TMI Tax Updates - e-Newsletter
April 24, 2025

Case Laws in this Newsletter:

GST Income Tax Customs Insolvency & Bankruptcy PMLA Service Tax Central Excise CST, VAT & Sales Tax Indian Laws

TMI Short Notes

1. Meaning of Associates Enterprise under Clause 162 of the Income Tax Bill, 2025 Vs. Section 92A of the Income-tax Act, 1961

  Bills:

2. Computation of income arising from international transactions and specified domestic transactions : Clause 161 of the Income Tax Bill, 2025 vs. Section 92 of the Income-tax Act, 1961

  Bills:

3. Remuneration and interest received by an individual partner from a partnership firm can be subjected to the presumptive taxation Under Section 44AD?

  Income Tax:

4. Future of Unilateral Agreement relief in India : Clause 160 of the Income Tax Bill, 2025 Vs. Section 91 of the Income-tax Act, 1961

  Bills:

5. Streamlining Double Taxation Relief and International Tax Agreements : Clause 159 of Income Tax Bill, 2025 Vs. Section 90A of Income Tax Act, 1961

  Bills:

Articles

1. India’s services exports are stepping into a new era

   By: DrJoshua Ebenezer

2. POWER OF ARBITRATOR TO GRANT pendente lite INTEREST

   By: DR.MARIAPPAN GOVINDARAJAN

3. Thermal Power Plants and Management of Fly Ash.

   By: YAGAY andSUN

4. 🏭 Environmental Impact Assessment (EIA) of a Thermal Power Plant (TPP).

   By: YAGAY andSUN

5. 🚴‍♂️ My Bicycle Journey – For a Fitter Me & a Fitter Planet 🌍

   By: YAGAY andSUN

6. How Air Conditioners (ACs) and Refrigerators Triggers Climate Change?

   By: YAGAY andSUN

7. Buyback of Plastic Bottles, Glass Bottles, MLP & Paper Packaging by Producers under Extended Producer Responsibility (EPR).

   By: YAGAY andSUN

8. Wetlands – An overview

   By: YAGAY andSUN

9. Non-compliance with rainwater harvesting (RWH) regulations – Consequences thereof.{Environmental Laws & Municipal Corporations’ Guidelines}

   By: YAGAY andSUN

10. Hazardous Manufacturing Process under Factory act, 1948

   By: YAGAY andSUN

News

1. Rate cut will boost private consumption, investment, says RBI Governor

2. CCI approves proposed combination involving acquisition of 100% equity shareholding of the AAM India Manufacturing Corporation Private Limited by Bharat Forge Limited with voluntary modifications

3. CCI approves the (i) acquisition of certain equity shares of Bharti Axa Life Insurance Company Limited (BALIC/ Target) by 360 ONE Private Equity Fund, through its schemes or affiliates (360 Fund); and (ii) subscription of certain equity shares in the Target by Bharti Life Ventures Private Limited (BLVPL) and 360 Fund

4. CCI approves the proposed acquisition of the Target Business by Kandhari Global Beverages Private Limited

5. India: Fastest-Growing Major Economy

6. World Economic Forum board backs launch of independent probe into founder Klaus Schwab

7. Handbags, wrist watches, other luxury items above Rs 10 lakh to attract 1 pc TCS

8. DPIIT Secretary chairs PMG review of mega infrastructure projects in Uttar Pradesh, Haryana, Punjab and Uttarakhand

9. Luxury goods costing above Rs 10 lakh will now attract 1 pc TCS

10. QCI Celebrates Panchayati Raj Diwas for empowering villages for a Viksit Bharat

11. India hosts inaugural Capacity Building Programme for Central Asian Republics on combating terrorism financing

12. NEW PRIVATE SUBSCRIBERS UNDER NPS CROSS 12 LAKH DURING 2024-25

13. I-T department introduces 'e-Pay Tax' feature on portal

Notifications

DGFT

1. 05/2025-26 - dated 23-4-2025 - FTP

Amendment in Import Policy Condition of Synthetic Knitted Fabrics Covered under Chapter 60 of the ITC (HS), 2022

Income Tax

2. 37/2025 - dated 22-4-2025 - IT

Exemption from specified income U/s 10(46A) of IT Act 1961 – National Mission for Clean Ganga

3. 36/2025 - dated 22-4-2025 - IT

Central Government notifies the goods of the value exceeding ten lakh rupees for collection of tax at source

4. 35/2025 - dated 22-4-2025 - IT

Income-tax (Eleventh Amendment) Rules, 2025

SEBI

5. SEBI/LAD-NRO/GN/2025/242 - dated 22-4-2025 - SEBI

Securities and Exchange Board of India (Credit Rating Agencies) (Second Amendment) Regulations, 2025

Circulars / Instructions / Orders

FEMA

1. 03 - dated 23-4-2025

Exports through warehouses in ‘Bharat Mart’ in UAE – relaxations

Customs

2. PUBLIC NOTICE No. 17/2025 - dated 11-4-2025

Reconfiguration of Trichy Zone Site (INKAR6) and rolling out of NTUT1 as master site and INTUT6 as child site for Tuticorin Customs Commissionerate on 14.04.2025 (Monday) -Reg.

3. PUBLIC NOTICE No. 16/2025 - dated 9-4-2025

Standard Operating Procedure to be followed for "Direct Port Entry" and "Document Processing Zone" in VOC Port for Export of Containerised Cargo - Reg.

Highlights / Catch Notes

GST

• GST Registration Cancellation Voided: Procedural Fairness Demands Proper Hearing and Opportunity to Defend Business Interests

  Case-Laws - HC : HC ruled that due to the death of key business principals and potential violation of natural justice principles, the GST registration cancellation proceedings against the Petitioner were procedurally flawed. The Court set aside the impugned order, remanded the matter to the adjudicating authority, and directed the Petitioner be granted a substantive opportunity to defend itself, including filing a reply within 30 days and receiving a personal hearing on merits.
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• Tax Appeal Allowed Beyond Limitation Period: Exceptional Relief Granted Based on Delayed Knowledge and Statutory Compliance

  Case-Laws - HC : HC granted relief to the Petitioner by permitting an appeal against the tax demand of Rs. 7,88,611/- beyond standard limitation period. Despite not interfering with the original order, the Court recognized the Petitioner's claim of delayed knowledge and allowed appeal filing subject to mandatory pre-deposit requirements under Section 107 of CGST Act. The decision effectively provides an exceptional opportunity to challenge the impugned order on substantive merits, while maintaining procedural compliance with statutory timelines and tax regulations.
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• Retrospective Penalty Under Section 122(1A) Challenged: Legal Challenge Highlights Potential Procedural Irregularity in Statutory Application

  Case-Laws - HC : HC granted ad-interim relief to petitioners challenging retrospective application of penalty under Section 122(1A). The court found a prima facie case exists, noting the statutory provision was enacted on 1 January 2021 but sought to impose penalties for period prior to enforcement (July 2017 to December 2020). The court's interim order suggests substantial merit in petitioners' arguments, referencing a prior judicial precedent. Balance of convenience favors petitioners, indicating potential procedural irregularity in retrospective penalty imposition. Petition disposed with interim relief granted.
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• High Court Quashes GST Registration Cancellation Order for Deceased Taxpayer's Heir Due to Lack of Substantive Evidence

  Case-Laws - HC : HC allowed the petition challenging a GST registration cancellation order under section 93(1)(a) of CGST Act, 2017. The order against a deceased taxpayer was deemed perverse and unsustainable, as the respondent failed to provide material evidence demonstrating the petitioner's continued operation of the deceased father's proprietary concern after obtaining a fresh registration. The court found no substantive basis for holding the petitioner liable for the deceased's tax obligations, effectively nullifying the impugned order without establishing legal continuity of business operations.
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• Judicial Intervention Halts Tax Penalty Enforcement, Mandates Goods Release and Security Compliance Under Section 112

  Case-Laws - HC : HC held that the appeal against the Additional Commissioner's order under Section 112 of UPGST Act, 2017, cannot be immediately adjudicated due to non-constitution of appellate tribunal. The penalty order is stayed, and seized goods shall be released subject to compliance with Rule 140 of CGST Rules, 2017. The previously deposited penalty amount shall be adjusted against security requirements. The modification application was allowed, providing interim relief to the petitioner pending tribunal formation.
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• Landmark CGST Act Amendment: Interim Deposit Reduced from 20% to 10% Under Finance Act, 2024 Provisions

  Case-Laws - HC : HC modified its prior interim order regarding CGST Act amendment, reducing the mandatory deposit from twenty percent to ten percent as per the Finance (No. 2) Act, 2024. The court interpreted Section 112(8) and Section 143, concluding that the statutory amendment directly impacts the interim deposit requirement. Consequently, the original direction for twenty percent deposit shall now be construed as a ten percent deposit, effectively aligning with the recent legislative modification. Application disposed of with consequential relief.
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• Corporate Insolvency Resolution Plan Bars Pre-Approval Tax Proceedings, Extinguishing Dues and Preventing New Recovery Attempts Under Section 31(1)

  Case-Laws - HC : HC held that once a Resolution Plan is approved under IBC Section 31(1), only debts specified in the plan remain payable, binding on all authorities. Tax proceedings relating to the period prior to plan approval stand extinguished. The impugned show cause notice and order under Section 73 of CGST Act for Financial Year 2019-20, issued after the Resolution Plan's approval on 26.10.2020, were deemed invalid and without jurisdiction. Consistent with Supreme Court precedent, the tax authorities cannot initiate or continue proceedings for pre-resolution plan dues. The petition was allowed, quashing the impugned SCN and order, effectively recognizing the clean slate principle post-corporate insolvency resolution process.
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• Input Tax Credit Restoration: Assessees Granted Portal Access to File or Revise TRAN-1 Forms Under Recent Directive

  Case-Laws - HC : HC ruled on Input Tax Credit TRAN-1 declaration, following SC directive in Filco Trade Centre case. Pursuant to SC order and departmental circular, web portal was reopened, allowing assessees to file or revise TRAN-1 forms irrespective of prior writ petitions or ITGRC decisions. Petitioner utilized the facility to file TRAN-1 form, resolving all previously raised issues. With substantive concerns addressed, the court found no further grounds for adjudication and dismissed the appeal.
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Income Tax

• Tax Refund Dispute: Unjustified Adjustment Overturned, Petitioner Wins Right to Recover Erroneously Withheld Funds

  Case-Laws - HC : HC allowed the petition, holding that the respondent's adjustment of refund for AY 2014-15 against the demand for AY 2016-17 was unjustified. The court noted that the petitioner had already paid 20% of the demand for AY 2016-17, and an appeal was pending. The respondent's action was contrary to CBDT Circular and prior judicial precedent. The court directed the respondent to refund the erroneously adjusted amount, emphasizing that the balance demand should be stayed pending appeal resolution.
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• Satellite Signal Transmission Income Not Taxable Under India-Netherlands Treaty: No Permanent Establishment Triggers Exemption

  Case-Laws - AT : ITAT adjudicated a tax dispute involving a Netherlands-based entity's income from satellite signal transmission. The tribunal ruled in favor of the assessee, determining that receipts from transponder leasing do not constitute royalty under the India-Netherlands tax treaty. The key holding affirmed that without a Permanent Establishment in India, the income is not taxable. The decision relied on prior judicial interpretations, specifically the Asia Satellite case, which established that transponder capacity lease revenues are not royalty. The tribunal rejected the revenue department's interpretation and answered the legal question against the tax authorities, maintaining the existing definitional understanding of royalty in international tax agreements.
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• High Court Finds Tax Penalty Unwarranted: Genuine Mistake, Procedural Defects Invalidate Section 271(1)(c) Proceedings

  Case-Laws - HC : HC held that penalty proceedings under Section 271(1)(c) were unwarranted. The AO had previously accepted the full partition of the HUF during assessment under Section 143(3), rendering subsequent challenges inappropriate. The assessee's treatment of assets as a transfer was deemed a genuine mistake, not a deliberate attempt to evade tax. The notice initiating penalty proceedings differed from the eventual penalty order, constituting a procedural defect. Consequently, the Tribunal's decision to set aside the penalty order was upheld, effectively ruling in favor of the assessee and negating the imposed penalty.
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• Trust Classified as AOP, Interest Payments Disallowed Under Section 40(b) Based on Voluntary Fund Pooling and Profit Intent

  Case-Laws - HC : HC upheld the ITAT's decision classifying the Trust as an Association of Persons (AOP), thereby disallowing interest paid to beneficiaries u/s 40(b). The AO found beneficiaries voluntarily pooled funds with clear intent to undertake project work and generate profits. The trust's self-declaration as an AOP and failure to rectify this status substantiated the classification. The court determined the findings were not perverse and the lower authorities' orders were legally justified, maintaining the disallowance of interest payments to beneficiaries.
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• High Court Validates Tax Assessment File Transfer Under Section 127, Prioritizing Centralized Investigation and Public Interest

  Case-Laws - HC : HC upheld the transfer of petitioner's income tax assessment file from Coimbatore to Kolkata under Section 127, finding no irregularity in the transfer order. The court determined that centralized investigation for coordinated tax assessment constitutes a valid ground for inter-jurisdictional transfer. Despite potential inconvenience to the petitioner, the transfer was deemed permissible as no prejudicial final assessment order was passed and the transfer served public interest. The writ petition challenging the transfer notification was consequently dismissed.
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• Reassessment Notice Invalidated: Limitation Periods Exceeded, Section 148 Notice Quashed After Detailed Statutory Analysis

  Case-Laws - HC : HC held that despite considering three block periods of limitation exclusion as per SC precedents, the re-assessment notice dated 23 July 2022 exceeded statutory limitation. The court specifically noted that even after adding 14 days for assessee's response to Section 148A(b) notice, the reassessment remained time-barred. Consequently, the writ petition was allowed, and the Section 148 notice was quashed, effectively invalidating the reassessment proceedings due to procedural time limitations.
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• Tribunal Orders Comprehensive Review of Unsecured Loans, Highlighting Inadequate Assessment under Section 263

  Case-Laws - AT : ITAT upheld the PCIT's revisionary order under Section 263, directing the AO to conduct a comprehensive examination of unsecured loans. The tribunal found the original assessment order deficient, as the AO failed to thoroughly investigate the three critical aspects of cash credits: identity, creditworthiness, and transaction genuineness. Despite the assessee providing confirmation letters, the AO did not perform requisite due diligence by examining financial statements, income tax returns, or verifying the transaction's nature. The tribunal rejected the assessee's contention regarding Section 153D approval, noting the assessment order did not adequately address unsecured loans. Consequently, the appeal was dismissed, mandating a detailed reassessment of the loan transactions.
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• Loan Against Fixed Deposit Not Business Income; Tribunal Upholds Assessee's Appeal Under Section 44AD

  Case-Laws - AT : ITAT allowed the assessee's appeal, finding the Assessing Officer's addition of Rs. 9 lakhs unwarranted. The tribunal determined that the amount received by the assessee as a loan against fixed deposit cannot be considered business income. Since the assessee had already declared income under the Income Tax Declaration Scheme for AY 2013-14 and opted for taxation under Section 44AD, the addition was unjustified. The tribunal set aside the lower appellate authority's order and directed deletion of the disputed addition.
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• Subscription Scheme "Kuber Dhanvarsha" Deemed Fraudulent, Deposits Treated as Taxable Income Under Section 28

  Case-Laws - AT : ITAT held that the assessee's subscription scheme "Kuber Dhanvarsha" involving deposits ranging from Rs. 1,250 to Rs. 10,000 was fraudulent. The tribunal found the depositor addresses cryptic and unverifiable, with no genuine intention to return funds. The deposits were characterized as income under Section 28, not Section 68, due to lack of depositor genuineness proof. The tribunal concluded the scheme was designed to defraud innocent depositors, and the entire deposit collection constitutes taxable ill-gotten income. Consequently, the ITAT sustained the tax authorities' proposed additions and dismissed the assessee's appeal.
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• Demonetization Cash Deposits Scrutinized: Tax Tribunal Partially Upholds Assessments Under Sections 69A, 36(1)(vii), and 115BBE

  Case-Laws - AT : ITAT ruled on multiple taxation issues involving unexplained cash deposits during demonetization. The tribunal sustained addition u/s 69A regarding cash deposits, finding the assessee's explanations unconvincing. Bad debt claims were partially allowed under section 36(1)(vii). The tribunal rejected the assessee's books of accounts and applied a minimal gross profit percentage of 0.1%. Notional commission additions were deleted. Regarding section 115BBE, the tribunal followed precedent limiting 60% tax rate to transactions from 01.04.2017 onwards, thereby restricting tax to 30% for earlier periods. Overall, the decision partially favored the assessee while upholding significant tax adjustments related to unexplained cash deposits during demonetization.
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• Taxpayer Wins Capital Gains Tax Exemption Under Section 54, Proving Flexible Interpretation of Investment Rules for Residential Property

  Case-Laws - AT : The ITAT adjudicated a capital gains tax exemption claim under Section 54, reversing lower authorities' decisions. The tribunal held that the assessee was entitled to exemption despite sale proceeds not being directly used for new property acquisition. The court emphasized that Section 54 does not mandate mandatory utilization of sale proceeds, but rather allows appropriation of capital gains towards new residential property investment. The tribunal found the assessee's investment in a new villa exceeded the sale consideration of the old residential house. Consequently, the tribunal set aside the previous order and directed the Assessing Officer to allow the exemption claim, ultimately deciding in favor of the assessee.
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• Legal Battle: Mandatory Prior Approval Invalidates Tax Reassessment Notice Under Section 147, Blocking Revenue's Claim of Bogus Transactions

  Case-Laws - AT : ITAT adjudicated a case involving reopening of assessment under section 147, addressing two primary legal issues. First, regarding notice issuance post-1-04-2021, the tribunal held that prior approval from the competent authority under section 151 was mandatory. The AO's notice was deemed invalid as procedural requirements were not strictly followed. Second, concerning share transaction allegations, the tribunal ruled against revenue, determining that reassessment proceedings constituted a change of opinion since all material was previously examined during original assessment. The tribunal found the reopening of assessment invalid, effectively deciding in favor of the assessee and against revenue's claims of bogus share transactions.
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• Tax Regime Flexibility: Assessee Can Switch Back to Old Taxation Framework After Initially Choosing New Regime Under Section 115BAC

  Case-Laws - AT : ITAT ruled that an assessee who initially filed Form 10-IE opting for new tax regime under Section 115BAC but subsequently filed income tax return under old regime cannot be compelled to adopt new taxation framework. The tribunal found that since the return was filed under old regime, the assessee's choice to revert to previous taxation method was valid. The Additional/Joint CIT's order upholding CPC's processing under new regime was set aside, and the assessee's grounds were allowed, permitting taxation under the traditional tax calculation method for the relevant assessment year.
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• Cooperative Credit Society Wins Partial Tax Appeal, Challenges Resolved Under Sections 68, 40A(3), and 80P

  Case-Laws - AT : ITAT analyzed multiple taxation issues for a cooperative credit society. The tribunal partially allowed the appeal, directing: (1) deletion of additions under Section 68 due to lack of evidence regarding cash deposits, (2) deletion of disallowance of rental payments under Section 40A(3), (3) allowing deduction under Section 80P for member transactions, and (4) restoring certain issues like prior period expenses and bank account recoveries to Assessing Officer for de novo adjudication. The tribunal upheld disallowances related to standard asset provisions, gratuity provisions, and rejected assessee's contentions about special audit directions. Overall, the decision provided nuanced interpretations across various taxation aspects while maintaining procedural fairness.
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• Income Tax Appeals Resolved: Assessee Wins Major Victories with Substantial Deductions Under Section 68 and Precedential Principles

  Case-Laws - AT : ITAT upheld multiple findings from CIT(A), predominantly favoring the assessee across various contested issues. Key determinations include deletion of additions under Section 68 relating to unexplained capital and cash credits, confirmation of jewellery valuation explanations, and rejection of revenue's extrapolation claims. The tribunal consistently applied precedential principles from the assessee's previous assessment year, dismissing revenue's appeals where no distinguishable facts or legal distinctions were presented. The ITAT directed the Assessing Officer to grant telescoping benefits against unaccounted income and investments, ultimately providing substantial relief to the assessee by substantially reducing proposed additions across different categories of income and investments.
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Customs

• Software License Documentation Classified Separately from Hardware, Shifting Customs Duty Treatment Under Specific Tariff Provisions

  Case-Laws - AT : CESTAT adjudicated an import classification dispute involving software license documentation accompanying distributed control system hardware. The tribunal determined that software license documentation in paper form should not be classified under CTH 8538 9000 as originally assessed. Relying on prior precedent and CBEC circular, the tribunal held that documents conveying software usage rights merit classification under alternative tariff headings, specifically rejecting the original classification. The tribunal's analysis emphasized the distinct nature of software licensing documentation from embedded hardware components. Consequently, the appeal was allowed, effectively overturning the previous classification and potentially modifying the applicable customs duty treatment for similar imported software licensing materials.
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• Vehicle Confiscation Upheld: Smuggling Penalties Reduced Under Section 115 of Customs Act Despite Lack of Intentional Knowledge

  Case-Laws - AT : The CESTAT upheld the vehicle confiscation under Section 115 of the Customs Act, 1962, rejecting the appellant's claim of lack of knowledge about smuggled goods. While mens rea cannot challenge confiscation, the tribunal partially allowed the appeal by reducing the redemption fine from the original amount to Rs 50,000, considering the total seizure value and disposal price of smuggled goods. The decision reinforces that conveyance used in smuggling is mandatorily confiscatable, and mere absence of intentional knowledge does not negate the confiscation order, though it may mitigate penalty implications.
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• Customs Valuation Dispute: Tribunal Upholds Original Invoice Value for Specialized Industrial Components Despite Weight Variations

