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Showing 261 to 280 of 1182 Records
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2025 (2) TMI 922
Validity of the additions made u/s 68 - whether ITAT has only considered cash credit to be taxable under the provisions of section 68, whereas the provision covers within its ambit ‘any sum credited in the Books? - whether order of Ld. ITAT is erroneous and untenable in law as it has failed to consider that the impugned transaction is a colorable devise to avoid tax liability and the facts clearly show that the assessee party has made the credit/ debit entries in contravention of provisions laid by the Act?
HELD THAT:- As undisputed that the shares had been issued without any monetary consideration. The respondent appears to have debited the goodwill account of the company and made a corresponding credit to the share capital account for the purposes of allotment of shares to Mr. Kaushik. It was in the aforesaid light that it had taken the position that it was merely a book entry and thus, would not have fallen within the ambit of Section 68.
the view as expressed by the CIT(A) and which came to be affirmed by the Tribunal does not merit any interference bearing in mind the undisputed fact that the transaction did not represent an actual receipt of any cash in the hands of the assessee company. In absence of any such consideration having entered the books, the provisions of Section 68 were clearly not attracted. The assessee had in any case satisfactorily explained the circumstances attached to the book entry in question. Decided in favour of assessee.
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2025 (2) TMI 921
Addition of bogus expense - CIT(A) confirmed the addition @ 20% of the bogus expense - contention of the assessee that identical addition in respect of sister concern of the assessee was restricted to the extent of 12.5% only - HELD THAT:- We are of the considered opinion that the Ld. CIT(A) had correctly appreciated the facts of the case and restricted the addition to the extent of 20% of the subcontract amount which was reasonable considering the fact that documentary evidence for a return of sub-contract amount in cash to the extent of 4.21 Crores only was found in this case. Accordingly, the order of the Ld. CIT(A) is upheld. The grounds taken by the Revenue are dismissed.
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2025 (2) TMI 920
Addition u/s. 69A - unexplained jewellery found in locker - locker was in the joint name of the assessee and her daughter - At the time of search assessee had given a categorical statement that the jewellery in the said locker belonged to her daughter, who was now a resident of UK - HELD THAT:- Daughter of the assessee filed an Affidavit stating that the jewellery seized from the locker belonged to her and that the same was received from her parents and relatives at the time of her marriage, on the occasion of birth of her children and on other occasion etc.
Nothing has been brought on record to dispute the veracity of the statement of the assessee or the contents of the Affidavit filed by the daughter of the assessee. The only reason for the addition was that since the locker was being regularly operated by the assessee, the natural presumption would be that the jewellery found in said locker, belonged to the assessee only.
Looking into the instant facts, no such presumption can necessarily be drawn, looking into the fact that the locker in question was jointly held by the assessee and her daughter.
Daughter of the assessee was residing in UK and hence it was practically not possible for her to operate the locker and further, the daughter of the assessee also filed an Affidavit stating that the jewellery impounded from the locker belonged to her and her family members. Accordingly, looking into the assessee’s set of facts, in our considered view, the additions made by the AO are liable to be deleted. Appeal of the assessee is allowed.
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2025 (2) TMI 919
Revision u/s 263 - issues not verified by AO during the course of assessment proceedings on Disallowance u/s 14A read with Rule 8D and Payment of compensation being allegedly not allowable as deduction u/s 28 to 44DA - HELD THAT:- AO has made disallowance which stands deleted by the CIT(A). Since the issue has already been examined by the AO, adjudicated by the Ld. CIT(A), the same issue cannot be again taken up the PCIT u/s 263. Further, disallowance u/s 14A cannot be made for investments made in partnership firm and the profit earned thereof. Even on merits, we find no prejudice is caused to the Revenue and hence the order of the Ld. PCIT on this issue cannot be upheld.
Compensation paid - PCIT held that assessee had neither disallowed such expense nor the Assessing Officer had verified the expense as it is not allowable within the provisions of section 28 to 44DA - Compensation expenses paid in year under consideration is on account of contractual payment and not on account of any violation of any law and hence, no disallowance in this regard is warranted under the provisions of the Act.
Since no disallowance is warranted as enumerated above, the assessment order passed u/s 143(3) of the Act by Assessing Officer can neither be held as 'erroneous' nor 'prejudicial or fatal to the interest of revenue'. We find that the AO has also examined the issue during the assessment proceedings as found in the notice issued u/s 142(1). Therefore, twin pre-conditions to assume revisionary jurisdiction u/s 263 of the Act are not satisfied in the issue on hand.
