year

  Case-Laws - HC : HC allowed the appeal regarding depreciation on goodwill post-demerger for AYs 2015-16 and 2016-17. The court determined that the 5th proviso to Sec 32 only applies in the year of succession regarding aggregate deduction by predecessor and successor, not subsequent years. The Tribunal erroneously based its judgment solely on the Fifth Proviso's applicability, which was irrelevant for the assessment years in question. The scheme became effective in FY 2013-14, making the proviso applicable only for AY 2014-15. Matter remitted to Tribunal for fresh examination, considering the proviso's temporal scope and aggregate deduction requirement. Original Tribunal order dated 03 February 2023 set aside.
  Visit to Get Source

  ---

• Faceless Assessment Order Nullified for Skipping Mandatory Show Cause Notice Under Section 144B Before Making Adverse Changes

  Case-Laws - HC : HC quashed the faceless assessment order due to procedural violations under Section 144B. After issuing notices under Section 148 and 143(2), the Assessing Officer proceeded directly to finalize assessment without following mandatory show cause procedure when variations prejudicial to assessee were proposed. This constituted a breach of natural justice principles and statutory requirements under the Faceless Assessment Scheme. The absence of proper show cause notice before making adverse modifications rendered the assessment void. Court set aside the assessment order, demand notice under Section 156, and penalty notice under Section 271(1)(C) read with Section 274, remanding the matter back to the AO for fresh consideration following proper procedure.
  Visit to Get Source

  ---

• Income Tax Reopening Invalid: AO's Failure to Verify Accommodation Entries and Denial of Cross-Examination Rights Under Section 147

  Case-Laws - AT : ITAT held reopening assessment under section 147 invalid as AO failed to specify detailed transaction particulars regarding alleged accommodation entries. AO's reliance solely on departmental information without independent verification constituted borrowed satisfaction. The reasons provided were vague and ambiguous. On merits, regarding section 68 additions, assessee demonstrated loan repayments with supporting evidence. AO neither conducted independent verification nor issued notices under section 133(6), merely relying on statements recorded during search under section 132(4). AO's denial of cross-examination rights further weakened the case. CIT(A)'s order directing deletion of additions upheld, ruling in assessee's favor.
  Visit to Get Source

  ---

• Asset Revaluation and Capital Account Credit Without Transfer Not Taxable Under Section 68; Brokerage Expenses Allowed

  Case-Laws - AT : ITAT dismissed Revenue's appeal regarding additions under Section 68 and brokerage expense disallowance. The Tribunal held that revaluation of assets by AOP (DD Associates) and subsequent credit to assessee's capital account did not trigger taxable income, as no actual transfer or sale occurred. The revaluation merely recognized present value in books without creating tax liability. The share adjustment from 46.50% to 5% was legitimate accounting entry, not a tax avoidance scheme. Regarding brokerage expenses, ITAT upheld CIT(A)'s deletion of disallowance since payments were made via cheque with TDS deduction and specific purpose was established. Both grounds decided in assessee's favor.
  Visit to Get Source

  ---

• Interest Disallowance Under Section 36(1)(iii) Rejected As No Proof Of Fund Diversion For Non-Business Purpose

  Case-Laws - AT : ITAT ruled in favor of assessee regarding interest disallowance under Section 36(1)(iii). AO's contention of interest-free advances from interest-bearing funds was rejected as AO failed to establish diversion of funds for non-business purposes. Tribunal found substantial interest-free funds available with assessee from sister concerns, exceeding the disputed amount. Regarding stock valuation, ITAT upheld CIT(A)'s partial deletion of addition, maintaining Rs. 50,63,472 for consistency in FIFO method while deleting Rs. 3,95,62,067. On handling/spillage/wastage losses, ITAT accepted natural losses due to environmental factors and handling, noting no adverse findings during search proceedings or in previous assessments. AO's arbitrary disallowance was set aside as reasonable business losses were established.
  Visit to Get Source

  ---

• Education Expenses for Director's Children Qualify as Business Expenditure Under Section 37; Bad Debts Write-off Allowed Under 36(1)(vii)

  Case-Laws - AT : The ITAT allowed deduction under Section 37 for education expenses sponsored for director's children, following precedent that educational sponsorship in business-relevant disciplines qualifies as valid business expenditure. Regarding bad debts, write-off was permitted under Section 36(1)(vii) without proving irrecoverability. On Section 14A disallowance, matter remitted to AO for fresh consideration per prevailing law. Computer peripherals including UPS qualified for 60% depreciation rate as integral computer components. Duty credit scripts addition dismissed as amounts were already offered for taxation. The tribunal's ruling largely favored the assessee, upholding CIT(A)'s findings on multiple grounds while remanding Section 14A computation for fresh assessment.
  Visit to Get Source

  ---

• Tax Reassessment Under Section 147 Quashed Due To Mechanical Approach And Lack Of Proper Verification In LTCG Case

  Case-Laws - AT : ITAT invalidated reassessment proceedings under s.147 and subsequent revision under s.263 concerning alleged accommodation entries treated as long-term capital gains. The AO's reasons for reopening were found mechanical, vague, and incomplete, lacking independent verification of information and proper inquiry. The notice under s.148 was deemed legally defective as the AO failed to specify details of alleged penny stock transactions and capital gains. Since the underlying reassessment order under s.144 r.w.s 144B was invalid, the subsequent revision proceedings initiated by Pr. CIT under s.263 were also quashed. The tribunal upheld taxpayer's additional grounds of appeal, emphasizing the importance of proper reasoning and verification in reassessment proceedings.
  Visit to Get Source

  ---

• Cash Deposits During Demonetization Justified Through Sales Records and TNVAT Data, Section 69A Addition Deleted

  Case-Laws - AT : ITAT upheld deletion of additions under s.69A r.w.s. 115BBE regarding cash deposits made during demonetization period. The taxpayer successfully demonstrated that deposits originated from legitimate cash sales recorded in books of accounts and verified by statutory authorities. ITAT found that cash generated through sales was properly credited in books and supported by TNVAT records and chartered accountant audit. The AO's allegations of abnormal sales patterns were rejected as based merely on suspicion without concrete evidence. Double taxation was deemed impermissible since sales were already reflected in accounts and offered for tax. The Tribunal concluded s.69A provisions were inapplicable as source of deposits was satisfactorily explained through documented business transactions.
  Visit to Get Source

  ---

• Transfer of Assets Without Corresponding Liabilities in Demerger Violates Section 2(19AA)(ii), Making Transaction Taxable as Capital Asset

  Case-Laws - AT : ITAT ruled against assessee regarding demerger treatment, finding non-compliance with Section 2(19AA)(ii) requirements. The tribunal determined that while assets worth Rs. 39.23 crores were transferred, related liabilities of Rs. 37.15 crores remained with the transferor, violating statutory provisions for qualifying demerger. The arrangement was consequently treated as transfer of capital assets subject to taxation. However, ITAT provided relief on multiple other grounds: allowed deletion of Section 14A disallowance for interest expenses, permitted product registration expenses as revenue expenditure, upheld Section 80IC deductions for Baddi unit's integrated operations, approved scrap sale income eligibility for deduction, and validated provision for expired goods based on scientific calculation methodology.
  Visit to Get Source

  ---

• Partnership Firm Providing Medical Facility Services Not Classified as Medical Profession Under Sections 44AD(6) and 44AA(1)

  Case-Laws - AT : ITAT ruled that a partnership firm providing IPD services, room rentals, and diagnostic facilities does not qualify as engaging in medical profession under Section 44AD(6) and 44AA(1). The firm's income from facility services is distinct from doctors' professional fees, which are separately declared by individual practitioners. The tribunal accepted the firm's business income classification with net profit ratios between 6-11% of turnover, consistent with previous years' treatment. The addition proposed based on partner's statement was rejected as unwarranted since the remaining receipts were already treated as business income. The provisions of Section 44AD were held inapplicable to the firm's operations, and the assessee's appeal was allowed.
  Visit to Get Source

  ---

• Income Tax Assessment Under Section 143(3) Invalidated Due To Improper Transfer Of Jurisdiction Between Officers

  Case-Laws - AT : ITAT quashed assessment order passed u/s 143(3) by ITO-4(1), Raipur due to invalid assumption of jurisdiction. The transfer of case from ITO-4(1), Kolkata to ITO-4(1), Raipur was held improper without requisite order u/s 127(2) from CIT, Kolkata-2. ITAT determined that under s.120, CIT Kolkata-2 lacked authority to transfer jurisdiction to an AO not subordinate to him. The claim based on order sheet noting dated 08.09.2014 regarding transfer pursuant to s.120 order was rejected. The assessment was invalidated as fundamental jurisdictional requirements under s.127 were not met. Appeal decided against Revenue.
  Visit to Get Source

  ---

• Penalty Under Section 271AAB Reinstated After Director Declares Undisclosed Income During Search and Seizure

  Case-Laws - AT : ITAT reversed CIT(A)'s deletion of penalty under s271AAB imposed during search and seizure proceedings. The company director had declared undisclosed income, but CIT(A) deleted penalty citing vague show cause notices. ITAT found AO had clearly specified penalty charges under s271AAB(1A) in both assessment and penalty orders, properly notifying assessee of proceedings and undisclosed amount. Computer-generated notice limitations were acknowledged. Following precedents from Allahabad HC and ITAT Pune, tribunal held CIT(A)'s order unsustainable, reinstating penalty. Revenue's appeal allowed, emphasizing sufficient specification of charges despite standardized notice format.
  Visit to Get Source

  ---

Customs

• Revised Process for Disposal of Confiscated Drones: Five Customs Commissionerates Designated as Centralized Warehouses

  Circulars : CBIC has modified Circular No. 32/2019 regarding disposal of drones through Circular No. 06/2025-Customs. The amendment designates five focal Customs Commissionerates (Chennai Airport, Delhi IGIA, Kolkata Airport, Mumbai Airport, and Bengaluru Airport & Air Cargo) as centralized warehouses for stocking, segregation, joint inspection, and distribution of all categories of confiscated drones. The circular includes updated mapping of Customs Zones to these focal Commissionerates in Appendix-I and a revised list of nodal officers from various security and defense organizations in Appendix-II. This reorganization streamlines the handling and potential redistribution of confiscated drone systems to authorized government agencies.
  Visit to Get Source

  ---

• Customs duty Exemption Granted for Industrial Goods Marked "Not for Retail Sale" U/s 4A of Central Excise Act

  Case-Laws - AT : CESTAT ruled that imported goods declared "NOT FOR RETAIL SALE" and sold to industrial consumers, whether directly or through distributors, are exempt from MRP/RSP-based assessment under Section 4A of Central Excise Act. The Tribunal found no evidence contradicting appellant's declaration that goods were meant for industrial consumers, making extended period invocation and penalties unsustainable. While the differential additional duty (CVD) demand based on MRP/RSP assessment was rejected, the matter regarding Special Additional Duty (SAD) was remanded to adjudicating authority for further examination due to unclear records about SAD payment at import and subsequent compliance with Notification 102/2007. The appeal was partially allowed through remand.
  Visit to Get Source

  ---

• Gold Smuggling: Failure to Prove Legal Import of Swiss Bank-Marked Bars Results in Confiscation Under Section 123

  Case-Laws - HC : HC ruled on gold smuggling case involving violation of Customs Act. Appellant failed to discharge burden of proof under Section 123 regarding gold bar with Commerz Bank Switzerland markings. While claiming legitimate import through NATAXIZ, Bank of Novascotia, and Standard Bank via MMTC Ltd, documentation provided did not correlate with seized items. Court upheld CESTAT's finding that gold bars lacked valid import documentation, violating Section 111. Though penalty was justified under Section 112, amount was reduced considering appellant's limited role. HC found no legal infirmity in CESTAT's interpretation of Chapter 14 provisions regarding confiscation and penalties. Appeal dismissed with modified penalty.
  Visit to Get Source

  ---

• Show Cause Notice Cannot Be Deemed Offense Report Without Proof of Communication to Customs Commissioner Under Section 124

  Case-Laws - HC : HC determined that while the show cause notice (SCN) dated 02.12.2014 issued by Additional Director General, DRI Chennai Zonal Unit qualified as an offense report, there was insufficient evidence to establish the respondent's knowledge or receipt of this notice. Unlike precedent in A.M.Ahamed case where SCN copies were explicitly marked to relevant authorities, no documentation proved the 02.12.2014 SCN was communicated to Commissioner of Customs, Tuticorin. The court found that mere existence of an offense report is inadequate; actual knowledge or receipt must be demonstrated to satisfy jurisdictional requirements. The limitation period of 90 days cannot be considered breached without establishing proper service or awareness of the initial SCN. Appeal allowed.
  Visit to Get Source

  ---

• Appeals Dismissed Under Rule 20 When Appellants Failed to Appear Despite Multiple Hearing Notices Without Valid Explanation

  Case-Laws - AT : CESTAT rejected appeals for default under Rule 20 of CESTAT (Procedure) Rules, 1982, due to appellant's non-appearance at hearings without valid justification. Following precedent from SC's ruling in an analogous case involving Order XLI Rule 17 CPC, the Tribunal determined that appeals with unexplained absences should be dismissed for non-prosecution rather than on merits. The decision emphasized that adjournments cannot be granted without substantial cause and supporting evidence justifying non-appearance. While Section 35C of Central Excise Act, 1944 permits restoration, the Tribunal concluded no purpose would be served by continuing proceedings given repeated defaults.
  Visit to Get Source

  ---

Corporate Law

• Resolution Plan Rejected Due to Director's Disqualification Under Section 29A(e) IBC and Section 164(2) Companies Act

  Case-Laws - AT : NCLAT dismissed appeal challenging rejection of resolution plan. Appellant was ineligible under Section 29A(e) of IBC, 2016 as its director became disqualified under Section 164(2) of Companies Act, 2013 for failing to file financial statements and annual returns for three consecutive years. Appellant had withdrawn EMD after multiple reminders to RP and filed application for plan reconsideration after six months, indicating attempt to delay CIRP/liquidation process. CoC's commercial wisdom in rejecting plan and ordering liquidation was non-justiciable. NCLAT upheld NCLT's refusal to intervene in CoC's decision, finding no grounds to interfere with rejection of resolution plan.
  Visit to Get Source

  ---

Benami Property

• Unaccounted Cash and Gold Worth 98.93 Crores Confirmed as Benami Property Under Section 2(9)(D) of PBPTA

  Case-Laws - AT : AT confirmed seized cash of Rs. 98.93 crores and 166.27 kg gold bullion as benami property under Section 2(9)(D) of PBPTA, overturning the Adjudicating Authority's decision. The Tribunal found the respondent firm's explanation regarding unrecorded sand sale proceeds unconvincing, particularly noting the timing of seizures post-demonetization and simultaneous filing of ITRs for two assessment years. Partners' contradictory statements and retractions undermined credibility. The substantial unaccounted assets, absence from regular books, and lack of proper business records indicated benami transactions where respondent merely lent their name while concealing actual beneficial owners. Appeal allowed, provisional attachment order upheld.
  Visit to Get Source

  ---

Indian Laws

• Landlord Can Deduct Unpaid Rent From Security Deposit Before Refund, Not Liable Under Section 138 NI Act

  Case-Laws - SC : SC held that appellant was not liable for dishonored security deposit cheques totaling Rs.9,00,000 under Section 138 of NI Act. Court found appellant entitled to deduct unpaid rent and maintenance from security deposit before refund. Respondent failed to establish entire cheque amount as legally enforceable debt. Trial Court's judgment limiting compensation to Rs.3,00,000 with 6% interest was restored, setting aside appellate court and HC decisions. Rs.5,000 forfeited to State Exchequer, with default penalty of one year simple imprisonment. Evidence showed respondent had defaulted on vacating property, requiring execution proceedings for possession through police intervention.
  Visit to Get Source

  ---

• Non-Executive Directors Need Clear Proof of Direct Involvement for Criminal Liability Under NI Act Sections 138-141

  Case-Laws - SC : SC held that non-executive directors cannot be held vicariously liable under Sections 138 and 141 of NI Act for dishonored cheques without specific evidence of their direct involvement in company operations. The Court emphasized that mere directorship does not create automatic liability - there must be clear proof of active participation in day-to-day business affairs and financial decisions at the relevant time. Finding no material evidence linking the appellant non-executive directors to the disputed cheque transactions or company's financial management, and noting their role was limited to governance oversight, the Court quashed the criminal proceedings against them. The appeal was allowed, reinforcing the principle that Section 141 liability requires demonstrated active involvement in company operations.
  Visit to Get Source

  ---

• Director Not Liable for Dishonored Cheque Under Section 138 Without Meeting Section 141 Requirements for Vicarious Liability

  Case-Laws - SC : SC determined that a director who is not a signatory to a dishonored cheque cannot be held liable under Section 138 of the 1881 Act unless Section 141 requirements are met. Section 141(1) mandates two distinct conditions: the person must be both in charge of and responsible for company's business conduct when the offense occurred. The complaints failed to establish that the appellant was in charge of company business at the relevant time. Without meeting these twin requirements and absent being a cheque signatory, vicarious liability cannot be imposed on the director under Section 138. Appeal allowed, director absolved of liability.
  Visit to Get Source

  ---

PMLA

• Money Laundering Accused Gets Bail Under PMLA Section 45 As Evidence Tampering Risk Low And Trial Delayed