  Case-Laws - AT : CESTAT resolved a customs valuation dispute involving mis-declaration of imported goods. The tribunal determined that filing an appeal constitutes a protest against previously consented value. Referencing precedent cases, the tribunal held that variations in weight for unit-based assessable goods do not necessitate changes to transaction value. Specifically, for specialized industrial components sold by units rather than weight, excess weight discovered during physical verification does not invalidate the original invoice value. With no evidence of excess remittance beyond invoice value, the tribunal accepted the declared transaction value and quantity for customs duty assessment, ultimately allowing the appeal.
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IBC

• Corporate Debt Resolution: Guarantor's Appeal Rejected, Liability Confirmed Under Insolvency Code Provisions

  Case-Laws - AT : NCLAT dismissed the appeal of the Personal Guarantor (PG), affirming the validity of notice service under the Guarantee Deed. The Tribunal held that notices were properly sent to the last known address, and the Resolution Professional complied with Sections 95 and 99 of the IBC. The Appellant failed to dispute the underlying debt or demonstrate procedural non-compliance. The Tribunal emphasized that simultaneous insolvency proceedings against the borrower and guarantor are legally permissible, and the PG remains liable for repayment despite the ongoing Corporate Insolvency Resolution Process of the primary borrower.
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• Debt Acknowledgments Validate Insolvency Proceedings Against Corporate Debtor Under Section 7 Within Prescribed Limitation Period

  Case-Laws - AT : NCLAT affirmed the DRT's Section 7 application admission against the corporate debtor. The tribunal found multiple debt acknowledgments within the three-year limitation period, specifically noting acknowledgments on 28.01.2014, 07.05.2014, and subsequent communications in 2016 and 2017. The court determined the application filed on 13.11.2019 was timely due to these acknowledgments. The Resolution Professional was authorized to proceed with Corporate Insolvency Resolution Process (CIRP), with interim orders vacated and the period from 29.08.2022 excluded from CIRP calculation. The appellant was directed to surrender corporate assets, having failed to make payments after 30.06.2015.
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• Unregistered Property Sale Agreement Lacks Legal Standing Under Section 49, Rendering Claims Invalid and Unenforceable

  Case-Laws - AT : NCLAT dismissed the appeal, holding that an unregistered agreement for sale cannot create legal rights in immovable property under Section 49 of the Registration Act, 1908. The appellant's claims for property tax reimbursement and other expenses were rejected due to lack of valid documentary evidence and failure to establish a legally enforceable right. The tribunal emphasized that without a registered sale deed, no debt could be recognized under the Insolvency and Bankruptcy Code, 2016, rendering the claims unsustainable and inadmissible.
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Indian Laws

• Supreme Court Confirms Employer's Legal Duty to Remit Employee Social Security Contributions Under Section 85(i)(a)

  Case-Laws - SC : SC upheld the conviction of the appellant under Section 85(i)(a) of the Employees' State Insurance Act for failing to remit ESI contributions deducted from employees' salaries. The Court rejected arguments challenging liability, affirming the Trial Court's sentence of imprisonment and fine. Referencing precedent in A K Abdul Samad, the Court emphasized statutory interpretation requires strict adherence to legislative intent. The appellant, as General Manager and Principal Employer, was found legally responsible for ESI contribution remittance. The Court directed the appellant to surrender and serve the prescribed sentence, with the appeal ultimately being dismissed.
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• Legal Challenge Fails: Cheque Dishonour Case Collapses Due to Insufficient Evidence Under Section 138 NI Act

  Case-Laws - HC : HC dismisses appeal in cheque dishonour case, affirming lower court's acquittal. Complainant failed to establish legally enforceable debt under Section 138 of Negotiable Instruments Act. Despite allegations of business contribution and third-party payments, no cogent documentary evidence was produced to substantiate claims. Accused effectively rebutted presumption of debt through substantial counter-evidence. The court found Complainant's assertions unsubstantiated and lacking credibility, particularly regarding guarantee or surety claims. Consequently, the appeal was dismissed, upholding the original acquittal and placing onus of proof squarely on Complainant.
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• Supreme Court Clarifies Buprenorphine Hydrochloride as Prohibited Substance Under NDPS Act, Reinforcing Drug Control Measures

  Case-Laws - SC : SC held that dealing in "Buprenorphine Hydrochloride" constitutes an offense under Section 8 of the NDPS Act, regardless of its listing in Schedule I of NDPS Rules. The Court determined that psychotropic substances in the Act's Schedule pose significant societal risks. The decision in Sanjeev V. Deshpande is retrospectively applicable, clarifying existing law without creating a new offense. The Court found that both Trial Court and High Court erroneously discharged charges under Section 216 CrPC. Consequently, the High Court's orders were set aside, and the appeal was allowed, reinstating the original charges against the accused.
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PMLA

• Share Attachment Upheld: Bribe Money Routed Through Equity Transactions Confirms Money Laundering Under PMLA Section 3

  Case-Laws - AT : The AT upheld the attachment of shares in a money laundering case, finding that the appellant routed bribe money through share purchases related to the Agusta Westland transaction. The tribunal determined that the relevant time for assessing money laundering is when the Enforcement Directorate discovers the crime, not the date of the predicate offence. The court emphasized that the appellant's actions involved channelizing proceeds of crime through strategic share acquisitions, thereby establishing a clear money laundering nexus. The evidence demonstrated a deliberate mechanism to transfer illicit funds through equity transactions. Consequently, the tribunal rejected the appellant's challenge to the share attachment, confirming the Enforcement Directorate's actions as legally valid under the Prevention of Money Laundering Act. Appeal dismissed.
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Service Tax

• Procedural Flaws Invalidate Service Tax Order: Petitioner Denied Fair Hearing and Opportunity to Present Evidence

  Case-Laws - HC : HC found a violation of natural justice principles in service tax proceedings. The impugned order was set aside due to procedural irregularities in personal hearing, specifically the failure to provide adequate opportunities for the petitioner to present documentation and submissions. The matter was remitted to the respondent with directions to fix a hearing date, providing at least four weeks' notice for the petitioner to produce supporting documents and make written submissions, thereby ensuring fundamental principles of fair hearing are upheld.
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• Taxpayer Wins: Legacy Dispute Resolution Scheme Payment Validated Despite Accounting Technicality Under Section 127(5)

  Case-Laws - HC : HC allowed the petition, directing respondents to issue manual discharge certification in SVLDRS-Form 4. The court found that the petitioner had validly paid the prescribed amount under Section 127(5) of Finance Act, 2019 and Rule 7 of Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019, despite the payment being recorded under a different head. The undisputed fact that the quantified amount was paid prior to the cut-off date warranted issuance of the discharge certificate, which had been improperly withheld by the respondents.
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• Services Pre-2012 Classified as Construction, Post-2012 as Works Contract with Valid Valuation Rule

  Case-Laws - AT : CESTAT ruled that services rendered prior to 30.06.2012 are correctly classifiable as 'Commercial or Industrial Construction Service' (CICS), entitling the appellant to abatement. For the period post 01.07.2012, services were appropriately classified as 'works contract service', with valuation under Rule 2(A)(ii) being valid. The tribunal set aside demands raised under extended limitation period, finding no intentional tax evasion. The department's order was quashed as it exceeded the show cause notice's scope, violating principles of natural justice. Consequently, the appeal was allowed, with no penalties imposed.
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Central Excise

• Excise Duty Valuation of Leaf Springs Overturned: Section 4 Applied, Revenue Authorities' Calculation Deemed Legally Insufficient

  Case-Laws - AT : CESTAT allowed the appeal, holding that the valuation of assorted leaf springs must be conducted under Section 4 of the Central Excise Act, 1944, not Section 4A. The tribunal found the revenue authorities' computational methodology lacking legal basis, with valuation based on erroneous presumptions and mathematical exercises. The goods were cleared loose without packaging, thus not qualifying as retail packages under Legal Metrology Rules. The demand and associated penalties were set aside due to insufficient evidence and improper stock verification procedures during the original investigation.
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Case Laws:

• GST

• 2025 (4) TMI 1241
  Violation of principles of natural justice - Dismissal of appeal filed by the petitioner without granting an opportunity of hearing - HELD THAT:- No useful purpose would be served in relegating the petitioner to the remedy of appeal at this stage. Thus, the impugned orders dated 07.08.2021 19.12.2024 are quashed. Matter is remanded to the assessing authority to pass fresh order after giving an opportunity of hearing to the petitioner - Petition allowed by way of remand.

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• 2025 (4) TMI 1240
  Violation of principles of natural justice - Petitioner was not provided a proper opportunity to file a reply - cancellation of GST registration of the Petitioner firm - HELD THAT:- Without going into this issue, the Court is of the opinion that since the main persons who were conducting the business have both passed away and the SCN was issued in the year 2023 which was just around the same period when the Directors were suffering ill-health and had passed away. The Petitioner ought to be given an opportunity to defend itself on merits. The proceedings initiated vide SCN dated 3rd December, 2023 are relegated to the adjudicating authority for the Petitioner to be provided a proper opportunity to be heard on merits. The Petitioner may file a reply to the SCN within 30 days - A personal hearing shall be afforded to the Petitioner as well. The impugned order dated 8th April, 2024 shall stand set aside - Petition allowed.

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• 2025 (4) TMI 1239
  Maintainability of petition - availability of alternative remedy - Seeking issuance of an appropriate writ assailing the impugned order - excess claim of ITC - case of the Petitioner is that the Petitioner never came to know of the SCN - Principles of natural justice - HELD THAT:- As per Section 107 (1) of the Central Goods and Service Tax Act, 2017 (hereinafter, CGST Act ), the limitation for filing an appeal is three months, which is extendible by one more month as per Section 107 (4) of the CGST Act. The Court has considered the matter. In terms of the impugned order, the Petitioner has to pay a demand of Rs. 7,88,611/-, including interest and penalty, which is a substantial sum. In terms of Notification 9/2023-State Tax dated 22nd June, 2023, 56/2023-Central Tax dated 28th December, 2023 and 56/2023 State Tax dated 11th July, 2024, the limitation for passing of the order-in-original by the Adjudicating Authority has been extended. Though the challenge to the said notifications is not being pressed, in this Petition, this Court is of the opinion that considering the nature of the demand, the Petitioner ought to be given an opportunity to assail the order on merits and place its stand. This Court is not inclined to interfere with the impugned order. However, considering the plea that the Petitioner came to know of the impugned order only in March, 2025, the Petitioner is permitted to file an appeal challenging the impugned order, after making the pre-deposit in terms of Section 107 of the CGST Act - Petiiton disposed off.

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• 2025 (4) TMI 1238
  Parallel proceedings - during pendency of the proceedings under Section 73 of the Act, another notice under Section 74 was issued with the same allegations - Eligibility to seek refund of ITC - HELD THAT:- Learned Standing Counsel prays for time to file response to the writ petition - Time prayed for is allowed. List on 22.05.2025.

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• 2025 (4) TMI 1237
  Seeking modification of order dated 12th September, 2024, extension for filing a response to SCN - HELD THAT:- A perusal of the sample signature shows that it does not match the signature filed with the affidavit in support of the Petition and with the present application. The rent agreement which was handed over by the ld. Counsel for the Respondent also has a different signature of the Petitioner - Moreover, the spelling of the name of the Petitioner is also different. In some places, he used the name SINGHAL but when he signed before the Court it was stated SINGAL . The Aadhar Card also has the Petitioner s name as Singhal. The Court is not satisfied as to the genuinity and the identity of the Petitioner. The application is not liable to be allowed.

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• 2025 (4) TMI 1236
  Levy of penalty u/s 122(1A) - relevant statute can be applied retrospectively for periods prior to its enforcement date of 1st January 2021, specifically for the period from July 2017 to December 2020 - HELD THAT:- As far as ad-interim relief is concerned, a prima facie case is made out for grant of ad-interim relief. Atleast prima facie, there are substance in the argument canvassed on behalf of the Petitioners. It is not in dispute that Section 122 (1A) was brought on the statute book only with effect from 1st January 2021 and yet penalty is sought to be imposed on the Petitioners for a period much prior thereto. Also, prima facie, we find that one of the issues raised in the present Petition is squarely covered by a decision of this Court in the case of Shantanu Sanjay Hundekari [ 2024 (3) TMI 1277 - BOMBAY HIGH COURT ]. A strong prima facie case is made out - the balance of convenience is in favour of the Petitioners - Petition disposed off.

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• 2025 (4) TMI 1235
  Challenge to order passed under section 93(1)(a) of the CGST Act, 2017 - GST registration of deceased father was cancelled posthumously - petitioner obtained a fresh registration for the same proprietary concern - HELD THAT:- A summons dt. 18.07.2022 was issued under section 70 to the father of the petitioner who no more was regarding non-payment of GST. The petitioner filed a reply thereto stating that his father died on 13.02.2018 and even enclosed the copy of the death certificate. He pointed out that there cannot be any proceeding initiated against a dead person after his death and requested to waive the liability. However, the impugned order came to be passed on 28.11.2022 by 3rd respondent in regard to the proprietary concern of the petitioner s deceased father quoting section 93(1)(a) of the CGST Act, 2017. In that order it is held that if the business is carried on by a person s legal representative after his death, the legal representative would be liable to pay tax, interest or penalty. But 3rd respondent did not provide details of any material evidence to show as to how the petitioner was said to be continuing business of the father s proprietary concern having himself obtained a fresh registration on 24.03.2018. In the absence of any material referred to by the said respondent as to on what basis it is held that the petitioner was continuing the business in the name of his father s proprietary concern after his father s death in spite of the petitioner obtaining a fresh registration in his own name on 24.03.2018, the impugned order dt. 28.11.2022 is perverse, based on no evidence and cannot be sustained. Conclusion - The impugned order dt. 28.11.2022 is perverse, based on no evidence and cannot be sustained. Petition allowed.

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• 2025 (4) TMI 1234
  Maintainability of appeal - appropriate form - non-constitution of appellate tribunal - Levy of penalty u/s 129(1)(a) of the Uttar Pradesh Goods and Services Tax Act, 2017 - HELD THAT:- The appeal of the petitioner has been rejected by the Additional Commissioner, State Tax, Agra by the impugned order dated 29.11.2024. The appeal against the order passed by the aforesaid appellate authority lies under Section 112 of the UPGST Act, 2017 before the appellate tribunal. The appellate tribunal has not been constituted till date. Section 112 of the UPGST Act, 2017 contemplates pre-deposit only in respect of the tax amount in dispute. Since no tax amount is disputed but only penalty is in issue no further amount is required to be deposited by the petitioner under Section 112 of the GST Act, 2017 - Matter needs consideration. In view of the fact that no tribunal has been constituted the impugned order of penalty shall remain stayed. The goods which have been seized shall be released subject to the petitioner complying with the requirements of Rule 140 of CGST Rules, 2017. The amount of penalty deposited by the petitioner at the time of institution of the first appeal shall be adjusted while determining the amount of security in the form of bank guarantee and the bonds to be executed by the petitioner under Rule 140 of the CGST Rules, 2017. The modification application is allowed.

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• 2025 (4) TMI 1233
  Levy of penalty imposed under section 125 of the GST Act - opportunity of hearing not provided - violation of principles of natural justice - HELD THAT:- Considering the fact that no opportunity of hearing has been granted or is reflected in the said order, the order dated 20.01.2023 is quashed. The matter is remanded to the authority concerned to pass a fresh order after giving an opportunity of hearing in accordance with law. Petition allowed.

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• 2025 (4) TMI 1232
  Prayer for modification of the order dated 14th August 2024 - amendment of Section 112(8) of the CGST Act, 2017 introduced by the Finance (No. 2) Act, 2024 which received the assent of the President on 16th August 2024 and was published in the Gazette of India on that day itself - HELD THAT:- From a perusal of Section 143 of the Finance Act it would transpire that in Section 112 of the CGST Act the words twenty percent as appearing in clause (b)(i) have been substituted by the words ten per cent . Since this Court by order dated 14th August 2024 had admitted the writ petition and passed an interim order on usual terms as provided in Section 112 of the CGST Act, 2017, the direction for deposit of 20 per cent should be treated as deposit of 10 per cent. Application disposed off.

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• 2025 (4) TMI 1231
  Jurisdiction to initiate or continue proceedings under Section 73 of the Central Goods and Services Tax Act, 2017 - Approval of a Resolution Plan under the statutory regime constructed in terms of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Once a Resolution Plan is duly approved under Section 31 (1) of the IBC, the debts as provided for in the Resolution Plan alone shall remain payable and such position shall be binding on, among others, the Central Government and various authorities, including the tax authorities. All dues which are not part of the Resolution Plan would stand extinguished and no person would be entitled to initiate or continue any proceedings in respect of any claim for any such due. No proceedings in respect of any dues relating to the period prior to the approval of the resolution plan can be continued or initiated. In this clear view of the matter, there can be no doubt that the Impugned Proceedings and their continuation against the Petitioner-Assessee are wholly misconceived and untenable. The Impugned Order is essentially for the Financial Year 2019-20. Evidently, such proceedings pertain to the period prior to the approval of the Resolution Plan. The Resolution Plan came to be approved on 26.10.2020. The conduct of such proceedings which has resulted in the passing of the Impugned Order would be directly in conflict with the law declared in Ghanshyam Mishra [ 2021 (4) TMI 613 - SUPREME COURT ]. Consequently, nothing in the Impugned Proceedings can legitimately survive. Evidently and admittedly, the Impugned Order relates to the period prior to the approval of the Resolution Plan of the Petitioner-Assessee, and therefore the claim made in the Impugned Order stands extinguished. This is why the Supreme Court has clearly ruled that initiation and continuation of proceedings relating to the period prior to the approval of the Resolution Plan cannot be indulged in. Upon completion of the CIRP, the Petitioner-Assessee has completely changed hands and has begun on a clean slate under new ownership and management. Conclusion - i) The Resolution Plan s binding effect precluded the Revenue from initiating or continuing proceedings for dues not included in the Plan, thereby invalidating the impugned order. ii) The tax authorities had no jurisdiction to proceed against the Petitioner for the Financial Year 2019-2020, as the Resolution Plan was approved on 26.10.2020, and the claims for the period prior to that date stood extinguished. The impugned SCN and Order issued u/s 73 of the CGST Act are quashed and set aside - petition allowed.

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• 2025 (4) TMI 1230
  Transition of Input Tax Credit - filing of TRAN-1 declaration in the web portal maintained by the appellants department - time limitation - HELD THAT:- The Hon ble Supreme Court in UNION OF INDIA ANR. VERSUS FILCO TRADE CENTRE PVT. LTD. ANR. [ 2022 (7) TMI 1232 - SC ORDER] where it was held that Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC). Pursuant to the said order of the Hon ble Supreme Court, the department also issued Circular No.180/12/2022-GST dated 09.09.2022. Web portal was once again opened to enable the assessee to file TRAN-1 declaration form. The writ petitioner herein also availed the said facility and filed TRAN-1 form. All the issues raised in the writ petition have since been resolved. Therefore, nothing survives for further adjudication. Appeal dismissed.

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• 2025 (4) TMI 1229
  Maintainability of petition - availability of alternative remedy of appeal - Principles of natural justice - permissibility of cross-examination of a witness - ineligible availment f ITC based on fake documents - HELD THAT:- It is found from the memorandum of appeal filed by the Joint Commissioner of Central Tax, Howrah CGST CX Commissionerate that the stand taken by the department is that the learned writ court ought to have held that the statement of Niraj Kumar Nathani is nothing but a corroborative one apart from other evidences including the said investigation and inspection report issued by the Bureau of Investigation, Government of West Bengal, Commercial Taxes as well as from the other documentary evidence relied upon by the adjudicating authority in the order-in-original dated 30.10.2024 - the said statement need not be referred to in the event the assessee files a statutory appeal before the appellate authority. Conclusion - Necessarily the assessee has to be relegated to file an appeal before the appellate authority, namely, the Commissioner (Appeal) CGST Central Excise Appeal-II Commissionerate, Kolkata. In the light of the fact that the time for preferring the appeal has already expired, the assessee is directed to file the appeal within 45 days from the date of receipt of server copy of this order and the assessee shall comply with the pre-deposit condition. The assessee shall be permitted to file the appeal manually as the online filing may not be possible as appeal is belated - matter disposed off.

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• Income Tax

• 2025 (4) TMI 1242
  Adjustment of refund against the demand - payment of 20% of the demand for assessment year 2016-17 by the Petitioner - HELD THAT:- There is no dispute that the Petitioner has made payment of 20% of the demand for assessment year 2016-17 and the appeal for the said assessment year is pending as of today. As per the CBDT Circular once payment of 20% of the demand is made, the balance demand would be stayed till the disposal of the appeal. Therefore, the adjustment of the refund for assessment year 2014-15 by the Respondent after the Petitioner has already paid 20% of the demand was not justified. This is contrary to their own Circular and the decision of this Court in the case of Mahesh Ganatra [ 2025 (2) TMI 1086 - BOMBAY HIGH COURT] . The Petitioner has raised this very specific ground in his reply to the proceedings u/s 245 of the Act and same has not been controverted. In our view, since the appeal for assessment year 2016-17 is pending and the Petitioner has made payment of 20%, the reasoning given by the Respondent that the balance demand has not been paid and therefore the adjustment is justified is erroneous and contrary to the decision of this Court. Thus, adjustment of refund arising out of proceedings for assessment year 2014-15 against the demand for assessment year 2016-17 is unjustified and illegal. Respondent is directed to refund the erroneous adjustment made of refund.

