TMI Tax Updates - e-Newsletter
May 7, 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. Harmonizing Minimum Tax Computation under India's Income Tax Laws : Clause 206(2)-(5) of the Income-tax Bill, 2025 Vs. Section 115JB and Section 115JC of the Income-tax Act, 1961

  Bills:

2. imposition of Minimum Alternate Tax (MAT) and Alternate Minimum Tax (AMT) on various classes of taxpayers : Clause 206(1) of the Income Tax Bill, 2025 Vs. Section 115JA of the Income-tax Act, 1961

  Bills:

3. Residency Reclassification and Tax Implications for Foreign Companies : Clause 220 of the Income Tax Bill, 2025 Vs. Section 115JH of the Income Tax Act, 1961

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4. Special provisions regarding conversion of an Indian branch of a foreign company, into a subsidiary Indian company : Clause 219 of the Income Tax Bill, 2025 Vs. Section 115JG of the Income-tax Act, 1961

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5. Special vs. General Tax Regimes for NRIs : Clause 218 of Income Tax Bill, 2025 Vs. Section 115I of Income-tax Act, 1961

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6. Concessional Tax Regime to non-resident Indians (NRIs) become residents of India : Clause 217 of the Income Tax Bill, 2025, Vs. Section 115H of the Income-tax Act, 1961

  Bills:

Articles

1. LLP Annual Return Filing for New LLPs

   By: Ishita Ramani

2. e-SHRAM – A PLATFORM FOR UNORGANISED WORKERS

   By: DR.MARIAPPAN GOVINDARAJAN

3. Chapter XXI: The Companies (Authorized to Register) Rules, 2014

   By: YAGAY andSUN

4. Chapter XXII: The Companies (Registration of Foreign Companies) Rules, 2014

   By: YAGAY andSUN

5. ECO BRICKS - A SOLUTION TO PLASTIC POLLUTION{Recycling, Environment Protection and Healing Climate Change}

   By: YAGAY andSUN

6. 🚧 ROADS FROM PLASTIC WASTE – A SMART SOLUTION TO PLASTIC POLLUTION.

   By: YAGAY andSUN

7. How Corporates can reduce both Logistics Cost and carbon footprints by opting green supply chain!

   By: YAGAY andSUN

8. Tooling Up for the Future: India’s Path to $25 Billion in Exports(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=2123437)

   By: YAGAY andSUN

9. 🔥 Fire Safety Standards in India: A Complete Overview.

   By: YAGAY andSUN

10. 🌿 Encroachment on Designated Green Belts: A Growing Urban oncern{Environment Protection & Healing Climate Change}

   By: YAGAY andSUN

11. 🧾 FSSAI's Norms for Street Food Vendors in India.

   By: YAGAY andSUN

12. Guardians of Environment and Climate Change in India.

   By: YAGAY andSUN

News

1. CBI arrests an Inspector of Central Goods & Service Tax (CGST), Regional GST Office, Prayagraj (UP) for demanding and accepting bribe amount of Rs. 10,000/- from the complainant

2. Pak to increase defence spending by 18 pc in budget: report

3. India, UK clinch ‘landmark’ Free Trade Agreement

4. Indian Institute of Foreign Trade receives approval to establish off-campus centre at GIFT City, Gujarat

5. Secretary, DFS reviews performance of Regional Rural Banks (RRBs) and progress on amalgamation plan

6. India’s first mortgage backed Pass Through Certificates listed on the National Stock Exchange

Notifications

GST - States

1. 601-F.T. - dated 16-4-2025 - West Bengal SGST

West Bengal Goods and Services Tax (Third Amendment) Rules, 2025

Money Laundering

2. S.O. 2012(E) - dated 5-5-2025 - PMLA

Reserve Bank of India has permits authorization to four additional entities to perform authentication under the Aadhaar Act for the purposes of section 11A of the Money laundering Act, 2002

SEBI

3. SEBI/LAD-NRO/GN/2025/247 - dated 5-5-2025 - SEBI

Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) (Amendment) Regulations, 2025

Circulars / Instructions / Orders

SEBI

1. SEBI/HO/MIRSD/PODFATF/P/CIR/2025/62 - dated 6-5-2025

Publishing Investor Charter for KYC (Know Your Client) Registration Agencies (KRAs) on their Websites

GST

2. Instruction No. 05/2025 - dated 2-5-2025

Timely production of records/information for audit

DGFT

3. 04/2025-26 - dated 6-5-2025

Amendments to Para 10.10 of the Handbook of Procedures (HBP) 2023 - Revised Framework for Stock & Sale Authorization of SCOMET Items

4. 05/2025-26 - dated 6-5-2025

Reinstatement and amendment of Standard Input Output Norms (SION C-888)

Highlights / Catch Notes

GST

• Tax Recovery Halted: Statutory Timelines Violated, Premature Action Rejected, Full Refund and Interest Ordered Under CGST Act Sections 78 and 79

  Case-Laws - HC : HC held that the recovery of tax dues from the petitioner was premature and in violation of statutory provisions under Sections 78 and 79 of CGST/BGST Act, 2017. The Recovery Officer was mandated to wait three months from the date of service order before initiating recovery proceedings. The impugned orders rejecting Input Tax Credit claims were set aside due to retrospective amendment under Section 16(5). Respondent authorities were directed to refund the recovered amount of Rs.50,75,214/- within two weeks, with 12% per annum interest in case of default. The second appeal could not be preferred as the Tribunal was not constituted, effectively suspending the appeal timeline.
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• High Court Quashes GST Registration Cancellation Order for Lack of Reasoning and Procedural Fairness Under FORM GST REG-19