  Case-Laws - SC : SC determined bail conditions in a money laundering case involving defalcation in PHED tender awards. Following Manish Sisodia precedent, the Court held that twin conditions under PMLA Section 45 cannot supersede Article 21 constitutional safeguards. Extended pre-trial detention without trial was deemed impermissible. Given the documentary nature of evidence already in prosecution custody, risk of tampering was minimal. The case involves examination of thousands of documents and approximately 50 witnesses. Notably, the Minister allegedly benefiting from transactions remains unimplicated. The petitioner, previously granted bail in predicate offenses, was granted relief as prolonged incarceration without trial violated constitutional rights. SLP disposed accordingly.
  Visit to Get Source

  ---

SEBI

• Insider Trading: Connected Persons Found Guilty of Trading Biocon Securities with Unpublished Price Sensitive Information Under PIT Regulations

  Case-Laws - AT : AT upheld insider trading charges against appellants for violating PIT Regulations through trading in Biocon securities while possessing UPSI. Appellant 1 was deemed a 'connected person' under Regulation 2(1)(g)(i) due to close association with company KMPs during CIMAB licensing negotiations and Biocon-Sandoz deal period. Appellant 2 was classified as connected under Regulation 2(1)(d)(i). The tribunal applied preponderance of probability test, noting suspicious trading patterns during UPSI period and frequent communications with senior management. Despite circumstantial evidence, appellants' close involvement with KMPs handling sensitive cross-border deals established insider status. Penalties and market trading restrictions maintained.
  Visit to Get Source

  ---

Service Tax

• Development Authority Must Pay Service Tax on Construction Activities Despite Government Status Under Section 65(105)

  Case-Laws - AT : CESTAT ruled ADA's activities are taxable under "construction of complex service" despite being a development authority. Court rejected appellant's claim of exemption as a government authority, finding services were not statutory functions. Following L&T precedent, CESTAT directed recalculation of tax value with applicable abatements. Extended limitation period was invalidated as ADA, being a state development body, lacked evasion intent. Only normal limitation period demand sustained. Matter remanded to Original Authority for de novo adjudication on value determination after allowing abatements. Appeal partially allowed with specific direction to reassess tax liability within normal limitation period.
  Visit to Get Source

  ---

• University's Distance Learning Centers Providing Support Services Not Taxable as Franchise Under Service Tax Rules

  Case-Laws - AT : CESTAT ruled that a state university's arrangement with Learning Centers (LCs) and Regional Centers (RCs) for distance education programs did not constitute taxable franchise services. The university maintained core control over admissions, curriculum, examinations, and degree conferral, while LCs/RCs provided teaching and operational support. The revenue-sharing arrangement, where LCs/RCs received percentages of collected fees, demonstrated they were service providers to the university rather than franchise recipients. The Tribunal determined these were education-related services falling under the Negative List and exempt under Notification No. 25/2012-ST and 6/2014-ST. The university's use of its name by LCs/RCs did not qualify as trademark or franchise rights under ejusdem generis principles. Appeal allowed with full relief from service tax liability.
  Visit to Get Source

  ---

• Tax Proceedings Against Deceased Sole Proprietor End with Death, Legal Heirs Cannot Face Demands Without Rule 22 Application

  Case-Laws - AT : CESTAT held tax proceedings against a deceased sole proprietor cannot continue against legal heirs. Following SC precedent in Shabina Abraham, tax demands expire with proprietor's death. Legal heir lacked standing as no Rule 22 application was filed before proprietor's death to claim appeal rights. Appellant failed to provide evidence of succeeding father's business ownership. Death certificate confirmed proprietor's demise, rendering proceedings non-maintainable. Section 22 provisions for legal heir claims were not properly invoked within prescribed timeline. Appeal dismissed as proceedings cannot survive proprietor's death or transfer to heirs without proper succession documentation.
  Visit to Get Source

  ---

Case Laws:

• GST

• 2025 (3) TMI 324
  Challenge to SCN issued by the Commissioner Central Goods and Services Tax - HELD THAT:- From a plain reading of the show-cause notice, it is found that the Commissioner concerned has given elaborate reasons for invoking provisions of the IGST Act, 2017, CGST Act, 2017 and J K GST Act, 2017 to initiate an action against the petitioner-Bank. The petitioner-Bank is well within its right to reply to the show cause notice and while replying the show-cause notice, the petitioner-Bank is also free to take the objection with regard to the jurisdiction of the Commissioner to issue a show-cause notice. The bank shall further be entitled to plead and demonstrate before the Commissioner that the transaction in question is neither covered under the CGST Act, 2017, J K GST Act, 2017 or the IGST Act, 2017. It is not inclined to entertain this petition - petition dismissed.

  ---

• 2025 (3) TMI 323
  Violation of principles of natural justice - validity of ex parte assessment order issued by the Assessing Officer (AO) without assigning and disclosing reasons - HELD THAT:- The order solely rests on a failure on the part of the taxpayer to respond to the Show Cause Notice [SCN] which had been issued. It is opined that irrespective of whether the assessee had chosen to submit a response to the SCN which was issued or not, the AO was clearly obliged in law to assign and disclose reasons before finalizing the assessment. As is ex facie evident from a reading of the order of 19 March 2024, the order clearly fails to meet those tests. Petiton allowed.

  ---

• 2025 (3) TMI 322
  Challenge to provisional order of attachment issued under Section 83 of the WBGST/CGST Act, 2017 - HELD THAT:- In terms of the scheme of Section 83 of the said Act, a provisional attachment ordinarily seizes to have effect after expiry of one year from the date of the order made under Sub-section (1) thereof. Having regard thereto, and without going into the question as to whether the respondents can seek to implement their demand consequent upon dismissal of the appeal, I am of the view that the order of attachment passed under Section 83 (1) of the said Act dated 13th April, 2023 has in effect expired by efflux of time and cannot be enforced against the petitioner at this stage any further. The same shall, however, not stand in the way of the respondents from proceeding against the petitioner on the basis of any independent cause of action or for enforcing the demand in accordance with law. Petition disposed off.

  ---

• 2025 (3) TMI 321
  Confirmation of demand u/s 74 of the GST Act - applicability of clarificatory circulars were issued on 01.08.2023 and 11.10.2024 - HELD THAT:- Apparently, from the impugned order, there is no consideration of the Circulars, as such, no useful purpose would be served in relegating the petitioner to the remedy of appeal. Thus, on the limited question of the circulars, which are binding on the department, not being taken into account, the order impugned dated 21.11.2024 is set aside. The matter is remanded to the authority concerned to pass a fresh order. While doing so, the benefit of the Circular No.200/12/2023- GST dated 01.08.2023 and Circular No.236/30/2024-GST dated 11.10.2024, as claimed by the petitioner, shall be specifically considered by the adjudicating authority. The petitioner is also permitted to file an application claiming the benefit of the said circulars indicating the manner in which he is entitled to the benefit of the said Circulars, which shall be considered by passing a fresh order. Petition disposed off.

  ---

• 2025 (3) TMI 320
  Challenge to the Garnishee Notice, the Show Cause Notice, and the impugned order - challenge to N/N. 56/2023-Central Tax dated 28th December 2023 and Notification No. 56/2023-State Tax, No. MGST-1524/C. R.6/Taxation-1 dated 16th January 2024 issued under Section 168A of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The issues raised in this Writ Petition are pending adjudication in several other Writ Petitions, including Writ Petition No.5146 of 2024 and Precaution Properties Pvt. Ltd. Versus State of Maharashtra Ors. [ 2025 (3) TMI 250 - BOMBAY HIGH COURT ]. The Hon ble Gauhati High Court has infact already struck down these Notifications. Though on this issue, the Telangana High Court has held in favour of the Petitioner before it, the Telangana High Court came to the conclusion that because of the order of the Hon ble Supreme Court in Re-Cognizance for extension of limitation [ 2022 (1) TMI 385 - SC ORDER ] the assessment was not time barred. This order of the Telangana High Court has been challenged before the Hon ble Supreme Court, and which is pending adjudication. Once these are the facts, it is opined that the Petitioner has not only made out a case for admission but also for grant of interim relief. Petition disposed off.

  ---

• 2025 (3) TMI 319
  Seeking to quash the proceedings of the respondent, consequential order and consequential attachment notice - wrongful availment of Input tax credit - short payment of GST - HELD THAT:- This Court directs the Joint Commissioner of CGST and Central Excise (Appeals), Coimbatore at Madurai, to consider the appeal [Appeal No.372 of 2024] filed by the petitioner on merits and pass appropriate orders in accordance with law, after giving due opportunity to the petitioner, within three months from the date of receipt of a copy of this order. Petition disposed off.

  ---

• 2025 (3) TMI 318
  Maintainability of petition - appellant was non-suited on the ground that he did not exhaust the alternate appeal remedy - HELD THAT:- The order impugned in the writ petition as well as the order passed by the learned single Judge stand set aside. The matter is remitted to the file of the respondent. The respondent shall issue fresh notice and decide the matter as per law. Appeal allowed.

  ---

• 2025 (3) TMI 317
  Refund of IGST - zero rated supply - duty drawback is claimed - HELD THAT:- The Hon ble Division Bench of Gujarat High Court in M/s.Amit Cotton Industries Through Partner, Veljibhai Virjibhai Ranipa Vs Principal Commissioner of Customs [ 2019 (7) TMI 472 - GUJARAT HIGH COURT] had categorically held that the aforesaid circular cannot prevail over Rule 96. The Hon ble Division Bench observed that the circular will not save the situation for the Department. This decision was followed by the Madras High Court in M/s.Precot Meridian Limited Vs The Commissioner of Customs, The Assistant Commissioner of Customs [ 2020 (1) TMI 90 - MADRAS HIGH COURT] . It is also informed that several other High Courts have also taken the very same view. Since the learned single Judge granted relief to the writ petitioner only by following the existing legal position, interference with the said order is not warranted. Appeal dismissed.

  ---

• 2025 (3) TMI 316
  Validity of summons issued by the Central Goods and Services Tax authorities, despite proceedings initiated by the State GST authorities - HELD THAT:- What the statute seeks to ensure and prohibit are parallel proceedings pertaining to assessment which may be drawn in exercise of powers conferred by Sections 73 and 74 or for that matter any other proceedings akin thereto by two separate sets of authorities. A summons issued pursuant to a search would have to be distinguished from an actual assessment that an authority may choose to undertake. This since such a summons is principally intended to elicit information in respect of material that may have been gathered or comes to light in the course thereof. A search may lead to the discovery of material and information which may not have been even available at the stage of the original assessment proceedings - A search could, hypothetically speaking, also lead to the recovery of material that never formed part of the original assessment and was unknown to the assessing authority. It could, theoretically speaking, also have a bearing on the truthfulness of the disclosures made in the course of the original proceedings. Of equal significance are the observations of the High Court in Vivek Narsaria [ 2024 (1) TMI 809 - JHARKHAND HIGH COURT] when it held that Section 6(2)(b) is principally concerned with a chain of a particular event and of proceedings being interrelated . The search which constitutes the basis for the issuance of summons cannot possibly be construed as being related to the earlier assessments or the pending notice proceedings since, undisputedly, it was undertaken post those events. There are no justification to interdict the summons which have been issued and which, as was noticed above, are only in aid of proceedings that may be ultimately drawn or initiated - petition dismissed.

  ---

• 2025 (3) TMI 315
  Permission to summon the witness from the GST Department - Discharge to onus to prove - HELD THAT:- The perusal of the impugned order reveals that the case is still at the stage of evidence of respondent. Since the GST record was stated to be not in power, possession and control of the respondent, the Court allowed the respondent to summon the witness from GST Department, subject to cost of Rs. 3,000/-. The onus to prove its case completely lies on the plaintiff. It is for the plaintiff to decide which witness is required to be summoned and with what record and in case the summoned record is found to be not relevant, obviously, the same would not be looked into, but at this stage, the plaintiff cannot be deprived of his right to summon the witness to prove its case, in its own way. There is no merit in the petition. The same is accordingly dismissed.

  ---

• 2025 (3) TMI 314
  Denial of input tax credit on account of the provisions contained in Sections 16(2)(c) and 16(4) of the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 (CGST/SGST Acts) for the period from October 2018 to March 2019 - HELD THAT:- This writ petition will stand disposed of setting aside Ext.P2 order and directing the respondent to pass fresh orders taking note of the provisions contained in sub-section (5) of Section 16 of the CGST/SGST Acts, which has been notified with effect from 27-09-2024, and also extending to the petitioner the benefit of the directions issued by this Court in paragraph No.101 of the judgment of this Court in M. Trade Links [ 2024 (6) TMI 288 - KERALA HIGH COURT] . Petition disposed off.

  ---

• 2025 (3) TMI 313
  Exemption from service tax - lump-sum amount received for Health care Services to be provided for 20 years by the applicant as Diamond Plan - applicability of Sr. No. 74 of Notification No. 12/2017-Central Tax. - HELD THAT:- The appellant has now vide Annexures H and I to the appeal papers, attached only a single sheet of paper listing out the details of Diamond plan and has also submitted a copy of the bill of supply No. 3/2021-22 dated 12.8.2021, issued to one of their customers. The only option left is to reject the appeal filed by the appellant on the grounds that they have not provided the relevant documents to enable us to decide the matter. Appeal rejected.

  ---

• 2025 (3) TMI 312
  Appropriate classification rate of GST applicable on supply of PVC floor mats [Cars] under CGST and GGST - HELD THAT:- The PVC floor mats for use in cars supplied by the applicant is classifiable under CTH 8708 would be leviable to GST @ 28%. Appeal dismissed.

  ---

• 2025 (3) TMI 311
  Classification of goods - Treated Water obtained from CETP - exemption from GST by virtue of SI. No. 99 of the Exemption Notification No. 02/2017-Integrated Tax (Rate), dated 28-6-2017 (as amended) - HELD THAT:- The appellant has not controverted the findings except for the averment that it is not a de-mineralized water. The appellant has also produced a laboratory certificate, which was not produced before the GAAR. It is not inclined to accept the certificate produced by the appellant because [a] the same is being produced at an appellate stage; [b] the certificate nowhere states that the laboratory is an accredited laboratory and [c] there is no mention about the manner in which the sample was drawn. It goes without saying that drawal of sample is sacrosanct, failing which the credibility of the results is questionable. The Tamilnadu Authority for Advance Ruling has held that treated water obtained from CETP, is de-mineralized water and will therefore not be eligible for the benefit of the notification Nos. No. 2/2017-CT(R) dated 28.6.2017 as amended vide notification No. 7/2022-CT(R) dated 13.7.2022, in the case of M/s. Mannarai CETP P Ltd. [ 2024 (7) TMI 358 - AUTHORITY FOR ADVANCE RULING, TAMILNADU] . While circular No. 52/26/2018-GST dated, 9.8.2018, clarifies that supply of drinking water for public purposes, if it is not supplied in a sealed container, is exempt from GST, likewise, circular no. 179/11/2022-GST dated 3.8.2022 clarified that supply of treated sewage water, falling under heading 2201, is exempt under GST and that the word purified is being omitted from the above-mentioned entry vide notification No. 7/2022-Central Tax (Rate), dated 13.7.2022. Appeal dismissed.

  ---

• 2025 (3) TMI 310
  Valuation of work contract service for charging GST - transaction of sale of goods by Tecnimont Pvt. Ltd. (TCMPL) to Indian Oil Corporation Ltd. (IOCL) on High Seas Sale basis in terms of Contract No. 44AC9100-EPCC-1 would be covered under Entry No. 8(b) of Schedule III of the CGST Act or not. Divisible contract or not - HELD THAT:- The GAAR vide its impugned ruling dated 5.1.2024 after dwelling into what is a works contract in terms of section 2(119), ibid, and further relying on the judgement of Kone Elevator India Private Limited [ 2014 (5) TMI 265 - SUPREME COURT (LB)] held that [i] works contract for EPC work pertaining to EPCC-1 project; [ii] supply of imported materials for the said project, is a lumpsum turnkey EPC contract hence division of a turnkey EPC contract into two parts, is legally not tenable. The reliance of the appellant on the judgement of BSNL [ 2006 (3) TMI 1 - SUPREME COURT] and Gannon Dunkerley Co., [ 1958 (4) TMI 42 - SUPREME COURT] , to aver that it is a divisible contract is not tenable owing to the fact that in terms of the contract the applicant was contractually bound/liable to supply both the goods and services. Levy of tax on that part of the goods which are sold on HSS basis - HELD THAT:- In terms of Schedule III, read with section 7 (2) of the CGST Act, 2017, supply on High Sea Sale basis, is treated as neither a supply of goods nor a supply of services. It is found that the impugned ruling clearly states that the EPC contract encompasses both the supply of goods and services and that in terms of the contract, the appellant is liable to provide the goods [supplied on HSS basis]. Therefore, the submission that the value is not to be included in the transaction value in respect of works contract service is legally not tenable more so since as is already mentioned, the applicant is contractually bound/liable to supply both the goods and the services. The averments even otherwise, stand answered in paragraph 34 of the impugned ruling. Hence, the finding that in terms of section 15, ibid, the value of such imported goods invariably forms an integral part of the Transaction value, agreed upon. Thus, the averment that the GAAR had mis-interpreted the provisions of section 15 (2) (b) of the CGST Act, 2017 is not a plausible argument. Conclusion - i) The value of goods sold on HSS basis should be included in the transaction value for GST calculation. ii) The sale of goods on HSS basis was determined to be neither a supply of goods nor services under the CGST Act. Appeal dismissed.