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• 2025 (4) TMI 1228
  Penalty u/s 271(1)(c) - disallowance of capital loss on dissolution of the HUF - AO has stated that he is satisfied that the assessee has furnished inaccurate particulars of the income by claiming the said amount as deduction - HELD THAT:- As the argument by relying upon Section 171 does not take the case of the revenue any forward. One more aspect which we have taken note of is that partition of the HUF completely was accepted by the AO while completing the assessment under Section 143 (3) of the Act and therefore, it will be too late for the revenue to now turn back and say that they will not recognize the partition of the HUF in full form. As already noted, the reason for which notice was issued for initiating penalty proceedings, is different from the conclusion which was arrived at by the Assessing Officer while passing the penalty order dated 30.6.2017. This is also yet another incurable defect which is called for interference of the penalty order. At this juncture, we need to point out that the law is well settled that the penalty proceedings are separate and independent from the assessment proceedings. Even assuming an addition has been made in the assessment proceedings, that will not automatically warrant levy of penalty. There is a mandate cast on the revenue to show with sufficient material that there was a concealment of income by the assessee and the assessee attempted to evade payment of tax. In the instant case, the assessee upon partition of the HUF in full form mistakenly treated the assets in the hands of erstwhile coparceners to be a transfer. This was subsequently ascertained during the course of the assessment proceedings and the assessee put forth the case to be a one of genuine mistake. If that be the case on facts, it is also one more ground for not to levy any penalty on the assessee. Thus, Tribunal was right in allowing the assessee s appeal and setting aside the penalty order. Decided in favour of assessee.

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• 2025 (4) TMI 1227
  Disallowing interest paid to the beneficiaries u/s 40(b) - status of the Appellant Trust was that of Association of Persons - HELD THAT:- The Supreme Court in INDIRA BALKRISHNA ( 1960 (4) TMI 7 - SUPREME COURT] has held that an association of persons must be one in which two or more persons jointly held common purpose or common action and as the word occurs in a section which imposes tax on income, the association must be one which produces income, profits or gains. The scope of Appeal u/s 260A of the Act is well settled. This Court, in an Appeal under Section 260A, can interfere with the finding of fact only if when the same is shown to be perverse. [See: SYEDA RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. [ 2016 (10) TMI 1233 - SUPREME COURT] and SOFTBRANDS INDIA P. LTD. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] . AO by applying the aforesaid criteria to the facts of the case, has held that the beneficiaries have come together voluntarily by pooling their money in the trust with clear knowledge that the funds will be utilized by the trust for the business of project work undertaken and would result in profits for the trust and consequently for the beneficiaries. AO has recorded a finding that the Trust is an Association of Persons. Accordingly, the interest claim to the beneficiaries has been disallowed. The aforesaid findings recorded by the Income Tax Officer as AO, has been upheld in Appeal. The Income Tax Appellate Tribunal has held that the assessee himself has declared the status as an association of persons and on that basis, the Assessing Officer has passed the order. It has further held that declaration by assessee is not a mistake which has been erroneously made, as no attempt has been made to rectify the aforesaid mistake. It is also pertinent to note that the assessee, while filing the return, had described itself as an Association of Persons for which neither any attempt has been made to correct the so called mistake nor any explanation has been offered for making such a mistake. The order passed by the Assessing Officer as well as the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal is based on meticulous appreciation of evidence. The finding of fact recorded therein by no stretch of imagination can be said to be perverse. Tribunal was justified in law in holding that the status of the Appellant Trust was that of Association of Persons and thus the lower authorities were justified in disallowing interest paid to the beneficiaries under Section 40(b) of the Income Tax Act, 1961.

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• 2025 (4) TMI 1226
  Transfer of case u/s 127 - Transfer income tax assessment file of the petitioner from the Office of the Principal Commissioner of Income Tax, Coimbatore to the Central Circle, Kolkatta (Central Circle-) - this transfer order has been passed to centralize the case of the petitioner for effective and co-ordinated investigation along with other cases Whether the respondents have sufficient material for transfer of the case from Coimbatore to Central Circle, Kolkata? - HELD THAT:- If the transfer is being made for the purpose of co-ordinated investigation for the purpose of assessment and collection of tax in a more convenient or efficient way, then it will be a good ground for transfer. In the present case, this Court does not find any irregularity or infirmity in passing the impugned Notification by the 1st respondent ordering transfer of the case of the petitioner to Central Circle, Kolkata along with other cases only for the purpose of co-ordinated investigation in Lottery Group. No doubt, transfer of a case from the place where the assessee has its place of residence or business to another place causes inconvenience but if it is necessary in the public interest then the transfer on the ground of proper and co-ordinated investigation cannot be held to be impermissible in law. Moreover, do not find any prejudice that would be caused due to the present notification to the petitioner because no final assessment order adverse to the petitioner was passed, except the transfer of the petitioner s case by invoking Section 127 of the Act from Central Circle, Coimbatore to Central Circle, Kolkata. The Income Tax Act, being a taxing statute, very strict interpretation has to be given and in the absence of any prejudice caused to the petitioner, the challenge to the impugned notification has to be rejected. The case laws referred to by petitioner would not persuade this Court to take a different view contrary to the decision of the 1st respondent and hence, the said case laws would not improve the case of the petitioner. This Court is of the view that the Writ Petitions are liable to be dismissed.

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• 2025 (4) TMI 1225
  Stay of demand - directing the petitioner to pay 20% of the disputed demand, pending disposal of the appeal before the Appellate Authority for the Assessment Year 2016-17 - As argued notice u/s 148 was issued by the jurisdictional Assessing Officer, whereas, as per the amended provision of the Act, that ought to had been issued in the Faceless manner - HELD THAT:- In the light of the subsequent amendments brought in the Act as also in the light of the decision rendered in the case of Union of India ors., v. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT ] the Assessing Authority ought to had granted interim protection to the Assessee till finalization of the appeal which the Assessing Authority has not considered. The contention of the learned counsel for the petitioner so far as the 148 notice issued by the jurisdictional Assessing Officer not being in dispute by the learned Standing Counsel for the Department and also in the light of the aforesaid judgments rendered by this Court in the case of Kankanala Ravindra Reddy [ 2023 (9) TMI 951 - TELANGANA HIGH COURT ] and in the light of the judgment of Ashish Agarwal (supra), we are of the considered opinion that the Assessing Authority in the course of deciding the petition under Section 220(6) of the Act, ought to have taken a more pragmatic view and should had kept the recovery proceedings in abeyance, pending the appeal before the Appellate Authority. We dispose of the present writ petition at this juncture directing the Assessing Officer not to pursue with the recovery proceedings in terms of the impugned order dated 07.01.2025 till the appeal for the Assessment Year 2016-17 is finally decided. Considering the fact that the appeal was filed in the year 2023, we expect that the Appellate Authority shall take up the appeal and decide the same at the earliest.

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• 2025 (4) TMI 1224
  Availability of an alternate remedy of appeal under the Income-tax Act, 1961 - HELD THAT:- Strangely, though, it is the procedural requirement, the petitioner has not made any averment in the Writ Petition regards alternate remedy. Paragraph 24 merely states that no similar petition is filed before any other Court including the Hon ble Supreme Court of India or this Hon ble Court. There is no statement about no alternate or efficacious remedy not being available to the petitioner or an admission that such remedy is available but cannot be resorted to because the petition falls within the line of exceptions carved out by Judicial precedents. This suppression, according to us, is material. That apart from since the petitioner has alternate and efficacious remedy to question impugned assessment order dated 26 February 2024, we see no ground to entertain this petition. The alternate statutory remedy cannot be bypassed so casually and without disclosing full and correct facts. This petition is accordingly dismissed with liberty however to the petitioner to avail of the alternate remedy available under the Income-tax Act. All contentions of all the parties are left open should the petitioner choose to avail of the alternate remedy.

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• 2025 (4) TMI 1223
  Validity of reopening of assessment - HELD THAT:- We issue Rule in this Petition. Respondents waive service after Rule. Liberty to the parties to apply after appropriate orders are passed by the Hon ble Supreme Court and/or final decision of the Hon ble Supreme Court in the challenge to this Court s decision in Hexaware Technologies Limited [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] As far as interim relief is concerned, we are not inclined to grant the same since we have noticed the delay in approaching this Court after the impugned order was passed and also in the wake of the fact that prior to issuance of the order under Section 148A(d), a show cause notice u/s 148A(b) was issued to which the petitioner has responded. However, pursuant to the assessment notice u/s 142(1) the petitioner once again sought to raise objection to the reassessement proceedings relying upon the decision of this Court in Hexaware Technologies Limited [ 2024 (5) TMI 302 - BOMBAY HIGH COURT] which is presently pending before the Apex Court. We may observe that once an order u/s 148A(d) has already been passed deciding the objection raised, it is not permissible for the petitioner to keep on raising the objection. There is no explanation for the delay in approaching this Court after the order u/s 148A(d) was passed.

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• 2025 (4) TMI 1222
  Reopening of assessment - Period of limitation - HELD THAT:- We find that in Union of India v. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] the Supreme Court had principally identified three block periods which were liable to be excluded for the purposes of examining a challenge based on the Proviso to Section 149 of the Act. The first of those periods was 20 April 2020 to 30 June 2021 and which essentially was the outcome of Section 3(1) of Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act, 2021 [ TOLA ]. Second period which the Supreme Court took into consideration was the date of the issuance of the original notice upto 04 May 2022, when it came to render judgment in Union of India Ors. v. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] The third period which was identified as being liable to be taken into account was that factored in by the Third Proviso to Section 148 of the Act, and which deals with the exclusion of time which is connected to the opportunity granted to the assessee to file a response to a notice under Section 148A(b). Even if the period of 14 days and which represented the time within which the petitioner was called upon to furnish a response to the Section 148A(b) notice were to be added, the re-assessment notice which ultimately came to be issued on 23 July 2022, would not be within the period of limitation as prescribed. The aforesaid factual position is conceded to even by the respondents. We allow the instant writ petition and quash the notice under Section 148.

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• 2025 (4) TMI 1221
  Unexplained investment in property - Addition u/s 69C - CIT(A) deleted the said addition made u/s 69 of the Act, and remanded the matter to the AO for verification of certain facts and decision afresh in respect thereof - HELD THAT:- As appellant has not brought to our notice, either by way of any informatory application, or in the course of arguments that the appellant has challenged said assessment order dated 2.4.2024 before the Commissioner of Income Tax(A). In the given situation, when vide impugned order, Learned CIT(A) deleted the first mentioned addition and remanded the matter to the Assessing Officer, and the Assessing Officer passed fresh order as regards the first addition, present appeal as regards said first addition challenging the impugned order passed by Learned CIT(A) is not maintainable. Addition on profit on sale of land - Nature of land sold - AO concluded that the said transactions of sale of immovable property were having the element of business transaction and adventure in the nature of trade - HELD THAT:- No merit in the contention of learned AR for the appellant that the period for which land is held by the landowner is not a significant factor. We confirm the decision of the Ld. CIT(A) whereby the view of the Assessing Officer has been confirmed that this is a case of an adventure in the nature of trade and the addition as regards profit on sale of land has been sustained.

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• 2025 (4) TMI 1220
  Revision u/s 263 - Addition u/s 68 - as per CIT after perusal of the assessment records noticed that there are huge unsecured loans standing in the books. However, ld. AO has not called for the necessary details to verify the Identity and Creditworthiness of the unsecured loans and genuineness of the transaction HELD THAT:- The assessee in the instant case has furnished the details of unsecured loans which mainly contains balance of unsecured loans brought forward from preceding years as well as loans taken during the year from the old parties as well as new parties and the interest charged thereon. The assessee has also furnished the confirmation letters which contain the names and addresses of the cash creditors along with their PAN Numbers. Now after receiving these details, there is no further inquiry carried out by the AO. In the assessment order also, the discussion is only with regard to the on-money transactions found during the course of search. At this juncture, we would like to take note of case of Kale Khan Mohd. Hanif [ 1963 (2) TMI 33 - SUPREME COURT] where laid down the proposition with regard to examination of nature and source of cash credit u/s. 68 and held that three limbs needs to be examined, namely Identity of the cash creditor, creditworthiness of the cash creditor and genuineness of the transaction. Now in the instant case, merely confirmation letters have been filed which can at most give the details of Identity of the cash creditor. So far as credit worthiness and genuineness of the transaction is concerned, ld. AO has to call for the details from the assessee about the financial statements including income-tax return and bank statement of the cash creditor and also the nature of transaction as to whether it is in the regular course of business and also to verify that it is a genuine transaction. In the instant case, from perusal of the assessment order, we find that no such enquiry has been initiated by the AO. Rather it seems that the confirmation letters from the assessee have been treated as full compliance for the explanation of nature and source. It can be rather inferred that only ld. AO has called for the details of unsecured loans but his actual work of investigation and carrying out the enquiry along with issuing of notice u/s. 133(6) or 131 of the Act (if considered necessary) starts only once the information about unsecured loans has been received. But ld. AO in the instant case has not moved a bit and only accepted the details filed by the assessee as complete compliance to discharging of burden by the assessee as contemplated in section 68 of the Act. These facts have been rightly observed by the ld. PCIT and he has therefore exercised the revisionary powers vested u/s. 263 correctly. Contentions of assessee that assessment order has been framed after taking due approval u/s. 153D of the Act and without revoking the order u/s. 153D of the Act, ld. PCIT erred in invoking section 263 - As gone through the assessment order and notice that ld. AO has nowhere dealt with the issue of unsecured loans. He has only dealt with the issues arising out of the search action and the on-money received by the assessee and therefore we are of the considered view that approval u/s. 153D of the Act has been taken only with regard to the observation of the AO about the issues arising out of the search but since there is no discussion about the unsecured loans issue nor any specific enquiry has been carried out by the AO during the course of assessment proceedings, we find that the approval order u/s. 153D has been issued without taking into consideration the issue of unsecured loans and therefore this contention of the assessee that section 263 of the Act cannot be invoked in case of assessment order passed after approval u/s. 153D of the Act has not merit considering the facts and circumstances of the case. We accordingly confirm the finding of ld.PCIT directing the AO to examine the issue of unsecured loans in the set-aside proceedings - Appeal of the assessee is dismissed.

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• 2025 (4) TMI 1219
  Unexplained receipts and withdrawals from the bank account - assessee had opted his income u/s 44AD - assessee has declared income under the Income Tax Declaration Scheme, 2016 - HELD THAT:- These amounts in our opinion cannot be considered as business receipts. Since the assessee in the instant case has opted his income u/s 44AD has declared income under the Income Tax Declaration Scheme, 2016 for assessment year 2013-14, therefore, we find some force in the arguments of assessee that the AO was not justified in making the addition and the Ld. CIT(A) / NFAC is not justified in sustaining the addition. We find in the instant case when the AO is analyzing the bank account of each deposit and the withdrawal, it is not understood as to how he has made the addition of Rs. 9 lakhs received from the assessee himself. Assessee has already declared the income under the Income Tax Declaration Scheme, 2016 for assessment year 2013-14 - the amount of Rs. 9 lakhs received by the assessee from himself from loan against FD cannot be considered as business income. The assessee has declared his income u/s 44AD of the Act by estimating the same and this being a very old appeal relating to assessment year 2013-14, we are of the considered opinion that there is no point in restoring the issue to the file of the AO for adjudication of the issue afresh as argued by the Ld. DR since the figures are crystal clear from the bank statement filed by the assessee in the paper book. Addition made by the Assessing Officer in our opinion is not justified. Accordingly, the order of the Ld. CIT(A) / NFAC is set aside and the AO is directed to delete the addition. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 1218
  Rejections books of account u/s 145(3) after detecting some discrepancies in the books - addition on GP rate of 12.5% on receipts as appearing in Form 26AS - HELD THAT:- The assessee has in the regular business of contract and all along he has declared the income at GP of 10.64% and net profit of about 5% in the past. Therefore, if there are any discrepancies in the information contained in the Form 26AS, it has to be dealt properly instead of rejecting the books. Further, if there are cash payments, it has to be dealt as per law and not estimate the income. This is not the first year of operation to adopt such pattern of estimation. In our view, the findings of ld. CIT(A) to the extent of estimate the income @ 12.5% of the gross receipt is not proper and it should be based on the past performance and reasonable basis. We observed that the assessee had declared the net profit @ 5.09% in the previous AY, therefore, it should be 5% and ld. CIT(A) has observed that the books are not complete, so he proceeded to add 2% for that purpose. If that be the case, the proper income estimation should have been at 7% of the gross receipts after reconciliation of books receipt and Form 26AS. Therefore, we are inclined to direct the AO to estimate the income of the assessee @ 7% of the reconciled gross receipt for the year under consideration. Accordingly, the ground no.1 raised by the department is dismissed and ground no 3 raised by the assessee in CO is partly allowed. Separate addition on account of disallowance of sundry creditor on estimate basis - HELD THAT:- We observed that the tax authorities have rejected the books of account and estimated the income of the assessee. As held by the Hon ble Allahabad High Court in Banwarilal Basheshwar [ 1997 (5) TMI 37 - ALLAHABAD HIGH COURT] once the books are rejected and resorted to estimate the income, no further disallowance can be made. Therefore, we do not see any reason to disturb the findings of CIT(A). In the result, ground no.2 raised by the revenue is dismissed.

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• 2025 (4) TMI 1217
  Reopening of assessment u/s 147 - assessee is a non-filer and had sold immovable property, but the capital gain derived on the same is not offered to tax - HELD THAT:- From the reasons recorded by the AO for reopening of the assessment and the facts brought on record by the AO, we find that the very basis for reopening of the assessment is that, the assessee has not filed any return of income disclosing the capital gains arising from sale of immovable property, whereas, the assessee has submitted before the AO that, he has fired his return of income on 22.12.2015 disclosing capital gains arising from sale of property. Therefore, is undisputedly clear that, the very foundation for which the reopening is based in the reasons recorded by the AO for the reopening of the assessment collapses, therefore, in our considered view, the AO has reopened the assessment on an incorrect assumption of facts even though, the assessee has filed his return of income for the impugned assessment year. AO went on to record reasons on the fact that, the assessee has not filed his return of income disclosing relevant capital gains. Since the very foundation of reopening of the assessment is collapsed, in our considered view, the subsequent issue of notice u/s 148 and consequent final assessment order passed by the AO u/s 144 rws 144C(13) cannot survive under Law. This legal principle is supported by the decision in the case of Vijay Harishchandra Patel [ 2017 (12) TMI 865 - GUJARAT HIGH COURT] . AO based his reopening on the sole premise that, assessee has not filed his return of income and disclosed relevant capital gain arising out of transfer of immovable property, whereas, the fact remains that, the assessee had already filed his return of income and disclosed the relevant capital gains arising out of transfer of property. Therefore, there is no application of mind by the AO to the relevant material before arriving at a conclusion that, there is escapement of income as per the provisions of section 147. Therefore, reopening of the assessment in light of an invalid reasons recorded by the AO cannot be sustained in law and thus, we quash the notice issued by the AO u/s 148 - Decided in favour of assessee.

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• 2025 (4) TMI 1216
  Reopening of assessment u/s 147 - As alleged approval was not taken prior to the issuance of the notice u/s 148 - Addition u/s 69A r.w.s. 115BBE - assessee has failed to disclose details of cash deposits during demonetization in its return of income Assessee submitted that notice is barred by limitation - HELD THAT:- We find that assessment order passed by the assessing officer, should be quashed as the notice under section 148 of the Act, is barred by limitation. That is, on the basis of illegal notice, assessment order should be quashed. We also note that procedure laid down u/s 148A of the Act is not followed by the assessing officer. The law for reopening of assessment u/s 147/148 of the I.T. Act has been amended w.e.f. 01/04/2021. Since, the notice u/s 148 of the Act, is issued on 01/04/2021, the new provisions are applicable for reopening of assessment as directed by Hon ble Supreme Court in the case of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] However, the assessment order u/s 143(3) of the Act has been passed under the old law by following the procedure as stated under the old provisions prior to amendments in the year 2021. Therefore, the AO is failed to follow the procedure as laid down under the new regime of proceedings u/s 148. The phraseology of amended section 148 makes in unmistakable terms clear that there should be concrete information as defined in Explanation 1 to section 148 of the Act. Such information should be suggestive of income escaping assessment and such information should be objective in nature. In other words, the arguable subjectivity in the pre-amendment provision is given a go-by. For conducting assessment u/s 147 of the Act, there should be not only escapement but also the reason to believe that there is such escapement, the reason being the information itself. Hence, a plausible view could be taken that post-amendment of the provision; the escapement has to be established with concrete information. Now coming to the assessee`s case under consideration, taking into account above provisions of the Act, we note that books of accounts of firm are duly audited and firm is maintaining regular books of accounts. The reopening is carried out on account of cash deposit in bank. It is established principle that merely because cash is deposited in bank does not lead to escapement of income. The cash deposits are duly recorded in the books of accounts and income from such deposits is duly considered at the time of filing of return of income. Therefore, reopening is conducted merely on account of reason to believe, as against escapement of income with concrete information on hand. The AO has failed to establish with concrete information that there is escapement of income. Non complaince to procedure mandated under the amended provisions of section 148A - The notice u/s 148 of the Act has been issued after obtaining the approval from JCIT Range 1, Jamnagar. The said fact is stated in notice u/s 148 of the Act. The AO is required to follow the procedure under new law and required to follow the approval as per Section 148A(d) of the I.T. Act, 1961. Therefore, the notice has been issued without obtaining the approval as prescribed under amended provision of section 151 of the Act. Thus we quash the reassessment order itself, and allow the appeal of the assessee.

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• 2025 (4) TMI 1215
  Addition u/s 68 - subscription received during the year from members of Tree Plantation Scheme namely Kuber Dhanvarsha - HELD THAT:- We noticed that assessee has collected various deposits from small time depositors ranging from Rs. 1,250/- to Rs. 10,000/- in various denomination and the addresses were recorded also in very cryptic and in our view, it is very difficult to trace back most of the depositors and from the decision of Additional Sessions Judge, 03/Special Judge Companies Act, Dwarka Courts, New Delhi, they have clearly held that assessee has no intention to return back the funds and from the attitude and behaviour of the assessee, they are not demonstrated that they are inclined to return any deposit. The assessee nowhere in a position to return any of the deposits with due returns. Therefore, the behavior of the assessee clearly shows that assessee will not return any of the funds to the depositors, therefore, the assessee has taken the deposits with the intention to defraud the innocent depositors and looking at the various small deposits with improper addresses it may lead to suspect that some of the deposits are assessee s own deposits which were brought into the books. The whole scheme is to defraud the depositors and the attitude of the assessee clearly shows that the intention is to earn the ill gotten income by fraud means. Therefore, in our view, the whole collection of deposit is nothing but income of the assessee u/s 28 of the Act not under section 68 (since the assessee has submitted the details of the depositors but not proved the genuineness. It is debatable issue.) The ill gotten money also taxable under the Act. Therefore, we are inclined to sustain the additions proposed by the tax authorities and we do not see any reason to disturb the findings of the ld. CIT (A). Appeal filed by the assessee is dismissed.