Appeal of the assessee is allowed.
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2025 (2) TMI 918
Ex-parte order - non-compliance to the hearing notices issued - HELD THAT:- CIT(A) proceeded to pass impugned order on 03.12.2024 ex-parte, even before the time for furnishing response by the assessee has not expired. Moreover, we find notices of hearing sent from Office of the First Appellate Authority was not sent to e-mail ID shown in Form No.35. Therefore, there was non-compliance to the hearing notices issued from the Office of First Appellate Authority, which had resulted in ex-parte order.
Denial of concessional rate of tax at 22% as per provisions of section 115BAA - delay in filing Form 10-IC - HELD THAT:- CBDT in its Circular No.6 of 2022 dated 17.03.2022 had stated that delay in filing Form No.10-IC, as per Rule 21AE of the Rules for the previous year relevant to AY 2020-21 is condoned in cases where following conditions are satisfied:-
i) The return of income for AY 2020-21 has been filed on or before the due date specified u/s. 139(1) of the Act;
ii) The assessee company has opted for taxation u/s/115BAA of the Act in (e) of ‘Filing Status’ in Part A-‘GEN’ of the Form of Return of Income ITR-6; and
iii) Form 10-IC is filed electronically on or before 30.06.2022 or 3 months from the end of the month in which this Circular is issued, whichever is later.”
As assessee had satisfied all the aforesaid three conditions mentioned in the Board’s Circular No.6 of 2022 dated 17.03.2022. In view of the assessee satisfying all the three conditions mentioned above, delay in filing Form 10-IC stands condoned and accordingly, the assessee would be entitled to be taxed at concessional rate of tax at 22% as per provisions of section 115BAA - Appeal filed by the assessee is allowed.
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2025 (2) TMI 917
Penalty order u/s 271AAB - Disclosure made in search proceedings - DR held that in case there was no search, no disclosure would have been made and a similar mention is also made in the assessment order - AR re-emphasized the fact that the assessee had voluntarily disclosed the income and the income was not represented by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other transactions found in the course of search - HELD THAT:- As gone through the statement of Poonam Mohta recorded on 08.05.2015, produced in the course of proceeding before us and a perusal of the same shows that though certain valuables were found in the locker of the assessee however, the assessee had not made any disclosure in the statement recorded while the locker no. 932A was subjected to search and seizure on 08.05.2020.
Hence, as the disclosure did not relate to the finding of the search and was made suo motu and though the Ld. AO has referred to certain seized documents in the penalty order, but he has not corelated how the disclosure of Rs. 50 lakhs had any reference to the seized documents; therefore, the disclosure could not be treated as undisclosed income for the purpose of imposition of penalty u/s 271AAB and the penalty imposed is liable to be cancelled. Hence, Ground No. 1 is allowed and the penalty is hereby cancelled.
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2025 (2) TMI 916
Addition made on account of short deduction of TDS - payments were made to M/s Steel Authority for supply of railways tracks in terms of contracts or for purchase of goods - CIT(A) deleted addition - HELD THAT:- We are in agreement of the finding of the Ld. CIT(A) that no liability for deduction of tax arises in respect of the contract related to supply of the material. As there is no provision of the Act that mandates for deduction of tax on the payment made for supply of material during the relevant year, we hold accordingly.
However, in respect of the short deduction of deduction and interest, it is the case of the assessee that short deduction was due to exclusion of the service tax component as per the CBDT Circular.
This fact is required to be verified at the end of the assessing authority. Therefore, the impugned order on the short deduction of tax is set aside and the issue is restored to the AO who would verify from the accounts of the assessee whether the short deduction was due to the exclusion of the service tax component and if so, same shall be decided in the light of the CBDT Circular No. 01/2014 dated 13.01.2014 (F.No 275/59/20124T(B). All the grounds of appeal of the Revenue are disposed off in the terms of the above.
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2025 (2) TMI 915
Validity of assessment u/s 153A - invalid approval u/s 153D - HELD THAT:- Violation of the mandatory provisions of section 153D of the Act which require the approval to be issued after application of mind to the assessment record and incriminating materials. We find that the case of the assessee is squarely covered on facts with the case relied by the learned DR in the case of Uttarkhand Uthan Samiti [2020 (4) TMI 878 - ITAT DELHI]. Further, it is now a settled provision of law that exercise of powers u/s 153D have to pass the scrutiny that the same were not exercised mechanically. The appeal of the assessee is allowed.