  Case-Laws - HC : HC allowed the writ petition challenging GST registration cancellation, finding the impugned order non-speaking and passed without application of mind. The court held that the order violates principles of natural justice by failing to record reasons for cancellation as mandated under FORM GST REG-19. Despite delayed filing, the court granted the petitioner one month to either seek details of outstanding dues from the proper officer or pursue alternative remedies, emphasizing that procedural defects cannot result in arbitrary administrative actions affecting taxpayer rights.
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• GST Registration Cancellation Order Struck Down for Lack of Reasoned Explanation and Procedural Fairness Under Rule 21

  Case-Laws - HC : HC nullified the GST registration cancellation order due to procedural irregularities. The order was found non-speaking and passed without proper application of mind, violating principles of natural justice. The Proper Officer failed to record specific reasons for cancellation, which is mandatory under GST regulations. Cancellation would impose adverse civil consequences on the petitioner without justification. The impugned order was consequently set aside, emphasizing the requirement of a reasoned, fair administrative process in tax registration cancellations. The court underscored that statutory authorities must provide transparent rationale when taking actions affecting an individual's business rights.
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• Petitioner Granted One-Month Reply Window Despite SCN Upload, Adjudication Order Conditionally Permitted Under Pending Supreme Court Review

  Case-Laws - HC : HC determined that despite the SCN being uploaded on the additional notices tab, the petitioner was permitted to file a reply within one month. The adjudicating authority shall pass an order after hearing the petitioner, with the caveat that the adjudication order remains subject to the pending SLP in SC challenging the impugned notification. The court followed precedential reasoning from prior GST-related jurisprudence, specifically referencing a recent decision involving procedural natural justice principles. The petition was ultimately disposed of, allowing procedural remedies while maintaining conditional administrative adjudication.
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• Tax Dispute Resolution: Petitioner Granted 30-Day Window to Submit Comprehensive Evidence Supporting Reply to Show Cause Notice

  Case-Laws - HC : HC adjudicates tax dispute, granting petitioner 30 days to submit comprehensive documentary evidence supporting reply to show cause notice. The court mandates adjudicating authority to thoroughly review petitioner's original reply and hearing submissions, requiring issuance of a substantive order after considering fresh documentary evidence. The procedural challenge concerning time limits under Section 73 of CGST Act is resolved by providing additional opportunity for evidentiary submission, thereby ensuring due process and fair administrative adjudication.
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• Legal Challenge Succeeds: GST Portal Notice Invalidated Due to Improper Service and Technical Procedural Errors

  Case-Laws - HC : HC found a violation of natural justice where respondent issued a show cause notice via GST Portal without direct service, preventing petitioner's reply. Despite initially being disinclined to set aside the impugned order, the court recognized technical errors in GSTR-3B table entries (6A and 6I). Consequently, the HC set aside the order dated 26.12.2024 and remanded the matter for reconsideration, providing petitioner an opportunity to rectify the incorrect value specifications. The rectification application's rejection order was set aside, effectively allowing the petition through procedural remand.
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• Leasehold Rights Transfer for Industrial Land Exempt from GST Under Section 7(1)(a) of GST Act

  Case-Laws - HC : HC ruled that transfer of leasehold rights for industrial land is not subject to GST taxation. The court found that assignment/sale of leasehold rights constitutes transfer of immovable property benefits, which falls outside GST applicability under Section 7(1)(a) of GST Act, read with Schedule II and Schedule III. Relying on precedent in Gujarat Chamber of Commerce case, the court quashed the respondent's order, effectively exempting the transaction from GST levy. Petition was allowed, establishing that such leasehold rights transfer does not trigger GST obligations.
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• Input Tax Credit Claim Upheld: Section 16(4) Validates Retrospective Credit for Financial Years 2017-2021

  Case-Laws - HC : HC allowed the writ petition, setting aside the appeal and assessment orders. The court held that under Section 16(4) of the CGST Act, the petitioner was entitled to claim input tax credit for Financial Years 2017-2018 through 2020-2021, which was previously rejected. The credit was sought within the prescribed timeline of 30.11.2021, specifically on 31.10.2019. The matter was remanded to the first respondent to issue a fresh assessment order in accordance with Section 16(5) of the CGST Act, ensuring compliance with statutory provisions governing input tax credit claims.
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• Tax Assessment Orders Invalidated for Exceeding Four-Year Limitation Period Under Rule 14A (5A) for 2014-2017

  Case-Laws - HC : HC held that assessment orders for tax years 2014-2015 and 2016-2017 were time-barred under Rule 14A (5A), which mandates assessments must be completed within four years from the date of return filing. The court invalidated assessment orders dated 12.07.2021 and 30.07.2021 as they exceeded the statutory limitation period. For 2015-2016, only assessments related to March were deemed valid, with the court emphasizing that the limitation period is mandatory and binding. The judgment reinforces strict adherence to prescribed time limits in tax assessment proceedings, effectively setting aside assessments conducted beyond the prescribed four-year window.
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• Refund Claim Upheld: Arbitrary Filing Date Restriction Invalidated, Statutory Two-Year Limitation Period Preserved for Input Tax Credit

  Case-Laws - HC : HC ruled that the petitioner's refund claim for accumulated ITC was improperly rejected. Applying precedent from Patanjali case, the court held that filing a refund application after 18.07.2022 does not automatically disqualify an applicant from seeking refund within the statutory two-year limitation period. The notification creating an arbitrary classification among assessees based on filing date was deemed invalid. Consequently, the court quashed the rejection orders dated 24.02.2023 and 30.01.2023, thereby allowing the petitioner's refund claim and upholding the statutory right to file claims within the prescribed time limit.
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• Challenging Tax Refund Appeals: Commissioner's Appeal Does Not Automatically Suspend Refund Order Under Section 54(11)