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• 2025 (4) TMI 1214
  Disallowance of loss booked through trading in penny scrips and commission paid to the broker - As during search and survey proceedings it was established that the penny stocks in which the assessee traded and booked losses have been used for providing bogus LTCG/STCL - CIT(A) deleted addition - HELD THAT:- As the documentary evidences put forth by the assessee could not be rejected without bringing on record any substantial contrary piece of evidence. Moreover, the jurisdictional High Court decisions and as also plethora of co-ordinate benches of Mumbai tribunal support the above observations. We have no hesitation in deleting both the additions. The AO is therefore, directed to allow the business loss claimed by the assessee. Also the addition made u/s 69C w.r.t alleged commission paid being devoid of any basis is also deleted. Accordingly, ground nos. 1 to 3 are dismissed. Addition made in respect being the amount receivable from National Spot Exchange Limited (NSEL) written off and claimed as Bad Debt - AO observed that as per the information received by from NSEL, the NSEL exchange platform was misused and exploited by unscrupulous brokers and traders to lend huge sums of black money - HELD THAT:- The provisions of law in the matter and find no infirmity in the conclusion drawn by the CIT(A). The disallowance has been made by the AO without any basis and against the well laid down provisions of the Act and also in contraventions of the Board Circular. Similar claim of Bad debt written off has been allowed by the department on similar facts and the circumstances in other assessment years. Therefore, there is no justification for disallowing the same in the year under consideration. Though the principles of res judicata are not attracted to income tax proceedings since each assessment year is separate in itself, there ought to be uniformity in treatment and consistency when the facts and the circumstances are identical. Order of the AO is silent on this important aspect of the deduction as there is no finding on record showing any justification for adopting divergent approach for the year under consideration. Accordingly, the AO is directed to delete the addition made. The ground of appeal no. 4 above is therefore dismissed.

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• 2025 (4) TMI 1213
  Unexplained money u/s 69A - cash deposit made out of sale proceeds of bullion, gold and silver ornaments, and other precious metals in the bank account - HELD THAT:- Referring to conduct of business by the assessee in peculiar circumstances, reflecting upon pre-ponderance of human probabilities by keeping in juxtaposition, the logistic and operational activities relating to transactions undertaken by the assessee within a short span of 25 days immediately preceding the announcement of demonetisation to justify the deposit of cash in various bank accounts of the assessee in the period of demonetisation. The thoughtful analysis done at both the levels of AO and CIT(A), based on corroborative documentary evidences and financial data furnished by the assessee from its own books of accounts, evidently demonstrates the fa ade created by the assessee and has been pierced to bring out the true intent and purpose of explaining unaccounted money of the assessee. Having perused orders of the authorities below, coupled with corroborative documentary evidences placed on record in the paper book, we do not find any reason to interfere with the conclusion drawn by the CIT(A) in respect of deposit of cash in the various bank accounts of the assessee. Accordingly, the addition made u/s. 69A is sustained. Grounds raised by the assessee in this respect are dismissed. Disallowance of claim of bad debts written off during the year - claim of the assessee is that sales on this account has been duly reported forming part of his total sales turnover for AY 2015-16 - HELD THAT:- We find that claim of any bad debts is to be allowed in terms of section 36(1)(vii) in the year in which such bad debts have actually been written off as irrecoverable in the accounts of the assessee. In this respect, we find support from the decision of TRF Ltd. [ 2010 (2) TMI 211 - SUPREME COURT ] Thus, we delete the addition so made by ld. Assessing Officer in this respect. Accordingly, grounds raised by the assessee in this respect are allowed. Rejection of book of accounts u/s. 145 - While dealing with issue relating to cash deposits in various bank accounts for which the addition has been sustained, as well as keeping in view the elaborate analysis made by the authorities below, we do not find any reason to interfere with their observations and findings to draw the conclusion for rejection of books of accounts. GP percentage of 4.76% as taken from the reported GP percentage of the assessee and was reduced by ld. CIT(A) to 0.1%, granting substantia relief - Considering nature of business reported by the assessee, we do not find any reason to interfere with the conclusion drawn by ld. CIT(A) in this respect and therefore uphold the profit estimation by applying percentage of 0.1% as done by ld. CIT(A) on the sales turnover excluding the sales relating to deposit of cash in various bank accounts during the demonetisation period. Notional commission computed by CIT(A) on both purchases as well as sales - Once the books have been rejected and net profit estimation have been applied, we do not find any justification for the enhancement made by CIT(A) by presuming commission without any corroborative material on record. The enhancement so made by ld. CIT(A) is solely on presumption and assumption, more importantly when net profit estimation has already been sustained in the hands of the assessee. Accordingly, notional commission added in the hands of the assessee is deleted. Grounds taken by the assessee in this respect are allowed. Applicability of provisions of section 115BBE - Alleged transaction of deposit of cash in the bank account of the assessee is during the period from 09.11.2016 to 30.12.2016. This issue of imposition of increased rate of tax from 30% to 60% by way of applying provisions of section 115BBE is addressed in the case of S.M.I.L.E Microfinance Ltd. [ 2024 (11) TMI 1444 - MADRAS HIGH COURT ] whereby it is held that Revenue is empowered to impose 60% rate of tax on transactions from 01.04.2017 onwards and not prior to the said date and for prior transaction, Revenue is empowered to impose only 30% tax. Accordingly, ground of appeal raised by the assessee on the issue of section 115BBE is allowed.

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• 2025 (4) TMI 1212
  Denying exemption u/s 11 - assessee has not filed details of registration obtained u/s 12AB - The registration application in Form 10A was filed on 26/03/2022, whereas as per the provisions of Section 12A(1)(ac)(i) of the Act, the assessee was supposed to apply within three months from the 1st day of April, 2024. Since the application was not made in time, the approval was given only from 05/04/2022 HELD THAT:- We find that the CBDT, vide Circular No. 16/2021 has extended the date for filing Form 10A to 31/03/2022 and as the application was filed on 26/03/2022, the same was within time as per Circular of the CBDT. In our considered view, by not considering the extended date, the order processing the return of income had a rectifiable error which was denied u/s 154 of the Act and the NFAC also fell into the same error in not considering the Circular of the CBDT extracted elsewhere. Since the assessee has filed the application on or before the extended date as per the CBDT Circular, the AO is directed to allow the exemption for AY 2021-22 also. Appeal of the assessee is allowed.

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• 2025 (4) TMI 1211
  Rejecting the registration u/s 12A - CIT(E) rejected the application due to non- compliance of the notice - Denial of principles of natural justice rejecting the application for registration u/s 12AA. HELD THAT:- CIT(E) after considering the preliminary submission had called for an additional evidence and complying documents inter-alia, copy of MOA, purpose of collecting fees from the students, financial statement for F.Y. 2022-23 along with annexures, copies of bills, invoices etc. which the appellant meritoriously failed to make good by the due date, consequent to which, the CIT(E) without further opportunity rejected to grant 12A registration to the appellant trust. Hon ble Supreme Court in its landmark decision rendered in Maneka Gandhi Vs UOI [ 1978 (1) TMI 161 - SUPREME COURT ] has laid down that, the rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. Ostensibly, the preliminary submission of the appellant did not productively prove its eligibility and claim for grant of approval for 12AA, as a consequence the Ld. CIT(E) requisitioned additional documents by a notice dated 15.01.2024 and in the event of failure, without further opportunity to the appellant, rejected the application in violation of principle of natural justice as commanded by proviso to section 12AA(1)(b)(ii) of the Act. Thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis- -vis to comply with the requirements sought. Thus for the reason, without commenting on the merits of the case, we deem fit to remand the matter back to the file of Ld. CIT(E) for denovo adjudication according reasonable opportunity to refute the rejection vis- -vis to comply with the requirements sought. Appellant is also directed to remain vigilant and make satisfactory compliance to the notice(s) of hearing issued by ld.CIT(E) and it should refrain from taking adjournments unless otherwise required for reasonable cause. Effective grounds of appeal raised by the appellant are allowed for statistical purposes.

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• 2025 (4) TMI 1210
  Addition made u/s 56(2)(x) - variance between the Stamp Duty Value of the Property purchase and Purchase consideration - AO regarding the assessee s half-share, calculated as 5% of the consideration - whether the assessee is entitled to the benefit of the tolerance limit of 6.56%? - HELD THAT:- We find that the amendment in question is curative in nature and is retrospectively applicable for impugned assessment year. Consequently, the assessee is eligible for the 10% tolerance limit under section 56(2)(x)(b)(B) of the Act and the impugned addition is deleted. Furthermore, AO has adopted a view that limits the tolerance threshold to 5% of the total consideration. This view is wholly unjustified and contrary to the correct interpretation of section 56(2)(x)(b)(B) of the Act. Therefore, the addition made on this account is directed to be deleted. Appeals filed by the assessee are allowed.

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• 2025 (4) TMI 1209
  Exemption u/s 54 - Long Term Capital Gain arising on the sale of his old residential house - claim denied as sale consideration of the old residential house was deposited in the assessee s bank account was neither utilized/used by him for purchase of the new residential property nor deposited by him till the end of the financial year relevant to AY 2016-17 in the Capital Gains Account Scheme (CGAS) as was required per the mandate of law to claim exemption of the LTCG arising on sale of the old residential house HELD THAT:- As the assessee had within the specified time period made an investment in the aforesaid new residential property, viz. Villa No. 53 much in excess of the sale consideration of Rs. 72.54 lacs of his old residential house, therefore, we find no reason for declining of his claim of exemption under Section 54 of the Act by both the lower authorities. Alternatively, even if the CIT(A) s view that the assessee had made investment in construction of the new residential property i.e., Villa No. 53 (supra) is to be accepted, then also there could have been no justification in declining his claim for exemption under Section 54 of the Act. Ostensibly, the CIT(A) had declined to consider the investment that was made by the assessee in the new residential property, viz. Villa No. 53 (supra), but we are unable to concur with the same. As decided in H.K. Kapoor [ 1997 (8) TMI 44 - ALLAHABAD HIGH COURT] exemption of capital gains could not be refused to the assessee simply on the ground that the construction of the new residential house had begun before the sale of the old residential property. Second issue i.e., for availing the benefits under Section 54 of the Act, is it necessary that the sale proceeds of the old residential house must be used in the purchase or construction of the new residential house , we do not find any substance in the view taken by the AO which thereafter had impliedly been approved by the CIT(A). On a perusal of Sec. 54 of the Act, it transpires that the same contemplates appropriation of the capital gain arising on the sale of the old residential property towards purchase or construction of the new residential property. However, nothing can be gathered therefrom that it is necessary that the sale proceeds of the old residential house must be utilized by the assessee for the purchase or construction of the new residential house. Our aforesaid view is fortified by the judgment of Moturi Lakshmi (Ms.) [ 2020 (9) TMI 416 - MADRAS HIGH COURT] as observed, that Section 54F of the Act nowhere envisages that the sale consideration obtained by the assessee from the original capital asset is mandatorily required to be utilized for the purchase or construction of a house property. Thus not being able to persuade ourselves to concur with the view taken by the lower authorities, we set-aside the order of the CIT(A) and direct the A.O to allow the assessee s claim for exemption under Sec. 54. We are of the affirm conviction that as the assessee had based on sale of his old residential property, viz. House No. 10-3-734/3 situated at Vijaynagar Colony, Malleapally, Hyderabad had made an investment towards purchase of the new residential house property, viz. Villa No. 53 (supra), therefore, no infirmity arises from the claim of exemption that was raised by him under Section 54 - Decided in favour of assessee.

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• 2025 (4) TMI 1208
  Bogus purchases - AO concluded that the assessee firm has indulged in inflating the purchases through bogus bills - AO has made the impugned addition by placing reliance entirely on the report given by the investigation wing - HELD THAT:- AO merely placed reliance on the report prepared by the Investigation wing. He did not find fault with any of the documents furnished by the assessee to prove the purchases. He also did not bring any material on record to prove that these purchases were bogus in nature. Report of the investigation wing will trigger further probe and it alone cannot be the basis for making addition. Admittedly, in the instant case, the AO did not carry out any enquiry in this case. As held in Ashok Kumar Rungta [ 2024 (10) TMI 766 - BOMBAY HIGH COURT] merely on suspicion based on information received from another authority, the assessing officer ought not to have made the additions without carrying out independent enquiry and without affording due opportunity to the respondent - assessee to controvert the statements made by the sellers before the other authority . Hence,we are of the view that the AO was not justified in disallowing the entire purchases treating them as bogus on the basis of his suspicion and surmises. Decided in favour of assessee.

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• 2025 (4) TMI 1207
  Rejection of bad debts claimed - AO took the view the write off of loans as bad debts is a colourable device/sham transaction adopted by the assessee to create loss with the purpose of setting off the same against the Long term capital gains earned by it - HELD THAT:- The first reason cited by the assessee is that the son-in-law of the main director of the assessee company is one of the common directors in both the borrower companies referred above. We notice that the assessee has explained that the above said son-in-law is not a share holder in both the borrower companies. Hence, it cannot be said that the son-in-law had any interest in the borrower companies. Hence, in our view, this reason cannot be a ground to suspect the claim of the assessee. Next reason cited by the AO is related to assignment agreements found during the course of survey operations - AO has also referred to an opinion given by a legal consultant, wherein he has expressed the view that the transfer of shares has taken place on 1.4.2015 and hence the capital gains will be taxable in AY 2016-17. It so happened that the agreement for sale of shares was entered in March, 2015, but the actual transfer took place on 1.4.2015. Hence, the assessee obtained a legal opinion. We notice that the AO has linked the Assignment agreements with the legal opinion given by the legal consultant and accordingly took the view that the writing off of bad debts was purposely shifted to AY 2016-17 in order to set off the same against the capital gains. However, we notice that the AO has rejected explanations given by the assessee without examining it at all, i.e., the AO could have conducted enquiry with the Assignees in order to find out the veracity of the explanations given by the assessee, which is not justified. Accordingly, we are of the view that the AO has come to such a conclusion only on presumptions and surmises. In our view, the above said observations of the AO are not required to be considered, since the claim of bad debts is allowed u/s 36(1)(vii) of the Act, wherein the requirement is that the debt should be written off as bad in the books of accounts and further the conditions prescribed in sec.36(2) should be fulfilled, i.e., there was no necessity for the assessee to establish that the debt has really become bad. Thus, we are of the view that the various reasoning given by the AO in support of his view that the writing off bad debts was a colourable device or sham transaction are based upon sound reasoning, but based upon on surmises and conjectures. Further, the AO has arrived at such a conclusion without conducting enquiry of any type or bringing any material on record to support his view. We noticed that the various reasoning given by the AO will not be relevant for allowing deduction u/s 36(1)(vii) of the Act. We have also seen that the assessee is eligible to claim deduction of bad debts u/s 36(1)(vii) of the Act and also fulfilled the conditions prescribed u/s 36(2) of the Act. Accordingly, we hold that the bad debts claimed by the assessee cannot be rejected. Accordingly, we set aside the order passed by the Ld CIT(A) on this issue and direct the AO to delete the disallowance of bad debts claimed by the assessee. Appeal filed by the assessee is allowed.

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• 2025 (4) TMI 1206
  Reopening of assessment u/s 147 - approval of the authority specified under section 151 accorded or not? - scope of New Regime - HELD THAT:- From the observations made by the Hon ble Apex Court in Rajeev Bansal s case [ 2024 (10) TMI 264 - SUPREME COURT (LB)] it transpires that though prior approval u/s 148A(b) and 148(d) was waived in terms of decision in the case of Ashish Agarwal case, for issuance of notice u/s 148A(a) and 148 on or after 1-04-2021, prior approval was required to be obtained from the appropriate authority specified u/s 151 of the New Regime. As per report from the AO, the assessee was issued notice under section 148 of the Act after obtaining sanction under section 151 from the JCIT, Range-4, Jaipur; that subsequently, an opportunity of being heard as per provisions of section 148A(b) of the Income Tax Act, 1961 was provided to the assessee with prior approval from the competent authority vide DIN and Notice dated 25.5.2022. In said report, the Assessing Officer has further reported that the competent authority for approving the proposal order u/s 148A(d) was Pr.CIT-2, Jaipur. In this way, the Assessing Officer has admitted the case of the assessee that for the relevant Assessment Year 2016-17, Pr. CIT-2 Jaipur was the competent authority for the purposes of sanction under section 151 of the Act. Copy of approval for passing order under section 148A(d), dated 22/25.7.2022, as per directions of Hon ble Apex Court would reveal that said order was passed with the approval of the Principal Commissioner of Income tax-2, Jaipur. This fact also finds mention in Order under section 148A(d) of the Act issued on 27.7.2022. Thus, we hold that the notice under section 148 of the Act is invalid in the eye of law. Decided in favour of assessee. Reopening of assessment on bogus share transaction - company-YICL had weak financial statement; that the movement of the share price was not correlated and not supported by its financial statement, which revealed that the prices were rigged and manipulated by way pre arranged or artificial transaction to book bogus LTCS, and that the LTCG claimed by the assessee from the said scrip was only in order to evade taxation, on the basis of accommodation entries made by the above said company - HELD THAT:- AO had already called upon the assessee from time to time to furnish information, documents and details in respect of said transactions with YICL, before passing the previous assessment order dated 11-12-2018. It is well settled that where during assessment proceedings, the assessee company furnished entire material related to purchase and sale of shares and capital gains/ loss made therein and the AO having considered the details, took a conclusive view, reassessment proceedings which are initiated u/s 147 by way of reconsideration of the material already available at the time of original assessment proceedings, would amount to change of opinion. Thus, we find that NFAC vide impugned order was fully justified in allowing Ground No.7 raised by the assessee in the appeal challenging assessment order while concluding that reopening in subsequent reassessment u/s 147 read with Section 144B of the Act was not valid. Decided against revenue.

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• 2025 (4) TMI 1205
  Assessment order passed u/s 153A - incriminating material discovered in the course of search or not? - HELD THAT:- As observed that there does not appear to be any reference to any incriminating material found in the course of search of the assessee per se. The alleged incriminating material referred are primarily in the nature of statement of third person prior or subsequent to search/survey proceedings. Guided by the principles laid down by the Abhisar Buildwell (P.) Ltd. [ 2023 (4) TMI 1056 - SUPREME COURT] Anand Kumar Jain (HUF) [ 2021 (3) TMI 8 - DELHI HIGH COURT] and Vikram Dhirani [ 2024 (8) TMI 1503 - DELHI HIGH COURT] we find force in the legal plea placed on behalf of the assessee. Hence, in the absence of any incriminating material in an unabated assessment, additions/ disallowances made by the AO in all captioned appeals requires to be quashed. Propriety of approval u/s 153D to the respective draft assessment orders placed before him by the AO - The approving authority has granted a mere technical approval by his own express admission in departure to a substantive approval expected in law. Curiously, the Addl.CIT has recorded that he has granted approval on the basis of submission of the AO that proper opportunity has been provided to the Assessee; all the issues have been examined by him i.e. the AO and relevant copies of seized documents have been verified by him i.e. the AO before passing the draft order. The Addl. CIT thus effectively claimed that he has not pursued the relevant underlying material and proceeded on dotted line. Such an act cannot be regarded as effective discharge of duty of supervisory nature. Manifestly, the Addl. CIT, without any consideration of factual and legal position in proposed additions and without the availability of incriminating material collected in search etc. has buckled under statutory compulsion and proceeded to grant a symbolic approval to meet the statutory requirement. This approach of the Addl. CIT has ipso facto rendered the impugned approval to be a mere ritual or an empty formality to meet the statutory requirement and is thus incapable of being sustainable in law. The cryptic conclusion drawn by the CIT(A) is bereft of any plausible reasons whatsoever and thus cannot be reckoned to be a judicial finding on the point. The observations so made are not tenable in law. We are unhesitatingly disposed to hold that the integrity and propriety of impugned assessments under captioned appeals based on such combined approval memo u/s 153D in question cannot be countenanced in law. Assessee appeal allowed.

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• 2025 (4) TMI 1204
  Withdrawal of the exercised option u/s 115BAC - assessee had decided to opt for the new regime of taxation u/s 115BAC of the Act as applicable for assessment year 2022-23 and accordingly had filed Form No.10-IE but assessee filed his return of income under the old regime of taxation - HELD THAT:- It is an admitted fact that although the assessee had originally exercised the option for taxation u/s 115BAC by filing the Form No.10-IE on 18.07.2022, however, the assessee has filed the return of income on 20.07.2022 declaring total income under the old regime of taxation. It is also an admitted fact that the return was processed on 07.08.2023 which is much after the date of filing of the return. It is not a case that the assessee has filed Form 10-IE and also filed the return under the new tax regime and thereafter filed a revised return withdrawing the option which according to us is not permissible in the said previous year and the assessee can change the option only in the next year. However, in the instant case, the assessee after filing the Form 10-IE has opted for the old regime of taxation in the return filed. Therefore, we are of the opinion that the assessee cannot be forced to adopt for the new regime. We, therefore, find merit in the arguments of assessee that the Ld. Addl./JCIT(A) was not justified in upholding the action of the CPC in processing the return of income determining the total income under the new regime of taxation. Accordingly, the order of the Ld. Addl./JCIT(A) is set aside and the grounds raised by the assessee are allowed.