  ---

• Income Tax

• 2025 (3) TMI 309
  Bogus purchases - bogus accommodation bills - hawala transactions from certain parties who were only providing accommodation sale bills - delay filling SLP As decided by HC [ 2022 (2) TMI 1482 - BOMBAY HIGH COURT] purchases cannot be rejected without disturbing the sales in case of a trader and additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases. HELD THAT:- There is a gross delay of 628 days in filing this Special Leave Petition. Following the order passed by this Court in Hasmukh J Visaria [ 2024 (3) TMI 1415 - SC ORDER] this Special Leave Petition also stands dismissed both on the ground of delay as well as on merits.

  ---

• 2025 (3) TMI 308
  TP Adjustment - ITAT is justified in restricting the adjustment only on international transactions where the assessee has selected TNMM and applied the same on entity level - HELD THAT:- Although it is correct that Income Tax Appeal [ 2024 (9) TMI 1703 - BOMBAY HIGH COURT] we cannot overlook the fact that at that time, the decisions in Spicer India Ltd. [ 2023 (7) TMI 139 - BOMBAY HIGH COURT] and Hindustan Unilever Ltd. [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] had not been delivered. The decisions of the Coordinate Bench hold that benchmarking should be done only on associated enterprise or related party transactions and not with respect to the entire turnover. In fact, in Hindustan Unilever Ltd. (supra.), the learned counsel for the revenue had fairly stated that this issue concerning transfer pricing adjustment stood concluded against the revenue and in favour of the assessee by decisions of this Court in Tara Jewellers Exports (P) Ltd. [ 2015 (12) TMI 1130 - BOMBAY HIGH COURT] , Petro Araldite (P.) Ltd. [ 2015 (11) TMI 1628 - BOMBAY HIGH COURT] There is no point in admitting this appeal, which now no longer raises any substantial question of law.

  ---

• 2025 (3) TMI 307
  Validity of reopening of assessment - reasons to believe - search proceedings and the seizure made pursuant to the search conducted - HELD THAT:- The assessment order that was passed on 31.03.2016 u/s 143(3) of Income Tax Act, 1961, may have given rise to an option either to invoke the machinery of revision under Section 263 of the Income Tax Act, on the ground that the assessment order dated 31.03.2016, passed under Section 143(3) of the Income Tax Act, was both erroneous and prejudicial to the interests of the revenue, or that there was income that had escaped assessment. Although there was no suppression of fact in the return that was filed on 22.02.2016, merely because amounts were recovered from the petitioner, the associate firms, and related party, itself would not justify the conclusion that there was failure on the part of the petitioner to fully disclose all materials that were required for passing the assessment order dated 31.03.2016, and there should have been a live link between the information that was surfaced for issuance of notice under Section 148 of the Income Tax Act, 1961, to reopen the assessment and to pass fresh re-assessment order under Section 147 of the Income Tax Act, 1961. To invoke the machinery under Section 148 of the IT Act as it stood till 31.03.2021, the Courts have repeatedly held that the term reason to believe means that Assessing Officer must have some tangible material passing before assuming jurisdiction under Section 147 of the IT Act. A reference is made to Commissioner of Income Tax, Delhi Vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT ] The dispute in the present case pertains to the Assessment Year 2014-2015. It can therefore hardly be said that the Assessing Officer was unaware of the search proceedings and the seizure made pursuant to the search conducted on 03.09.2013 resulting in seizure of a sum of Rs. 1,77,50,045/- from the petitioner Firm, and a sum of Rs. 50,00,000/- from the petitioner s partner, and gold worth of Rs. 38,69,168/-, which was recovered from M/s.VIP City. Writ Petition is allowed.

  ---

• 2025 (3) TMI 306
  Depreciation claimed on goodwill u/s 32, albeit post demerger - depreciation claimed by the appellant for AYs 2015-16 and 2016-17 - HELD THAT:- We are concerned with a Scheme which came into effect in FY 2013-14 and the Proviso thus being pertinent only for AY 2014-15. The said provision could have had no bearing on the issue of depreciation claimed by the appellant in AY 2015-16 or 2016-17. As decided in Padmini Products (P) Ltd. [ 2020 (10) TMI 424 - KARNATAKA HIGH COURT ] 5th proviso to Sec 32 of the Act restricts aggregate deduction both by the predecessor and the successor and if in a particular year there is no aggregate deduction, the 5th proviso does not apply. Thus, it is axiomatic that until and unless it is the case of aggregate deduction, the proviso has no role to play. The 5th proviso in any case will apply only in the year of succession and not in subsequent years and also in respect of overall quantum of depreciation in the year of succession. Tribunal has failed to even notice or examine the issue from that angle. Its judgment is based solely on the applicability of the Fifth Proviso to Section 32 (1) and which we, in any case, have found was clearly not germane to AYs 2015-16 and 2016-17. In view of the above in our considered opinion, therefore, the ends of justice would warrant the matter being remitted to the board of the Tribunal for examining the appeal afresh and bearing in mind the issue which stands flagged hereinabove. We accordingly allow the instant appeal and set aside the Order of the Tribunal dated 03 February 2023.

  ---

• 2025 (3) TMI 305
  Condonation of delay in filing Form 10-IC as required to avail the concessional tax rate prescribed u/s 115BAA - HELD THAT:- This Court, after carefully considering the submissions and examining the scope, purport and object of Section 119 (2) (b), finds that identical submissions were made before this Court and the same was rejected in[ 2024 (11) TMI 1434 - MADRAS HIGH COURT] as held Respondent Authority/Board has completely mis-directed itself in not examining if the failure to consider the claim of option to discharge tax under Section 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated under Section 115BAA would cause genuine hardship to the petitioner/assessee and thus it is desirable as expedient to permit the petitioner to file Form 10-IC in support of its option under Section 115BAA and deal with the same on merit. The facts narrated supra leaves no room for doubt that the rejection of the petition under Section 119 (2) (b) to permit the petitioner to file Form 10-IC in support of its exercise of option under Section 115BAA of the Act would cause genuine hardship and it is desirable and expedient to permit the petitioner to file Form 10-IC in support of its claim / option under Section 115BAA of the Act and deal with such claim on merits in accordance with law. The impugned order is set-aside, the respondent shall keep the portal open to enable the petitioner to upload the Form 10-IC and the petitioner shall file the Form 10-IC within a period of four weeks from the date of receipt of a copy of this order.

  ---

• 2025 (3) TMI 304
  Procedure of faceless assessment u/s 144B - absence of show cause notice - HELD THAT:- The entire faceless assessment scheme provides for an opportunity to be given to the assessee whenever there is a proposed variation from the earlier determination of assessment prejudicial to the interest of the assessee. Therefore, the absence of such a show cause notice would clearly be a violation of the principles of natural justice, rendering the Assessment Order passed as void. In the present case, the perusal of the e-proceeding sheet clearly indicates that, after having issued notice u/s 148, the Respondent issued only two notices; one u/s 143(2) dated 21.05.2021 and another issued on 15.02.2022 u/s 142(1), which simply called for the details, and as such, the same were pre-assessment notices as envisaged in clause (vi) of Section 144B(1). The entire procedure subsequent to obtaining further information, documents or evidence has not been gone through in case of the Petitioner, and straightaway, the impugned assessment has been finalized. Thus, there has been a blatant violation of the mandatory procedure prescribed under the Faceless Assessment Scheme as stipulated u/s.144B of the Act as held in case of Akashganga Infraventures Indi Ltd. Vs. National Faceless Assessment Centre [ 2021 (8) TMI 1343 - DELHI HIGH COURT] Thus, the present petition succeeds and is accordingly allowed. The matter is remanded back to the AO by quashing and setting aside the impugned assessment order as well as demand notice u/s 156 of the Act, as well as the notice for penalty u/s 271(1)(C) read with Section 274.

  ---

• 2025 (3) TMI 303
  Penalty u/s 271(1)(c) - AO denying the exemption u/s 11 of the Act and disallowing the expenses towards the object of the assessee trust - HELD THAT:- Expenses claimed by the assessee was disallowed by the AO which neither falls under the realm of concealment of income nor filing of inaccurate particulars of income and hence under these facts and circumstances, penalty cannot be levied u/s 271(1)(c) of the Act. Consequently, we hereby cancel the levy of penalty imposed by the AO and confirmed by the learned CIT(A). Accordingly, grounds raised by the assessee are allowed.

  ---

• 2025 (3) TMI 302
  Addition u/s 69B for the purchase of immovable property - difference in the Loan amount and consideration for the purchase of immovable property - HELD THAT:- CIT(A) considered the loan amount as received from ICICI Bank. However, the assessee contended that the actual loan amount was Rs. 30,00,000/-. Upon review, we find that there is a factual discrepancy in this regard. Therefore, we remit the matter to the file of the Ld. AO for verification of the addition granting the assessee an opportunity to furnish any relevant evidence or documents during the set-aside assessment proceedings. Addition u/s 56(2)(x) - assessee purchased the property less than stamp duty valuation - HELD THAT:- As assessee had already requested before the CIT(A) that the valuation be considered in accordance with the Third Proviso to Section 56(2)(x) of the Act. However, we find that the CIT(A) passed the order without considering this aspect. Accordingly, we remit the matter to the file of the Ld. AO for reconsideration of the issue. AO is directed to refer the valuation of the property to the DVO, taking into account the provisions of the Third Proviso to Section 56(2)(x) of the Act.

  ---

• 2025 (3) TMI 301
  Reopening of assessment u/s 147 - reasons to believe - notice after the expiry of 4 years - denying the claim made u/s 90 - HELD THAT:- There is no dispute that a return of income was filed by the assessee u/s 139(1) - from the perusal of the reasons recorded for reopening the assessment, as noted above, we find that there is not even an allegation by the AO that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts. From the perusal of the order disposing the assessee s objections against the reopening of assessment, we find that it was for the first time there was any whisper of the allegation that there was gross failure on the part of the assessee to disclose all the material facts fully and truly. Therefore, it is ostensible that the reasons recorded while initiating the re-assessment proceedings were completely silent as regards the allegation that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts, and vide order disposing the assessee s objections, the AO tried to improve upon the reasons by making the allegation, which is completely impermissible. From the perusal of the reasons recorded there is not even a mention of any new or tangible material which formed the basis to believe that income chargeable to tax has escaped assessment during the year under consideration. We find that the entire edifice of the impugned re-assessment proceedings is based on the perusal of case records which were already considered during the scrutiny assessment proceedings concluded u/s 143(3) of the Act. This aspect is further evident from order passed u/s 143(3) r/w section 147, wherein the AO completely denied the claim made under section 90, after noting that partial relief was granted to the assessee vide order dated 16/03/2015 passed u/s 143(3) of the Act. Thus re-assessment proceedings initiated by the AO, in the present case, are bad in law on more than one count and are not in conformity with the provisions of section 147 - Decided in favour of assessee.

  ---

• 2025 (3) TMI 300
  Reduction in the current year loss eligible to be carried forward - addition made in the intimation passed u/s 143(1) of the Act by CPC, Bangalore - HELD THAT:- We find that the assessee has shown refund of value added tax which was admitted by the authority concerned. In the tax auditors report same was duly reported. As stated that the amount falling within the scope of Section 28 was Nil. We also note that assessee has stated that the goods and service tax was not rooted through the profit and loss account. Considering these facts, we find merit in the contention of the ld. AR that the information furnished by the assessee in the tax report qua the refund of GST admitted by the authority concerned has been mistook and misunderstood by the CPC, Bangalore to be item falling under Para 16a which is qua the item falling within the scope of 28 of the Act. Since, this is a factual mistake committed by the CPC, Bangalore at the time of processing which the CIT (A) failed to appreciate and rectify during the appellate proceedings. The order passed by the ld. CIT (A) is incorrect and accordingly, set aside order and the AO is directed to delete the adjustment made by the AO. The appeal of the assessee is allowed.

  ---

• 2025 (3) TMI 299
  Reopening of assessment u/s 147 - reasons to believe - addition u/s 68 - HELD THAT:- On perusal of the above reasons, we observe that the ld. AO has not completely mentioned the details of transactions which the assessee has entered into during the impugned year as accommodation entries such as the particulars as to person from whom/ entity from whom the money was received and when it was received etc. AO merely reproduced the information available with the department and recorded his so-called satisfaction in one line that on the basis of information available, the assessee has taken accommodation entry which in our opinion is wrong and against the provisions of the Act. The reasons are sanctity, unambiguous and vague and the ld. AO acted merely on the basis of borrowed satisfaction without any independent application of mind. Therefore, we are of the view that the case of the assessee was invalidly reopened u/s 148 of the Act. Addition u/s 68 - Even on merit, we note that the loans raised by the assessee were fully repaid and assessee has filed all the information/ evidences before the ld. AO but the ld. AO has not done any independent verification and so much so that that the notice u/s 133(6) of the Act were not issued and he merely relied on the statement recorded during the course of search u/s 132(4) of the Act that Mr Banks and his associate concerns were engaged in providing accommodation entries. Even the cross examination requested by the assessee was not granted and the ld. CIT (A) after taking int account all the facts allowed the appeal of the assessee by directing the ld. AO to delete the addition. Decided in favour of assessee.

  ---

• 2025 (3) TMI 298
  Reopening of assessment u/s 147 - Addition u/s 68 - Reason to believe or suspect - HELD THAT:- Assessee filed all the details before the AO during the assessment proceedings and similarly, the loan creditor responded to the notice issued u/s 133(6) and acknowledged that the assessee has been given an unsecured loan. The transaction of loan was examined in the original assessment proceedings. Now, the reasons recorded by the AO has not stated as to how the assessee failed to disclose the fully and truly all material facts qua the said loan which has resulted into escapement of income. Therefore, the issue at hand is squarely covered in the case of CEAT Ltd. [ 2023 (1) TMI 73 - SC ORDER ] and accordingly we quash the reopening of assessment made by the AO. Appeal of the assessee is allowed

  ---

• 2025 (3) TMI 297
  Addition u/s 68 - as alleged that the assessee firm has introduced its undisclosed income in the process and has failed to prove the genuineness of the transaction for which he invoked provisions of section 68 - CIT (A) held that Section 68 is not applicable because here in this case AOP had re-valued its assets and accordingly, credited into creditor s profit and loss account - HELD THAT:- The amount credited to the assessee s account in the books of AOP was recorded by the assessee by debiting the investment in AOP and crediting the capital account of individual partners in their respective shares which has been as highlighted above. AO without understanding the true nature of transaction has held that during this process, the development rights in line is getting transferred from one partner to other without getting registered through instrument and that it is some kind of accounting gimmick to reduce the tax liability by transferring entries by denying the real income. First of all, we are unable to understand how any income has arisen on account of such revaluation by the joint venture M/s. DD Associates in assessee s hand. The revaluation has been done by M/s. DD Associates who is independently assessed to tax as an AOP. The assessee was only entitled to receive share debt surplus from AOP because any such tax incidence would be only in the hands of the AOP only. The AOP i.e. M/s.DD Associates have members having determined share therefore, liable to pay tax in its own hands. Even otherwise also there is no sale or transfer of any assets warranting liability to tax as it is only a revaluation of stock in trade to recognize in the books of accounts and the present value does not trigger in tax liability either in the hands of joint venture AOP from any of its members. It has also been brought on record and also noted in the CIT(A) order that credit of small share of re-valuation of stock-in-trade in the books of the other member i.e. Friends Development Corporation, no adverse view has been taken by the department in their case. Here in this case, the total re-valuation of project land was Rs. 125.72 Crores as per the audited financial statement of M/s. DD Associates-AOP and the share of the assessee till 31/03/2017 was Rs. 46.50 which was brought down to 5% at the year ending 31/03/2018. The gain equivalent to 41.50% to which assessee was entitled to is recognized by AOP by crediting to the capital account by such amount and pressing equivalent debit to the capital account of the other member of the AOP. It was for this reason that the profit and loss share alleged was increased by 41.1%. There is no sale consideration as inferred by the ld. AO or any kind of transfer of property to trigger capital gain and stamp duty or to reduce any tax liability. There is no provision or law which has been referred by the ld. AO that form of partner cannot revalue assets or is there any procedure to moderate such exercise. Accordingly, we do not find any reason to uphold the addition as stated by the ld. AO and order of the ld. CIT(A) is confirmed. Decided in favour of assessee. Disallowance of property paid for loan - disallowance of brokerage expenses claimed against unsecured loans - CIT(A) deleted addition - HELD THAT:- On perusal of the facts and material brought on record, once there is a finding of the fact that the brokerage has been paid for the specific purpose and the amounts have been paid through cheques and TDS has been deducted and without any adverse material, we do not find any infirmity in the order of the ld. CIT (A) deleting the addition. Accordingly, this ground raised by the Revenue is dismissed.