  Case-Laws - HC : HC held that a Commissioner's mere decision to appeal does not automatically suspend a refund order under Section 54(11). The plain statutory language indicates that the pendency of an appeal does not ipso facto place the principal order in abeyance. Relying on prior judicial precedent, the court mandated that the revenue authority must comply with the appellate order and release the refund amount with applicable statutory interest. The writ petition was consequently allowed, directing immediate refund to the petitioner.
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Income Tax

• New ITR-2 Form for AY 2025-26 Introduced with Amendments to Income-tax Rules, Effective April 1st

  Notifications : CBDT has issued Notification No. 43/2025 amending the Income-tax Rules, 1962, specifically notifying the ITR-2 Form for Assessment Year 2025-26. The amendment, effective from 1st April 2025, substitutes the existing Form ITR-2 in Appendix-II of the Income-tax Rules. The notification, issued under sections 139 and 295 of the Income-tax Act, 1961, was signed by the Under Secretary of Tax Policy and Legislation, with an explanatory memorandum certifying no adverse impact on taxpayers from the retrospective implementation.
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• Expenditure for Subsidiary Wind-Up Deemed Commercially Expedient, Deductions Allowed Under Established Legal Principles

  Case-Laws - HC : HC upheld the assessee's claim for deduction of expenditure incurred to maintain and wind up a subsidiary company, finding it permissible under commercial expediency. The court determined that the expenditure was aimed at protecting the company's assets, goodwill, and reputation. Regarding book profit calculation under Section 115J, the HC affirmed that the Assessing Officer lacks jurisdiction to reassess the company's income beyond the specified statutory adjustments. The court ruled in favor of the assessee on both substantial questions of law, allowing the claimed deductions and maintaining the profit computation as originally submitted.
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• Tax Exemption Upheld for ST Member Under Section 10(26) Based on Community Status and Service Location

  Case-Laws - HC : HC affirmed the tax exemption claim for a ST member under Section 10(26) of Income Tax Act, 1961. The respondent, belonging to a Rajasthan ST community, was entitled to income tax exemption for the period posted in Agartala, Tripura, a specified area. The court relied on prior Full Bench precedent and upheld the Single Judge's order, confirming the respondent's right to tax refund based on his ST status and service location, thereby rejecting appellants' challenge to the exemption claim.
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• Income Tax Department Authorized to Seize and Retain Cash Under Section 132A, Upholds Statutory Power in Financial Investigation

  Case-Laws - HC : HC held that the Income Tax Department is entitled to requisition and retain seized cash under Section 132A of the Income Tax Act. Following investigation of theft involving Rs. 1,40,00,000/-, the department identified an unexplained amount of Rs. 35,28,000/-. The court allowed the department's petition, quashing previous judicial orders and permitting the department to deposit the entire seized amount of Rs. 35,28,000/- in the P.D. Account within four weeks, in accordance with Income Tax Act provisions and rules, thereby affirming the department's statutory authority to manage seized funds during ongoing proceedings.
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• Gold Parcel Seizure Insufficient Evidence: Tax Authorities Cannot Reopen Assessments Without Substantive Proof of Income Discrepancy

  Case-Laws - HC : HC held that the seizure of a 49 gms gold parcel dispatched for job work does not constitute incriminating material for reopening assessments for AYs 2012-13 to 2017-18. The Assessing Officer (AO) failed to record satisfaction that the seized material bore any nexus with the petitioner's income. Following precedents, the court set aside the impugned notices and order under Section 153C, thereby allowing the assessee's appeal and quashing proceedings initiated without valid justification.
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• Income Tax Authorities Granted Broad Powers to Review, Rectify, and Enhance Tax Assessments Under Sections 251, 154, and 263

  Case-Laws - HC : HC held that the Appellate Commissioner possesses wide powers under Section 251 to review issues from the original Assessment Order, including those addressed in Section 154 rectification applications. The court clarified two key principles: (i) when no appeal is pending, the Income Tax Department can invoke Section 263 revision powers if a Section 154 order is erroneous, and (ii) during pending appeals, the Appellate Commissioner can enhance tax liability for assessment order subjects. Regarding unabsorbed depreciation, the court interpreted Section 32(2) to allow set-off against business profits or other assessable income for the relevant assessment year. The matter was remanded for reassessment, with directions to complete proceedings within six months and recompute Minimum Alternate Tax calculations accurately.
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• Farmer's Agricultural Income Claim Rejected: ITAT Confirms 15% Expense Limit for Diverse Crop Cultivation on 40 Acres

  Case-Laws - AT : ITAT dismisses agricultural income challenge, upholding CIT(A)'s 15% expense limitation. The tribunal found the assessee's agricultural activities legitimate, involving diverse crops like mango, wheat, and chickpea across 40 acres with minimal labor and owned water facilities. Sale receipts were undisputed, with average agricultural income per acre ranging from Rs. 25,000 to Rs. 30,000. The tribunal concluded that the CIT(A)'s expense restriction was reasonable and rejected the assessee's appeal against the income assessment, affirming the original determination of agricultural income and associated expenses.
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• Income Tax Tribunal Reclassifies Property Rental as Business Income, Upholds Penalties for Undisclosed Investments Under Sections 24(a), 69B, and 115BBE