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• 2025 (4) TMI 1203
  Special Audit - Direction of AO to get the accounts audited u/s 142(2A) at the fag end of the assessment proceedings - HELD THAT:- We find that the assessee vide its reply dated 24/12/2019 though agreed that the examination of money trail is a complex investigation, however submitted that there are no complexities in its accounts which will require Special Audit. The assessee further submitted that it has provided various details to the Department during the ongoing assessment proceedings and has been fully co- operating with the Department. Accordingly, vide its reply the assessee prayed that no Special Auditor should be appointed. We find that after taking note of the assessee s submission, AO passed the necessary directions on 27/12/2019 for audit of the accounts of the assessee u/s 142(2A). From the careful perusal of the aforesaid documents, forming part of the paper book, we find no merits in the submission of the assessee that the direction to get the accounts audited u/s 142(2A) is mere tactics to extend the period of limitation and we find the same to be necessary due to multiplicity of transactions and complexities involved in assessee s accounts. Accordingly, ground no.2 raised in assessee s appeal is dismissed. Addition u/s 68 - cash deposits and credit transactions - HELD THAT:- As undoubtedly there may have been discrepancies in maintaining KYC documentation, account opening form, and violation of society bye-laws, however, the same does not substantiate any addition in the hands of the assessee under the Act, and for the same the remedial action needs to be taken in some other statute/regulations. Accordingly, in absence of any material to show that the cash deposited in the accounts of the members, maintained with the assessee society, belongs to the assessee, we do not find any basis in sustaining any addition in the hands of the assessee u/s 68. Accordingly, the addition made u/s 68 and also the commission income estimated by learned CIT(A) are directed to be deleted. Disallowance of provision for standard assets - HELD THAT:- As undisputed that the assessee is a co-operative credit society and is a registered Multi-State Co-operative Urban Credit Society established under the Multi-State Co-operative Societies Act, 2002 and is involved in the facility of providing credits and other banking facilities to its members. Therefore, assessee does not fall within the meaning of any category of assessee considered u/s 36(1)(viia). Accordingly, we find no infirmity in the findings of the CIT(A) in upholding the disallowance of provision for standard assets. As a result, ground raised in assessee s appeal is dismissed. Disallowance of prior period expenses - HELD THAT:- We find that it is a settled proposition that expenditure shall be allowable in the year of crystallisation of its liability, even though the said expenditure was related to an earlier period. The said expenditure is treated as current year s expenditure in the year of crystallisation and accordingly allowable as deduction in that year. In the present case, we find that the details of prior period expenses have not been examined in order to find out the year of crystallization of the liability. Accordingly, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication and to determine the allowability of expenses by applying principles as discussed above. With the above directions, ground raised in assessee s appeal is allowed for statistical purposes. Disallowance u/s 40A(3) - assessee has paid rental expenses to the parties, in excess of the prescribed limit - HELD THAT:- There cannot be any dispute regarding the identity of payee, i.e. the landlord members. Further, it is also not disputed that the payment was made on account of rent as per the rent agreement. There is also no allegation that the assessee has not deducted applicable TDS while crediting the rental payment to the account of the landlord members. Considering the fact that the activities of the assessee are akin to banking activities; and the landlords have opened savings/current accounts with the assessee, we are of the considered view that the rent payments so credited to the accounts of the landlords do not violate the objective of introducing section 40A(3) - Therefore, the disallowance of rental payment u/s 40A(3) of the Act is directed to be deleted. Disallowance of deduction u/s 80P - HELD THAT:- In the present case, it is evident from the record that the lower authorities also alleged that the assessee has earned income from providing services to non-members, i.e. by issue of at par cheques in lieu of cash. However, it is pertinent to note that the demand draft or at par cheques are also issued at the instructions of the member and the amount is debited/credited from/to the member s account. Therefore, it was a transaction which was carried out at the behest of the member in the accounts of the member maintained with the assessee society. Thus, we are of the view that the same cannot be treated as providing services to non-members. We find that the assessee has exclusively made the transactions in the accounts of its members, i.e. ordinary members and nominal members, and the issuance of at par cheques in lieu of cash was also at the behest of the members of the society. Hence the assessee society, herein, is eligible for deduction u/s 80P. Disallowance of provision for gratuity - HELD THAT:- As in the present case, there is no material available on record to show that the provision was made by the assessee for payment of a sum by way of contribution towards approved gratuity fund . Therefore, section 40A(7)(b) of the Act is not applicable and under section 40A(7)(a) of the Act no deduction is allowable in respect of any provision made by the assessee for payment of gratuity. Further, under section 43B of the Act, the sum payable by the assessee as an employer by way of contribution to gratuity fund is allowable upon actual payment, therefore, even under section 43B of the Act the provision is not allowable. However, we direct that the gratuity payment be allowed in the year of payment. As a result, ground raised in assessee s appeal is dismissed. Addition u/s 68 - amount receivable from banks where appellant-society has maintained their bank accounts - HELD THAT:- It is not understandable as to how the assessee has credited Reserve account . It is also not clear as to whether the assessee has claimed any deduction of the amount so illegally embezzled from the bank account. If that be the case, the recovery of part or whole of the amount would be taxable. On the contrary, if the assessee has not claimed any such deduction, then the recovery of part of whole of the amount is not taxable. However, we notice that the assessee has not clearly explained the nature of journal entries passed by it in the books of account, whether it has claimed any deduction of such embezzled amount etc. In the absence of any such details, we are also unable to express any concrete view on this matter. Accordingly as noted in the foregoing paragraph, we deem it appropriate to restore this issue to the file of the jurisdictional AO for de novo adjudication, as per law and in terms of legal principles explained above, after examination of the details filed by the assessee. The assessee shall be at liberty to furnish further documents in support of its claim. The AO is also directed to call for any other information for complete adjudication of this issue.

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• 2025 (4) TMI 1202
  Addition u/s 68 - unexplained capital and unexplained cash creditors - assessee failed to prove the identity and capacity of the depositors and the genuineness of the transaction with conclusive evidences - CIT(A) deleted addition - HELD THAT:- All the evidences were confronted to the AO who, CIT(A) noted, did not dispute the veracity or the authenticity of the evidence, and therefore on a holistic consideration of the issue, CIT(A) deleted the addition made u/s 68. We have noted that the facts and circumstances relating to the impugned addition are identical to that in AY 2004-05 in the case of the assessee. DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the additions made u/s 68 pertaining to unexplained capital and pertaining to unexplained cash credits have been rightly deleted by the ld. CIT(A) after appreciating all evidences filed by the assessee. Addition made of unexplained investment in jewellery of 496 gms found at the residence of the assessee which was attributed as belonging to the maid servants of the assessee and the jewellery attributed as belonging to the family over and above that allowed by the AO - CIT(A) deleted addition - HELD THAT:- CIT(A) has found the explanation to be plausible. We do not find any infirmity in this finding of the ld. CIT(A). We agree with the CIT(A) that it is not unusual for the ladies of the house to be generally aware of the status of the jewellery and being in the habit of safe keeping the jewellery of others and the men being generally unaware in respect of these matters. Also pertinent is the fact noted by the CIT(A) that the spouse of the assessee identified all the items of the jewellery belonging to the maid servants even at the time of search, which was indicated from the relevant panchnama. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) treating the jewellery of 496 gms, valued at Rs.2.57 lakhs, as duly explained. The order of the ld. CIT(A) deleting the addition, therefore, of Rs.2.57 lakhs is confirmed. As for the deletion of part of addition of jewellery found in the locker amounting to Rs.2,52,824/-attributing it as belonging to the family in line with the Board s guidelines and judicial decisions in this regard considering the status, community, customs of the assessee/family. DR was unable to controvert the applicability of Board s guidelines and judicial decisions to the jewellery found in the locker to the tune of 574.3 gms. The order of CIT(A), therefore, deleting the addition of unexplained jewellery found in the locker to the tune of Rs.2,52,824/- is, therefore, confirmed. Ground of Appeal No.3 of the Revenue is accordingly dismissed. Disallowance of interest for non business use of borrowed funds without considering the fact that borrowed funds were used for non business purposes - CIT(A) deleted addition - HELD THAT:- The relevant portion of the order was pointed out to us wherein the ITAT had noted the fact of sufficiency of own funds for making the impugned advance and the proposition of law settled in this regard that no disallowance is called for where sufficient own interest free funds are available for making interest free advances, as laid down in the case of CIT Vs. Reliance Industries Ltd [ 2019 (1) TMI 757 - SUPREME COURT] DR was unable to distinguish the decision of the ITAT in AY 2004-05 both the facts and on law. In view of the same, we concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee s own case for AY 2004-05, following which we hold that the disallowance made by the AO of interest expenses amounting to Rs.4,48,988/- has been rightly deleted by the CIT(A) after appreciating all evidences filed by the assessee. Undisclosed income from construction business of Sahjanand complex - proper profit on work in progress was not disclosed by the assessee particularly when the stock register for consumption of the material was not maintained - CIT(A) held that the AO was not justified in rejecting the audited books of accounts of the assessee since he had failed to point out specific deficiencies which were fatal in deducing the profits correctly - HELD THAT:- We find that the ITAT noted the basis with the ld. CIT(A) for finding anomaly in the books of accounts of the assessee to be entirely baseless and confirmed the order of the ld. CIT(A) noting that not a single anomaly was noted by the AO in the financial figures reported. DR was unable to distinguish the decision of the ITAT in AY 2004-05 both the facts and on law and, therefore, the issue raised in Ground No. 5 by the Revenue stands covered by the order of the ITAT in AY 2004-05, following which we uphold the order of the ld. CIT(A) deleting the addition made by the Assessing Officer on account of undisclosed income from construction business of Sahjanand complex. Suppression of receipts - HELD THAT:- Before the CIT(A), the assessee, however, demonstrated that the amounts were received from the members over a period of three years and even filed confirmation from some members with regard to the same. The ld. CIT(A) has gone through all these details and given a finding of fact that the assessee has in fact recorded more receipts as compared to that noted in the documents seized during survey. DR was unable to refute the factual finding of the CIT(A). We have no hesitation, therefore, in agreeing with the ld. CIT(A) that the Assessing Officer s findings of suppressed sales by the assessee to the tune of Rs.2.08 crores was based on incomplete appreciation of facts. The order of the ld. CIT(A) deleting the addition made is, therefore, upheld. Unexplained investment in purchase of land - entries recorded on seized document as well as the statement of Shri Vikas A. Shah who was one of the parties to the impugned transaction - CIT(A) deleted addition - CIT(A) deleted the addition noting that the Assessing Officer has made these additions based on statement of Shri Vikas Shah and documents found from him which were never confronted to the assessee - HELD THAT:- DR has been unable to point out any distinction in facts or even on law on this aspect before us. We, therefore, concur with the assessee that the issue stands squarely covered by the order of the ITAT in the case of the assessee for AY 2004-05, following which we hold that the addition made by the Assessing Officer on account of unexplained investment in purchase of land from Shri Vikas Shah has been rightly deleted by the ld. CIT(A) after appreciating all evidences/submissions filed by the assessee. Ground No.7 raised by the Revenue is, therefore, found to be devoid of any merit and is accordingly dismissed. Unexplained investment - HELD THAT:- We concur with the ld. Counsel for the assessee that the issue stands squarely covered by the order of the ITAT in the assessee s own case for AY 2004-05, following which we uphold the order of the ld. CIT(A) restricting the addition of Rs.17,23,126/- to Rs.14,90,312/- and Rs.8,44,032/- to Rs.5,61,655/- in respect of unexplained investment in Swaminarayan Residence and Hotel Nilkanth respectively. Accordingly, ground raised by the Revenue is dismissed. Addition made on the basis of a seized document considering the entries on the document as well as the findings of the AO - CIT(A) deleted addition - HELD THAT:- DR has been unable to controvert the fact noted by the ld. CIT(A) that the confirmation filed by Jasubhai who acknowledged the document as pertaining to him for work carried out in his flat by his society and having nothing to do with the assessee, was not refuted by the AO in the remand report. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) deleting the addition made to the income of the assessee as there was nothing in the document attributing it to the assessee in any way and this fact was even confirmed by the party whose name found mentioned in the document, i.e. Mr. Jesubhai Barot. AO having not refuted the contents of the confirmation filed by Mr. Jesubhai, we are of the view that his challenge the deletion of addition made by the ld. CIT(A) is not sustainable. Ground of appeal No.9 raised by the Revenue is, therefore, dismissed. Anticipation of receipts in future - CIT(A) deleted addition - HELD THAT:- With regard to amounts so found recorded in the books of the assessee, the Revenue, we find, has no case with the Assessing Officer having accepted the fact that the same were duly recorded in the books of assessee by way of banking entries. With respect to the amount of Rs.25 lakhs, it is not disputed that there was no description or narration of any sort against this figure while against the rest of the figures, there were name mentioned of different enterprises of the assessee and name of persons to whom the amounts were attributed. Therefore, the contention of the assessee was that this was a dumb figure accepted by the CIT(A), we hold, is correct and his explanation thereof that the figure may have been noted in anticipation of receipts in future appears to be plausible. The order of the ld. CIT(A), therefore, deleting the entire addition on account of notings is upheld. Suppressed of receipts of hotel business - HELD THAT:- Document revealed data only for two months pertaining to the impugned year i.e. April and May 2004, and even for the sake of argument,though it has been found to be incorrect by the ld. CIT(A), the figures noted in the seized document are taken to be correct, the Assessing Officer cannot resort to extrapolation of this data for the entire year in the absence of any material found during search pertaining to the rest of the months of the year. The addition, in any case, could have been made only with respect to the data found for the months in the document, i.e. April and May 2004, the exercise of extrapolation of this data by the AO for the rest of the year, in any case, is not tenable. In view of same, we uphold the order of the ld. CIT(A). Depreciation @ 25% on electrical installation and fittings installed in hotel buildings, while the authorities below had held the applicable rate of depreciation on the same to be 15% - HELD THAT:- DR was unable to distinguish the said decision before us. In view of the same, we agree with the ld. Counsel for the assessee that the disallowance of depreciation on electrical installations and fittings in hotel buildings of the assessee by applying rate of 15% as against 25% applied by the assessee treating it as plant and machinery was contrary to law. The issue, we agree with assessee, is squarely covered in favour of the assessee by the Express Resorts Hotels Ltd. [ 2014 (12) TMI 1256 - GUJARAT HIGH COURT] Disallowance made of depreciation is directed to be deleted. Addition made noting that the reference made to the DVO for valuation of the property was not in accordance with the law having been made without rejecting the books of accounts of the assessee - HELD THAT:- DR was unable to point out any distinction either on facts or on law on the issue before us. In view of the same, we agree with the assessee that the issue of addition made on account of unexplained investment in Swaminarayan Farm Residence and Hotel Neelkanth, stands covered in favour of the assessee by the decision of the ITAT in the case of the assessee itself in the immediately preceding year i.e. AY 2004-05. The addition, therefore, is directed to be deleted. Unexplained investment in jewellery found from the locker and residence - HELD THAT:- The explanation of the assessee with regard to this jewellery which was found in the locker of the assessee was that it was purchased from one Mahendra Co., sourced out of withdrawals reflected in the books of accounts. The Assessing Officer, on inquiry made in this regard, found that the said person was not in existence on the date of the supposed sale. CIT(A), based on this finding of the AO which remained uncontroverted, confirmed the addition to the extent of Rs.5.99 lakhs. The assessee was unable to convince us in any manner about the genuineness of the alleged purchases made of the jewellery from Mahendra Co. He was unable to controvert the findings of the inquiry of the Assessing Officer that the said party was not in existence when the sale of the jewellery purportedly was made. In view of the same, we see no reason to interfere in the order of the ld. CIT(A) confirming the addition of unexplained investment in jewellery. Undisclosed investment in valuables - HELD THAT:- There were many items which were categorically found not disclosed in the books of the assessee. The fact situation, therefore, calls for addition to be made on account of unexplained investment in these assets and the CIT(A) has been fair enough in scaling down the valuation of the assets made by the AO, and further giving the benefit of telescoping against the same. Assessee was unable to point out any perversity in the valuation attributed by the CIT(A) to these items at Rs.30 lakhs. The decision relied by the ld. Counsel for the assessee before us in the case of Balbir Singh Sekhon [ 2011 (9) TMI 1144 - ITAT CHANDIGARH] we find, is of no assistance since the findings of the ITAT of the said case was to the effect that where no reasons have been assigned to valuation of household expenses at higher amount, the addition is not sustainable. In the present case, however, there are valid reasons for making addition on account of unexplained investment. The articles found at the residence of the assessee being far more than that recorded in the books of the assessee. Therefore, in view of the above, the addition confirmed by the ld. CIT(A) as undisclosed investment in valuables is, therefore, upheld. Sales proceeds of the godown sales not disclosed in the books of account - No infirmity in the order of the ld. CIT(A) holding that a nexus of the data contained in the document seized with the assessee was clearly established and, as rightly pointed out by the ld. CIT(A), in the absence of any credible explanation given by the assessee for the said document there is no other recourse left but to confirm the addition made on account of the difference in the receipts as per the seized document and that reflected in the books of the assessee on account of sale of godowns. Non granting benefit of telescoping and not granting set off of alleged unaccounted income against alleged unexplained investment in various assets found during the course of search proceedings - Assessing Officer is directed to grant the benefit of telescoping of the unaccounted income of the assessee against unaccounted investment in various assets as possible on facts and in law.

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• 2025 (4) TMI 1174
  Validity of Revision u/s 263 - order of the AO u/s 143 (3) is found to be erroneous and prejudicial to the interest of the revenue - Large investment in property - HELD THAT:- The issue relating to acquisition of property was subject matter of consideration before the Assessing Officer. The assessee submitted their explanation to the same contending that the assessee has entered into an agreement for purchase of a building at Worli, Mumbai from Shreeniwas Cotton Mills Limited on 28.11.2014 and the total sale consideration is Rs. 11,41,07,130/-. A copy of the ledger of capital WIP (Building) Account was enclosed showing the payment made at various dates. Assessee stated that the availed loan from ICICI bank for purchase of such property and the copy of the bank statement of various banks has been enclosed to show the payment made to Shreeniwas Cotton Mills Limited. Further, the assessee pleaded that the possession of the aforesaid property was not handed over by the seller to the assessee before 31.3.2015 and the amount paid by them is reflected in the balance-sheet as on 31.11.2015 under the head capital work in progress . Further, the assessee stated that the agreement for purchase was duly registered with the Joint Registrar, Mumbai City-IV. Considering all these aspects, the AO completed the assessment. Though the aforementioned points were placed by the assessee in response to the show cause notice issued u/s 263 PCIT opined confirmation of the proposal in the show cause notice not on the ground which was proposed in the show cause notice that the Assessing Officer did not do any verification at all but on the ground that the Assessing Officer has not carried out proper verification/investigation. As pointed out above, the factual position clearly shows that there has been due verification done by the AO and the AO was also careful enough to note CASS point which was also verified by the AO. The substantial questions of law are answered against the revenue.

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• 2025 (4) TMI 1173
  Denial of final approval under clause (iii) to the first proviso to Section 80G(5) - scope of registration or approval - technical discrepancies in Form No. 10AC, specifically the erroneous mention of provisional approval instead of approval - HELD THAT:- Where due to technical glitches, Form No. 10AC has been issued during FY 2021- 2022 with the heading Order for provisional registration or Order for provisional approval instead of Order for registration or Order for approval , then in all such cases, Form No. 10AC shall be considered as an Order for registration or approval as the case may be, and, in such cases where Form No. 10AC has been issued, in the relevant columns, wherein the word provisional registration or provisional approval have been mentioned, they shall be read as registration or approval as the case may be. The relevant provisions of section 80G(5) provide that institutions which were already approved u/s 80G(5) prior to the amendment were required to apply under clause (i) of the first proviso for fresh approval, which was to be granted for five years. The provisions nowhere state that such approval would be provisional. The confusion has arisen only due to technical glitches in Form No. 10AC where such approvals were erroneously mentioned as provisional . CBDT Circular No. 11/2022 has clarified this position beyond any doubt by specifically stating that in such cases, the words provisional approval shall be read as approval . This issue has been considered in identical circumstances in the case of Ananda Nagar Development Society [ 2025 (1) TMI 1546 - ITAT KOLKATA] wherein, it was held that where an institution was already approved under section 80G(5) prior to the amendment and had applied for fresh approval under clause (i) of the first proviso to section 80G(5), the approval so granted is a regular approval and not provisional, notwithstanding the inadvertent mention of the term provisional approval in Form No. 10AC due to technical reasons. Since the approval granted to the assessee under clause (i) of the first proviso to section 80G(5) is a regular approval valid for five years from AY 2022-23 to AY 2026-27, hence, there is no requirement to the assessee for applying for final/regular approval under clause (iii) to the first proviso to section 80G(5) of the Act. The present appeal of the assessee, thus, is infructuous and not maintainable and the same is accordingly dismissed. However, it is made clear that the dismissal of the above appeal of the assessee will not in any manner tantamount to affect the approval granted to the assessee vide order dated 28.05.2021 which is valid up to AY 2026-27. Decided against assessee.

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• 2025 (4) TMI 1172
  Accrual of income in India - Income derived from transmitting of satellite signals from ship to the customers and vice versa - assessee is a tax resident of Netherland and it is eligible to claim the treaty benefits as per Indian-Netherland DTAA - AO held that the assessee has received the revenue from the customers by leasing transponders in India and held that the receipts are in the nature of royalty u/s 9(1) (vi) of the Act as well as under 12 of India Netherlands tax treaty as they are towards use or right to use of equipment/processes etc.- assessee stated that in absence of a Permanent Establishment in India, the income of Inmarsat is not chargeable to tax in India. HELD THAT:- Considering the rival submission and material placed on record, we observed that similar issues were considered and adjudicated by the Coordinate Bench in assessee s own case for A.Y. 2019-20 2020-21 [ 2023 (10) TMI 1520 - ITAT DELHI] decided the issue in favour of the assessee as held Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word royalty in Asia Satellite [ 2011 (1) TMI 47 - DELHI HIGH COURT ] which held that receipts from lease of transponder capacity are not royalty and when the definitions were in fact parimateria (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so supra note 1 that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement. For the above reasons, it is held that the interpretation advanced by the Revenue cannot be accepted. The question of law framed is accordingly answered against the Revenue.