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2025 (2) TMI 914
Penalty levied u/s. 270A - under reporting of income - assessee didn’t file Form 68 before AO - assessee’s failure to explain on merits against disallowance/addition made in the assessment order - Pursuant to survey u/s. 133A return was selected for scrutiny and the AO made an addition - HELD THAT:- Since, the assessee offered Rs. 30 lakhs under PMGKY scheme, the net-assessed income was computed at Rs. 25,46,812/-. Pursuant thereto, assessee paid tax & interest within the period/time given in the assessment order/demand notice and thus it is an undisputed fact that the assessee has fulfilled conditions prescribed u/s. 270AA of the Act for claiming immunity from imposition of penalty.
Assessee has fulfilled both the conditions for grant of immunity as stipulated under clause (a) & (b) of sub-section (1) of section 270AA of the Act, which are substantive in nature except didn’t file Form 68 before AO. Therefore, in substance assessee was entitled for claiming immunity from imposition of penalty u/s. 270A of the Act. In this context, it has to be kept in mind that courts are meant to do substantial justice between the parties, and that technical rules or procedure should not be given precedence over doing substantial justice.
Undoubtedly, justice according to the law, doesn’t merely mean technical justice, but means that law is to be administered to advance justice [refer the decision Pankaj Bhai Rameshbhai Zalavadiya v. Jethabhai Kalabhai Zalavadiya [2017 (10) TMI 1397 - SUPREME COURT]]. In the given factual background, according to us, non-filing of Form 68 is only a technical or venial breach which should not snatch away the substantive right to claim immunity from levy of penalty, which assessee got vested with on fulfillment of substantive conditions mandated in Clause (a) & (b) of sub-section (1) of section u/s. 270AA of the Act.
Thus no penalty ought to have been levied u/s. 270A of the Act for under-reporting of income - Decided in favour of assessee.
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2025 (2) TMI 913
TDS u/s 194H - disallowance of discount extended to prepaid distributors u/s. 40(a)(i) - assessee has paid sum to its various distributors of prepaid SIM cards/recharge coupons as amount represents the difference between MRP of the talk time and prepaid connections and the price at which these are transferred to pre-paid distributors and discount in nature - HELD THAT:- Whether TDS is to be deducted by the cellular mobile services company on the discount given to distributor has now been settled by the decision of Bharti Cellular Ltd [2024 (3) TMI 41 - SUPREME COURT] wherein as held that Section 194H of the Act is not applicable in respect of payment made by the distributor/franchise - Thus, disallowances made by AO is not sustainable. The ground of appeal is accordingly allowed.
Disallowance of year-end accruals u/s. 40(a)(ia) - AO has disallowed the year end provision debited on the last day of accounting - HELD THAT:- Provision has been reversed and credited back on the next day and such expenditure has been debited on the basis of actual bill and TDS deducted, wherever applicable in the next financial year. We find that the issue whether TDS is to be deducted on year-end provisions which is reversed on the first day of the subsequent year has been decided in the case of Subex Ltd. [2023 (1) TMI 778 - KARNATAKA HIGH COURT] held if no income is attributable to the payee there is no liability to deduct tax at source in the hands of the tax deductor. The existence or absence of entries in the books of accounts is not decisive or conclusive factor in deciding the right of the assessee claiming deduction. See KEDARNATH JUTE MANUFACTURING COMPANY LIMITED [1971 (8) TMI 10 - SUPREME COURT] - Decided in favour of assessee.
Nature of expenses - Disallowance of club expenses - AO has made disallowance of entry fee/subscription charges paid by the assessee on the ground that the said expenditure is capital expenditure - HELD THAT:- The assessee has incurred club expenses and claimed as revenue expenditure. The A.O without examining the nature of expenditure has held it capital expenditure.
As decided in the case Ingersoll-Rand India Ltd. [2020 (4) TMI 550 - KARNATAKA HIGH COURT] has held that expenditure spend on club expenses are revenue in nature. Respectfully following the decision of Hon’ble Karnataka High Court, supra, the addition made on disallowance of club expenses is deleted. The ground of appeal is accordingly deleted.
Appeal filed by the assessee is allowed.