  ---

• 2025 (3) TMI 296
  Addition u/s 69A on account of unexplained deposit in Bank A/c during demonetization period - HELD THAT:- Assessee claimed before AO that the sales of business was the source for accumulation of cash which was deposited in bank a/c. The assessee has filed contemporary details/documents of purchases, sales, cash-book, VAT return and the AO has examined those details/documents as is clearly acknowledged by him. Nowhere in the assessment-order, the AO has pointed out any fallacy or flaw in the books of account of assessee or the transactions of purchases and sales made by assessee. The sole reason of taking adverse view against assessee is the non-response of notices sent by AO u/s 133(6) to customers. This, in our considered view, is not a valid reason to make addition. Accordingly, we direct the AO to delete the impugned addition. Addition on account of difference in value of opening stock - HELD THAT:- AR successfully demonstrated that in AY 2016-17, the assessee was engaged only in job work, commission and brokerage, therefore the assessee declared Sunari Work Gold Investment under the heading Fixed Assets in the Balance-Sheet as on 31.03.2016 and there was no closing stock shown. It is when the assessee started trading of jewellery from 17.08.2016 during current year after obtaining registration under VAT that the same jewellery held by assessee in the list of fixed assets as on 31.03.2016 became part of business stock of assessee and was declared as opening stock as on 01.04.2016 in Trading and P L A/c. Thus factum of purchases made by assessee in preceding AY 2016-17 which has given rise to holding of impugned closing stock as on 31.03.2016 / opening stock as on 01.04.2016. Even the AO has also mentioned in assessment-order that the assessee filed purchase bills. Ld. DR for revenue though relied upon orders of lower-authorities yet could not controvert the submissions made Ld. AR with are fully supported by documentary evidences. No justification in the addition made by AO. Accordingly, the AO is directed to delete this addition also. The assessee succeeds in this issue. Assessee appeal is allowed.

  ---

• 2025 (3) TMI 295
  Disallowance u/s 80P - assessee has earned the alleged sum towards the interest earned from the scheduled banks - CIT(A) confirming the action of Ld. AO in treating the interest received from bank as Income From Other Sources and denying the benefit of deduction u/s 80P HELD THAT:- We find assessee argument have no merits because in the judgment of Nawanshahar Central Cooperative Bank Ltd [ 2005 (8) TMI 28 - SC ORDER] the assessee was a cooperative bank having banking licensing whereas in the instant case the assessee is not cooperative bank and it does not have any banking license but is merely a cooperative society engaged in providing credit facility to its members. Therefore the ratio laid down in the case of Nawanshahar Central Cooperative Bank Ltd (supra) is not applicable on the facts of the instant case. Even the CBDT circular No.18/2015 is not applicable on the assessee society because this circular has been given referring to the judgment of Nawanshahar Central Cooperative Bank Ltd (supra) and it was only with regard to bank/commercial bank to which banking license applies. Since the assessee is not registered under banking Act 1949 and is merely a cooperative society CBDT Circular No.18/2015 (supra) will not apply on it. We fail to find any merit in the grounds of appeal raised by the assessee and thus no infirmity is called for in the finding of Ld. CIT(A). Appeal of the assessee is dismissed.

  ---

• 2025 (3) TMI 294
  Disallowance of interest u/s 36(1)(iii) - assessee had made interest free advance out of interest bearing funds - CIT(A) deleted addition - HELD THAT:- We find that the provisions of section 36 (1) (iii) of the Act, are enabling provisions, whereby interest claimed is required to be allowed, as a deduction to the assessee, provided the claim is genuine. AO made unverified and wrong statement that no interest-free funds were available with the assessee and irrelevant statement that the assessee has also not furnished any details or evidence to establish that impugned advances were given for business expediency . AO has failed to realize that the obligation to establish business expediency would arise on the part of the assessee only when the assessing officer has discharged his obligation to show ( provided the assessee has filed all documents and evidences, as required by the assessing officer, to explain the interest free funds) that any part of interest-bearing loans have been diverted for non-business purposes. We find that the issue of disallowance u/s.36 (1) (iii) out of the claim of interest, arose in the assessment proceedings, on account of the report of the Special Auditor, who had only mentioned that the assessee has taken loans from Banks/Financial institutions and has paid interest.When the Spl. Auditor was able to provide such information/ledger accounts from the books of account, obviously he had scanned through the entire ledger meticulously and thoroughly. However, while he could find the accounts listed by him, his discerning eye failed him to find accounts reflecting huge interest-free receipts by assessee from sister concerns, despite there being ledger accounts of sister concerns, reflecting interest free funds provided to the assessee. As noticed that as a matter of fact, considering the amount due to these two parties in trading accounts, interest payable to them worked out to more Rs. 62,46,112/-, than the interest disallowed by the AO. Therefore, even on facts, the disallowance of Rs. 40,49,780/- is the result of lack of inquiry by the assessing officer. Further, scanning of the entire ledger and picking up and choosing only such accounts (of interest-free advances) by the Spl. Auditor, again failed him to notice the accounts of other sister concerns providing huge interest-free funds to assessee. It is also a settled-principle that ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his business. As decided in the case of Sassoon J David and Co. (P) Ltd [ 1979 (5) TMI 3 - SUPREME COURT] expenditure may be incurred voluntarily and without any necessity and if it is incurred for promoting the business and to earn profits, the assessee can claim deduction for the same. It is not the case of the assessing officer that the interest free advances given by the assessee were withdrawn by the sister concern and utilized for personal purpose such as buying of property by the directors or making donations or gifts, as is the case, in many of the decisions cited by the assessing officer. In fact, short term advances to meet with urgent requirements of sister concerns with whom regular business is also transacted on daily basis, is squarely covered under the phrase for the purpose of business occurring in section 36(1)(iii) as well as 37(i) of the Act. Thus, there is no tax-avoidance angle also, there can be no justification for assessing officer to have made a disallowance when firstly advance is made out of interest free funds and secondly the interest-bearing loans are deployed for the purposes for which the funds are borrowed and also there is manifest business expediency, and assessing officer has not demonstrated the personal or non-business or purely charitable use by the recipient - Decided in favour of assessee. Disallowance of claim for the interest - It is a settled principle of law that business or commercial expediency has to be judged from the perspective of the businessman and not of the Revenue, since it is the businessman who is being benefited from the services rendered and also it is he who knows to what extent the benefit ensures to him. Based on these facts and circumstances, we allow the ground pressed by the assessee. Disallowance of under valuation of stock of Rapeseeds DOC and salt - there were some errors in valuation of closing stock on FIFO basis - CIT(A) deleted addition partly - HELD THAT:- while the assessee submitted before the assessing officer that the valuation is based on the average cost price of opening stock plus purchases, the same could not be substantiated by the assessee, in a proper way. Moreover, ld CIT(A) noticed that the method of valuation for the year under reference adopted is not consistent with the method adopted for preceding and the subsequent years. Even by assessee s own submission, the valuation for the year under reference would need to be revised upwards by Rs. 24 per,mt. though it is also submitted by the assessee that such an action is uncalled for in view of the fact that in subsequent year also, the tax rate is same. Therefore, ld CIT(A) made an addition of Rs. 50,63,472/- @ of Rs. 24 per,mt. The ld CIT(A) noticed that this addition is obviously called for, so as to, maintain the consistency, as also the matching principle. Thus, out of the total addition of Rs. 4,46,25,539/-, on account of valuation of closing stock, an amount of Rs. 50,63,472/- was upheld while the balance amount of Rs. 3,95,62,067/- ( Rs. 4,46,25,539- Rs. 50,63,472) was deleted, by ld. CIT(A). Therefore, after having regard to the given facts and circumstances of the case, in our considered view, the action of the ld.CIT(A) does not warrant any interference. Accordingly, the ground of appeal of Revenue is dismissed. Disallowance of handling/ spillage/wastage loss - HELD THAT:-We find that it is a natural phenomenon that due to loading, unloading wind, washing, rain and even inaccuracy in quantification of purchase and sale, a reasonable claim of wastage/spillage is bound to be there and cannot be disputed without any adverse material brought on record. Considering the fact that the stock of salt is kept in open and obviously there are spillages and wastages on account of loading, unloading wind, washing, rain and even inaccuracy in quantification of purchase and sale, a reasonable claim of wastage/spillage is bound to be there and cannot be disputed without any adverse material brought on record. Similarly, the ld CIT(A) also found favour with the submission of the assessee that during the course of the search, no discrepancy in the stock or evidences with regard to wrong claim of wastage/spillage or of unaccounted sales have been found or seized. Moreover, no such disallowance has even been considered by the assessing officer in any of the other years, that is, in previous years or subsequent years. In view of this, the assessee was right in his submission that the rejection of claim is arbitrary and not justified in law. Accordingly, it was held by ld. CIT(A) that there is no merit in the action of the assessing officer and therefore the addition was correctly deleted by ld CIT(A).

  ---

• 2025 (3) TMI 293
  Disallowance on account sponsoring of education expenses for persons specified u/s 40A(2)(b) - AO observed that the amount incurred towards education of son and daughter of the Director of the assessee company was not incurred wholly and exclusive for the purpose of business and there was no any nexus between foreign education incurred on behalf of the children of the Director of the assessee company and the business of the company and disallowed u/s 37 HELD THAT:- AR relied upon judgment passed in the case of Ras Information Technologies (P) Ltd. [ 2010 (7) TMI 670 - KARNATAKA HIGH COURT] in which held that once the expenses incurred is not a capital expenditure or an expenditure incurred for personal expenses of the assessee or the said expenditure is for which is not an offence or is not prohibited by law and was not spent in adventuring in any souvenir, brochure, tract, pamphlet or like published by a political party, the assessee is entitled to the benefit of deduction u/s 37 of the Act. In other words, the money spent by an assessee either in sponsoring a student or towards educational expenses of a student, in a discipline, in which the assessee is carrying on its business, is a valid expenditure and is entitled to deduction. On the basis of foregoing discussion and established principle of law, this ground deserves to be allowed in the favour of assessee. Disallowance on account of write-off of advances for the purpose of lease hold improvements - In similar facts, said issue already been decided in the favour of assessee in assessee / appellant s case for the AY 2004-05 position in law is well as settled as far as the provisions of section 36(1)(vii) read with section 36(2) of the Act is concerned. After 1/4/1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrevocable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee, subject to the provisions of section 36(2) that such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year. Disallowance u/s 14A - AO computed disallowance u/s 14A applying Rule 8D of the Rules - CIT(A) rejected the same and recomputed disallowance applying proportionate method was submitted back to the Ld. AO for re-computation of disallowance with a direction to not to apply Rule 8D and in compliance thereof, the Ld. AO vide order recomputed the disallowance as per the proportionate method and on the grounds of consistency, the proportionate method should be accepted as the correct method for computation of disallowance u/s 14A of the Act. CIT(A) upheld the computation of AO but granted partial relief by excluding interest expenditure exclusively incurred by the Appellant on loans, which were specifically availed for acquisition of aircraft on which taxable income was earned and accordingly, restricted the disallowance. AR contended that the disallowance u/s 14A r/w rule 8D is required to be recomputed by taking into account in the Average Value of investments - as submitted that disallowance should have been restricted to amount of dividend income earned during the relevant previous year - HELD THAT:- Fact situation mentioned hereinbefore and by following binding judicial precedents in order to resolve dispute in proper perspective remitting this issue back in the file of the AO for the consideration afresh in accordance with the prevailing laws and passed order as per law after providing effective opportunity of being heard to the assessee. Disallowing the excess depreciation of computer peripherals - @ 15% OR @ 60% - HELD THAT:- Hon ble High Court while deciding appeal preferred by Revenue in the case of CIT vs. Birala Soft Ltd. [ 2011 (12) TMI 608 - DELHI HIGH COURT] observed that the question raised in the present appeal is whether the computer peripherals like CD writer, Printer, Network, Cable, Switches, Isolators etc. has decided against Revenue and in favour of the assessee in view of the decision in CIT vs. BSES Rajdhani Powever Ltd. [ 2010 (8) TMI 58 - DELHI HIGH COURT] Revenue assails above order before Hon ble Apex Court by way of Special Leave to appeal, which came to be dismissed [ 2014 (2) TMI 1343 - SC ORDER] On the basis of fact situation, mentioned hereinbefore that UPS is integaral part of computer and so entitled to depreciation @ 60% and we do not see any infirmity in the order of the Ld. CIT(A) on this issued and hence ground rasied by Revenue is liable to be dismissed. Addition as made on account of duty credit scripts but not utilized ignoring the material fact that the duty credit was offered for taxation by the assessee - HELD THAT:- Fact situation emerged from above discussion leads us to conclude that ground raised by Revenue is liable to dismissed as no anything contrary brought on record by Revenue to deviate from the observation and findings expressed by the Ld. CIT(A) and hence we inclined to dismiss this ground.

  ---

• 2025 (3) TMI 292
  Addition u/s 68 - unexplained unsecured loans received - HELD THAT:- Before the AO, the assessee filed all the details at the very fag end of the assessment proceedings in the month of March when the time barring limit was about to expire and the AO has to complete the assessment on 31.03.2016. In the instant case, to establish the creditworthiness certain details were asked by the AO since October 2015 however, after expiry of almost 5 months, part of these details were filed before the ld AO leaving no time to AO to examine all the details to find out the creditworthiness of the creditors. AO was not provided sufficient opportunity to examine the details filed by the assessee before him nor the additional details filed before the ld CIT(A) were confronted by the CIT(A) before reaching to the conclusion that all lender companies have creditworthiness and deleted the addition. Therefore, in the interest of justice, the matter is set aside to the file of the AO with a direction that all the documents be examined and decide the matter in accordance with law. Appeal of the revenue is allowed for statistical purposes.

  ---

• 2025 (3) TMI 291
  Revision u/s 263 - validity of the reassessment proceedings - reopening the case by directing the AD to make fresh assessment against the provisions of law and natural justice - Addition u/s 68 as long term of capital gain received in the form of accommodation entries of the companies - HELD THAT:- From the perusal of the reasons recorded it is found that the Assessing Officer has not given the details of transactions of capital gain alleged as the accommodation entry in the shape of penny stock. AO further observed that the assessee has obtained bogus accommodation entries whereas the assessee has declared long term capital gain from the sale of two companies. It appears that AO has recorded the reasons in mechanical manner without any independent application of mind and without making any enquiry nor making any other of verification the information received by him with the information available on record. Also found that from the face of the reasons, it is clear that they are incomplete and vague, therefore, in our considered opinion, the notice issued u/s 148 in the case of the assessee is bad in law and consequently order passed u/s 147 r.w. s 144B is invalid. Since the order passed u/s. 144 r.w.s.144B of the Act is an invalid order, any further proceedings originated from the said order cannot be held as valid proceedings which includes the revisionary proceedings initiated by the ld. Pr. CIT, Sambalpur u/s. 263 of the Act. Thus as relying on Westlife Development Ltd. [ 2016 (6) TMI 1208 - ITAT MUMBAI] we quash the revisionary order passed u/s 263 as the re-assessment order passed u/s 144/143(3) is already held as invalid. Thus, the additional grounds of appeal allowed.

  ---

• 2025 (3) TMI 290
  Addition u/s. 69A r.w.s. 115BBE - cash deposits made during demonetization period into various bank accounts in the form of Specified Bank Notes - CIT(A) deleted addition as held that the assessee s submissions with regard to cash deposits during demonetization period is supported with documents and evidence HELD THAT:- When the sale has been reflected in the books of accounts and offered to tax, adding the same again would amount to double taxation, which is impermissible in law. The cash sales made by the assessee have been credited in the books of accounts and the same form part of the assessee s cash book. On these facts, it could be very well said that the assessee s claim was backed up by relevant evidences. Thus, the assessee has discharged the burden of proving the source of the cash/SBN deposited in the bank and the AO failed to rebut the same. The allegations/statistics of entire sales made from 01.11.2016 to 08.11.2016 by accepting the SBNs relied upon by the AO to take an adverse view is not backed up by relevant evidence/material and therefore the action of AO, which has been rightly set aside by the ld.CIT(A) and hence cannot be interfered. The finding of the AO that such abnormal sales could not be achieved before the announcement of demonetization by the Government, is bereft of any concrete evidence to prove otherwise on record. The reliance on the decision of the Hon ble supreme court in the case of Durga Prasad More, is not applicable to the present facts of the case, as the assessee has furnished the documents and records which are submitted to the statutory authority like TNVAT department and discharged the taxes on monthly basis, apart from the books of accounts audited by a Chartered accountant. No addition could be made merely on the basis of suspicion, conjectures and surmises. Since cash generated out of sales has been credited in the books of accounts, the provisions of section 69A could not be invoked in the present case. The impugned additions are not sustainable in the eyes of law and hence, we are of the considered view that the action of the CIT(A) in deleting the addition need not be interfered - Decided in favour of assessee.