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• 2025 (4) TMI 1171
  Estimation of income - bogus purchases - CIT(A) confirmed the addition of GP at 8% and upheld the assessment order - HELD THAT:- The issue stands well settled by the decision of the Coordinate Bench of ITAT, Mumbai, in the assessee s own case [ 2018 (12) TMI 2017 - ITAT MUMBAI] . The assessee had accepted the addition of GP at 8% on the alleged bogus purchases. We find no reason to deviate from the ruling of the Coordinate Bench, and accordingly, we restrict the addition to 8% GP on the alleged bogus purchases. It is noted that in the original assessment order u/s 143(3), an addition (8% GP) was made on the alleged bogus purchase which was already confirmed. Therefore, the entire addition made in the reassessment order under Sections 143(3)/147 is unsustainable and is accordingly deleted. However, concerning the alleged bogus purchases we direct that the addition be restricted to 8% of the GP, which works out to Rs. 5,49,452/-.

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• Customs

• 2025 (4) TMI 1201
  Jurisdiction - proper officers or not - officers of DRI - jurisdiction of Directorate of Revenue Intelligence (DRI) to issue SCN under Section 28 of the Customs Act, 1962 - HELD THAT:- The question as to jurisdiction of DRI officials now stands resolved in the Canon II [ 2022 (2) TMI 1480 - SC ORDER] decision of the Supreme Court where it was held that Applications seeking exemption from filing affidavits are allowed . Since the said issue now no longer remains res integra, CESTAT would have to decide the appeals of the Customs Department on merits, in terms of the orders passed in similar matters. Accordingly, Customs Appeal No. C/52942/2015 in CUSAA 62/2025 and Customs Appeal No. C/52578/2015 in CUSAA 63/2025 respectively, are restored before the CESTAT. Appeal disposed off.

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• 2025 (4) TMI 1200
  Confiscation of the seized vehicle - redemption fine - penalty - main ground of challenge is that appellant had no prior knowledge about the smuggled nature of the goods - HELD THAT:- The knowledge and mensrea can be ground for challenging the penalties imposed, but cannot be the ground for challenging the confiscation of vehicle. Undisputedly the goods found in the vehicle of were of foreign origin and were illicitly imported in the contravention of the provision of the Custom Act, 1962, hence were smuggled goods. Further the Appellant or the driver of the vehicle on demand was not in position to produce any documents with regards to the licit importation of the said goods - there are no merits in the submission that Appellant or his agent i.e. the driver was not aware of the illicit nature of the goods. There are no merits in the appeal filed by the Appellant challenging the order of confiscation of vehicle under Section 115 of the Customs Act, 1962. However taking note of the fact that total seizure value of the smuggled goods was about Rs 3,43,000/- and the same have been disposed for Rs 2,24,800/-, the redemption fine imposed for the release of confiscated vehicle to be on higher side and reduce the same to Rs 50,000/-. Conclusion - i) Confiscation of conveyances used in smuggling is mandatory unless the owner proves lack of knowledge or connivance. ii) Mere lack of knowledge or mens rea may absolve penalty liability but does not affect confiscation liability. iii) Redemption fine must be proportionate and not exceed the market value of smuggled goods. Appeal partly allowed by reducing the redemption fine to Rs 50,000/-.

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• 2025 (4) TMI 1199
  Mis-declaration of the quantity of imported goods - violation of provisions of Section 40(4) of the Customs Act, 1962 read with the provisions of Section 111(m) of the Customs Act, 1962 - HELD THAT:- The filing of an appeal itself can be taken as a protest thereby uprooting the consented value which might have been given at the time for taking clearance of goods. Of course, this will be with the caveat that the value which has been consented is contested further, as per law, before the higher Judicial fora. On the other issue regarding the effect of declaring units and therefore the variation in weight being detected and its consequences, it is found that the decision in the case of NILKAMAL LTD. VERSUS COMMR. OF CUS. (IMPORT), NHAVA SHEVA [ 2018 (11) TMI 1767 - CESTAT MUMBAI] , held that when the goods are in excess for items which are assessable as units and not by weight and excess weight, noticed at the time of physical verification of import by Customs authorities, could not be considered as requiring change in the transaction value disclosed in invoices. Further, it is also found that Grasim Industries Ltd Vs. Commissioner of Central Excise, Rajkot [ 2007 (5) TMI 468 - CESTAT, NEW DELHI] have clearly brought out that weight cannot be considered to be influencing the transaction value. When purchase order was given on per piece basis. It is also agreed that there is nothing on record to show that there was any excess remittance made for the excess weight which was found at the time of examination in impugned goods which were Proof Machined Low Alloy Steel Shell Belt, Carbon Steel Forged Hemi, Machined Carbon Steel Forged Test Plate. The very nature of the goods indicate that they are sold in the market by units and not by weight. Conclusion - In the absence of evidence showing remittance above invoice value, the declared transaction value must be accepted. The declared transaction value and quantity as per units should be accepted for customs duty assessment. Appeal allowed.

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• 2025 (4) TMI 1198
  Classifictaion of imported goods - software license in paper form imported along with the Distributed Control System (DCS) hardware - to be classified under Customs Tariff Heading (CTH) 8538 9000 or not - applicability and interpretation of Note 2 to Section XVI of the Customs Tariff Act, 1975 - HELD THAT:- The admitted facts are Distributive Control Unit AC460 BOT system and the software imported are embedded in the hardware. It is also not in dispute that the software license in paper form is also received along with this hardware. The impugned Order-in-Appeal No.21/2011-Cus dated 31.03.2011 is a common order against Order-in-Original 284/2009 dated 12.10.2009 and No.417/2009 dated 26.12.2009. Both these Order-in-Originals have been considered by Commissioner (Appeals) in Order No.33/2009 dated 30.03.2009 wherein it was held that the software and the license fees goes hand-in-hand and are classifiable together, the software to be classified along with the hardware and the claim of the appellant under CTH 4907 or 8523 was rejected . Accordingly, the impugned order confirmed the classification of the software paper license as part of hardware under 8538 9000. The decision relied upon by the Original Authorities based on which the Commissioner (Appeals) also confirmed the demands was set aside by this Tribunal in [ 2019 (9) TMI 80 - CESTAT BANGALORE] . The case before the Tribunal was regarding classification of software under CTH 49 or 8524 which attracted Nil rate of duty are to be classified under CTH 8471 and it was held that the CBEC has also clarified vide Circular 15/2011 that documents conveying the right to use software do not merit classification under CTH 8523 8020 but merits classification under CTH 4907. Conclusion - There are no reason to uphold the classification of the software license in paper form under CTH 8538 9000. Appeal allowed.

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• 2025 (4) TMI 1197
  Levy of Custom duty - appellant have cleared the imported goods under Release order issued against DEPB Scrips by the DGFT - HELD THAT:- The entire argument of the Learned Counsel is that since the DEPB Scrips and/or Release Advice has not been cancelled by the DGFT the same stand valid and import thereunder cannot be questioned. In these circumstances, it is found that the case of the department is that the DEPB Scrips was obtained fraudulently therefore any import made on that basis cannot be extended the benefit of duty free clearance under DEPB Scheme. However, despite the direction from this Tribunal, the Revenue could not produce the status report of the DEPB license/release advice issued there under. Therefore, the matter needs to be remanded to the adjudicating authority for ascertaining status of DEPB License/release advice issued by DGFT and thereafter to pass a fresh order on all the issues. Appeal allowed by way of remand.

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• Insolvency & Bankruptcy

• 2025 (4) TMI 1196
  Admission of Section 7 application filed by the Central Bank of India against the Corporate Debtor - application barred by time limitation - whether between 28.01.2014 where corporate debtor has acknowledged and 22.11.2018 which is also another OTS submitted by corporate debtor, there are any material to indicate that there is any acknowledgment within three years from the first acknowledgment? - HELD THAT:- Acknowledgment has to be treated on 28.01.2014 as well as 07.05.2014 and we have to find out whether after 07.05.2014 within three years there are any other acknowledgment because the acknowledgment dated 22.11.2018 is beyond period of three years. The written statement of the Defendant as noticed by the Court is clear acknowledgment of the dues of the bank. OTS amount of Rs.5.78 Crores was noted to be payable with overdue interest at PLR on reducing balance. Defendant further stated that interveners are duty bound to pay the balance amount with overdue interest. The order of the DRT, thus, clearly records the acknowledgment of the corporate debtor about the dues of the bank. The above is also clear acknowledgment of the corporate debtor recorded by the Court on 15.06.2016/ 20.01.2017. Thus, after 07.05.2014 there is acknowledgment within three years. Thus, from the above, it is clear that there are innumerable acknowledgments by the corporate debtor on the record capable of extending the period of limitation and the application which was filed on 13.11.2019 (24.01.2020 as noted by the Adjudicating Authority) is well within the time and cannot be thrown out on this ground. The case of the appellant is that no payment has been made by the appellant after 30.06.2015. Payments made by the appellant are also reflected in the bank statement brought on the record. The entire OTS amount was not paid within time as allowed by the OTS letter dated 07.05.2014. OTS has come to an end. It is also relevant to notice that after receiving OTS letter dated 07.05.2014, as noted above, the corporate debtor has written letter to the bank on 16.05.2019 where the corporate debtor has requested the bank to restore possession to the corporate debtor so it can arrange to pay the OTS amount may be at a time. Appellant is illegally continuing in the possession of the assets of the corporate debtor being not paid any payment after 30.06.2015 i.e. for the last 10 years. It is enjoying possession of cold storage and as noted above, Resolution Professional has filed application for taking possession before the Adjudicating Authority where Adjudicating Authority has directed the Resolution Professional to take possession which could not be taken in view of the interim order passed by this Tribunal. Resolution Professional has also filed an application seeking recovery for amount on account of illegal gains obtained by the appellant by utilising and running the valuable assets of the corporate debtor. The order passed by the Adjudicating Authority admitting Section 7 application against the corporate debtor is upheld. The interim order passed in this appeal on 29.08.2022 is vacated. Resolution Professional to proceed with the CIRP in accordance with law - The period from 29.08.2022 till date is excluded from CIRP period. Conclusion - i) The Adjudicating Authority s order admitting Section 7 application is not liable to be set aside merely on the ground of limitation if the debtor has acknowledged the debt within the limitation period. ii) The Resolution Professional is entitled to take possession of the corporate debtor s assets to carry out the CIRP, and the Court can direct forcible possession if the appellant refuses to hand over possession. Appeal disposed off.

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• 2025 (4) TMI 1195
  Admission of claims for the reimbursement of the property tax paid, based on an unregistered agreement for sale relating to immovable commercial property - HELD THAT:- The claim for the reimbursement of the property tax paid by the Appellant (claim No. 2) for the alleged temporary office accommodation said to have been provided by the Corporate Debtor for the office purpose of the Appellant, no right would accrue in favor of the Appellant, for the reason being that if the unregistered agreement for sale, which has been placed on record and relied by the Ld. Counsel for the Appellant, before this Appellate Tribunal, as well as before the Ld. Adjudicating Authority is taken into consideration and scrutinized, Ld. Adjudicating Authority did not find any reference to any specific observation which has been made in the said agreement towards parting over the rights over any of the area for the purpose of being utilized, as the office of the appellant society. In the absence of there being any specific observation made in the said agreement for providing space for the office of the appellant society, there arises no legal liability to reimburse the amount paid by the Appellant towards GHMC property tax for the temporary office accommodation. Apart from it, nothing on record has been brought by the appellant to establish that a right was created in favor of the Appellant society by execution of a sale deed for the alleged office space for Appellant society. In fact, the Appellant had attempted to make a plea for the purposes of the remittance of the balance claims, by referring to the unregistered agreement for sale, as though it is a registered document. The agreement for sale, dated 05.08.2010, which is placed on record is not a document which has been registered in the eyes of the law, so as to make it to be read in evidence; for determining of a claim or any right arising from it. The claim raised by the Appellant in the application thus preferred for a sum of Rs. 4,47,161/- payable towards the reimbursement of the property tax as alleged to have been paid by the Applicant based on the unregistered agreement for sale dated 05.10.2010 would not be sustainable, and that when creation of right and handing of possession is not proved, there cannot be any tax liability. The contention raised by the Appellant in the instant appeal, that the said aspect was not taken into consideration while rejecting its claims by the impugned order, is not sustainable owing to the findings, which have been recorded by the Ld. Adjudicating Authority. In order to appreciate further, the arguments which had been extended by the Ld. Counsel for the Appellant, in fact, the Burden of proof to collate the claim by virtue of evidence is a responsibility, which is cast upon the claimant itself who submits Form-F before the Resolution Professional for the verification of the claim by receiving all the claims submitted by the creditors, which is supported by the documents, which are to be submitted in compliance with the provisions contained under Section 18 (b) of I B Code, 2016 - What is relevant herein is to point out that, the entire basis of the claim did not satisfy the parameters as prescribed under Regulation 7(1) to be read with Regulation 7(2), as they were contrary to the records, which were made available before the Resolution Professional. Hence, the Appellants were not entitled to any amount for which they could claim as defined under Section 3 (6) of the Regulations, where accrual of the right of payment is only subject to when the amount is fixed, undisputed, and legally established to equitable secured debt. As per claim No. 7 the Appellant themselves have prayed for that an appropriate direction may be issued for the purposes of execution of the sale deed, which is an admission of fact, that there is no sale deed so far, conferring any right over an immovable property. Thus, it becomes a tacit admission made by the Appellant society that, there was no validly executed sale deed in favor of the society and its members. If that be the situation, the other preceding claims except for the claim of corpus fund cannot be admitted, as grant of those claims would have arisen only when there was a valid sale deed executed, without which the debt due cannot be established. Conclusion - i) The unregistered agreement for sale, which is mandatorily required to be registered under Section 17 of the Registration Act, 1908, being unregistered, cannot be received as evidence to create or confer any right, title or interest in immovable property under Section 49 of the Registration Act, 1908. ii) The claims raised by the Appellant based on such unregistered agreement for sale, including reimbursement of property tax, costs of integrated building management system, maintenance expenses, and other related claims, are not legally tenable and cannot be admitted as debt due under the Insolvency and Bankruptcy Code, 2016. Appeal dismissed.

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• 2025 (4) TMI 1194
  Non-service of the demand notice - delivery of Recall Notice, Invocation Notice and Demand Notice - various discrepancies in the report filed by the RP u/s 99 of the Code - acknowlegdement of liability to pay the debt - statutory requirements under Sections 95 and 99 of the Insolvency and Bankruptcy Code (IBC) - HELD THAT:- The Respondents had sent the Loan Recall Notice, Invocation Notice, and Demand Notice to the Given Address recorded in the Guarantee Deed. Appellant contends that the notices were either not served or not adequately proven to be served. Clause 22 of the Guarantee Deed explicitly states that all communications, including a Notice of Demand, sent to the address provided in the Guarantee Deed or the last known address shall be considered sufficient service. In another case the Hon ble High Court of Delhi in Ajay Ahuja v. Subhiksha Trading Services Ltd. [ 2010 (12) TMI 1369 - DELHI HIGH COURT ] provides us guidance. Even though this was a case of Transfer of Property Act, 1882 - being similar to Rule 3(g) of the PG Application Rules. Herein, while examining Section 106(4) of the Transfer of Property Act, 1882, viz. the requirement of affixing the notice in case the same was not served, held that by sending the notice on the correct address, which was returned back with remarks shifted , and left without instructions the requirement of Section 106 of the Transfer of Property Act, 1882 was met. The claim of the Appellant that the Since the invocation notice and the demand notice were issued in accordance with the provisions of the Guarantee Deed and which constitutes a separate contract between the parties; therefore, the claim of the Appellant-PG is not maintainable - the grounds raised by the Appellant- PG on validity of service are without merits and are not acceptable and doesn t provide any support to the Appeal. Accordingly, the arguments of the Appellant that service of various notices have not been done cannot be accepted. Despite multiple attempts to engage with the Appellant, they remained unresponsive and only raised objections later which appear more to cause delays rather participating in resolution process. Respondent No. 2- RP ensured the Appellant- PG was given an opportunity to present their case, but no response was received. The Appellant has not disputed the debt, the guarantee, or the last known address but only alleged non-delivery of the demand notice, which is unfounded. Only claim of lack of acknowledgment of notices etc is legally untenable and unacceptable. As noted earlier it was the duty of the Appellant to notify any change in their address, if any. Regarding the Appellant s claim that Section 95 requirements were not met, Respondent No. 2 reviewed all documents, including those submitted via email on January 3, 2024 - the issuance of the Recall Notice, Invocation Notice, and Demand Notice to the Given Address constitutes valid service in accordance with the Guarantee Deed. Consequently, the Respondent s objections regarding non- service of the notices are found to be contradict the terms of the Guarantee Deed, and cannot be accepted. The Resolution Professional s report, prepared under Section 99 of the IBC, substantiates that the procedural requirements under Section 95 specifically the issuance and service of the Demand Notice in the prescribed manner have been met. The evidence of service, including speed post receipts and email transmissions, supports the contention that the statutory process was duly followed. The Appellant s argument that the non-receipt of the notices undermines the proceedings is not borne out by the documentary record - the contentions of the Appellant-PG for non- compliance of statutory requirements are devoid of merits and are rejected. Invocation of the Guarantee and Liability of the Appellant - HELD THAT:- The Guarantee Deed provides that liability arises upon the occurrence of default by the borrower, and the subsequent actions taken by the financial institution were in line with the contractual obligations. It is claimed that the guarantee becomes a debt once the said guarantee is invoked, wherein after the guarantor becomes liable. The Appellant has placed reliance upon Edelweiss Asset Reconstruction Company v Orissa Manganese and Minerals Limited and others [ 2019 (6) TMI 639 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ] wherein it has been held that A contract of guarantee matures in to a binding obligation only upon its invocation. Contract of Guarantee is an autonomous contract and the admission of the principal debtor to CIRP does not mean that the debt stands proved as against the Guarantor in a Section 7 proceeding against the Corporate Guarantor automatically. The guarantee has to be invoked and the debt and default proved separately in the proceeding against the Guarantor. The Appellant does not get any support from Edelweiss Asset Reconstruction Co. v. Orissa Manganese and Minerals Ltd. [ 2019 (6) TMI 639 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ], as the existence of a Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor does not preclude the initiation or continuation of proceedings against the Personal Guarantor. This principle has been upheld in decisions such as Lalit Kumar Jain v. Union of India [ 2021 (5) TMI 743 - SUPREME COURT ] by the Hon ble Apex Court, wherein it was held that even if the resolution plan is approved, the same does not discharge the personal guarantor. Further, this Tribunal in the matter of Mohan Kumar Garg vs. Omkara Assets Reconstruction Pvt. Ltd. Anr [ 2023 (8) TMI 1636 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI] , had held that the simultaneous proceedings in respect of the guarantor as well as the borrower can be proceeded with. It is a settled position of law that simultaneous proceedings can be initiated against the borrower as well as the guarantor. As the Respondent No1- Omkara has not received the outstanding amount, either in part or in full, hence, the contention of that since borrower is already undergoing CIRP, wherein resolution plan is being considered by the members of the COC, the Petition ought not be proceeded with, is bereft of any justification and needs to be rejected. Facts and materials on record reveal that, the Appellant-PG has not denied executing the Guarantee Deed, which binds him with joint and severe responsibility of repayment, in case of non-payment by the Borrower and Co- Borrower. Clause 1 of the Guarantee Deed clearly states that in the event of default by the Borrower or Co-Borrower, the Appellant-PG shall be liable to pay the defaulted amount - It had sufficient opportunity to submit the repayment plan, but it did not file any Repayment plan. Respondent No.2-RP was, therefore, constrained to file I.A No. 283 of 2025 under Section 114(1) read with Sections 115(2) and 106 of the Code, before the Adjudicating Authority, seeking the closure of the Insolvency Resolution Process of the Appellant, liberty for creditors to file a bankruptcy application under Chapter IV of the Code, and discharge from duties as there was absence of a viable repayment plan under Section 105 of the Code from the Appellant tantamount to rejection of repayment plan under Section 114(1) of the Code. Conclusion - i) The notices in question were sent to the last known address as stipulated in the Guarantee Deed, and such service is deemed valid under established legal principles. ii) The Resolution Professional has satisfactorily demonstrated compliance with the requirements of Sections 95 and 99 of the IBC. iii) The Appellant s contentions regarding non-service and the alleged deficiencies in the report are without merit, as the burden of updating one s address lies with the Appellant. iv) The simultaneous CIRP against the Corporate Debtor does not interfere with the obligations of the Personal Guarantor under the Guarantee Deed. There are no infirmity in the orders of the Adjudicating Authority - the appeal is dismissed.