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2025 (2) TMI 912
Rejection of application for registration u/s 12AA - Assessee trust was required to file application under clause (iii) of section 12A(1)(ac) of the IT Act but due to inadvertent error the application was filed under clause (vi) of section 12A(1)(ac) - assessee is a non-profit company registered u/s 8 of Companies Act -
HELD THAT:- As relying on Raj Krishan Jain Charitable Trust [2024 (6) TMI 1400 - ITAT DELHI] and in the light of the circular no 7/2024 issued by CBDT on 25-04-2024, i.e. after the filing of application by the assessee wherein the issue of mentioning wrong section code has been addressed / considered as a common & frequent error and also observing the fact that in the instant case CIT, Exemption, Pune has not given any adverse finding on merits of the case, against the assessee, accordingly considering the totality of facts of the case and in the interest of justice we deem it fit to set-aside the order passed by Ld. CIT, Exemption, Pune and direct him to treat the application already filed by the assessee as under clause (iii) of section 12A(1)(ac) of the IT Act instead of under clause (vi) of section 12A(1)(ac) of the IT Act and decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is allowed for statistical purposes.
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2025 (2) TMI 911
Seeking unconditional release of the wrist watch detained - non-issuance of a show cause notice and personal hearing to the petitioner - violation of principles of natural justice - HELD THAT:- Though the Petitioner ought to have disclosed the fact that he had submitted the documents in response to email dated 20th February, 2024, in a belated manner, however, the fact that show cause notice was not issued in this case cannot be ignored by the Court.
Following the decision in Amit Kumar [2025 (2) TMI 385 - DELHI HIGH COURT] the detention of the subject goods is itself liable to be set aside due to non-issuance of show cause notice, and the goods are accordingly directed to be released to the Petitioner within a period of two weeks.
Conclusion - Detention is liable to be set aside due to non-issuance of show cause notice.
Petition allowed.
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2025 (2) TMI 910
Seeking to quash the impugned Order - misdeclaration of export goods - Narrow Woven Fabrics - HELD THAT:- Since, both the show cause notice and the final order that arise from the said show cause notice have already been quashed by the Court qua the main company i.e., M/s J.R. International, the Order In Original qua the Petitioner would also be liable to be quashed.
In fact, this Court has recently in Shri Balaji Enterprises v. Additional Director General New Delhi & Ors. [2024 (12) TMI 1208 - DELHI HIGH COURT] also followed a similar rationale as the Coordinate Bench of this Court.
The SCN along with Order In Original emanating therefrom are quashed - Petition disposed off.
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2025 (2) TMI 909
Seeking release of the currency which was seized by the Respondent/Department from the Petitioner - HELD THAT:- Since the clear instructions are that the Department has challenged the Order-in-Original dated 29th March, 2024, the Commissioner (Appeals) must now adjudicate the appeal in accordance with the law. Until such adjudication, the prayer for the release of the currency cannot be granted - In terms of Section 128A(4A), the Commissioner (Appeals) is to decide every appeal where it is possible to do so within a period of six months from the date when it has been filed. Accordingly, the Commissioner (Appeals) in the present case shall decide the appeal as per the provisions of the Act within a period of four months.
Petition disposed off.
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2025 (2) TMI 908
Imposition of penalties u/s 114(i), 114(iii), and 114AA of the Customs Act, 1962 - Siphoning off duty drawback from the exchequer by export of inferior quality of readymade garments at highly overvalued price - HELD THAT:- There is no denial of the Revenue that appellant obtained all the requisite documents vis-à-vis the identity and the place of existence by verifying said KYC documents with the respective departments.
It is also observed that all the consignments were allowed to be exported after scrutiny of the documents which were filed along with shipping bills. Even the physical examination of the goods was conducted without any objection been raised at the time of clearance of the export consignment neither with respect to the quality nor the value of the exported garments. There is also no denial to the fact that with respect to the impugned exports the appellant filed eight shipping bills on behalf of M/s. Kenstar Overseas and six shipping bills on behalf of M/s. Alpha Impex in the month of May-June 2009 - Apparently and admittedly the impugned show cause notice was issued on 19.05.2015 i.e. six year after the impugned export consignments got cleared by the appellant.
There are no denial of Shri Vinod Kumar Mulani, the beneficial owner of the exports, who is the alleged mastermind behind the fictitious firms fraudulently exporting the inferior quality of garments to receive ineligible duty drawback, that the appellant was authorized to clear the impugned export consignments.
This Tribunal in the case of M/s. Mauli Worldwide Logistics Vs. Commissioner of Customs, New Delhi (Airport and General) [2022 (7) TMI 368 - CESTAT NEW DELHI], has also held that the fact that appellant had carried out due diligence is consistent with the fact that the KYC documents were obtained by him as CHA and were submitted by him before the Commissioner. Same is the fact of the present case. Hence the decision is squarely applicable in the present case also.