  ---

• 2025 (3) TMI 289
  Levy of capital gains u/s 45 considering demerger of the treasury undertaking as non-qualifying demerger - HELD THAT:- Provisions of Section 2(19AA)(ii) which mandates that all the liabilities relatable to the undertaking are also to be transferred to the demerged company, and considering the explanation of the Counsel that the existing liabilities of Rs. 37.15 crores were knocked off against the transfer of assets of Rs. 39.23 crores is against the provisions of the Section 2(19AA)(ii). Thus, it can be found that the assessee has only transferred the assets while keeping the liabilities with them. The explanation of the assessee that the liability belonging to other segments whereas assets belong to the Treasury Segment cannot be accepted. Hence, it can be held that the Revenue Authorities have rightly treated the demerger as transfer of capital assets. The process of demerger generally consists of following transactions - Transfer of assets and liabilities by the transferor company to the resulting transferee company, Transfer/ extinguishment of shares of the transferor company and Issuance of shares of resulting transferee company to the shareholders of the transferor company. All the abovementioned transactions have been specifically exempted from the levy of capital gains tax by virtue of various clauses forming a part of Section 47 of the IT Act subjected to the applications of provisions of Section 2(19AA) of the Act. It is also settled position of law that the scheme of demerger once approved by the Hon ble Jurisdictional High Court, it cannot be re-visited by any statutory authority. At the same time, the provisions of Income-tax Act had prescribed the conditions under which the benefits can be accorded in the case of demerger which means that mere fact that ipso facto does not entitle an assessee to claim benefit. The harmonious interpretation of the Corporate Law and Income-tax Law and the Orders of the Hon ble High Court is sine qua non for the benefit of the tax payer as well as for the interest of the exchequer. The vary purpose of demerger which is for better conducting of the business cannot be curtailed by the Income-tax Department and the assessee would be eligible for business in accordance with the provisions of Section 2(19AA) Section 2(22)(a) Section 47. In the instant case, the assessee failed to comply with the provisions of Section 2(19AA) (ii) (iii). Hence, the order of the Ld. CIT(A) on these grounds are affirmed. Decided against assessee. Disallowance u/s 14A - AO was not satisfied with the correctness of the claim of the assessee in respect of expenditure incurred in relation to income which does not form part of total income - HELD THAT:- Respectfully following the decision of the Tribunal in assessee s own case for AY 2008-09 [ 2018 (8) TMI 2167 - ITAT AHMEDABAD] the disallowance made by the Assessing Officer u/s. 14A to the extent of interest expenses is hereby deleted. Nature of expenses - Product registration expenses - AO held that the Marketing Intangibles are created by these product registration expenses and hence, it is a capital expenditure not allowable u/s 37(1) - HELD THAT:- As decided in own case [ 2018 (8) TMI 2167 - ITAT AHMEDABAD] for AY 2008-09 assessee has incurred these expenses for registering its product in various countries to enable the assessee to sell the product in such counties. We observed that in absence of registration, the assessee would not be able to sell the product in the foreign countries as per the regulatory requirement of different countries, it is mandatory to get the product of the assessee registered in respect of counties for the purpose of selling in the overseas markets. Therefore, the finding of the assessing officer that assessee is getting benefit of enduring nature of registration of product has no merit. Reduction of claim u/s 80IC to Baddi Unit - as per AO since the Baddi unit of the assessee-company only possesses manufacturing assets and is engaged solely in manufacturing activities, the profits of the Baddi unit should be restricted to those derived from manufacturing alone - HELD THAT:- We find that this issue stands covered in assessee s own case [ 2018 (8) TMI 2167 - ITAT AHMEDABAD] provisions of section 80IC do not require assessee to split the activities and contribute the profit attributable to separale activities which constitute one business. Also considered the decision Cadila Healthcare Ltd. [ 2012 (6) TMI 13 - ITAT AHMEDABAD ] wherein on identical facts on claim of deduction from eligible profits derived by a Baddi unit of a pharmaceutical company it is held that that eligible profits should not be artificially segregated in to manufacturing, marketing and brand profits. Scrap Sale Income - assessee had earned miscellaneous income comprises of scrap income from Baddi unit - HELD THAT:- We find that the issue stands covered by the decision of Tribunal in assessee s own case for AY 2009-10 [ 2022 (3) TMI 919 - ITAT AHMEDABAD ] as held that compensation received by industrial undertaking from insurance companies on account of loss raw materials and finished products in fire, would be eligible for deduction u/s. 80IA of the Act. In view of the above, we do not find any infirmity on the order of ld. CIT(A) in allowing the claim of deduction u/s. 80IC of the Act on scrap income. Deduction u/s 80IC on the disallowance made under section 40(a)(ia) was disallowed - DR argued that the enhancement of profit on account of disallowance u/s 40(a)(ia) cannot increase the deduction u/s 80IC - HELD THAT:- AO has erred in disallowing the deduction and we uphold the order of the Ld. CIT(A) on this issue. Disallowance on account of provision for expiry of goods - AO held that this is not an expenditure, but a future expectation of incurring certain expenditure which may be more or less than for what provision is made - HELD THAT:- CIT(A) correctly deleted the addition on the ground that the assessee has recognized the provisions for sales return based on scientific basis and past experience and hence the same was alloawable expenditure.

  ---

• 2025 (3) TMI 288
  Application of provisions of Section 44AD - Net profit estimation - assessee firm is earning income only from IPD services, room rent, X- ray charges, etc. - HELD THAT:- We find that the activity carried out by the assessee firm are in the nature of business and not profession as per provisions of section 44AD (6) and section 44AA(1) of the Act. A combined reading of the above two sections clearly establishes that the provisions of Section 44AD do not apply to individuals engaged in the medical profession. However, it is submitted that the assessee is a partnership firm providing services such as patient room rentals, X-ray facilities, and other ancillary inpatient department (IPD) services. The income generated from doctors fees is separately declared by the respective doctors in their individual tax returns. Therefore, the assessee cannot be classified as a person engaged in the medical profession. We respectfully rely on the rulings in Dr. K. K. Shah [ 1981 (7) TMI 39 - GUJARAT HIGH COURT] and Shalini Hospitals [ 2006 (5) TMI 138 - ITAT HYDERABAD-B] which support this position. Accordingly, the turnover of the assessee firm should not be considered as professional income. The addition based solely on the partner s statement, is unwarranted, particularly when the remaining receipts have been treated as business income and the net profit rate has been accepted by the Ld. AO. See S. Khader Khan Son [ 2013 (6) TMI 305 - SC ORDER] . The assessee has consistently maintained a net profit ratio ranging between 6% and 11% on its turnover in preceding and succeeding years, which has been accepted by the revenue authorities. Assessee appeal allowed.

  ---

• 2025 (3) TMI 287
  Validity of the jurisdiction - Validity of assessment made u/s 143(3) by ITO-4(1), Raipur in absence of order u/s 127 - whether or not the assessment order passed by the ITO-4(1), Raipur u/s. 143(3) dated 31.03.2015 can be sustained in absence of any order of transfer u/s. 127 of the Act passed by the Pr. CIT, Kolkata? - HELD THAT:- We are of a firm conviction that in terms of Section 120 pursuant to a CBDT direction, it though might have been possible for the CIT, Kolkata-2, Kolkata to have authorized vesting the exercise of powers and performance of functions of one Income- tax authority subordinate to him to another Income-tax authority subordinate to him, but are afraid that there was no power vested with him u/s. 120 of the Act to have transferred the jurisdiction to an A.O who was not sub-ordinate to him. Accordingly, we are of the view that the claim of DR which in turn, is based on the order sheet noting dated 08.09.2014that the case of the assessee company had been transferred to ITO-1(1), Raipur from ITO-4(1), Kolkata pursuant to the order passed u/s.120 dated 08.08.2014 of the CIT, Kolkata- 2, Kolkata cannot be accepted and thus, fails. Whether transfer of the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur i.e. inter se the A.O s who were not sub-ordinate to the same CIT could have been carried out without passing an order as required under sub-section (2) of Section 127 of the Act.? - As the assessee company had not called in question the jurisdiction assumed by the A.O, based on, viz. (i) territorial area; (ii) persons or classes of persons; (iii) income or classes of income; or (iv) cases or classes of cases, but had rather assailed the validity of the assessment order passed by the ITO-4(1), Raipur in absence of an order of transfer that was statutorily required to have been passed by the CIT-2, Kolkata u/s. 127 of the Act, therefore, it would not be circumscribed by the restriction contemplated under sub-section (3) of Section 124 of the Act. Accordingly, we are of a firm conviction that the judgment of Kalinga Institute of Industrial Technology [ 2019 (3) TMI 1996 - ORISSA HIGH COURT] is distinguishable qua the issue involved in the present case of the assessee company before us. Thus, in absence of any order of transfer passed by the CIT, Kolkata-2, Kolkata u/s.127(2) of the Act, which was the very foundation for transferring the case of the assessee company from ITO-4(1), Kolkata to ITO-1(1), Raipur and finally to ITO-4(1), Raipur, the latter had invalidly assumed jurisdiction and framed the assessment vide his order u/s.143(3) of the Act, dated 31.03.2015. Accordingly, the assessment framed by the ITO-4(1), Raipur vide his order passed u/s.143(3) of the Act, dated 31.03.2015 in absence of an order of transfer u/s.127 of the Act having been passed by the CIT, Kolkata is quashed for want of valid assumption of jurisdiction. Assessment order quashed for want of valid assumption of jurisdiction by the ITO-4(1), Raipur i.e. in absence of an order of transfer u/s. 127 of the Act. Decided against revenue.

  ---

• 2025 (3) TMI 286
  Exemption u/s 11 - Whether assessee is not covered within the meaning of proviso to section 2(15) as assessee carrying on objects of the, General Public Utility (GPU)? - HELD THAT:- We noted that neither the AO nor the CIT(A), in the present case, has not considered the activities of the assessee as elaborated in Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT ], whether aim of the trust or GPU is charitable or not? To consider the principle lay down by Hon ble Supreme Court in the above case, we set aside the order of CIT(A) and that of the AO, and, remand the matter back to the file of the AO. In terms of the above, the matter is restored back to the file of the AO, and the appeal of the revenue is allowed for statistical purposes.

  ---

• 2025 (3) TMI 285
  Penalty u/s 271AAB - during the course of Search Seizure proceedings, the Director of the company had declared the undisclosed income - CIT(A) has deleted the penalty on the ground that show cause notice issued by AO are vague and are silent about the default of the appellant - HELD THAT:- AO has categorically specified the charge of the penalty in the assessment order. Then, in the penalty order the AO has again discussed 271AAB(1A) of the Act. Thus, at the time of assessment, the Assessee was made aware that penalty proceedings under section 271AAB(1A) of the Act, has been initiated for undisclosed income. In the assessment order, the AO has specifically mentioned the amount of undisclosed income also. Therefore, the Assessee was categorically made aware about the amount of undisclosed income for which penalty under section 271AAB(1A) of the Act was initiated. As far as notice dated 05.06.2021 is concerned, these are computer generated notices and the Assessing Officer do not have any scope to make changes other than putting the dates, PAN, Assessment Year etc. Respectfully following case of Sandeep Chandak [ 2017 (12) TMI 70 - ALLAHABAD HIGH COURT] and Smt. Taradevi R. Bafna [ 2023 (7) TMI 894 - ITAT PUNE] we hold that the order passed by ld.CIT(A) is not sustainable. Hence, for all the reasons discussed, we set aside the order of ld.CIT(A). Accordingly, Ground raised by the Revenue is allowed.

  ---

• 2025 (3) TMI 284
  Assessment u/s 144 - assessee argued that they had not been given a fair opportunity to present their case and provide evidence to support their claims - AO recorded that despite such show cause notice, neither the assessee furnished any reply nor any evidence to substantiate the cash deposit - AO made addition on account of cash deposit in absence of evidence - HELD THAT:- Assessee explained that notice under section 250 was issued by CIT(A) for filing submission by 09.01.2022 and again vide notice dated 21.02.2022, the assessee filed application for adjournment, copy of screen shot of ITBA portal is filed. Assessee sought one-month time and thereafter no notice was received by the assessee. It was also explained the that it is not the case where the assessee has not made compliance, rather, the assessee is interest in pursuing his appeal and prayed that in the interest of justice, matter may be restored back to the file of Assessing Officer to allow the assessee to file submissions and evidence in support of cash deposit. Considering the facts and circumstances of the case and keeping in view the principles of natural justice, restore the matter back to the file of Assessing officer to decide the issue afresh. The matter is restored to the file of Assessing Officer keeping in view of the facts that assessment was also completed under section 144. Grounds of appeal raised by the assessee are allowed for statistical purposes.

  ---

• 2025 (3) TMI 283
  Disallowance of interest tax payment - Whether CIT(A) erred in not allowing the interest tax paid inspite of the specific provisions of Section 18 of the Interest-tax Act? - HELD THAT:- Assessee is eligible to claim the interest tax payable for any assessment year shall be deductible from the income of the assessee. Assessee originally had paid the applicable interest tax in the respective assessment years 1993-94 to 1997-98, which was later refunded by the Revenue in accordance with the decision of this Tribunal. However, the interest tax liability arose to the assessee during the A.Y 2018- 19 by way of OGE of the Revenue pursuant to the decision of the Hon ble Madras High Court . [ 2014 (9) TMI 429 - MADRAS HIGH COURT] , which was subsequently confirmed by Hon ble Supreme Court by dismissing the SLP filed by the assessee . Accordingly, the interest tax liability for the A.Ys 1993-94 to 1997-98 has been discharged by the assessee during the A.Y 2018-19 and claimed as expenditure. Assessee s claim of interest tax expenditure during the A.Y 2018-19 disallowed by the A.O and that of the CIT(A) is erroneous and hence, we set aside the order of the CIT(A) and allow the claim of the assessee of interest expenditure for the A.Y 2018-19. Thus, the grounds of appeal raised on this issue of the assessee is allowed.

  ---

• 2025 (3) TMI 282
  Rejection of books of accounts - AO estimating 8% of turnover - HELD THAT:- AO has observed that, the assessee had not submitted the Profit and loss account for the few projects of the clients and hence decided to reject the entire books of accounts, which is not permissible as per law. AO on one hand rejects the books of accounts of the assessee and on the other goes on to adopt the contract revenue declared by the assessee in its books of accounts for the purpose of estimation of revenue at 8% which only goes to prove that the AO accepts the value of turnover reported by the assessee in its books and has only arbitrarily rejected the books of accounts without giving any cogent reasons in doing so. In the present case, the AO has not given any specific finding that the assessee has not followed continuously accounting method. As in the case of CIT Vs. Woodword Governor [ 2009 (4) TMI 4 - SUPREME COURT] held that the accounting method followed by an assessee continuously for a given time period has to be presumed to be correct till the AO comes to know the reasons to be given that system does not reflect the true profits. we are of the considered view that, the AO has grossly erred in rejecting the books of accounts of the assessee in the above factual matrix. We also gone through the reasons given for rejecting the books of accounts by the AO is not as per the provisions of Section 145 of the Act and allegations made in the AO s order is dehors the facts. Further, it is noted that the Assessee has furnished the details of all the projects giving true picture of turnover and the corresponding loss / profit earned in the respective projects in the consolidated statement showing the percentage of completion method by offering revenues on year-on-year basis by following the AS 7 along with ICDS prescribed under the Act. Thus, addition made by the AO, based on the estimation of profit @ 8% on the turnover derived from the books of accounts is not justified and arbitrary. Addition on account of difference in contract receipts as per 26AS and Books of accounts - CIT(A) deleted addition - HELD THAT:- On perusal of the submission made by the Ld.AR, we note that the assessee has maintained the project wise details of all the clients for having executed the projects reported the turnover and profit based on percentage completion method. Further it is also noted that, the assessee has furnished the reconciliation of the turnover of the clients before ld.CIT(A), wherein the AO had not accepted the explanation of the assessee in respect of 4 clients in remand report. On perusal of the statement of turnover calculation as per AS 7 for the A Y 2018-19, we find the argument of the Ld.AR as submitted the reconciliation of the Turnover along with 26AS has been carried out correctly. Therefore, we are of the view that the addition made by the AO is not justified on this issue and hence dismiss the ground of the revenue by affirming the impugned order of the Ld.CIT(A) on this issue. Addition in respect of waiver of loan as income under the head profits and gains of business or profession - CIT(A) deleted addition - HELD THAT:- Addition being only the principal portion of the loan being waived cannot be taxed as income under the head profits and gains of business or profession and hence cannot be subject to tax as per the provisions of section 28(iv) by treating the same as income of the assessee. The reliance made by the ld.AR upon the decision of Mahindra and Mahindra Ltd.[ 2018 (5) TMI 358 - SUPREME COURT] wherein in respect of application of section 28(iv), which refers to nonmonetary benefit or perquisite, whether convertible into money or not, it was held that in the context of waiver of loan, the provisions of section 28(iv) would not be applicable since the benefit derived is in the form of money. Therefore, in the present case, the nature of loan would be of no relevance, since the interest paid on loan has been regularly claimed and allowed as expenditure and hence nature of loan cannot be disputed at this juncture and accordingly, the exercise of ascertaining the purpose of loan as contended by the Revenue does not arise. Revenue appeal dismissed.