  Case-Laws - AT : ITAT ruled on multiple taxation issues involving property rental and undisclosed investments. The tribunal determined that the assessee's property rental activities constituted a business income rather than house property income, thereby disallowing deductions under section 24(a). The tribunal upheld the Assessing Officer's treatment of unrecorded property investments under section 69B and section 115BBE, rejecting the assessee's explanations as insufficient. The tribunal found the assessee's conduct indicated an intention to conceal income. Regarding section 68 charges, the matter was restored to the AO with directions to verify creditor payment evidence. Ultimately, the assessee's appeal was partly allowed, with key taxation treatments confirmed and limited relief granted.
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• Taxpayer Fails to Prove Ownership of Silver Bars, Income Tax Tribunal Upholds Original Assessment of Undisclosed Assets

  Case-Laws - AT : ITAT dismissed the assessee's appeal, confirming the addition of silver bars to the assessee's taxable income. The tribunal rejected the assessee's claim that the silver belonged to his brother, finding no credible supporting evidence. The affidavit submitted post-search was deemed an afterthought, lacking substantive proof. Given the absence of corroborative documentation and the consistent assessment by the Assessing Officer, the tribunal upheld the original addition, determining the silver bars were part of the assessee's undisclosed assets. The appeal was consequently dismissed, with the CIT(A)'s order remaining intact.
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• ITAT Quashes Assessment Order for Procedural Defects in Merger Case, Upholds Taxpayer's Right to Fair Hearing

  Case-Laws - AT : ITAT allowed the assessee's appeal, finding significant legal defects in the assessment order. Despite clear intimation of company amalgamation and submission of NCLT order, the AO issued notice u/s 143(2) against a non-existent entity. The TPO and AO both ignored repeated communications about the merger, rendering the assessment order legally invalid. The tribunal held that passing a final assessment order against a non-existent corporate entity constitutes a fundamental procedural error, thereby rendering the entire proceedings null and void. The assessment order was consequently set aside due to substantial legal infirmity in the administrative process.
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• Scrap Dealer Wins Partial Tax Relief: Unexplained Cash Deposits Limited to Rs. 5 Lakhs Under Section 115BBE

  Case-Laws - AT : ITAT partially allowed the assessee's appeal, restricting unexplained cash deposit additions to Rs. 5 lakhs. The tribunal found no merit in the revenue department's contentions, noting that section 115BBE was inapplicable for FY 2016-17 transactions. The enhancement made by NFAC was quashed due to lack of opportunity of being heard. The tribunal concluded that cash sales were routine for a scrap dealer and the additions were not substantiated by cogent evidence. The AO was directed to delete balance additions beyond Rs. 5 lakhs, effectively providing partial relief to the assessee.
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• Tax Collector Wins Appeal: Illness-Induced Delay Deemed Reasonable, Penalty Overturned Under Section 271CA

  Case-Laws - AT : ITAT adjudicated a tax collection at source (TCS) penalty case involving coal and lignite sales. The tribunal found reasonable cause under Section 273B for delayed TCS compliance, noting the taxpayer had ultimately deposited Rs. 87,750/- in the same financial year and the delay resulted from personnel illness. Despite initial non-compliance, the taxpayer submitted challans evidencing payment. The tribunal set aside the CIT(A) order, directing the Assessing Officer to delete the penalty levy, thereby accepting the taxpayer's contention of reasonable cause and procedural irregularity. The penalty under Section 271CA was consequently quashed.
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• Tax Dispute: Penalty Confirmed for Income Concealment and Inaccurate Reporting Under Section 271(1)(c)

  Case-Laws - AT : ITAT upheld penalty proceedings under Section 271(1)(c) for concealment and furnishing inaccurate income particulars. The tribunal confirmed CIT's revision order under Section 263, directing reassessment of penalty for professional fees, receipts from a specific company, and personal expenses. The tribunal found no justification to interfere with the original order and dismissed the assessee's appeal, affirming that penalty proceedings were appropriately revived in accordance with Section 275 of the Income Tax Act, 1961, and consistent with prior judicial precedents regarding revenue interests.
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• Income Tax Assessment Invalidated: Search Proceedings Flawed, Professional Income Correctly Determined Under Section 44ADA

  Case-Laws - AT : ITAT held that proceedings u/s 153A were invalid due to unabated assessment year and absence of incriminating material during search. The Tribunal determined the income received from hospital was professional fees, not salary, thereby entitling the assessee to presumptive taxation under section 44ADA. The AO's arbitrary rejection of 50% income computation was deemed incorrect. CIT(A)'s dismissal without merit-based adjudication was overturned. The assessment order was quashed, and the assessee's appeal was allowed, establishing the professional nature of income and proper tax treatment.
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• Income Tax Dispute: Tribunal Orders Fresh Assessment with Comprehensive Evidence Review Under Section 69A

  Case-Laws - AT : ITAT remanded the assessment proceedings, setting aside CIT(A)'s order for all four tax years. The appellate tribunal found insufficient evidentiary basis for income addition under Section 69A and directed the Assessing Officer (AO) to conduct a fresh examination. The AO must provide substantive materials forming the basis of income addition, afford the assessee a hearing, and make a legally appropriate determination after comprehensive review and cooperation from the assessee.
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• Transfer Pricing Dispute Resolved: TNMM Validated as Superior Method for Benchmarking International Goods Sale Transactions

  Case-Laws - AT : The ITAT determined that the Transactional Net Margin Method (TNMM) was the most appropriate method for benchmarking international goods sale/export transactions, overturning the revenue's Comparable Uncontrolled Price (CUP) method. The transfer pricing adjustment was set aside, and the matter was remanded to the assessing officer to determine the arm's length price using TNMM. The appellate tribunal ruled in favor of the assessee, allowing the appeal for statistical purposes and directing a fresh assessment based on the approved transfer pricing methodology.
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• Transfer Pricing Order Quashed: Invalid Assessment Beyond Time Limit Invalidates Extended Deadline for Final Order Under Sections 143(3) and 144C