Hon’ble Delhi High Court in the case of Kunal Travels [2017 (3) TMI 1494 - DELHI HIGH COURT] has held that the CHA is not an inspector to weigh the genuineness of the transaction. It is a processing agent of documents with respect of clearance of goods through customs house - all CHA need not to sit as an examiner or supervisor to such authorities issuing the documents to the importer/exporter as the case may be. Even the CHALR Regulations do not expect the CHA to physically examine the genuineness vis-à-vis the identity of his client and his existence at the address mentioned on the documents which are otherwise being verified by CHA as genuine. The onus of CHA therefore cannot be extended to verify that the officers issuing those documents/certify/registration whether or not have correctly issued the same.
There is no evidence produced by the department to prove the allegations of lack due diligence on part of the CHA nor of abatement in impugned illegal exports. There is not even any evidence on record to prove that the appellant had derived any benefit out of alleged violation by the exporters or out of availment of ineligible drawback - There is no corroboration to that effect despite the department had done a meticulous enquiry with the banks of the exporter firms but no single documentary evidence could have been produced showing any remittance to the appellant out of the amounts received by those firms in the name of duty drawbacks.
Conclusion - In absence of any evidence to support the allegations of the show cause notice against the appellant, the penalty against the appellant has wrongly been imposed.
Appeal allowed.
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2025 (2) TMI 907
Valuation of imported goods - redetermination of duty - enhancement of value - Whether the Revenue has rightly re-assessed and enhanced the value of the imported goods without passing any speaking order but based on the fact that the differential duty has voluntarily been paid by the appellant? - HELD THAT:- Once the value is declared in the Bill of Entry filed in terms of Section 46 of Customs Act 1962, the proper officer has to assess the duty and the assessment has to be made in terms of Section 17 of the Customs Act, 1962. The joint reading of 5 sub-sections in the said provision reflects that the importer/exporter initially follow a process of self-assessment of declaration of the transaction value [Section 17(1)]. The proper office is entitled to examine veracity of self declaration that is made [Section 17(2)]. For the purpose, the proper officer is required to call upon the importer or the exporter, as the case may be, to produce further document or information based whereupon the correct duty leviable on the imported/exported goods should be ascertained [Section 17(3)].
In addition to enquiry, as required under Rule 12 of Valuation Rules the enquiry prescribed under Section 17(4) of the Customs Act is required to be conducted by the proper officer to arrive at the reassessed value. It is seen from a perusal of Section 17(4) of the Customs Act that the proper officer can re-assess the duty leviable, after verification, examination or testing of the goods or otherwise if it is found that the self-assessment was not done correctly - where the proper officer is not satisfied and has reasonable doubt about the truth or accuracy of the value so declared. It is deemed that the transactional value of such imported goods cannot be determined under the provision of sub-rule (1) of Rule 3 of the 2007 Rules. Clause (iii) of Explanation to Rule 12 states that the proper officer can on “certain reasons” raise doubts about the truth or accuracy of declared value.
The transaction value declared by the importer should form the basis of assessment unless the same is rejected for the reasons set out in Rule 12 of the Customs Valuation Rules. The Customs Valuation Rules outlines the step-by-step methodology to be adopted for re-determination of the assessable value in certain cases. The primary requirement for re-determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value.
Conclusion - i) Where the importer confirms his acceptance in writing about the re-assessment arrived at after following the procedure of Section 17(4), it is only in that situation, that the proper officer would stand relieved of the obligation of passing his speaking order in respect of such assessment. The mere waiver will not get covered under the admission as termed by statute in Section 17(5) of the Customs Act. ii) Apparently and admittedly no enquiry as is required under Rule 12 of Valuation Rules has been conducted by the department prior rejecting the said value. Nor any exercise was undertaken as is required under Section 4 of Section 17 of the Customs Act. It is only the NIDB data which was relied upon by the department to reject the value declared in Bills of Entry and to re-assess the value of the goods at a higher price.
Confirmation of differential duty is, therefore, held violative of Section 17(4) of Customs Act and of Rule 12 of Customs Valuation Rules and hence is liable to be set aside - appeal allowed.
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2025 (2) TMI 906
Public Interest Litigation or not - alleged role, irregularities, and misconduct on the part of the IRP - Siphoning of funds by the ex-promoters and directors of Three C Shelters Pvt. Ltd. - whether the submissions on the part of the learned counsels for the parties should at all be considered by this Court sitting in writ jurisdiction under section 226 of the Constitution of India, 1950? - HELD THAT:- Unhesitatingly, this Court finds no ground to recall the order dated 02.02.2024. The issues relating to the genuineness of the IRP report dated 09.08.2023, which has been espoused on behalf of the petitioner, respondent No. 11/Orris and respondent No. 4/Greenopolis Welfare Confederation on one side, and contested by applicants/respondents No. 12 and 13, along with respondent No. 5/Greenopolis Welfare Association on the other side, are complex set of facts which need to be addressed by the NCLT in view of the directions of the Supreme Court.