  ---

• Benami Property

• 2025 (3) TMI 281
  Benami Property Transactions - Provisional Attachment order had held that the movable properties comprising of total cash of Rs. 98,93,34,581/- and total gold bullion weighing 166.27 kg are the Benami Property - Adjudicating Authority has not confirmed the Provisional Attachment Order Whether the provisions of Section 2(9)(D) of the PBPTA require it to be shown that the Benamidar holds the benami property for the benefit of the Beneficial Owner, who is not traceable or fictitious? -HELD THAT:- The circumstances under which the statement or its retraction is to be accepted or rejected need to be evaluated by the Tribunal/ Court. Very circumstance of working in unison among the three partners while shifting their positions at the time of tendering statements and retractions, which are supposed to be true and voluntary, cast doubt on the veracity of their narrations. The recovery of huge cash and gold bullion of substantial amount and quantum cannot be overlooked. The seizure was made by the Appellant only of that amount of cash and the quantum of gold which was not even explained in the parallel books of account, besides, no mention thereof in the regular books of account. The reason stated by the Respondent that Shri S Nagarathinam could not have kept record of these recoveries because the Respondent undertook sand sale at many places cannot cut much ice in view of the Firm having established businesses which how could not even keep regular accounts. It is not convincing that the Firm was clueless of its business activities so as to maintain its record even in informal accounting. It cannot also be ignored that the detection and the recovery of unaccounted cash and gold bullion happened within a months time of the demonetization. The rush by the Respondent as reflected in the filing of the ITRs for the seizures effected under the PBPTA on the same date for the AYs 2016-17 2017-18 cannot but show their attempt to bypass the provisions of the PBPTA. It, therefore, appears to us that the seized cash and gold bullion are Benami Properties for which the Respondent lent its name rather disclose the name of the Beneficial Owner(s). We find that the transactions or the arrangements relating to seized movable properties are Benami within the import of Sub-Section 2(9)(D) of the PBPTA. We, therefore, set aside the Impugned Order as being devoid of merit and allow the Appeal. The pending applications are accordingly disposed of.

  ---

• Customs

• 2025 (3) TMI 280
  Smuggling of Gold Bar - discharge of burden of prove - Section 123 of the Customs Act - HELD THAT:- Chapter 14 of the Customs Act deals with confiscation of goods and conveyance and imposition of penalties. Before proceeding with confiscation of goods, the Officer of Customs not below the rank of an Assistant Commissioner of Customs shall cause notice informing the grounds on which he proposed to confiscate the goods or to impose penalty after affording reasonable opportunity, goods improperly imported can be confiscated under Section 111 and penalty can be imposed under Section 112 of the Customs Act. Gold with foreign marking is a dutiable goods which requires valid import document under law. The statement of M/s Surana Corporation Limited and their purchase documents reveals that M/s Surana Corporation importing gold from (1)NATAXIZ (2) Bank of Novascotia (3) Standard Bank through M/s.MMTC Ltd., whereas gold bar seized have the marking of Commerz Bank, Switzerland. Further enquiry with M/s Surana Corporation in respect of the said discrepancies, certain documents were produced by M/s Surana Corporation. None of these documents correlate the gold bar with marking of Commerz Bank seized from Rajan with the invoices and bill of entry packing list furnished by M/s Surana Corporation. Hence, it is apparent that when the statute under Section 123 cost burden the possessor of the goods reasonably believed to be a smuggled goods to distract the burden. In this case, the appellant had miserably failed to distract the said burden. The order in original as well as the order in appeal had disclosed this fact in detail. It has been concluded that the gold bar seized does not supported by valid import documents either at the time of seizure or later. Conclusion - The imposition of the penalty on the appellant was justified, but the penalty amount was reduced considering the appellant s role. The Court found no error in the CESTAT s decision. Appeal dismissed.

  ---

• 2025 (3) TMI 279
  Time limitation to issue SCN - SCN issued by the appellant quashed on the ground that it was issued beyond the limitation period of 90 days proscribed in the Regulation - HELD THAT:- There are no doubt that the show cause notice dated 02.12.2014 issued by the Additional Director General, Directorate of Revenue Intelligence, Chennai Zonal Unit would definitely be qualified to be an offence report. But then, there is nothing on record to show that the appellant was in receipt or was at least in the knowledge of the aforesaid show cause notice dated 02.12.2014. In the affidavit filed in support of the writ petition, the respondent / writ petitioner has no where averred that the authority who issued show cause notice impugned in the writ petition was cognizant of the show cause notice dated 02.12.2014. In A.M.Ahamed and Company Vs. Commissioner of Customs (Imports), Chennai) [ 2014 (9) TMI 237 - MADRAS HIGH COURT ], it was specifically mentioned that copy of the show cause notice issued to the writ petitioner therein on 08.05.2010 was marked to the Commissioner of Customs (Imports), Chennai. In this case, there is nothing on record to show that copy of the show cause notice dated 02.12.2014 was issued to the Commissioner of Customs, Tuticorin. Conclusion - The show cause notice dated 02.12.2014 could qualify as an offence report, but there was no evidence that Shanmugasundaram was aware of this notice. Appeal allowed.

  ---

• 2025 (3) TMI 278
  Dismissal of appeal for default due to the appellant s non-appearance at the hearing - applicability of Section 35C of the Central Excise Act, 1944, and Rule 20 of CESTAT (Procedure) Rules, 1982 - HELD THAT:- The Division Bench of the Hon ble Supreme Court in Benny D Souza Ors vs Melwin D Souza Ors [ 2023 (11) TMI 1309 - SC ORDER] , heard an appeal wherein the major contention of the appellant was that the High Court should have dismissed the appeal for non-prosecution in terms of the order XLI Rule 17 CPC and particularly the Explanation thereto instead of dismissing the appeal on merits. The Hon ble Court after extracting Order XLI Rule 17 of the CPC held that the Explanation to the Order categorically states that if the appellant does not appear when the appeal is called for hearing it can only be dismissed for non-prosecution and not on merits and went on to allow the appeal. Considering the statutory position and the views expressed by the Hon ble Apex Court in the various judgments, adjournments can t be given for the mere asking without any serious reason, backed with proof, for the non-appearance of the Appellant or his authorised representative on the dates of public hearing. we find that no purpose would be served in continuing with these appeals and hence reject the same for default as per Rule 20 of CESTAT (Procedure) Rules, 1982. Appeal disposed off.

  ---

• 2025 (3) TMI 277
  Determination of applicability of MRP/RSP based assessment of imported goods cleared to/meant for industrial consumers as declared by the appellant in their Bills of Entry as NOT FOR RETAIL SALE - Extended period of limitation - penalty. HELD THAT:- It is clear from the evidences on record that all the goods were cleared/sold to industrial consumers directly or through their distributors/stockists by the appellant. Since, all the imported goods in dispute were cleared to industrial consumers only, revision of RSP declared at the time of import will also have no significance.; hence, the demand on this count cannot be sustained. This Tribunal in the case of Hi-Tech Computers [ 2024 (4) TMI 1234 - CESTAT BANGALORE] following the judgment of this Tribunal in the case of Starlite Components Ltd. [ 2013 (4) TMI 624 - CESTAT, MUMBAI] in similar circumstances held that the goods imported and cleared to industrial consumers cannot be assessed to CVD under Section 4A of the Central Excise Act, 1944. The claim of the appellant is that in most of the cases, they have cleared the imported goods on payment of SAD; however, in few/stray cases even though, they have not paid SAD at the time of its import but later cleared on payment of applicable Sales Tax on sale of such goods, hence the demand on this count also not sustainable. Extended period of limitation - penalty - HELD THAT:- From the records, since it is not clear as the extent of imported goods cleared on payment of SAD at the time of import and the procedure followed later under the said N/N.102/2007, the matter is remanded to the adjudicating authority to examine the demand relating to SAD. The appellant all along has been clearing the goods declaring in the respective Bills of Entry that the goods are not meant for retail sale and in fact no evidence brought on record indicating that the goods are ultimately not sold to industrial consumers. Therefore, invocation of extended period of limitation cannot be sustained. Also, on the same ground, penalty imposed on the company as well as on other appellants cannot be sustained. Therefore, the demand attributable to differential additional duty (CVD) applying MRP/RSP based assessment cannot be sustained. Conclusion - i) Goods declared as not for retail sale and sold to industrial consumers are exempt from MRP/RSP-based assessment under Section 4A of the Central Excise Act, 1944. ii) The Legal Metrology (Packaged Commodities) Rules, 2011, do not apply to goods sold to industrial consumers, even if through distributors, as these are not retail sales. iii) The demand for SAD requires further examination, and the matter is remanded to the adjudicating authority for this purpose. iv) The invocation of the extended period of limitation and penalties is unsustainable due to the lack of evidence of suppression of facts. Appeal allowed by way of remand.

  ---

• 2025 (3) TMI 276
  Classification of imported goods under the Customs Tariff Act - HELD THAT:- This Bench in the case of Commissioner of Customs (Port), Kolkata Vs. Carbon Resources Private Limited [ 2019 (1) TMI 1891 - CESTAT KOLKATA] where it was held that the imported goods is a carbon additive, used in Steel and Casting Industry (not used as fuel) and classifiable under CTH 38249911, attracting BCD @ 7.5% and CVD @ 12.5%. Appeal of Revenue dismissed.

  ---

• Corporate Laws

• 2025 (3) TMI 275
  Eligibility of Appellant to submit a resolution plan under Section 29A of the Insolvency and Bankruptcy Code, 2016 - locus to seek reconsideration of its resolution plan after the refund of the Earnest Money Deposit (EMD) - HELD THAT:- The default under Section 164(2) had occurred on 01.12.2017, the date on which the GADPPL failed to file financial statements and annual returns for a continuous period of three years. Thus, Mr. Avanish Kumar Singh was ineligible to be a director as per provisions of Section 164(2) of the Companies Act, 2013 and the Appellant company also accordingly was not eligible to be a resolution applicant in terms of provisions of clause (e) of Section 29A of IBC, 2016. Further, it is noticed that the Appellant, after writing repeated reminders to RP, had taken back the EMD amount, and it is only as an afterthought, after nearly six months, that the Interlocutory Application was filed for consideration of the resolution plan. This clearly appears to be an attempt to delay the process of CIRP/liquidation. The CoC, in its commercial wisdom, has not accepted the resolution plan and had directed the liquidation of the Corporate Debtor. The commercial wisdom of the CoC regarding acceptance/rejection of the resolution plan is non-justiciable . Conclusion - The Ld. NCLT had rightly refused to intervene in the decision of the CoC and its commercial wisdom in rejecting the resolution plan of the Appellant. There is no ground to interfere with the order of the Ld. NCLT, and accordingly, the appeal fails and is dismissed.

  ---

• Securities / SEBI

• 2025 (3) TMI 274
  Insider trading - use of Unpublished Price Sensitive Information - connected persons - restraining the appellants from dealing in the securities market and directing to disgorge an amount and to pay penalties mentioned in the order. Whether the noticees are insiders in terms of Regulation 2(1)(g) of the PIT Regulations, being connected persons ? - HELD THAT:- Undisputedly, the appellant No. 1 was in close association with KMP of Biocon and Mr. Arun Chandawarkar, CEO and joint MD of Biocon and CFO of Biocon Mr. Sidharth Mittal both were directly involved in the negotiations on the Biocon-Sandoz deal as also in CIMAB licensing deal. Appellant No. 1 was undoubtedly in frequent and regular communication with senior managerial persons of Biocon, who had direct knowledge of UPSI. Keeping the twin sensitive assignment being handled by the appellant No. 1 (a) advising on CIMAB licensing deal, which allowed him frequent access to CEO and CFO during the year long deal period while these KMPs were also negotiating the Sandoz deal; and (b) handling trading accounts of the CMD and Joint CMD of the company, we hold that the preponderance of probabilities test was correctly applied by the learned WTM. The appellant nos. 1 is a connected person in terms of Regulation 2(1)(g)(i) of the PIT Regulations by having access to UPSI, and the appellant No. 2 is a connected person in terms of Regulation 2(1)(d)(i) of the PIT Regulations. Possession of Unpublished Price Sensitive Information (UPSI) - Whether the trading behavior of the appellant s shows that they were in possession of UPSI? - Considering the fact that there was a spike in the trading of Biocon within four days of the said UPSI period suggests that such trades were made based on the knowledge of the UPSI. No error in the finding recorded by the learned WTM that there was a strong preponderance of probability that the trades executed by the appellants in Biocon during the UPSI period, were guided by UPSI on account of appellants being insiders . We are also in agreement with the finding of the learned WTM of holding the appellants as connected persons within the meaning of Regulation 2(1)(d)(i) of the PIT Regulations and not on the basis of possession of UPSI under the Regulation 2(1)(g)(ii) of the PIT Regulation, which distinguishes ruling in case of Balram Garg [ 2022 (4) TMI 945 - SUPREME COURT ] In our considered view, in case of insider trading , the evidence cannot be direct but circumstantial, since evidence with respect to communication channel may not be on record. Often such sensitive information in case of connected persons falling under 2(1)(d)(i), need not be necessarily through an email or a letter because, in the instant case, appellant was admittedly working closely with joint CMD CEO and CFO on cross-border licensing deal and was in frequent communication with them for a long period of time, while they were simultaneously working on another cross- border deal (Sandoz-Biocon deal). Appeal dismissed.

  ---

• PMLA

• 2025 (3) TMI 273
  Money Laundering - seeking grant of bail - appellants acted in collusion with the main accused and became beneficiaries of the proceeds of crime - HELD THAT:- It is not in dispute that the co-accused have been granted bail. Apart from that, we have taken note of the value of the proceeds of crime that the appellants are alleged to have been involved with. We have also perused the rejoinder affidavit filed on behalf of the appellants which indicates the specific roles played by the coaccused who have been granted bail. Suffice it is to state that the co-accused who have been granted bail are involved with higher amounts of proceeds of crime in comparison to the appellants. Conclusion - On the grounds of parity, bail is allowed. Bail application allowed.

  ---

• 2025 (3) TMI 272
  Money Laundering - involvement in a crime of defalcation of huge sum in the matter of managing the award of tenders to PHED - twin conditions under Section 45 of the PMLA - HELD THAT:- In the case of Manish Sisodia [ 2024 (8) TMI 614 - SUPREME COURT ] the Court has not exercised the powers under Article 142 of the Constitution of India. The Court has held that the twin conditions under Section 45 of the PMLA cannot override the constitutional safeguards, as provided under Article 21 of the Constitution of India. This Court has held that a prolonged incarceration cannot be permitted to be converted pre-trial detention into a sentence without trial. Like in the case of Manish Sisodia [ 2024 (8) TMI 614 - SUPREME COURT ] in the present case also thousands of documents are required to be considered at the stage of trial, so also around 50 witnesses are required to be examined. The main evidence in the present case is documentary in nature, which is already seized by the prosecution agency. As such, there is no possibility of the same being tampered with. It is further to be noted that the Minister, for whose benefit the alleged transactions have taken place, has also not been implecated as an accused in the present case. The petitioner has already been released on bail in the predicate offences. SLP disposed off.

  ---

• 2025 (3) TMI 271
  Money Laundering - predicate offence - direction to remove the attachment made by the 2nd respondent - HELD THAT:- A perusal of the order passed by the appellate Tribunal reveals that when predicate offence does not survive on account of acquittal, then it cannot be presumed that the said attached properties were purchased out of proceeds of crime by way of money laundering. Further, the appellate Tribunal directed the 2nd respondent to release the attached properties of the appellants / affected persons, as V. Kasimayan and the other accused persons are already acquitted in predicate offence under NDPS Act vide judgment of acquittal dated 01.08.2017 in Complaint Case No.52 of 2016. Since already the appellate Tribunal directed the 2nd respondent to release the attached properties in pursuant to the Complaint Case No.52 of 2016, the attachment made by the 2nd respondent in respect of the subject properties is hereby raised in pursuant to the order passed by the appellate Tribunal dated 14.09.2023. The registering authority is directed to record the same in the book of records in respect of the subject properties forthwith. Conclusion - i) When an accused is acquitted in a criminal case, the attached properties cannot be presumed to be proceeds of crime through money laundering. ii) The attachment made by the 2nd respondent on the subject properties was raised in accordance with the appellate Tribunal s order, and the registering authority was directed to record the same. Petition allowed.