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• PMLA

• 2025 (4) TMI 1193
  Money laundering - predicate offence - possession of proceeds of crime - attachment of shares - HELD THAT:- The description of the litigation taken by the appellant has been given with operative paras as otherwise the appellant has also summarized certain parts of the order in the written argument but it is only after extracting small part of the para suitable to the appellant leaving other parts and it is without referring to the operative part of the orders. The earlier litigation resulted in the order based on facts available then and otherwise the involvement of appellants in commission of crime was revealed even in further investigation and therefore prosecution complaint (PC) has been filed against the appellant. The fact otherwise reveals receipt of the amount and purchase of shares was designed for transfer of bribe money out of the deal of Agusta Westland, UK. Paras 77 and 83 of judgment have also been referred to indicate that the shares were acquired in the year 2003 which is prior to the allegation of any scheduled offence and as a result of alleged kickbacks paid by AgustaWestland and thereby the Deputy Director of Enforcement Directorate had no authority to freeze the shares which were delivered in settlement to the purchaser and there was no allegation against the purchaser. It is necessary to clarify that in the aforesaid judgment, cognizance of the freezing of shares under section 17(1) of the Act of 2002 was taken along with the appeal preferred by the appellant against the freezing order with appropriate liberty to pursue the appeal. If final conclusion would have been drawn by High Court of Delhi in favour of the appellant, there was no reason to allow the appellant to pursue the appeal. It is, further, necessary to clarify that the main allegation against the appellant is routing the bribe money for which ledger entry was referred and thereupon money was transferred and used for purchase of shares. The case of money-laundering is to be taken when it is revealed that proceeds of crime has been channelized. In reference to this, we may cite the judgment of Karnataka High Court in Mr. Dyani Antony Paul versus Union of India [ 2020 (12) TMI 1296 - KARNATAKA HIGH COURT] and Telangana High Court in Vem Krishna Keerthan versus Directorate of Enforcement [ 2024 (12) TMI 1557 - TELANGANA HIGH COURT] where it was held that the relevant time to look into the crime would be the date when it comes to the notice of Enforcement Directorate that a crime of money-laundering has taken place and not the date of predicate offence. Part of paras 92 and 93 of the judgment of the High Court of Delhi [ 2019 (1) TMI 515 - DELHI HIGH COURT] have been quoted without indicating the reason of making observation by the High Court of Delhi in regard to the transaction of sale of equity shares of KRBL. In fact, the Writ Petition was filed when the respondent restrained the appellant to transact in the shares and it was addressed by the High Court of Delhi as to whether action is legally sustainable or not. Subsequently those shares were frozen and against which appellant filed the appeal and was noted by the High Court of Delhi. No interference in the freezing order was caused. It is necessary to further add that the High Court of Delhi had disposed of the appeal and operative part of the said order has been quoted. It was not entirely favourable to the appellant, rather, Writ Petition was disposed with certain observations. Had it been a case to hold action of the respondent to be illegal and the appellant is not the recipient of the proceeds of crime, there was no reason for the High Court of Delhi to dispose of the petition in reference to the appeal preferred by the appellant against the order of seizure of the shares. Conclusion - The appellants are involved in money laundering activities. The attachment of shares is lawful and justified under the PMLA. Appeal dismissed.

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• Service Tax

• 2025 (4) TMI 1192
  Recovery of service tax with interest and penalty - exempted services under Entry Serial No. 12 (e) of the notification - adequate opportunities of personal hearing provided to petitioner as per Central Board of Excise Customs (C.B.E. C.) Circular No. 1053/02/2017-CX dated 10.03.2017 or not - violation of principles of natural justice - HELD THAT:- This writ application is fit to be allowed on the very first ground taken by learned counsel for the petitioner i.e., the ground of violation of principles of natural justice, the other issues raised by learned counsel for the petitioner are not required to be discussed and adjudicated upon for the present in this writ application. On the point of violation of principles of natural justice, this Court finds that the petitioner has made out a case. The facts reveal that the show cause notice was issued on 13.10.2021, no defence reply was filed but then for two and half years nothing happened in the proceeding. For the first time, a date was fixed on 11.01.2024 for personal hearing. On this date, the petitioner submitted a letter requesting a deferment which was accepted by Respondent No. 3 and a date of hearing was fixed on 14.02.2024. Admittedly, on 14.02.2024, the representative of the petitioner appeared - The impugned order (Annexure-P4) nowhere records that the Respondent No. 3 fixed a further date giving an opportunity to the petitioner company to appear with the documents and make its submissions. All that is stated in the impugned order in paragraph 3.2 is that the representative of the petitioner was explicitly asked to provide substantiating documentation supporting the assertions made by the noticee. However, as of the present moment, even after 15 days, the noticee has failed to submit any documents in support of his claim. Thus, it appears that when the hearing took place on 14.02.2024, no specific date was fixed by Respondent No. 3 giving an occasion to the petitioner company to know the actual date of the next hearing. Paragraph 14.4 of the master circular mandates that the adjudicating authority must maintain a record of personal hearing and written submission made during the personal hearing. Evidence of personal hearing and written submission on record, would be very important while adjudicating the case. A combined reading of paragraph 14.3 and 14.4 of the master circular leaves no room to contest that Respondent No. 3 may deviate from these provisions of the master circular but in the present case, we find that Respondent No. 3 has not followed the mandate of granting at least three opportunities of personal hearing to the petitioner company. Conclusion - The statutory requirement as envisaged under Section 33A of the Central Excise Act, 1944 read with paragraph 14.3 of the master circular has not been complied with. The impugned order is liable to be set aside - The matter is remitted to the Respondent No. 3 for fixing a date of hearing giving at least four weeks time to the petitioner to produce the documents and submit a written submission in support of its contention - application allowed.

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• 2025 (4) TMI 1191
  Valid proof of payment under Section 127(5) of the Finance Act, 2019 read with Rule 7 of the Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - payment made by the petitioner - direction to issue manual discharge certification in Form SVLDRS-4 in accordance with provision of section 127(8) of Finance Act, 2019 read with Rule 9 of Sabka vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 - HELD THAT:- Perusal of the material on record would indicate that the amount payable by the petitioner under the SVLDR Scheme was paid by him under a different head in a manual form as a result of which same was not reckoned towards the scheme despite the petitioner having actually paid the said amount. In the light of the undisputed fact that the amount as quantified and estimated by the respondent No.1 in SVLDRS-Form 3 had already been paid by the petitioner much prior to the cut off date, the respondents ought to have issued the SLVDRS- Form 4 certificate to the petitioner and the same having not been issued to the petitioner till date, the petition deserves to be allowed. Petition allowed.

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• 2025 (4) TMI 1190
  Wrongful availment of CENVAT Credit - scope of SCN - impugned order passed beyond the allegation in the SCN - HELD THAT:- At the time of issuance of show cause notice, the appellant could not produced all the documents to satisfy that they have correctly availed the Cenvat Credit on the capital goods, but while filing the reply to show cause notice, the appellant produced all relevant valid documents on which credit was availed under Rule 9(1)(f) of the Credit Rules and the original authority, after fully satisfied with the documents provided by the appellant, dropped the proceedings initiated in the show cause notice and allowed the Cenvat Credit. It is pertinent to note that the original authority has observed that the appellant has submitted all the relevant/prescribed documents i.e. concerned bills of entry, invoices vide letter dated 04.10.2021 alongwith complete documents as Annexure A at the time of adjudicating process. Excess Cenvat Credit so availed at the time of audit was examined in terms of Rule 9 of Credit Rules and found relevant. The original authority has also observed that the bills of entry are in the name of Nando s Bangalore and not in the name of the appellant, but the credit has been availed, apparently, on the basis of bills of entry and not on the basis of exporter s invoice. The substantial benefit cannot be denied merely on procedural infirmities as held by the Tribunal in the case of M/s Bharat Sanchar Nigam Limited [ 2008 (10) TMI 141 - CESTAT CHENNAI] , wherein it has been held that a substantive benefit cannot be denied on a procedural or technical ground where the beneficiary has satisfied the substantive conditions for benefits. It is also found that the appellant has produced the Chartered Accountant Certificate certifying that the head office at Bangalore has not availed Cenvat Credit on the import of goods and the same is also proved from the ST-3 returns filed by the appellant on record. Conclusion - The denial on the sole ground of invoices being in the name of head office, is not justified. The impugned order is not sustainable in law - Appeal allowed.

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• 2025 (4) TMI 1189
  Availment of Cenvat credit on Service Tax paid on rent for a business premises (Himalaya Crown Apartment) that was not included in the appellant s ST-2 registration certificate - input services or not - HELD THAT:- On carefully going through the decision of this Tribunal in the case of 24/7 Customer Pvt. Ltd. [ 2013 (12) TMI 257 - CESTAT BANGALORE] , it is understood that this Tribunal had allowed Cenvat credit of Service Tax paid to said appellants for Gurgaon office for the period for which Gurgaon office was not registered. Following the said precedent decision, the appellant is entitled for disputed Cenvat credit of Rs. 2,35,500/-. Conclusion - The appellant is entitled to the disputed Cenvat credit on rent paid for the unregistered premises. The impugned order is set aside - appeal allowed.

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• 2025 (4) TMI 1188
  Classification of service - Renting of Immovable Property Service or not - transaction of transferring leasehold rights for a period of 99 years by the appellant to sub-lessees - levy of service tax under the category of Business Auxiliary Service (BAS), given the nature of the receipts involved - time limitation. Classification of service - Renting of Immovable Property Service or not - transaction of transferring leasehold rights for a period of 99 years by the appellant to sub-lessees - HELD THAT:- The one time Premium received by the Appellant cannot be equated with rent payable on regular intervals for continuous use of the property. The difference between the Premium or Salami and the lease rent as envisaged in Section 105 of the Transfer of Property Act, 1882, has been dealt in the decision of the Hon ble High Court in the case of AR KRISHNAMURTHY AND AR RAJAGOPALAN VERSUS COMMISSIONER OF INCOME-TAX, MADRAS [ 1980 (12) TMI 33 - MADRAS HIGH COURT] . From the decision, it is observed that the price paid for transfer of possession or the right to enjoy the property is called the Premium or Salami and the periodical payments made for continuous use of the property under lease is called rent . The Applicant has received only a one-time payment as Premium and hence by relying on the above decision it becomes clear that the Premium received by the Appellant cannot be called as rent . The difference between the Premium and Rent has been highlighted in the Judgment of the Hon ble Supreme Court in the case of Commissioner of Income Tax v. The Panbari Tea Co. Ltd., [ 1965 (4) TMI 19 - SUPREME COURT] . From the aforesaid judgement, it is observed that consideration, i.e. one-time payment, in the form of Premium or Salami and consideration in the form of rent connotes two different types of consideration. In the instant case, the Applicant has not received any rent from the sub-lessees. Accordingly, the premium or salami paid to the Applicant for transfer of right in the property, should not be exigible to the service tax. The one time Premium/ Salami received by the appellant from the sub- lessee is not a consideration towards the taxable service of Renting of Immovable Property . Levy of service tax under the category of Business Auxiliary Service (BAS), given the nature of the receipts involved - HELD THAT:- The impugned Order does not specify under which clause of BAS the aforesaid charges would fall. Accordingly, it is held that demand of service tax confirmed under the category of BAS is not sustainable without specifying the particular Clause under the definition of BAS . Accordingly, the demand confirmed under the category of BAS in the impugned order is not sustainable. Time Limitation - HELD THAT:- In this case, the Show Cause Notice was issued after a period of 18 months. We also observe that the taxability on this issue has been subject matter of dispute at various forums. Also, it is a fact on record that the demand has been calculated from the audited financial statements. Thus, there is no suppression of fact with intention to evade the tax established in this case. Accordingly, the demand is also barred by limitation. Since, the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise. Conclusion - i) The one time Premium/ Salami received by the appellant from the sub- lessee is not a consideration towards the taxable service of Renting of Immovable Property . ii) Demand of service tax confirmed under the category of BAS is not sustainable without specifying the particular Clause under the definition of BAS . iii) There is no suppression of fact with intention to evade the tax established in this case, the demand is also barred by limitation. iv) Since, the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise. Appeal allowed.

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• 2025 (4) TMI 1187
  Classification of services - management, maintenance or repair service or Commercial or Industrial Construction Service? - classification of services rendered post 01.07.2012 as works contract service by the appellant - scope of SCN - extended period fo limitation. Whether the services provided by the appellant during the period prior to 30.06.2012 are correctly classifiable as management, maintenance or repair service or as Commercial or Industrial Construction Service (CICS) for the purpose of service tax levy and abatement? - HELD THAT:- With effect from 01.07.2012, the Appellant classified the services in question as Works Contract Service and accordingly was discharging service tax. For the period post 01.07.2012, it has been alleged that the classification of the subject transaction as works contract is incorrect inasmuch as the Appellant failed to submit any documentary evidence to substantiate discharge of VAT on the value of goods involved in the execution of goods. For the period post July 2012, even when the adjudicating authority accepted that the underlying agreements qualifies as works contract services , he has held that the valuation adopted by the Appellant in terms of Rule 2(A)(ii) of Service Tax Valuation Rules is incorrect since the Appellant is able to determine the value of VAT payable. Accordingly, it was held that the Appellant ought to have adopted Rule 2(A)(i), for determination of value of services. Whether the classification of services rendered post 01.07.2012 as works contract service by the appellant is correct? - HELD THAT:- Reliance placed on the decision in the case of Gainwell Commosales Pvt. Ltd. v. CCE ST, Ranchi [ 2023 (6) TMI 1308 - CESTAT KOLKATA ], wherein this Tribunal has held that if a contract involves supply of goods as well services prior to 01.07.2012, then such composite contract cannot be classified under management maintenance or repair service. It has been held that such contracts would more appropriately be classifiable under works contact service and thus, demand under management maintenance or repair service was set aside. The demand of service tax confirmed in the impugned order for the period prior to 30.06.2012 under the category of management maintenance or repair service is not sustainable. Accordingly, the appellant has rightly classified the said service under the category of Commercial or Industrial Construction Service (CICS) and claimed abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006. Scope of SCN - Demand of service tax confirmed for the period from period from July 2012 to September 2014 - HELD THAT:- The Ld. Commissioner has travelled beyond the scope of the Show Cause Notice and confirmed the demand on a ground which is not raised in the Notice. It is observed that nowhere in the Show Cause Notice was there any allegation or proposal with respect to the valuation of such services under Rule 2(A) of the Service Tax Valuation Rules. Once the allegation in the Show Cause Notice regarding the classification of the services in question has been decided, the Ld. Commissioner cannot travel beyond the proposals in the Show Cause Notice and confirm the demand. It is a settled principle of law and has been held in a number of decisions that when an order goes beyond the allegations mentioned in the Show Cause Notice, such order is violative of the principles of natural justice. Accordingly, the demand confirmed post June 2012, up to September 2014, is liable to be set aside on this ground alone. Valuation of works contract under Rule 2A(ii)(c) of the Valuation Rules - HELD THAT:- Regarding the method of valuation adopted by the Appellant, we observe that as per the agreement between the Appellant and TSL, the Appellant is required to raise its invoice for the composite service at the beginning of each month based on agreed contract value. Hence, material requirements and details of such procurement is not known to the Appellant at the time of raising of invoice. Consequently, it is impractical to compute service portion of the contract in terms of Rule 2(A)(i) of the Valuation Rules since value of goods used toward rendering of services is not known at the time raising the invoice. In view of the above, the valuation cannot be done as per Rule 2A(i) of the Valuation Rules. Rule 2A provides two methods of valuing the works contract service and entails a right upon the assessee to choose any method of valuation of works contract. Thus, it is at the discretion of the Appellant to choose the method of valuation as per their contract and convenience. Since the Appellant had not entered into the contract with intention of valuing the service and material elements separately, hence, the Appellant chose to determine value of goods under Rule 2(A)(ii), as it provides for a simplified and specific method of computation - the method of valuation adopted by the appellant as per rule 2(A)(ii) is in order. Accordingly, the demand confirmed in the impugned order on account of valuation of works contract by adopting Rule 2(A(i) of the Valuation Rules, is not sustainable. Since the demand itself is not sustainable, the question of demanding interest and imposing penalties in the impugned orders does not arise. Extended period of limitation - HELD THAT:- The present demands have been raised based on the information obtained from ST-3 returns and other documents submitted by the Appellant. In this case, the Department has failed to bring in any evidence to allege suppression of fact with intention to evade the tax. In the absence of any suppression of facts on the part of the appellant, the extended period of limitation is not invokable. Accordingly, the demand confirmed for the extended period is liable to be set aside on the ground of limitation. Conclusion - i) The demand of service tax confirmed under the category of management, maintenance or repair Service for the period prior to 30.06.2012, is not sustainable. The services rendered by the appellant for the period from 2009-10 up to 30.06.2012 is rightly classifiable under the category of Commercial or Industrial Construction Service (CICS), as classified by the appellant and the appellant are eligible for the abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006. ii) For the period post 01.07.2012, the service rendered by the appellant is rightly classifiable as works contract service . The demand of service tax confirmed in the impugned order by adopting Rule 2(A)(i) of the Valuation Rules is not sustainable and hence we set aside the same. The appellant has correctly opted for Rule 2(A)(ii) of Valuation Rules to discharge service tax on the works contract services rendered by them. iii) The demand confirmed by invoking the extended period of limitation is not sustainable. iv) No penalty is imposable on the appellant in the facts and circumstances of the case. Appeal allowed.

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• Central Excise

• 2025 (4) TMI 1186
  Interest on an asserted delay in disbursal of refund - it was held by CESTAT that Section 35FF thus indicates that interest would commence from the date of the order of the Appellate Authority as distinct from the making of an application which is prescribed to be the starting point insofar as Section 11BB of the 1944 Act is concerned. - HELD THAT:- There are no reason to interfere with the impugned judgment passed by the High Court. Hence, the Special Leave Petition is dismissed.

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• 2025 (4) TMI 1185
  Reversal of CENVAT Credit as per Rule 6(3) of the Cenvat Credit Rules, 2004 - inputs used in manufacture of dutiable as well as exempted final products - appellant had not maintained the separate accounts with regard to the dutiable goods as well as the exempted goods - invocation fo extended period of limitation - interest and penalty - HELD THAT:- This issue is no more res integra and Rule 6(3) of Cenvat Credit Rules was amended vide Notification No. 10/2008-CE(NT) dated 01.03.2008, wherein sub-rule (3A) was incorporated with effect from 01.04.2008. The appellant has reversed the proportionate amount of Cenvat Credit amounting to Rs.14,683.70 on 18.08.2008, availed in respect of services attributable to exempt goods as per the procedure prescribed under Rule 6(3A) of the Cenvat Credit Rules. The appellant also paid the interest and the same was not disputed in the impugned order. Vide Section 73 of the Finance Act, 2010, Rule 6 of the Cenvat Credit Rules was amended retrospectively to provide for reversal of credit on proportionate basis alongwith interest and in the present case, the appellant has reversed the credit alongwith interest and therefore, the appellant is entitled to the benefit of the retrospective amendment in Rule 6 ibid as held in the cases relied upon by the appellant - it is a settled law that reversal of credit amounts to non-availment of credit. Extended period of limitation - HELD THAT:- The learned Commissioner confirmed the demand by invoking the extended period, but the department had not established anything on record to show that the appellant has suppressed the material facts with intent to evade the payment of duty. Further, we find that the appellant made the proportionate reversal of Cenvat Credit even before the objection was raised by the department in the audit proceedings and the same is not disputed by the department. Also, the issue involves interpretation and hence, extended period of limitation cannot be invoked. Interest and penalty - HELD THAT:- Since the demand itself is not sustainable, therefore, the question of interest and penalty does not arise. Conclusion - i) The appellant s reversal of Cenvat Credit under Rule 6(3A) satisfies the legal requirement for reversal of credit attributable to exempted goods, despite non-maintenance of separate accounts. ii) The extended period of limitation cannot be invoked as there was no suppression or fraud, and the appellant disclosed and reversed the credit before audit objections. iii) The demand of Rs.1,79,25,988/- along with interest and penalty is unsustainable and is set aside. Appeal allowed.

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• 2025 (4) TMI 1184
  Refund claim rejected on the ground of being barred by time limitation - relevant date for the purpose of limitation under Section 11B(5)(B)(ec) when the refund arises as a consequence of a judgment or order of the Appellate Tribunal - HELD THAT:- In the present case, the Tribunal passed the order on 01.11.2018 in the presence of both the parties and the appellant was very much aware of the decision of the Tribunal as the order was passed on the date of hearing itself; but the appellant filed refund application on 16.12.2019 which is beyond the period of one year. There is a statutory provision as prescribed under Section 11B (5) (B) (ec) of the Central Excise Act, 1944, which says that in case, where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction will be the relevant date and the limitation period of one year will start from that date. This issue of relevant date has been considered by the Tribunal in the case of Prontos Steerings Ltd Vs CCE, Chandigarh-I [ 2011 (8) TMI 898 - CESTAT, NEW DELHI] where it was held that it is clear that when some order of Court or an authority affects an assessee, the limitation would start from the date on which the order was communicated to the assessee or the date on which it was pronounced or published so that the party affected by which have reasonable opportunity of knowing of the passing of such an order and what it contains. Further, the statutory provision also prescribed that the period of one year would start from the date of the judgment on which the same is pronounced in the open court. Therefore, in the present case, the date of communication of the Tribunal s order is 01.11.2018, on which the order was pronounced in the open court in the presence of the appellant s counsel, but the refund application was filed on 16.12.2019; hence, the refund claim filed by the appellant on 16.12.2019 is beyond the prescribed period of one year, accordingly, is clearly time barred. Conclusion - i) The limitation period prescribed under Section 11B for filing the refund claim is one year from the relevant date. The term relevant date in the case where the duty becomes refundable as the consequences of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any Court has been defined in Explanation B (ec) of Section 11B as the date of such judgment, decree or direction . ii) The refund claim filed by the appellant is beyond the prescribed period of one year, accordingly, is clearly time barred. Appeal of appellant dismissed.

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• 2025 (4) TMI 1183
  SSI Exemption - clubbing of value of clearances of a holding company, with the value of clearances of its subsidiary for the purpose of determining eligibility for exemption - applicability of concept of interconnected undertaking , holding and subsidiary etc. for denial of benefit of SSI exemption - HELD THAT:- Since, the appellants are recognized as an independent manufacturer of excisable goods, which are distinctively different from the final products of M/s. Parle Products and upon satisfaction, the jurisdictional Central Excise authorities have issued the Central Excise Registration certificate in their behalf, the clearance value of holding company M/s. Parle Products Pvt. Ltd., cannot be clubbed with the clearance value of the appellants for the purpose of denying the benefit of SSI exemption provided under the Notification dated 01.03.2000. The issue arising out of the present issue is no more res integra, in view of the order passed by the Tribunal in the case of Aschem Agrotech [ 2015 (10) TMI 1937 - CESTAT BANGALORE] where it was held that For all purposes the holding company would be having more than 50% of the shares of the subsidiary company and in this case admittedly 100% of the shares are held by the holding company. When 100% of the shares are held, Interest is paid on the loan or not does not really make a difference for the transaction between the two. Because in any case the holding company would have to bear the entire amount or profit or loss, whatever be the result of the activity of the subsidiary. The judgement of Hon ble Supreme Court, in the case of Parle Bisleri Pvt. Ltd., [ 2010 (12) TMI 26 - SUPREME COURT] , relied upon by the learned AR for Revenue are distinguishable from the facts of the present case inasmuch as the issue considered in those decided cases is in context with affixation of the brand name of another manufacturer(s) and the judicial forum have held that in the case, where brand name of another manufacturer is affixed with the product manufactured by the assessee governed under SSI, then the claim of the benefit provided to the SSI unit, shall not be available. Contrary is the situation in the present case, inasmuch as the appellants are recognized as an independent manufacturer of excisable goods and for that purpose, were also issued with the registration certificate by the jurisdictional Central Excise authorities. Conclusion - The value of clearances of the holding company, under such circumstances, cannot be clubbed with the value of the goods cleared by the appellants, for denying the benefit provided under the Notification dated 01.03.2000. The impugned order iss et aside - appeal allowed.