  Case-Laws - AT : ITAT held that the transfer pricing order dated 12.01.2015 merged into the final assessment order dated 20.04.2015 for AY 2011-12 was quashed by CIT(A) as being passed in a non-existent entity's name. Consequently, the extended 12-month time limit for passing the final assessment order was invalid. The assessment order dated 12.05.2015 was beyond the prescribed limitation period of 31.03.2015. The tribunal ruled that the impugned order under section 143(3) read with section 144C was time-barred and liable to be quashed, thereby allowing the assessee's challenge to the order's validity.
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• Tax Reassessment Quashed: Revenue's Limitation Period Extension Rejected, Procedural Defects Invalidate Assessment Order

  Case-Laws - AT : ITAT adjudicated a tax assessment reopening dispute, holding that revenue's attempt to extend limitation period through reminder communications was invalid. The tribunal rejected revenue's contention regarding 14-day response timeline, finding it inconsistent with judicial precedent. The assessment order was quashed as the section 148A(d) order and section 148 notice were issued beyond the prescribed limitation period. The tribunal determined that without a valid notice, the assessment order dated 30.05.2023 could not be sustained. The decision was rendered in favor of the assessee, effectively nullifying the tax department's reassessment proceedings due to procedural non-compliance with statutory timelines.
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Customs

• Pakistani and Indian Nationals Allowed Limited Cross-Border Movement at Attari Border Under Modified Travel Directive

  Circulars : The MHA issued a modified directive regarding the Integrated Check Post (ICP) at Attari, partially reversing an earlier closure order. The revised instruction permits Pakistani nationals with valid travel documents to exit India into Pakistan, and Indian nationals with valid travel documents to enter India from Pakistan through the Attari border crossing, effective immediately and until further notice. The modification allows limited cross-border movement for specific nationalities with proper documentation, maintaining restricted transit protocols at the international border checkpoint.
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• Streamlined Electronic Clearance for Gems, Jewellery, Samples, and Prototypes via Personal Carriage Effective May 2025

  Circulars : CBIC issued Public Notice 06/2025 harmonizing procedures for import/export of gems, jewellery, samples, and prototypes through personal carriage. The directive introduces electronic processing of Bill of Entry/Shipping Bill for such transactions at specified airports from 01.05.2025, covering personal carriage modes for commercial cargo. Key provisions include simplified regulatory framework for facilitating export/import, enabling electronic filing, and providing clearance options at airports or factory premises for eligible importers/exporters. The procedure aims to promote ease of doing business and reduce transaction time and costs for high-end manufacturing and jewellery sectors.
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• Government Blocks All Trade with Pakistan, Enforcing Comprehensive Import Ban Under Foreign Trade Policy Para 2.20A

  Circulars : The GoI through CBIC issued Instruction No. 07/2025-Customs prohibiting direct or indirect import and transit of all goods originating from or exported from Pakistan, effective immediately. The prohibition applies to all goods, regardless of importability status, and is implemented under Para 2.20A of Foreign Trade Policy (FTP), 2023. The restriction is imposed on national security and public policy grounds, with any exceptions requiring prior governmental approval. The directive mandates immediate implementation by all customs authorities, emphasizing comprehensive trade restrictions against Pakistani goods until further governmental orders.
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• Revenue Dispute Highlights Procedural Complexities in Show Cause Notice Adjudication, SC Suspends HC Order for Comprehensive Review

  Case-Laws - SC : SC adjudicated a revenue dispute concerning delayed adjudication, where the HC previously quashed a Show Cause Notice (SCN) based on procedural inefficiencies. The Revenue's counsel argued against the HC's order, emphasizing potential administrative complications. The SC temporarily suspended the HC's judgment and deferred potential hearings on similar matters before the Tribunal or HCs, pending a comprehensive review. The court strategically scheduled the matter for post-summer vacation consideration, indicating a nuanced approach to resolving the procedural and substantive legal issues underlying the case.
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State GST

• Tax Relief Roadmap: Section 128A Clarifies Eligibility and Compliance for KGST Taxpayers with Flexible Verification Process

  Circulars : The Karnataka Commercial Taxes Dept issued a circular clarifying the implementation of Section 128A of the KGST Act, 2017. The circular addresses two key issues: (1) taxpayers who paid tax through GSTR-3B before 1st November 2024 remain eligible for benefits under Section 128A, subject to proper officer verification; and (2) for notices/orders spanning periods partially within and outside Section 128A's scope, taxpayers can file specific forms (SPL-01/SPL-02) after paying tax liability for covered periods, with appellate authorities empowered to adjudicate remaining periods appropriately. The circular aims to provide clarity and uniformity in implementing the statutory provisions.
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IBC

• Government Dues Extinguished: Authorized Representative's Writ Validates Insolvency Resolution Plan Under IBC Section 31(1)

  Case-Laws - HC : HC held that the writ petition filed through an authorized representative is maintainable. Regarding recovery of government dues, the court followed the SC's ruling in Ghanshyam Mishra & Sons Pvt. Ltd., affirming that statutory dues not included in the resolution plan under IBC Section 31(1) stand extinguished. The municipal corporation's claims for property tax dues prior to the resolution plan's approval are consequently nullified. For the period subsequent to plan approval, the corporation retains the right to assess dues in accordance with applicable legal provisions. The petition was accordingly disposed of.
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Indian Laws

• Advance Money Forfeiture Upheld: Reciprocal Contract Obligations Protect Vendor's Interests Against Purchaser's Breach