  ---

• Service Tax

• 2025 (3) TMI 270
  Taxability of service - classification of services - education services - franchise service. Whether the service alleged to have been rendered by the appellants to RCs/LCs can be termed as Education Service as claimed by the appellants? - HELD THAT:- Punjab Technical University is a body created under Punjab Technical University Act, 1996; they have 494 affiliated colleges; in terms of the decision taken in the seventh meeting of the Boards of Governor in the year 2001, the appellants have started implementing Distance Education Programme (DEP); for this purpose, they have established Learning Centers (LCs) and Regional Centers (RCs) to coordinate/ control the learning centers and have entered into a Memorandum of Understanding with them. In terms of the Agreement, the fee is collected by the LCs from the students in the form of Demand Drafts drawn in favour of The Registrar of the appellant; the total revenue collected is distributed as per the agreed share of the appellant RCs and LCs, which is in the range of 28/32.2/37%, 18/20/22% and 45/47.5/50% respectively; however, Authorization Fee and Additional Authorization Fee collected is entirely retained by the appellant. On going through the clauses of the Agreement, we find that the appellant retains the core functions; eligibility for admission of the students, syllabus and qualification of the teachers, setting of question papers and examination time-table and award of degree/ diploma is decided by the appellant; LCs/ RCs are responsible for appointment of teachers, classroom coaching practical training as per the syllabus, conduct of examinations; LCs/ RCs may advertise/ canvas about the courses in the university. The services as regards education fall in the Negative List. It is also found that these Notifications provide exemption for Auxiliary Education Services also. Exemption is also extended to services to education by way of Renting of Immovable Property also. In such circumstances, it is not understood as to why such exemption is not available to the appellant-university, which is established by an Act of State Legislature to propagate education. CBEC vide Circular No.172/7/2013-ST dated 19.09.2013 clarifies the kind of exemptions available to the services rendered in relation to education. Whether the service alleged to have been rendered by the appellants to RCs/LCs can be termed as Franchise Service as alleged by the Revenue? - HELD THAT:- The definition of Franchise involves trademark, service mark, trade name or logo (or any such symbol); learned Counsel for the appellants submits that the expression any such symbol should be read with the preceding words and should not be extended beyond. The principal of ejusdem generis is agreed, it is found that the name of the university being used by LCs/ RCs cannot be taken to be a trademark, service mark, trade name or logo (or any such symbol). A reading of the MOU does not give an understanding that it is Franchise Agreement. There are force in the argument of the learned Counsel for the appellants that even if it is a Franchise Service, it would be exempt in terms of the Notification discussed above as they are rendered in relation to education. This Bench while deciding the case of Swift Institute of Engineering and Technology [ 2019 (4) TMI 1151 - CESTAT CHANDIGARH] held that the appellant-university is not rendering any Franchise Service. The position of Swift Institute of Engineering and Technology and the LCs/ RCs in the impugned case is comparable. In fact, the position of the LCs/ RCs is on a better footing inasmuch as they are conducting courses approved by the appellant-university, who also award degree/ diploma. The learned Commissioner has grossly overlooked the fact that the appellant university is in total control of the fees, the curriculum and award of degree/ diploma. The LCs/ RCs cannot operate independently just by using the name of the university in the respective area assigned to them - the entire proceedings are based on a grave misconception on the part of Revenue. There is no clarity in the approach of the department vis a vis the serviced provider, service rendered and the consideration in the impugned case. In case the appellant-university is alleged to have rendered any service, say Franchise Service to the LCs/ RCs, they should have received some consideration towards the same. In fact, the university is not getting any consideration from the LCs/ RCs. It is the appellant-university who are paying the LCs/ RCs by way of a percentage of the revenue - It is very clear from the facts of the case and the MOU that the appellant-university is using the services of LCs/ RCs in discharging their statutory function of spreading education. Service tax, if any, is leviable on the LCs/ RCs. However, this is not the case of the Department. Conclusion - i) The appellants are rendering services related to education, which is exempt from service tax. ii) The alleged service is also exempted under Entry No. 39 of Notification No. 25/2012-ST, dated 20.06.2012, as amended and Notification No. 6/2014 ST dated 11.07.2014 during the relevant period. Appeal allowed. Whether the appellants are rendering any taxable service to the RCs/LCs? - HELD THAT:-

  ---

• 2025 (3) TMI 269
  Recovery of service tax with interest and penalty - correctly determination and declaration of taxable value of services provided during the audit period from April 2015 to June 2017 - exempted services under the Notification No. 25/2012 dated 20.06.2012 - evasion of service tax by misrepresenting the nature of services provided - legal fees expenses. Exemption of services - HELD THAT:- As per Agreements of the appellant, the nature of services were exempted from service tax viz. Distribution of SIM cards, Recharge Coupons, Supply of Farm Labour for agriculture operation, business facilitator etc. However, as per the copies of Agreements provided by the clients of the appellant, the services related to manpower supply services and other taxable service. The impugned order goes on to note that the appellant had submitted agreement dated NIL of farm labour supply with Gujrat Tea Processors und Packers Ltd., Ahmadabad in which scope of work was mentioned as Supply of contract Farm labour/workers for agricultural operations and agricultural produce and contract period was mentioned as 1st April 2015 to 31 March 2017. The impugned order has established that during the period 2015-16, 2016-17 and 2017-18 (up to June, 2017), the appellant had rendered taxable services which was deliberately suppressed resulting in the evasion of service tax of Rs. 19,81,97,629/-(including cess). We find that in their grounds of appeal, the appellant has stated that as per audited accounts, gross receipts for 2015-16 is Rs. 15,67,08,892/-, for 2016-17 is Rs. 62,16,63,588/- and for first quarter of 2017-18 is Rs. 10,83,21,412/- - apart from merely stating that the impugned order has added the amount shown in 26AS statement with the amount shown in Books of Accounts no evidence has been adduced by the appellant in support of their contention. No one even appeared on the day this case was posted for hearing, nor any written submissions have been filed. It has been clearly established that the services provided by the appellant are covered under the definition of Taxable Services in the light of the changed provisions of the Finance Act, 1994 made applicable with effect from 01.07.2012. We find that the impugned order has given evidence that the appellant had received Rs. 1,52,54,53,781/- from its service recipients against provision of the said taxable services and was liable to pay service tax on said amount. The impugned order notes that the appellant failed to provide any relevant authentic documents like invoices in original work orders in original etc to justify their claim of duplication of demand in case of few of their clients. In the absence of any authentic evidence in the form of original invoice etc showing the actual value of taxable services provided by the appellant during the relevant period, it is found that there is no reason to interfere with the computation of service tax liability against the appellant in the impugned order. Hence, there is no merit in the above contention of the appellant and the same is rejected. Legal fees expenses - HELD THAT:- The appellant has shown Legal fees expense of Rs. 2,12,000/-in 2016-17. In this regard, no submission was made by the appellant nor have they contested the applicability of Service Tax on the said expense. In absence of any reply or any supporting documents, it is held that Legal fees expense incurred by the appellant are expenses towards Legal services. Accordingly, Service Tax amounting to Rs. 31800/- on Legal Fee expense incurred by the appellant during the period F.Y. 2016-17 is upheld. Conclusion - i) The appellant s deliberate misrepresentation of service nature and forgery of documents constituted a clear intent to evade service tax. ii) The imposition of interest and penalties was justified given the appellant s failure to deposit collected service tax and misrepresentation of taxable services. iii) The appellant s claims of duplication in service tax computation were unsupported by evidence, leading to the rejection of these claims. iv) The service tax liability on legal fees under RCM was upheld due to the lack of contestation or evidence from the appellant. There are no infirmity in the impugned order - appeal dismissed.

  ---

• 2025 (3) TMI 268
  Classification of services - construction of complex service or not - services provided by the appellant, Allahabad Development Authority (ADA) - denial of benefit of abatement - extended period of limitation. Classification of services - construction of complex service or not - services provided by the appellant, Allahabad Development Authority (ADA) - HELD THAT:- The issue involved in the present case is squarely covered by the decision of Hon ble jurisdictional Allahabad High Court in the case of GREATER NOIDA INDUSTRIAL DEV. AUTHORITY VERSUS COMMR. OF CUS., C. EX. [ 2015 (4) TMI 1231 - ALLAHABAD HIGH COURT ] by holding that The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of a compulsory levy and are deposited into the Government account. Such activities are purely in public interest and are undertaken as mandatory and statutory functions. These are not to be treated as services provided for a consideration. Therefore, such activities assigned to be performed by a sovereign/public authority under the provisions of any law, do not constitute taxable services. Any amount/fee collected in such cases are not to be treated as consideration for the purposes of levy of Service Tax. The decision of the Tribunal in case Greater Noida Industrial Development Authority [ 2014 (9) TMI 306 - CESTAT NEW DELHI] has not been agreed to by the larger bench of Tribunal in case of Rajasthan State Industrial Development and Investment Corporation Ltd. [ 2025 (2) TMI 211 - CESTAT NEW DELHI - LB] and Larger Bench has observed settled the issue stating The value of premium or salami is exigible to service tax under renting of immovable property for the period prior to 01.07.2012 under section 65(105)(zzzz) of the Finance Act and from 01.07.2012 under section 66B of the Finance Act. The submission made by the appellant that they are not liable to pay service tax being government authority in respect of the services in dispute, is thus devoid of merits. Denial of abatement - HELD THAT:- The appellant have claimed benefit of abatement for determination of the value of taxable services provided by them which has been denied for production of sufficient documents admissibility. Denial of such abatement cannot be justified and the value of taxable services needs to be determined after allowing for abatement either under the composition scheme or on the basis of actual documents, if documents produced. The said view is in line with the decision of Hon ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS [ 2015 (8) TMI 749 - SUPREME COURT ] wherein following has been held that It is interesting to note that while introducing the concept of service tax on indivisible works contracts various exclusions are also made such as works contracts in respect of roads, airports, airways transport, bridges, tunnels, and dams. These infrastructure projects have been excluded and continue to be excluded presumably because they are conceived in the national interest. If learned counsel for the revenue were right, each of these excluded works contracts could be taxed under the five sub-heads of Section 65(105) contained in the Finance Act, 1994. For redetermination of value of taxable services, the matter remanded back to the Original Authority after allowing the abatement. Invocation of extended period of limitation - HELD THAT:- Appellant being a development authority duly constituted by the Government under Section-4 of the Uttar Pradesh Town Planning and Development Act on 20 August 1974 by the Government s release dated 09-08-1974 to solve the complex housing problem arising out of the pressure of this growing population, cannot be imputed with intention to evade payment off service tax. Hence, there are no merits in invocation of extended period of limitation for making this demand - the demand for normal period of limitation upheld. Conclusion - i) ADA s activities are classifiable under construction of complex service and are subject to service tax. ii) The exemptions claimed by ADA were not applicable, as the services were not statutory functions. iii) There are no merits in invocation of extended period of limitation for making this demand. Matter is remanded back to the Original Authority for consideration and de-novo adjudication - Appeal allowed in part.

  ---

• 2025 (3) TMI 267
  Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the entire contract value - Commercial or Industrial Construction Service - Retrospective applicability of the Circular - invocation of extended period of limitation - interest and penalties - HELD THAT:- Even if the main contractor pays Service Tax on the full amount, the sub-contractor shall be liable to pay Service Tax for the services rendered by them to the main contractor. It is found that during period under dispute, Trade Notice. No.53-C.E (service Tax) /97 dated 04.07.1997 was in existence, which clarified that the sub contractor is not liable to pay service tax when the main contractor discharges service tax on the entire value. Thus, the appellant cannot be held responsible for non payment of service tax for the period under dispute. Retrospective applicability of the Circular - HELD THAT:- The circular is oppressive in nature in-as-much-as it has taken a diagonally opposite view that has been taken in the Trade Notice. This circular has put the burden of discharging the liability of service tax to the sub- contractor. It has been held in the case of Commissioner of Central Excise, Bangalore Vs. Mysore Electrical Industries Ltd. [ 2006 (11) TMI 202 - SUPREME COURT] and also in the case of Suchitra Components Ltd Vs Commissioner of C. Ex, Guntur [ 2007 (1) TMI 4 - SUPREME COURT] that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, the said Circular cannot be applied retrospectively. Invocation of extended period of limitation - HELD THAT:- The appellant have not suppressed any information from the department. The appellant has followed the clarification issued in the Trade Notice. No.53-C.E (service Tax) /97 dated 04.07.1997. They have regularly filed ST-3 returns and declared in the ST- 3 returns that they have not paid service tax as a sub-contractor as the principal contractor paid service tax. The departmental audit conducted on February 20, 2008 has not issued any objection for non-payment of service tax as a sub-contractor - the extended period of limitation was not applicable due to the absence of suppression or misstatement by the appellant. Interest and penalties - HELD THAT:- Since the demand of service tax is not sustained, there is no question of demanding interest and imposing penalties. Conclusion - A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. Extended period of limitation as well as interest and penalties set aside. The impugned order set aside - appeal allowed.

  ---

• 2025 (3) TMI 266
  Classification of services - mining services or not - transportation services provided by the Appellant within the mines - HELD THAT:- The appellant has rendered the activities of Transportation within the mines and the said services cannot be classified under the category of Mining Services . It is observed that the ld. adjudicating authority has classified the said transportation services with incidental loading, and confirmed the demand, under the category of Mining Services on the ground that the said services are provided within the Mines. However, going by the scope of works under the contract and applying the principles of classification set out under sections 65A and 66F of the Finance Act, 1994, it is observed that the said services cannot be taxed under the category of Mining Services . It is clear that the services are appropriately classifiable under the category of Transportation Services on which the Appellant is not liable to pay Service Tax. Conclusion - The transport services are logistic services which are not understood as a mining activity in the common parlance. The activity of transportation is not understood as an activity in relation to mining of mineral, oil or gas. Transport services are post mining activity and hence, the transport services provided by the appellant cannot be classified under Mining Services . The demand of Service Tax under the category of Mining Services is not sustainable. Appeal allowed.

  ---

• 2025 (3) TMI 265
  Proceedings for demand of tax against a deceased proprietor, to be continued against his legal heirs or not - legal heir has the locus standi to challenge the impugned order or not - HELD THAT:- All the proceedings for demand of tax etc are alive till the proprietor is alive and will die with him, as has been held by Hon ble Supreme Court in the case of M/s Shabina Abraham [ 2015 (7) TMI 1036 - SUPREME COURT ]. As the death certificate of the proprietor is available in the file, there are o merits for entertaining this appeal. The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir. In terms of Section 22, if legal heir or any person intends to make a claim against this appeal he should have file an appeal under Rule 22 and that was possible only when the appeal was filed before the date of death of proprietor and in this case that is not so. Hence, the appeal is dismissed as not maintainable as Shri Nadeem Akhtar, appellant could not produce the documents as observed by first Appellate Authority evidencing that he has taken over the proprietor ship concern of his father. Conclusion - The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir. Appeal dismissed.

  ---

• Central Excise

• 2025 (3) TMI 264
  Valuation of Central Excise duty - inclusion of components like Royalty , Stowing Excise Duty (SED), and Assam Land Tax in the assessable value - invocation of extended period of limitation - penalty - HELD THAT:- As on date, the issue as to whether Royalty is tax of not, stands clearly held against the appellant in view of the 9 Member Supreme Court decision in the case of MINERAL AREA DEVELOPMENT AUTHORITY ANR. VERSUS M/S STEEL AUTHORITY OF INDIA ANR ETC. [ 2024 (7) TMI 1390 - SUPREME COURT (LB)] . Therefore, on merits the appellants do not have any case. Accordingly, we hold that the Royalty component is required to be added to arrive at the Assessable Value. We dismiss the appeal on merits to this extent in respect of Royalty component. he levy is being termed as Duty of Excise and also being treated as such. It is also not disputed that in the case of the goods in question, the Stowing Excise Duty is being paid by the appellant. The Revenue cannot take a contorted and narrow view that only when the Duty of Excise is paid as Central Excise Duty, such exclusion is available. It is to be noted that the word used is duty of excise along with sales tax and other taxes , which would clarify that if these are paid to State Govt or to any other agency also, the transaction value should exclude the same. Assam Land Tax - HELD THAT:- The very word used therein is Tax. As we have observed above, the Section 4 (3) (d), when speaking of Tax, speaks of Central Govt and State Govt Taxes. Hence, we hold that the Assam Land Tax is not required to be included while arriving at the Assessable Value. Accordingly, we set side the confirmed demand on account of the Assam Land Tax component. Time limitation - HELD THAT:- Admittedly the appellant is a reputed Public Sector Undertaking, having no necessity to indulge in any suppression with an intent to evade Excise Duty payment. They have been paying the Excise Duty on the AV arrived at by them as per their interpretation and filing their Returns. Hence, no case of suppression has been made out by the Revenue, so as to invoke the extended period provisions. Levy of penalty - HELD THAT:- When the penalty under Section 11AC is waived on the ground that no case of suppression has been made out, even the duty demand would not legally sustain. There cannot be a case where it is held that there is no suppression, but only the penalty is dropped, but the Duty is confirmed. Both the Duty as well as penalty are required to be dropped if the case of suppression is not made out. Conclusion - i) The demand on account of Royalty component sustains. ii) The demand on account of Stowing Excise Duty and Assam Land Tax components gets set aside. iii) The confirmed demand towards the extended period stands set aside and the demand stands allowed on account of time- bar to this extent. Appeal allowed in part.

  ---

• 2025 (3) TMI 263
  Levy of Centrat Excise Duty - amount of performance incentive received from the buyers for the Financial Year 2010-11 - suppression of facts or not - invocation of extended period of limitation - penalty - HELD THAT:- In this case, it is found that the observation of the adjudicating authority while dropping the penalty against the appellant under Section 11AC of the Central Excise Act, 1944, has attained finality - the extended period of limitation is not invokable in the facts and circumstances of the case. The extended period of limitation is not invokable. Consequently, whole of the demand is set aside - appeal allowed.

  ---

• 2025 (3) TMI 262
  Process amounting to manufacture - whether the excise duty paid by appellant by utilizing the CENVAT credit is recoverable? - HELD THAT:- While disposing the Revenue appeal regarding manufacture, it is beyond the scope of show cause notice since there is no such allegation as to the activity of the appellant not falling under manufacture in the Show cause notice. Moreover, the issue is well settled by the decision of this Tribunal in M/S. MINERAL ENTERPRISES LIMITED VERSUS COMMISSIONER OF CUSTOMS AND SERVICE TAX [ 2017 (5) TMI 99 - CESTAT BANGALORE ], M/S. MINERALS ENTERPRISES LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, BANGALORE [ 2017 (10) TMI 500 - CESTAT BANGALORE ] and M/S. MINERAL ENTERPRISES LTD. VERSUS THE COMMISSIONER OF CUSTOMS, BANGALORE [ 2024 (8) TMI 848 - CESTAT BANGALORE ] holding that the activity carried out by the Appellant is manufacture. As regards allegation of considering the excise duty paid by the appellant has deposit, there are strong force in the contention of the appellant that once the duty is not exempted absolutely, as per the provision of Section 5(1) of the Central Excise Act, it is an option available to the appellant to either opt for the benefit of Notification No. 23/2003-CE or not and it is for the assessee to decide the best method of making payment and merely if the assessee fails to avail the benefit of said notification, no allegation can be made that they have made an attempt to evade duty and to confirm demand of duty and impose penalty alleging violation of provision of law. Conclusion - The findings on manufacture by the Appellate Authority are beyond the scope of the Show Cause Notice and were settled by previous Tribunal decisions in favor of the appellant. Appeal allowed.