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• 2025 (4) TMI 1182
  Method of valuation - assorted leaf springs and assemblies - to be classified u/s 4 of the Central Excise Act, 1944, or u/s 4A? - Clandestine removal - demand worked out on the basis of the comparison of the figures in the order sheets with invoices issued during the same month - HELD THAT:- Taking note of the fact that the Revenue authorities have accepted the order in appeal dated 17.11.2017 holding that the value of the assorted leaf springs , seized and confiscated in the same proceedings initiated during the search of the Appellant premises on 04.08.2015, there are no merits in the appeal filed by Revenue in the present proceedings. Revenue authorities do not have discretion to pick and chose the proceedings for filing the appeal, when they have accepted the order on the same issue earlier. Even otherwise the both the authorities have concluded that the goods in the form in which they cleared do not qualify to be cleared in the packaged form for which the provisions of Standard of Weight and Measures Act and Rules made thereunder will be applicable. That being so, in view of the decision of the Hon ble Supreme Court in case of Jayanti Food Processing (P) Ltd. [ 2007 (8) TMI 3 - SUPREME COURT ], valuation will have to be done as per Section 4 of the Central Excise Act, 1944 and not under Section 4A ibid. The finding of fact and the application of the case law in terms of the referred decision of Hon ble Apex Court do not call for any interference and the appeal filed by the Revenue is without any merits. The demand has been worked out on the basis of the comparison of the figures in the order sheets with invoices issued during the same month. In some months where the figures as per the invoices is higher than the figure indicated in the order sheet the differential figure of number of assorted leaf springs cleared clandestinely is shown as 0 (Zero). In the months where figure of number of leaf springs as per order sheet is higher than the number in the invoice the differential is alleged to be cleared clandestinely. No explanation is given for adopting such an approach. It is possible that the number of assorted leaf spring which are found in excess in one month get cleared in subsequent month or vice versa. The assessable value of the assorted leaf springs have been calculated on the basis of the presumption in terms of the formula which has been adopted by the adjudicating authority which do not have any basis in law. During search of the premises of the Appellant certain excesses of the finished goods were found which were seized by the officers. In respect of these excess finished the value of the seized goods was determined as per Section 4A, and show cause notice dated 29.01.2016 was issued to the Appellant. This show cause notice was adjudicated by the original authority determining the seizure value in line with the proposal made in the show cause notice on the basis of Section 4A of the Central Excise Act, 1944. Interestingly on the basis of the statement of the Shri Ashu Pandey Authorized Signatory of the Appellant recorded on 23.01.2018 and accepted by the proprietor in his statement on 04.04.2018, the present show cause notice dated 20.04.2018 was issued to Appellant seeking to value the alleged clandestinely cleared goods again in terms of Section 4A of Central Excise Act, 1944 - The formula adopted by the adjudicating authority for valuation under Section 4 which is only a mathematical exercise has no basis in law. Thus computation of the assessable value on such basis cannot be anything other than presumption for computing the demand. Appellant was never put to notice about any such presumption in the show cause notice. The demand made on the basis of such erroneous computations and presumptions do not satisfy the test of pre-ponderance of probability enunciated by the Hon ble Supreme Court in case of D Bhoormull [ 1974 (4) TMI 33 - SUPREME COURT ], and relied in the impugned order. The demand thus made in respect of alleged clandestinely cleared goods on the basis such erroneous computations and presumptions need to be set aside. It is evident that the panchnama is totally silent about the manner in which stock verification was undertaken. From the annexure to Panchnama it is transpires that Appellant had stock of about 93.6 Tons of Assorted spring leafs and 960 pcs of Spring leaf assembly. Even the in the statement of Shri Ashu Pandey recorded on that date nothing is forthcoming to say how this stock was verified and excesses and shortages determined. In absence of any thing with regards to the manner of stock verification in the panchnama there are no merits in the confirmation of the demand made in respect of shortages determined. There are no merits in the impugned order to the extent it uphold the order in original to the extent of demanding duty in respect of allegedly clandestinely cleared assorted spring leafs and the shortages of spring leaf assembly detected at the time of visit of officers on 04.08.2015. As there are no merits in the demand, the penalties imposed also need to be set aside. Conclusion - Assorted leaf springs cleared loose without any packaging do not qualify as retail packages under the Legal Metrology (Packaged Commodities) Rules, 2011, and hence valuation under Section 4A of the Central Excise Act, 1944 is not applicable. Valuation must be done under Section 4 of the Act. Appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (4) TMI 1181
  Challenge to assessment order - invocation of extended period of limitation - absence of willful evasion of tax by the petitioner - Section 21 (5) of the A.P VAT Act - Penalty order - HELD THAT:- A best judgment order, of assessment, in the case of willful evasion of tax, by the dealer, would mean that the period of assessment, of six years, for every month would commence from the 20th day of the succeeding month, where returns have been filed in time. As there is no dispute that the returns have been filed, by the petitioner, within the prescribed time, the limitation of every month would have to be taken into account. In such circumstances, the order of assessment, dated 31.03.2021, is beyond the period of limitation set out for the months of April to February of the financial year 2014-15. Since the assessment order is beyond the period of limitation, the order of assessment, dated 31.03.2021, passed by the 1st respondent is to be set aside for the period April, 2014 to February, 2015. The fact remains that the period beyond limitation would have to be excluded and a fresh computation of the tax that would have paid would have to be undertaken. For this purpose, it would be more appropriate that the entire order is set aside and the matter is remanded for a fresh assessment, by the Assessing Officer, for the period which is within limitation. Apart from this, the petitioner has also raised a ground that the levy of tax @ 14.5%, without giving the benefit of the composition scheme, is impermissible as the Assessing Authority had not verified the forms of composition given by the petitioner and endorsed by the 1st respondent. Penalty order - HELD THAT:- The order of Penalty, dated 21.05.2021, is based upon the order, dated 31.03.2021. Once the order of assessment itself has been set side, the order of penalty would not survive. Conclusion - Since the assessment order dated 31.03.2021 is beyond the period of limitation set out for the months of April, 2014 to February, 2015, the order of assessment passed by the 1st respondent is to be set aside for that period. The order of assessment, passed by the 1st respondent on 31.03.2021 as well as the order of penalty, passed by the 1st respondent on 21.05.2021 set aside - petition allowed.

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• 2025 (4) TMI 1180
  Refund of excess tax credit - applicability of provisions of Rule 18(3)(b) of the Andhra Pradesh VAT Rules, 2005, read with Section 22 of the A.P. Value Added Tax Act, 2005 (the VAT Act) - HELD THAT:- While Section 22 (3) would be applicable to the Central Government, the State Government and the organizations mentioned in Section 22 (3), the provisions of Section 22 (3-A) would be applicable only to the Government of A.P., or any local authority. It would not be applicable to the Central Government - The State is relying upon the provisions of Rule 18 (3) (b) to contend that any payments made in excess of tax liability of the dealer, by a Government authority, can be forfeited under Rule 18 (3) (b). A closer look at Rule 18 would show that the said Rule specifically stipulates that it would be applicable for payments made under Section 22 (3-A). As the Central Government is not covered under Section 22 (3-A), the provisions of Rule 18 (3) would not be applicable. Consequently, the State cannot refuse refund of amounts to the credit of the petitioner on the ground of Rule 18 (3) of the VAT Rules. Concluson - Excess tax credits arising from contracts executed for the Central Government are refundable and cannot be forfeited under the provisions invoked by the Revenue in this case. This writ petition is allowed setting aside the assessment order, dated 30.10.2023, passed by the 3rd respondent with a consequential direction to the 3rd respondent to refund the amount of Rs. 20,19,710/- along with interest under the provisions of the APVAT Act and the Rules made thereunder.

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• Indian Laws

• 2025 (4) TMI 1179
  Offence under Section 8(c) of the NDPS Act - production, manufacture, possession, sale, purchase, transport, warehouse, use, consumption, import inter-State, export inter-State, import into India, export from India or transhipment of a psychotropic substance which is listed under the Schedule to the NDPS Act but not mentioned under Schedule I of the NDPS Rules - Doctrine of prospective overruling - Prospective effect of decision of this Court in Sanjeev V. Deshpande [ 2014 (8) TMI 695 - SUPREME COURT] - seeking for discharge/deletion of a particular offence from the charge under Section 216 CrPC, once, the charge has been framed by a competent court under Section 228 of the CrPC. HELD THAT:- It cannot be said that the dealing in of Buprenorphine Hydrochloride would not amount to an offence under Section 8 of the NDPS Act owing to the fact that the said psychotropic substance only finds mention under the Schedule to the NDPS Act and is not listed under Schedule I of the NDPS Rules. There exists nothing to indicate that Rules 53 and 64 of the NDPS Rules respectively, are the governing rules in their respective Chapters, more so, when the language of the other rules in Chapters VI and VII respectively, are clear about their application to the substances mentioned under the Schedule to the Act as well. All the psychotropic substances mentioned under the Schedule to the Act have potential grave and harmful consequences to the individual and the society at large, when abused. Some psychotropic substances mentioned under the Schedule to the NDPS Act are also mentioned under the D C Act and the rules framed thereunder - the mere mention of certain psychotropic substances under the D C regime would not take them away from the purview of the NDPS Act, if they are also mentioned under the Schedule to the NDPS Act. There arises no occasion for us to declare the interpretation given to Section 8 of the NDPS Act and the relevant NDPS Rules, by the decision in Sanjeev V. Deshpande [ 2014 (8) TMI 695 - SUPREME COURT] , as prospectively applicable. There exists no overwhelming reason for us to do so. On the other hand, in order to meet the ends of justice and with a view to ensure that public interest is safeguarded and to give effect to the salutary object behind the enactment of the NDPS Act, the decision must necessarily be retrospectively applicable. This Court in Sanjeev V. Deshpande, perhaps, did not think fit to confine or restrict its interpretation of Section 8 of the NDPS Act to future cases only. The retrospective application of the dictum in Sanjeev V. Deshpande would not give rise to any implications as regards the rights of the accused persons under Article 20(1) of the Constitution. This is because while overruling the decision in Rajesh Kumar Gupta [ 2006 (11) TMI 542 - SUPREME COURT] , the decision in Sanjeev V. Deshpande has only clarified the law as it stood from its inception and given true effect to the meaning assigned to the relevant provisions of the NDPS Act and the Rules thereunder, by the lawmakers. The same cannot be construed as creating a new offence. Additionally, the overruling of a decision cannot be equated to the enactment of an ex-post facto law, especially when the interpretation given to the statute/provision in the overruling decision is not a novel and unreasonably expansive interpretation of the provision in question such that it was completely unforseeable - there remains no doubt that giving retrospective effect to the decision in Sanjeev V. Deshpande would be necessary considering the facts and circumstances in the background of which are called upon to adjudicate these matters. Both the Trial Court and the High Court committed an error in holding that the offence under the provisions of the NDPS Act is not made out. The Trial Courts in both the appeals could also not have discharged/deleted the charge under the NDPS Act framed against the accused persons while disposing of an application under Section 216 CrPC. This is something not permissible within criminal procedure and the High Court unfortunately failed to take notice of this aspect. Conclusion - The Trial Courts and High Courts erred in holding that offences under the NDPS Act were not made out and in permitting discharge or deletion of charges under Section 216 CrPC. The impugned orders passed by the High Court are set aside - appeal allowed.

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• 2025 (4) TMI 1178
  Liability under the Employees State Insurance Act, 1948 - post of General Manager or Principal Employer - case of appellant is that the liability was on the Company for making payments to the ESIC, therefore, he could not be charged, much less convicted, for an offence under the Act - HELD THAT:- The High Court rightly indicated that non-remittance of the contribution deducted from the salary of an employee to the ESIC is a offence under Section 85(a) of the Act and punishable under Section 85(i)(a) of the Act but the Trial Court had imposed a lesser sentence as provided under Section 85(i)(b) of the Act. This is clearly borne out by Section 85(i)(a) of the Act which provides for a sentence of not less than one year imprisonment and fine of Rs.10,000/-, since the amount had been deducted from the salaries of the employees and not paid, which is the fact in the present case, whereas under Section 85(i)(b) of the Act, sentence of imprisonment is not less than six months and with fine of Rs.5,000/- in other cases. Of course, the Trial Court could have given a lesser sentence even for an offence under Section 85(i)(a) of the Act under the proviso to Section 85(i) of the Act. Overall, the High Court did not feel the necessity to interfere in the lesser sentence awarded by the Trial Court. Thus, we find that the conviction and the sentence does not require any interference, much less in the present case, where despite contributions having been deducted from the employees salaries, they were not deposited with the ESIC. In A K Abdul Samad [ 2016 (3) TMI 1488 - SUPREME COURT] , the question before the Court was as to whether discretion had been granted only to reduce the sentence of imprisonment for a term lesser than six months or whether it encompassed discretion to levy no fine or a fine of less than five thousand rupees. Answering the said question, the Court held that There is no discretion of awarding less than the specified fee, under the main provision. It is only the proviso which is in the nature of an exception whereunder the court is vested with discretion limited to imposition of imprisonment for a lesser term. Conspicuously, no words are found in the proviso for imposing a lesser fine than that of five thousand rupees. In such a situation the intention of the legislature is clear and brooks no interpretation. The law is well settled that when the wordings of the statute are clear, no interpretation is required unless there is a requirement of saving the provisions from vice of unconstitutionality or absurdity. Neither of the twin situations is attracted herein. The decision in A K Abdul Samad, thus, is of no help to the Appellant. While the fine awarded and affirmed by the Courts below is upheld, we are not convinced to substitute the term of imprisonment to be operative only for a day till the rising of the Court. The Appellant is directed to undergo the sentence after setting off the period already undergone, if any and pay the fine, if not already paid, as awarded by the Trial Court. The exemption from surrendering granted by order dated 18.03.2024 stands withdrawn. The appellant shall surrender before the Trial Court within two weeks from today. Conclusion - i) The Appellant is rightly held liable as the General Manager and Principal Employer under the Act. ii) The Appellant s conviction under Section 85(i)(b) of the Act for failure to remit deducted ESI contributions is justified and sustained. Appeal dismissed.

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• 2025 (4) TMI 1177
  Vicariously liability of Hospital (Appellant) and the doctor (Respondent No. 2) for medical negligence resulting in the death of the complainant s son - challenge is on the ground that the liability as has been imposed upon the Appellant and the proforma Respondent No.2, on the ground of negligence without there being any medical literature or evidence of any expert substantiating the said findings deserve to be set aside - HELD THAT:- It is apparent that there is ample evidences as well as records to indicate that there was indeed medical negligence at the end of the Appellant and Respondent no.2. Quantum of compensation as has been assessed and awarded by the NCDRC - HELD THAT:- As is apparent from the pleadings, the son of the complainant was 27 years of age at the time of his death, which is the prime age when a person starts his career and has his whole life to look forward to. Considering that the individual was a B.Tech graduate and he was working in a soap factory, albeit drawing a modest salary. In the beginning, when youngsters start their career, generally, humble short steps are taken. It is evident that he was financially supporting the family and had the qualification and potentiality for earning higher income in future. Therefore, it cannot be said that the compensation as has been assessed by NCDRC is without any basis or the quantum is on extremely higher side. As a matter of fact, the NCDRC has fixed the compensation at Rs.5 lakhs to be paid by Dr. J.V.S. Vidyasagar, proforma Respondent no.2 who has accepted the said judgment and has even deposited the said amount. As regards the amount of Rs. 15 lakhs is concerned which is assessed to be paid as compensation by the Appellant, it would not be out of way to mention here that while issuing notice in the present case, this Court had directed the Appellant to deposit an amount of Rs.10 lakhs in the Registry of this Court to be invested in short term fixed deposit to be renewed from time to time - the amount of Rs.10 lakhs as stands deposited in this Court by the Appellant along with the accrued interest thereon would serve the interest of justice and the said amount of compensation would suffice as far as the liability of the appellant hospital is concerned. Conclusion - Considering that the individual was a B.Tech graduate and he was working in a soap factory, albeit drawing a modest salary, the compensation as has been assessed by NCDRC is fully justified calling for no interference by this Court. The decision of the NCDRC is upheld however, the amount of compensation with regard to the liability of the appellant hospital would stand at Rs.10 lakhs along with accrued interest. The amount so deposited be disbursed to Respondent no.1 the complainant on an application to be submitted to the concerned Registrar of this Court - appeal disposed off.

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• 2025 (4) TMI 1176
  Dishonour of Cheque - challenge to setting aside of conviction and sentence of the Respondents accused - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- This Court is of the view that the consensual terms are fair and reasonable. Accordingly, the Special Leave Petition is disposed of.

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• 2025 (4) TMI 1175
  Dishonour of Cheque - legally enforceable debt or liability - scope of an appeal against an acquittal - Section 138 of the Negotiable Instruments Act, 1881 - HELD THAT:- It would be worthwhile to note the scope of Appeal against Acquittal and the law with regard to scope of interference by Appellate Court in an Appeal against acquittal. A recent decision of the Division Bench of this Court in the case of ABC, Through Police Station, Chhavani, Nashik Vs. The State of Maharashtra and Anr. ABC, VERSUS THE STATE OF MAHARASHTRA, RAOSAHEB BABURAO MALI [ 2024 (6) TMI 1453 - BOMBAY HIGH COURT] , has after analysing the settled law on the above issue laid down the scope for interference in Appeal against Acquittal. This is because the trial before the trial court on remand by the session court was specifically required to determine the existence of a legally enforceable debt. In the Suit plaint Complainant has stated that the claim arises out of a mutually agreed settlement between parties as on 30.06.1996 after accounts between the Plaintiff and the Defendants that is Complainant and Accused were worked out mutually between them and the said statement of claim was prepared. If this statement of cause of action is true then Exhibit-A appended to the Suit plaint ought to have been signed and acknowledged by both the parties. However it doesn t bear signature of either parties. It is merely prepared by the Complainant on his own. There is no evidence or fact stated about how and whether the mutual settlement occurred or took place. Same cause of Action is pleaded by Complainant in the present case also when he is called upon to prove his legally enforceable debt or liability of the Accused towards him. The present appeal is dependent upon the strength of the evidence of the Complainant to prove the legally enforceable debt. In the present case it is seen that substantial witness action is led by both sides. What is crucial to be noted is the fact that claim of Complainant is for a substantial tenure of time on the ground that he brought good amount of business to the Accused and was to get 0.5 percent of the total turnover in addition to Rs. 3,000/- per month as salary. Complainant was employee of Accused and his firm, Meera Investments is an admitted fact - The question as to why did the Complainant choose to pay the third parties is left clearly unanswered. This goes to the root of the matter to prove legally enforceable debt, if any from the Accused. The Complainant admittedly was not the agent of the Accused so as to foist the liability on Accused. Complainant in his deposition claimed to be a guarantor but once again his claim is a bald claim without any deed of guarantee between the parties. Complainant did not choose to make the Accused aware even once that he was guarantor / surety for the investors over the years. Hence his case is unbelievable. It is seen that Complainant issued the legal notice under Section 138 in the year 1996 raising the demand of Rs. 49,83,836/- under the two cheques. It is seen that immediately thereafter in the reply to the said notice Accused raises his defense of the issue of the two cheques by fraudulent means. Complainant thereafter issued a rejoinder. In the notice and the rejoinder Complainant does not state the cause of action namely the details of the eleven (11) heads under which the twin cheques were issued by the Accused to him. There is admittedly no evidence produced to arrive at the said statements and liability. Hence, if it is Complainant s case that the cheques were issued for a legally enforceable debt, it was his duty to prove the same. There is nothing on record placed by the Complainant to show that the amounts stated in Exhibit P11 to Exhibit P13 are arrived at pursuant to a legally enforceable debt. Exhibit P11 to Exhibit: P-13 do not prove the case of the Complainant. Mere exhibition of the said Computer statement prepared by the Complainant do not prove the contents of the said document - The Complainant has failed to prove the existence of any legally enforceable debt and on the contrary. Accused in his defence by leading cogent evidence has clearly rebutted the Complainant s case. On the basis of material on record, it cannot be said that Complainant has proved his case beyond all reasonable doubts. The burden on the Accused to prove his case only to the extent of preponderance of probability is clearly proved in the present case even though there may be a probability that Complainant brought business to the Accused or the Accused received loans from third parties. Admittedly there is no documentary evidence placed on record to that effect by Complainant. That apart Complainant had no right whatsoever to recover the amounts given by him on his own volition to third parties from the Accused. Complainant was neither guarantor nor surety for these amounts. Accused has clearly set and proved the probability that the Complainant through his nexus/ employment with the firm of the Accused obtained the two cheques signed by the Accused which is believable and therefore the onus of proving that the two cheques were issued towards a legally enforceable debt and liability was on the Complainant. The Complainant has failed to discharge this burden. Therefore the case of the Complainant- Appellant before me fails miserably. Conclusion - The Complainant failed to prove the existence of a legally enforceable debt, and the Accused successfully rebutted the presumption under Section 139. Therefore, the acquittal by the trial court is upheld. Appeal dismissed.

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