  Case-Laws - SC : SC held that the Rs. 20,00,000/- advance money was essentially earnest money serving as a guarantee for contract performance. The forfeiture clause was fair and equitable, imposing reciprocal obligations on both parties. Since the purchaser breached the contract by failing to pay the balance sale consideration within four months, the vendors were justified in forfeiting the entire advance amount. The court emphasized that the forfeiture was legitimate as the financial losses incurred by the vendors exceeded the forfeited sum. No amendment seeking refund was sought at trial or appellate stages, rendering such relief unavailable. The appeal was consequently dismissed, upholding the vendors' right to forfeit the advance money.
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PMLA

• Money Laundering Case: Fraudulent Bank Transaction Funds Deemed Proceeds of Crime Under PMLA Section 2(u)

  Case-Laws - AT : The AT held that the Rs. 2.02 crores earnest money received by the appellant, originating from fraudulent bank transactions, constitutes 'proceeds of crime' under PMLA, 2002. Despite the amount being contractually forfeited prior to attachment, the PMLA provisions supersede contractual agreements. The tribunal rejected arguments regarding retrospective application, emphasizing that money laundering assessment depends on actions post-scheduled offence inclusion. The court affirmed the directorate's power to attach proceeds of crime, irrespective of the current holder's knowledge or direct involvement in the predicate offense. Consequently, the appeal was dismissed, validating the provisional attachment order.
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VAT

• Bank's Prior Security Interest Trumps Tax Authority's Unregistered Attachment Under SARFAESI Section 26-E

  Case-Laws - HC : HC determined that the petitioner-bank's security interest, registered with CERSAI on 09/07/2011 prior to the tax authority's attachment order on 02/02/2015, takes precedence under Section 26-E of SARFAESI Act. The tax authorities failed to register their attachment order or provide sufficient notice, rendering their claim invalid. Consequently, the bank's e-auction sale to the respondent was upheld, granting clear title to the secured asset free from any encumbrances claimed by the tax authorities. The petition was allowed, establishing the bank's priority over the state's dues.
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Case Laws:

• GST

• 2025 (5) TMI 391
  Constitutionality of Section 174(2) of the Kerala State GST Act - HELD THAT:- The Division Bench in Sheen Golden Jewels (India) Pvt. Ltd. v. The State Tax Officer (IB) and Another [ 2022 (12) TMI 1137 - KERALA HIGH COURT ] while dismissing the batch of Writ Appeals held that The Constitutionality of Section 174(2) of the KSGST Act and legality of notices/ orders as the case may be impugned in the respective Writ Appeals are answered against the dealers, hence necessarily, the Writ Appeals must fail and accordingly are dismissed. The same direction as issued by the Division Bench in Sheen Golden Jewels (India) Pvt. Ltd. will apply mutatis mutandis to this appeal as well. This Writ Appeal is therefore dismissed by leaving open the liberty granted by the Division Bench above, to the appellants herein as well.

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• 2025 (5) TMI 387
  Challenge to SCN - submissions have been made that the circular, which has formed the basis for issuing the show cause notice and the adjudication order, is pending consideration before Hon ble Supreme Court and in similar nature matter, directions have been given not to take any coercive steps - HELD THAT:- In view of the submissions made, counter affidavit be filed by the respondents by the next date. List the petition on 22.07.2025.

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• 2025 (5) TMI 386
  Violation of principles of natural justice - ex-parte order - cancellation of registration of petitioner on the ground that previous quarters returns have not been filed by the petitioner - HELD THAT:- On perusal of the record, it shows that the show cause notice was given for failure of filing of returns for previous quarters. A copy of notice dated 6.9.2023 is annexed as Annexure No. 6 of this writ petition and on perusal of the same, it shows that neither name of the proper officer has been mentioned nor its description has been mentioned. Once the notice does not disclose that before which officer, the petitioner has to appear, the notice cannot be said to be proper in accordance with law. Further, the petitioner for the first time came to know about the cancellation in January, 2024. Once the impugned cancellation order has been passed without putting any proper notice or affording any opportunity of hearing to the petitioner, the same itself is in violation of principles of natural justice. Further the petitioner was also not afforded any opportunity of being personally heard. Therefore, the impugned order cannot be sustained in the eyes of law. Conclusion - The record shows that the impugned order has been passed without application of mind and same does not satisfy the test of Article 14 of the Constitution of India. Petition allowed.

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• 2025 (5) TMI 385
  Initiation of parallel proceedings by respondent No.1 as well as respondent No.2 by virtue of notice issued under Section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The record reveals that respondent No.2 i.e. Senior Intelligence Officer, DGGI, Meerut Zonal Unit has now transferred the proceedings and the same are pending before the 1st respondent, as is evident from letter dated 24.04.2025. Since the proceedings now stand transferred by respondent No.2 to respondent No.1, the instant petition has achieved its purpose and is disposed of accordingly. Petition disposed off.