  ---

• 2025 (3) TMI 261
  Method of Valuation - clinkers transferred by the appellant to their sister concern - to be valued under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or under Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000? - Revenue neutrality - HELD THAT:- This Tribunal in appellant s own case for their own unit for the period from March 2011 to November 2013 held that Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 be adopted following the judgment of the Larger Bench of the Tribunal in the case of Ispat Industries case [ 2006 (9) TMI 181 - SUPREME COURT] . This Tribunal in M/S. ULTRATECH CEMENT LTD., (UNIT: RAJASHREE CEMENT WORKS) , VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, [ 2024 (1) TMI 663 - CESTAT BANGALORE] observed as we have no hesitation to hold that the appropriate rules for determination of the assessable value of the goods for the transferred clinkers to sister units will be Rule 4 read with 11 of the Central Excise Valuation Rules, 2004 rather than Rule 8 of the Central Excise Valuation Rules, 2000 for the period in question. Revenue neutrality - HELD THAT:- The revenue neutrality is not a statutory concept but a principle of equity developed by courts as a mitigating factor in appreciating the intention of the persons while applying the principle of law to a particular situation to determine the reason for non-payment of duty. Revenue neutrality cannot be considered as an incentive not to follow the statutory provision governing principle of valuation solely on the ground that the other unit could avail the benefit of credit of the differential duty payable. Conclusion - i) The goods transferred should be valued under Rule 4 read with Rule 11. ii) Revenue neutrality cannot be a reason to deviate from statutory provisions and that the correct method of valuation should be applied. Appeal allowed by way of remand.

  ---

• 2025 (3) TMI 260
  Reversal of CENVAT Credit under Rule 3(5B) of the CENVAT Credit Rules, 2004, due to provisions made in the books for slow-moving inventory - invocation of extended period of limitation - HELD THAT:- The appellant had not written off the obsolete items. They only reduced the value of the slow-moving items, at the end of each financial year, if such inputs were lying in stock for a specified period. It is intended to determine the profit loss at the end of the year. It is based on the principle of conservatism and to comply with the Accounting Standards, which was never with an intention to write off any portion of inventory in the Books of Accounts. Since it is not concerned with obsolete items, which are unusable, we hold that the provision of Rule 3(5B) of the CENVAT Credit Rules was not applicable. The issue is no more res integra as the issue has been decided by this Tribunal in the case of M/S. STEEL AUTHORITY OF INDIA LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, DURGAPUR NOW COMMISSIONER, CGST CX, BOLPUR COMMISSIONERATE [ 2024 (12) TMI 1538 - CESTAT KOLKATA] , wherein it has been held that the provisions of Rule 3(5B) of the CENVAT Rules are not applicable in such cases. Extended period of limitation - HELD THAT:- The appellant is a wholly owned Govt. of India undertaking whose complete set of records were maintained and whose accounts were audited by statutory auditors appointed by CAG as well as supplementary audit by representatives of CAG-New Delhi. The appellant did not suppress any information from the Department and in fact maintained all the statutory documents, records/registers and accounts and filed the statutory returns. Thus, it is observed that the conditions precedent for invoking longer period of limitation under proviso to Section 11A(4) of the Central Excise Act are not satisfied in the present case and hence the demand confirmed by invoking the extended period of limitation is not sustainable. Conclusion - i) Rule 3(5B) of the CENVAT Credit Rules, 2004, does not apply to provisions for slow-moving inventory that are not written off. ii) The demand, interest, and penalty set aside as unsustainable. iii) The extended period of limitation under Section 11A(4) was not applicable due to the appellant s transparent and audited practices. The demands confirmed in the impugned order set aside - appeal allowed.

  ---

• 2025 (3) TMI 259
  CENVAT credit - input services - GTA services used for transportation of goods on FOR basis - initiation of proceedings against the Input Service Distributor (ISD) instead of the appellant for the alleged incorrect availment of CENVAT Credit. Whether the appellant is entitled to CENVAT Credit in respect of GTA services and clearing and forwarding agency services in case of FOR destination contracts or not? - HELD THAT:- The said issue has been examined by this Tribunal in the case of M/s. The Ramco Cements Ltd. v. Commissioner of C.Ex., Puducherry [ 2023 (12) TMI 1332 - CESTAT CHENNAI-LB] wherein it has been observed that the eligibility of CENVAT credit on GTA services for outward transportation should be determined by ascertaining the place of removal based on the facts of each case, considering the Supreme Court s judgments and the Board s Circular. - Thus, the appellant is entitled for availment of CENVAT Credit on GTA services and clearing and forwarding agency service in case the good are sold on FOR basis. Accordingly, the CENVAT Credit cannot be denied. Whether proceedings should have been initiated against the Input Service Distributor (ISD) instead of the appellant for the alleged incorrect availment of CENVAT Credit? - HELD THAT:- The appellant has availed CENVAT Credit on the basis of invoices issued by their ISD and admittedly, no proceedings had been initiated against the ISD. In these circumstances, the CENVAT Credit availed at the end of the appellant cannot be denied, as held by this Tribunal in the case of Indsil Energy Electrochemicals Ltd. v. Commissioner of C.Ex. and S.Tax, Raipur [ 2016 (9) TMI 944 - CESTAT NEW DELHI] - the CENVAT Credit in respect of the said input services cannot be denied to the appellant. Conclusion - The appellant had correctly taken CENVAT Credit and the denial of CENVAT Credit is therefore not sustainable. Accordingly, no penalty is imposable on the appellant. The impugned order is set aside - appeal allowed.

  ---

• 2025 (3) TMI 258
  Extended period of limitation - undervaluation of goods - stock transfer to related units - contravention of provisions of Section 4(1)(b) of the Central Excise Act, 1944 read with Rule 8 and Rule 9 of the Valuation Rules - Revenue Neutrality - HELD THAT:- In this case, the appellant has cleared the goods to their sister unit on payment of duty under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, by adopting 110% of the cost of the product determined as per CAS-4. If any excess duty is to be paid by the appellant, the same is entitled to take the cenvat credit by the appellant s unit only. In that circumstances, it is the case of revenue neutrality as held by this Tribunal in the case of M/s Hindalco Industries Limited [ 2023 (5) TMI 720 - CESTAT KOLKATA] wherein this Tribunal has held When excess paid duty is adjusted against the short payment that net result is that there is no short payment by the Appellant. The Adjudicating Authority failed to do this adjustment. Demanding duty onlu on the short payment, ignoring the excess payment is bad in law. Accordingly we hold that the demand confirmed in the impugned order is not sustainable. Accordingly, relying on the decision of this Tribunal in the case of Hindalco Industries, it is held that it is a revenue neutral situation. No demand is sustainable against the appellant. The impugned order is set aside - appeal allowed.

  ---

• 2025 (3) TMI 257
  Challenge to order of adjustment of demand made by the department against the rebate claim which was sanctioned - suo moto adjustment of rebate amount is done - HELD THAT:- The rival submissions have been considered by this court. It finds weight in whatever learned advocate has stated that as on date with the setting aside of the order by the Revisionary Authority, there is no demand which is existing. Appeal allowed.

  ---

• Indian Laws

• 2025 (3) TMI 256
  Dishonour of Cheque - Security Cheque against renting / leasing of property - whether the appellant-accused is liable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for the dishonour of four post-dated cheques issued to the respondent-complainant, and whether the amount of compensation awarded by the lower courts was justified? - HELD THAT:- It is evident from the record that the appellant-accused was prosecuted for the dishonour of four post-dated cheques totalling to an amount of Rs.9,00,000/- which were issued by him in favour of the respondent-complainant and on presentation, had been dishonoured with an endorsement funds insufficient . In regard to the dishonour of these four post-dated cheques, the respondentcomplainant instituted four separate complaints . The trial Court convicted the appellant-accused under Section 138 of the NI Act concluding that the specific plea taken by the appellant-accused that he had repaid a sum of Rs.5,00,000/- to the respondentcomplainant was not controverted by the respondent-complainant by way of any rejoinder or counter to the reply notice submitted by the appellant-accused - the trial Court while convicting the appellantaccused for the offence punishable under Section 138 of the NI Act confined the sentence of fine, to Rs.3,00,000/- with simple interest @ 6% per annum from the date of the cheques till realisation, to be paid by the appellant-accused to the respondent-complainant. From the said amount of Rs.3,00,000/-, a sum of Rs.5,000/- was directed to be forfeited to the State Exchequer towards defraying expenses. In default, the appellant-accused was directed to undergo simple imprisonment for a period of one year. Despite the decree, the respondent-complainant failed to vacate the subject flat on which the appellant-accused, being the decree-holder, was compelled to institute execution proceedings . The Small Causes Court, Bengaluru after perusing the bailiff report which stated that the respondent-complainant(judgment debtor) had locked the subject flat, vide order dated 2nd January, 2020, directed police assistance to break open the locks in order to ensure that the decree is satisfied and possession of the subject flat is handed over to the appellant-accused(decree holder). In compliance of the aforesaid order, the locks were broken and possession of the subject flat was handed over to the appellant accused( decree holder) on 8th January, 2020. The appellant-accused was definitely not liable to refund the entire security deposit amount of Rs.9,00,000/- covered by the post-dated cheques, to the respondent-complainant because he was entitled to deduct the amount of due rent and maintenance from the said amount. Hence, the respondent-complainant failed to lead evidence to conclusively establish that the entire amount under the post-dated cheques was a legally enforceable debt against the appellantaccused. Conclusion - The appellant-accused was definitely not liable to refund the entire security deposit amount of Rs.9,00,000/- covered by the post-dated cheques, to the respondent-complainant because he was entitled to deduct the amount of due rent and maintenance from the said amount. The impugned judgments, dated 6th March, 2018 passed by the appellate Court and dated 8th July, 2024 passed by the High Court are hereby, quashed and set aside. The judgment dated 9th November, 2016 rendered by the trial Court is restored - Appeal allowed in part.

  ---

• 2025 (3) TMI 255
  Dishonour of Cheque - seeking quashing of criminal proceedings initiated against the Appellant(s) under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 - vicarious liability of non-executive directors - HELD THAT:- This Court has consistently held that non-executive and independent director(s) cannot be held liable under Section 138 read with Section 141 of the NI Act unless specific allegations demonstrate their direct involvement in affairs of the company at the relevant time. In Pooja Ravinder Devidasani v. State of Maharashtra Anr., [ 2014 (12) TMI 1070 - SUPREME COURT] , this Court while taking into consideration that a non-executive director plays a governance role, they are not involved in the daily operations or financial management of the company, held that to attract liability under Section 141 of the NI Act, the accused must have been actively in charge of the company s business at the relevant time. Mere directorship does not create automatic liability under the Act. The law has consistently held that only those who are responsible for the dayto- day conduct of business can be held accountable. There is no material on record to suggest that they were responsible for the issuance of the cheques in question. Their involvement in the company s affairs was purely non-executive, confined to governance oversight, and did not extend to financial decisionmaking or operational management - The complaint lacks specific averments that establish a direct nexus between the Appellant(s) and the financial transactions in question or demonstrate their involvement in the company s financial affairs. Conclusion - Non-executive directors cannot be held liable under Section 138 read with Section 141 of the NI Act without specific allegations of their direct involvement in the company s affairs. Appeal allowed.

  ---

• 2025 (3) TMI 254
  Dishonour of Cheque - appellant (director of company) is a signatory to the cheque or not - HELD THAT:- As the appellant is not a signatory to the cheque, he is not liable under Section 138 of the 1881 Act. As it is only the signatory to the cheque is liable under Section 138, unless the case is brought within the four corners of Section 141 of the 1881 Act, no other person can be held liable. There are twin requirements under sub-Section (1) of Section 141 of the 1881 Act. In the complaint, it must be alleged that the person, who is sought to be held liable by virtue of vicarious liability, at the time when the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. A Director who is in charge of the company and a Director who was responsible to the company for the conduct of the business, are two different aspects. The requirement of law is that both the ingredients of sub-Section (1) of Section 141 of the 1881 Act must be incorporated in the complaint. Admittedly, there is no assertion in the complaints that the appellant, at the time of commission of the offence, was in charge of the business of the company. Therefore, on a plain reading of the complaints, the appellant cannot be prosecuted with the aid of sub-Section (1) of Section 141 of the 1881 Act. Conclusion - The appellant, who was not a signatory to the cheque and did not meet the requirements under Section 141(1) of the 1881 Act, could not be held liable under Section 138. Appeal allowed.

  ---

• 2025 (3) TMI 253
  Liability of defendant to pay the plaintiff with interest as prayed in the plaint - suit promissory note was supported by consideration or not - discharge of a lawfully owed debt payable under the suit promissory note or not - discharge of legal presumption or not - HELD THAT:- It is needless to state that as per Section 118(a) of the Negotiable Instruments Act, 1881 until the contrary is proved, it shall be presumed that every negotiable instrument was made or drawn for consideration. This presumption can be rebutted by the opposing party by way of evidence that the instrument was not issued for consideration effectively disproving the initial presumption. In other words, it is obligatory on the part of the court to raise the initial presumption in every case where the factual basis for the raising of the presumption has been established. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. In Kundan Lal Rallara v. The Custodian, Evacuee Property Bombay [ 1961 (3) TMI 100 - SUPREME COURT ], the Hon ble Supreme Court has held that the presumption of law under Section 118 of the Negotiable Instruments Act could be rebutted, in certain circumstances, by a presumption of fact raised under Section 114 of the Evidence Act. Whether the execution of Ex.A.1-Promissory Note and Ex.A.2-Cheque have been proved to attract the legal presumption? - Whether the defendant has brought out circumstances to discharge such legal presumption? - HELD THAT:- Though it was stated by the plaintiff that Ex.A.1 Promissory Note was executed by the defendant on 09.09.2014 and Ex.A.2 Cheque dated 15.10.2016 was issued by the defendant in discharge of the legally owned debt under the promissory note, during cross examination, it was clearly admitted by the plaintiff that he was an Electrical Contractor for the defendant mill. P.W.2-P.K.Rajendran in his crossexamination stated that he was present at the time of borrowal of the suit loan by the defendant, but in the chief examination he never spoke about the execution of promissory note nor stated that Ex.A.1 was signed by the defendant in his presence. P.W.2 s evidence had proceeded as if he had signed as a witness on the promissory note. The burden shifts to the plaintiff to establish the fact that consideration was passed on to the defendant under Ex.A.1 promissory note. The plaintiff has placed much reliance on Ex.A.10-Statement of Account from Axis Bank for the period between 01.08.2024 and 31.08.2024 and Ex.A.11- Statement of Account from Canara Bank for the period between 01.09.2014 to 26.09.2015 relating to Roja Textiles. According to him, from 01.08.2014 to 30.08.2014, he has sufficient funds in the account. To show whether the plaintiff was running Roja Textiles or not, no material whatsoever was produced by the plaintiff. Even if it is assumed that the plaintiff was running that company, merely showing the income in the account of Roja Textiles would not by itself prove that the plaintiff had sufficient means at the relevant point in time, i.e., on the date of the Ex.A.1 promissory note dated 09.09.2014. Ex.A.10 and Ex.A.11 do not show any entry to prove that the amount had been withdrawn from his bank account to pay the consideration under the promissory note. Therefore, merely showing that some amount is lying in the bank account, by producing a bank statement, it cannot be said that the burden of establishing passing of consideration has been discharged. When the plaintiff was working as an electrical contractor in the defendant s mill and he was aware of the fact that the defendant s mill had been closed and was sold in the year 2013, still by reciting in the promissory note as if the mill was run by the defendant even in the year 2014 and getting a cheque in 2016 drawn by the company that was closed in the year 2013 is highly improbable. It goes against the normal prudence of an ordinary man. It is further to be noted that though the promissory note was said to be executed on 09.09.2014, a suit was not filed immediately for recovery of money due on the promissory. On the contrary, pursuant to the so-called cheque (Ex.A.2), which was returned dishonored for the reason account closed, a notice was caused to the defendant, and thereafter, a private complaint under Section 200 of Cr.P.C. was filed against the defendant alleging an offence under Section 138 of the Negotiable Instruments Act, 1881, before the jurisdictional magistrate - The trial court has completely lost sight of all these aspects of the matter and erred in decreeing the suit of the plaintiff by granting the relief of recovery of money against the defendant. Conclusion - The plaintiff failed to establish the passing of consideration and the execution of the promissory note and cheque. The defendant successfully rebutted the presumption of consideration and execution under the Negotiable Instruments Act. The appeal suit is allowed.

  ---