There is no gainsaying that the NCLT is seized of the matter with regard to the CIRP proceedings pertaining to respondent No. 3/TCSPL, which will invariably delve into all the relevant aspects of the matter. At the cost of repetition, a Monitoring Committee has already been constituted by the NCLT, which will naturally examine the complex factual issues and facts raised by the parties, including the successive reports by the three IRPs appointed including the present one, besides the revival of respondent No. 3/ TCSPL so as to provide some relief to the petitioner and homebuyers.
The bottom line is that the petitioner is espousing her personal cause and, in doing so, has also espoused the cause of the similarly placed investors/claimants/homebuyers, who form a distinct class and whose long-promised dream of owning residential flats remains unfulfilled, as construction has been stalled for over thirteen years now - The modus operandi adopted by them in defrauding the homebuyers has been exposed even in the above referred directions by the Allahabad High Court, the foot prints of which are evidently visible in the instant matter too.
This Court is not by-passing the jurisdiction of the NCLT to determine the fate of the respondent no. 3/TCSPL, which is involved in CIRP, nor is it usurping any power under Section 63 of the IBC. However, it is undeniable that the investigation by respondents No. 1 and 2 is progressing at a snail's pace qua respondent No. 3/TCSPL and its ex-promoters & directors, marked by tardiness and a lack of urgency, which is unacceptable in law and prejudicial to the interests of the homebuyers.
Section 212(3) of the Companies Act, 2013 provides that the Central Government has the power to order investigation in respect of any company which it deems necessary and also to order special investigations in respect of other concerns related to corporate law. The Central Government may appoint any authority, officer or agency to conduct the investigations and to report its findings to the Central Government with the primary objective of investigating frauds and offences relating to a company under section 447 of the Act. The entire setting of the present matter, compels this Court to direct the Central Government to entrust the investigation to the SFIO as regards the role of the ex-promoters and directors of respondent no. 3/TCSPL is concerned - in the instant matter, the entire facts and circumstances presented go beyond mere assumptions, surmises or conjectures. The stark fact is that the Greenopolis project has been abandoned by the respondent Nos. 6-10/ex-promoters and directors after siphoning of funds generated directly through respondent no. 3/TCSPL and the petitioner as well as those who are similarly placed investors/claimants/homebuyers are the victims at their hands, which is an undisputed proposition.
Conclusion - i) The investigation into the affairs of TCSPL and its ex-promoters is necessary to protect the interests of the homebuyers and ascertain the extent of the fraudulent activities. ii) The ACE Group is not to be investigated by the SFIO, but the Registrar of Companies will continue to examine their transactions with TCSPL. iii) The interim order remains in effect, with modifications to exclude certain parties from the SFIO investigation. iv) The NCLT will continue to handle the CIRP, with the Monitoring Committee overseeing the process.
Application disposed off.
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2025 (2) TMI 905
Seeking dismissal of Section 7 application filed by the Appellant seeking initiation of Corporate Insolvency Resolution Proceedings (CIRP) of the Respondent-Corporate Debtor - credit facility provided by the Appellant to the Respondent was in the nature of a financial debt falling within the meaning of Section 5(8) of the IBC or not.
Whether the infusion of funds by the Appellant in the Corporate Debtor was in the nature of financial debt and, if so, whether the Appellant, being a financial creditor, was entitled to file the Section 7 application? - HELD THAT:- For a debt to be treated as financial debt there has to be an element of disbursal of money and the disbursal must be against the consideration for time value of money. The concept of time value of money has been further explained to also include a transaction which does not necessarily culminate into interest being paid in respect of money that has been borrowed.
The nature of underlying transaction is therefore a determinative factor in deciding whether infusion of funds can be classified as financial debt or not. To find out whether any element of commercial borrowing for time value of money is noticeable in the transactions which have taken place in the present facts of the case, it is required to study the various relevant clauses of the MoA since it is the MoA which constitutes the underlying edifice of the transactions.