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• 2025 (5) TMI 384
  Retrospective insertion of sub-Section (5) of Section 16 of the CGST/BGST Act, 2017 - entitlement to claim Input Tax Credit (ITC) beyond the originally prescribed time limit under Section 16(4) of the CGST/BGST Act, 2017, by virtue of the retrospective amendment introduced by Finance Act No. 2 of 2024 - time limit of three months time to prefer a second appeal under Section 112 of the CGST/BGST Act, 2017 - HELD THAT:- Once the appeal of the petitioner was dismissed by the Appellate Authority, the petitioner had three months time to prefer a second appeal under Section 112 of the CGST/BGST Act, 2017. It is an admitted position that the second appeal could not have been preferred by the petitioner because the Tribunal where the second appeal was to be presented had not been constituted. Till date, it has not been constituted. In the case of Sita Pandey [ 2023 (9) TMI 272 - PATNA HIGH COURT] , the learned Coordinate Bench has taken note of it that for purpose of filing of second appeal, 20% of the tax dues was to be deposited by the petitioner in the said case. On a bare reading of Section 79 of the CGST/BGST Act, 2017, it would appear that it talks of taking a step towards the recovery of amount by the Proper Officer but only where any tax amount payable by a person to the Government is not paid within the stipulated period under Section 78. A conjoint reading of Sections 78 and 79 would show that while Section 78 prescribes a period of three months to a taxable person to pay the amount in pursuance of an order passed under this Act from the date of service of the order and then only a recovery proceeding is to be initiated, Section 79 is in consonance with Section 78 but it provides other modes of recovery of the tax amount. It is in the nature of a garnishee proceeding where the tax dues may be recovered by adopting any one or more modes prescribed under sub-Section (1) of Section 79. In the case of Sita Pandey [ 2023 (9) TMI 272 - PATNA HIGH COURT] , the learned Coordinate Bench has taken note of it that for purpose of filing of second appeal, 20% of the tax dues was to be deposited by the petitioner in the said case. This Court has no iota of doubt that the Recovery Officer had to wait for a period of three months from the date of service of the order for deposit of the payable amount by the petitioner. Only in case of the petitioner failing to deposit the amount within the prescribed period of three months, one of the modes as prescribed under Section 79 of the CGST/BGST Act, 2017 could have been invoked - the recovery of Rs.50,75,214/- effected from the bill of the petitioner through Respondent No. 4 was in haste and in violation of the statutory provision. The Respondent Authorities are directed to refund the recovered amount i.e. Rs.50,75,214/- within a period of two weeks from today, failing which interest shall run at the rate of 12% per annum. Conclusion - The impugned orders rejecting ITC claims and directing payment of tax, interest, and penalty were set aside in light of the retrospective amendment under Section 16(5). Application allowed.

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• 2025 (5) TMI 383
  Cancellation of GST registration - failure to furnish returns for a continuous period of six months - non-application of mind - non-speaking order - violation of principles of natural justice - HELD THAT:- Under the GST regime a registered assessee is required to pay the statutory dues under the CGST Act or the SGST Act, as the case may be, or both. These statutory dues are required to be paid by all the assessees, who are registered under the GST regime, mandatorily. Such payments of statutory dues contribute towards the State Exchequer. If an assessee like the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by an assessee like the petitioner would not be deposited and properly accounted for and such a situation is, albeit, not in the interest of the revenue. It is pertinent to note that in the Statement Table in the Order dated 09.09.2020, no Central Tax/State Tax/Union Territory Tax/Cess is shown as due. On perusal of the impugned Order, it is evidently clear that the impugned Order is not in conformity with the procedure prescribed in FORM GST REG-19. A speaking order is one which expressly states the reasons for the decision. In other words, a speaking order speaks for itself by assigning the reasons behind the conclusion. If an order is passed without giving a reason by the concerned authority, then the order is a non-speaking one. Non-speaking order is one which does not provide a clear reason for its decision. The fact that the petitioner-assessee did not submit any Reply to the Show Cause Notice dated 27.08.2020 or did not appear before the Proper Officer for personal hearing, with no date time appointed by him, does not absolve the Proper Officer from the obligation of passing a speaking order as any order which brings adverse consequence to a person cannot be a mere paper formality. The obligation to record reasons is a possible check against arbitrary action on the part of the adjudicating authority invested with the statutory power to take a decision which is likely to affect the right of the person concerned. When the statute itself contains a prescription to record reasons in the decision, absence of reasons in the decision falls short of the prescription and would be in violation of the prescription and thus, illegal. A look at FORM GST REG-19 also goes to substantiate that the Proper Officer is obligated to record his reason[s] for taking the action of cancellation of GST Registration - from every standpoint, the impugned Order dated 09.09.2020 is not a speaking order. As such, the impugned Order dated 09.09.2020 is found to be one which is passed without any application of mind. For the afore-stated reasons, the impugned Order dated 09.09.2020 cannot stand the scrutiny of law and is liable to be set aside and quashed. A submission has been made that the writ petition has been preferred with delay as the petitioner has filed the writ petition in March, 2025, that is, after almost four years from the order of cancellation of registration. Although the petitioner has not approached the Court immediately after the order of cancellation of registration, this Court is of the considered view that when the extent of vulnerability of the order of cancellation of registration is due to not meeting the statutory prescription of recording reasons is pitted against the delayed approach, the vulnerability of the order of cancellation of registration would far outweigh the delayed approach because of its likely adverse affect on a registered person like the petitioner. This Court, for ends of justice, deems it just and proper to grant a period of one month from today to the petitioner to avail either of the two permissible options. If the petitioner wants to know her outstanding dues including the tax dues, applicable interest, late fee, penalty, etc. the Proper Officer shall furnish or shall supply such details to the petitioner if the petitioner approaches him within the said period of one month. Conclusion - The fact that the petitioner-assessee did not submit any Reply to the Show Cause Notice or did not appear before the Proper Officer for personal hearing, with no date time appointed by him, does not absolve the Proper Officer from the obligation of passing a speaking order as any order which brings adverse consequence to a person cannot be a mere paper formality. The writ petition stands allowed.