Whether money disbursed by the Appellant to the Corporate Debtor to operationalize its business can be treated as a financial debt? - HELD THAT:- In the present facts of the case, there is sufficient material on record to prove that there was disbursal of funds by the Appellant to the Corporate Debtor in their account. The bank transaction details have been placed at page 248-284 of Appeal Paper Book (APB) to substantiate their contention that money was actually disbursed to the Corporate Debtor, which was in dire financial straits, towards working capital to make the Corporate Debtor operational - an abstract of commission on sales received by the Appellant from the Corporate Debtor for Rs 2.95 Cr. along with tax invoices have been placed from pages 366 to 375 of APB. It has also been indicated that an amount of Rs 11.54 lakhs was still due from the Corporate Debtor towards commission. This leaves no doubts that there was fund infusion into the Corporate Debtor by the Appellant.
Whether this disbursal was made by the Appellant against consideration for time value of money? - HELD THAT:- It is an undisputed fact that payment of interest against disbursal was not specifically mentioned in the clauses. Be that as it may, the IBC does not provide for any prescriptive requirement for the Financial Creditor to place on record formal written agreements/documents between the parties to establish that the disbursal made was in the form of loan with interest. It would be misconceived to hold that the fund infusion did not qualify to be a financial debt merely because loan component was not explicitly mentioned in the MoA. It is a well settled proposition of law that interest on loan is not the only binding criterion for determining time value of money. The question whether a credit facility without charging interest can be considered to be a financial debt in terms of Section 5(8) of the IBC is no longer res integra and has already been decided by the Hon’ble Supreme Court in Orator judgment [2021 (8) TMI 314 - SUPREME COURT] to hold that the definition of “financial debt” in Section 5(8) IBC does not expressly exclude an interest free loan. Viewed against this backdrop, the contention of the Respondent that the disbursal of the fund was bereft of loan component and hence not in the nature of a financial debt does not have legs to stand on.
Whether the disbursal made by the Appellant in the present context reflected consideration for time value of money? - HELD THAT:- Time value of money is not only a regular or timely return received for the duration for which the amount is disbursed as an amount in addition to the principal but also covers any other form of benefit or value accruing to the creditor as a return for providing money for a long duration. It is required to see if the Appellant had envisioned enhancement of economic prospect in return for the funds disbursed and if so then the sum advanced would qualify to entail time value of money and acquire the colour and character of commercial borrowing.
The disbursals clearly display commercial effect of borrowing. In our considered opinion the Adjudicating Authority committed an error in holding the transaction to be a business arrangement and non-suiting of the Appellant on the ground of not being a financial creditor. The Appellant has been wrongfully ousted by the Adjudicating Authority on the ground that the Appellant was not a financial creditor and the infusion of fund was not in the nature of financial debt. There are no hesitation to observe that this is a case of financial debt and the Appellant is clearly a financial creditor in terms of statutory provisions of IBC.
The Appellant has brought on record the Section 7 application filed by them. In Part-IV of the Section 7 application, the amount claimed to be in default as well as date of default has been clearly depicted therein. Part-IV also contains the pleadings and submissions made pertaining to debt and default. In Form-1 filed by the Appellant under Section 7 of IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, the principal amount of loan advanced as ‘Financial Assistance’ by the Appellant is shown as Rs.39,84,72,111/- and the amount claimed in default to be Rs.42,47,32,067/- including interest - The Adjudicating Authority is obliged to determine whether default has occurred and whether the debt which was due and payable has remained unpaid. Clearly enough, the rival contentions of the two parties with respect to default in repayment of debt has not been considered and adjudicated upon by the Adjudicating Authority.
Conclusion - The infusion of funds by the Appellant constituted a financial debt under the IBC, and the Appellant was a financial creditor entitled to file a Section 7 application. The absence of an interest clause does not preclude a transaction from being a financial debt if it has the commercial effect of borrowing.
The matter remanded to the Adjudicating Authority to exercise its satisfaction as to whether financial debt has crossed the threshold limits and has become due and payable and basis these findings decide to accept or refuse admission of the Section 7 application of the Appellant - appeal allowed by way of remand.
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2025 (2) TMI 904
Money Laundering - offence under Section 3 of the Prevention of Money Laundering Act, 2002 - appellant had been in custody for over a year with the trial not likely to conclude within a reasonable time - there are 225 witnesses cited, out of which only 1 has been examined - HELD THAT:- Reliance placed in the decision of this Court in the case of V.Senthil Balaji v. Deputy Director, Directorate of Enforcement [2024 (9) TMI 1497 - SUPREME COURT] where it was held that 'the appellant has been incarcerated for 15 months or more for the offence punishable under the PMLA. In the facts of the case, the trial of the scheduled offences and, consequently, the PMLA offence is not likely to be completed in three to four years or even more. If the appellant's detention is continued, it will amount to an infringement of his fundamental right under Article 21 of the Constitution of India of speedy trial.'
Attention is invited to a decision of a coordinate Bench in the case of Union of India through the Assistant Director v. Kanhaiya Prasad [2025 (2) TMI 563 - SUPREME COURT]. After having perused the judgment, it is found that this was a case where the decisions of this Court in the case of Union of India v. K.A.Najeeb [2021 (2) TMI 1212 - SUPREME COURT] and in the case of V.Senthil Balaji were not applicable on facts. Perhaps that is the reason why these decisions were not placed before the coordinate Bench.
The appellant shall be produced before the Special Court within a maximum period of one week from today. The Special Court shall enlarge the appellant on bail on appropriate terms and conditions including the condition of regularly and punctually attending the Special Court and cooperating with the Special Court for early disposal of the case.
Conclusion - The principles laid down in previous cases were not applicable in that specific case, leading to the cancellation of bail. The appellant is directed to be produced before the Special Court within a week for bail to be granted on appropriate terms and conditions, including surrendering any passport and cooperating with the court for the early disposal of the case.
Appeal allowed.
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2025 (2) TMI 903
Money Laundering - Proceeds of crime - Seeking grant of Regular bail - alleged illegal extortion on Coal Transportation - Sections 3 & 4 of the Prevention of Money Laundering Act, 2002 (PMLA, 2002) - fulfilment of twin conditions of Section 45 of the PMLA or not - HELD THAT:- From perusal of the ECIR, it is prima facie vivid that present applicant with connivance of Saumya Chaurasia, Sameer Vishnoi and other senior bureaucrats and politicians hatched a conspiracy of illegal extortion of Rs. 25/- per tonne on Coal which was transported from SECL mines & other places and the same was being carried out with the active connivance of State Mining Officials, District Officials, by using a wide network of agents which were stationed in the coal belt by maintaining a close liaison with the administration. This coal syndicate had extorted illegal levy of Rs. 540 crores approximately from Coal businessmen/ transporters and other sectors from July, 2020 to June, 2022 - The proceeds of crime generated by this syndicate have been utilized for political funding, making bribes to Government Officials, purchasing of properties including coal washeries by the co-accused persons, Smt. Saumya Chaurasia in the name of their benamidars and members of syndicate & their family members. The ECIR further prima facie reveals that the present applicant has played specific role in commission of offence.
The investigation revealed that the applicant was actively involved in formation of syndicate, arranged meetings with coal businessmen, coal transporters etc., collected illegal cash from businessmen, distribution of illegal cash to different persons on direction of Suryakant Tiwari - The investigation conducted under PMLA, 2002 revealed that the applicant has received cash as salary out of the illegal extortion money as in his statement under Section 50 of PMLA, 2002 has stated that apart from salary he also used to receive bonus in cash from Suryakant Tiwari at regular intervals. Hence, the applicant is in possession of proceeds of crime which have been utilized by him in purchasing immovable properties on his name and on the name of his wife Smt. Talvinder Chandrakar. Thus, he was involved himself in the acquisition of proceeds of crime.
The applicant is unable to fulfill twin conditions for grant of bail as per Section 45 of the PMLA, 2002 and also considering the submission that the applicant has not prima facie reversed the burden of proof and dislodged the prosecution case which is mandatory requirement to get bail. Hon'ble the Supreme Court in case of Directorate of Enforcement Vs. Aditya Tripathi [2023 (5) TMI 527 - SUPREME COURT] has held that 'the High Court has neither considered the rigour of Section 45 of the PML Act, 2002 nor has considered the seriousness of the offences alleged against accused for the scheduled offences under the PML Act, 2002 and the High Court has not at all considered the fact that the investigation by the Enforcement Directorate for the scheduled offences under the PML Act, 2002 is still going on and therefore, the impugned orders passed by the High Court enlarging respective respondent No. 1 on bail are unsustainable.'
Conclusion - Considering the ECIR and other material placed on record, which prima facie shows involvement of the applicant in crime in question and also considering the law laid down by Hon’ble the Supreme Court, it is quite vivid that the applicant is unable to fulfill the twin conditions for grant of bail as provided under Section 45 of the PMLA, 2002. Thus, the Point is answered against the applicant.
The bail application filed under Section 483 of the Bhartiya Nagrik Suraksha Sanhita, 2023 is liable to be and is hereby rejected.
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