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• 2025 (5) TMI 382
  Cancellation of GST registration of petitioner without due application of mind - failure to furnish returns for a continuous period of six months - non-speaking order - violation of principles of natural justice - HELD THAT:- Under the GST regime a registered assessee is required to pay the statutory dues under the CGST Act or the SGST Act, as the case may be, or both. These statutory dues are required to be paid by all the assessees, who are registered under the GST regime, mandatorily. Such payments of statutory dues contribute towards the State Exchequer. If a taxable person like the petitioner is not included within the GST regime, then any statutory dues that may be required to be deposited by an assessee like the petitioner would not be deposited and properly accounted for and such a situation is, albeit, not in the interest of the revenue. It is pertinent to note that in the Statement Table in the Order dated 18.03.2023, no Central Tax/State Tax/Union Territory Tax/ Cess is shown as due. At the same time, cancellation of GST registration would entail adverse civil consequences to the person affected as due to cancellation of her registration under the GST regime, she would be outside it and it would be difficult for the person to carry on any business in a valid manner. It is not in doubt that the impugned Order dated 18.03.2023 whereby the petitioner s GST registration has been cancelled is an order which has the consequence of bringing adverse consequences to the petitioner - When the contents of the impugned Order dated 18.03.2023 are looked at, it is found that in the impugned Order, the Proper Officer has not assigned any reason as to why the petitioner s GST Registration has been cancelled. It is implicit in the principles of natural justice and fair play that an adjudicating authority should record reasons as it is part of fair procedure, more particularly, when the decision is likely to affect the right of the person concerned. Recording of reason is also prima facie suggestive of conscious application of mind on the part of the authority. The obligation to record reasons is a possible check against arbitrary action on the part of the adjudicating authority invested with the statutory power to take a decision which is likely to affect the right of the person concerned. When the statute itself contains a prescription to record reasons in the decision, absence of reasons in the decision falls short of the prescription and would be in violation of the prescription and thus, illegal. A look at FORM GST REG-19 also goes to substantiate that the Proper Officer is obligated to record his reason[s] for taking the action of cancellation of GST Registration. The impugned Order dated 18.03.2023 is not a speaking order. As such, the impugned Order dated 18.03.2023 is found to be one which is passed without any application of mind. For the afore-stated reasons, the impugned Order dated 18.03.2023 cannot stand the scrutiny of law and is liable to be set aside and quashed. Conclusion - The cancellation of GST registration must be preceded by a speaking order assigning valid reasons and following due procedure, including proper service of notice and opportunity of hearing. Failure to comply with these requirements renders the cancellation order invalid and subject to judicial review and quashing. Petition allowed.

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• 2025 (5) TMI 381
  Time limitation of assessment order - the orders have been passed more than four years after the relevant assessment periods had concluded - HELD THAT:- A similar issue had come up before a Division Bench of this Court in W.P. No.12529 of 2024 [ 2025 (4) TMI 1284 - ANDHRA PRADESH HIGH COURT] , which was disposed of by the judgment dated 21.04.2025. In the said judgment, this Court, applying the principles laid down by the Hon ble supreme Court in S. Kasi vs. State through the Inspector of Police, Samaynallur Police Station, Madurai District [ 2020 (6) TMI 727 - SUPREME COURT] and the principles laid down by a Division Bench of this Court in V-Guard Industries Limited vs. The Commercial Tax Officer, Mangalagiri Circle and Ors. [ 2022 (1) TMI 1012 - ANDHRA PRADESH HIGH COURT] , had held that the benefit of extension of limitation granted by the Hon ble Supreme Court would not be available to the authorities exercising power under various statutes and the said extension of limitation would be available only to the members of the general public who had approached the relevant Fora, after the period of limitation had expired. In the present case, Rule 14A (5A) of the A.P. Central Sales Tax (A.P.) Rules, stipulates that every dealer shall be deemed to have been assessed to tax, based on the returns filed by him, if no assessment is made within a period of four years from the date of filing of the return - This would mean that any assessment would have to be carried out within four years from the date on which the returns would have to be filed. In the present case, the assessments carried out, in relation to the assessment orders 2014-2015 and 2016-2017, are clearly beyond the period of four years from the last date on which the returns are to be filed for the month of March for these two assessment orders. As far as the assessment for the year 2015-2016 is concerned, the return for the month of March, 2016 would have been filed by 20th April 2016 and consequently, the assessment for the month of March could have been carried out up to 20th April 2020. As the assessment order has been passed on 23.03.2020, it would have to be held that the assessment for the year 2015-2016, except for the month of March, is beyond limitation. Conclusion - The statutory limitation period under Rule 14A (5A) is mandatory and binding, and assessments beyond this period are invalid. The assessment for the years 2014-2015 and 2016-2017 have to be held to be beyond limitation and the assessment orders dated 12.07.2021 and 30.07.2021 stand set aside - Petition disposed off.

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• 2025 (5) TMI 380
  Service of SCN - SCN have been uploaded on the Additional notices tab and the show cause notice did not come to the knowledge of the Petitioner - Validity of N/N. 09/2023-Central Tax dated 31st March 2023 and related notifications issued under Section 168A of the Central Goods and Services Tax Act, 2017 (GST Act) - violation of principles of natural justice - HELD THAT:- In the opinion of this Court, considering that the rectification application is itself barred by limitation, and the show cause notice was uploaded on the additional notices tab, following the decision in NEELGIRI MACHINERY THROUGH ITS PROPRIETOR MR. ANIL KUMAR VERSUS COMMISSIONER DELHI GOODS AND SERVICE TAX AND OTHERS [ 2025 (3) TMI 1308 - DELHI HIGH COURT] . Accordingly, the Petitioner is permitted to file a reply to the show cause notice within one month - After hearing the Petitioner, the Adjudicating Authority shall pass the order of adjudication. Needless to add that the adjudication order shall be subject to the outcome of the SLP pending in the Supreme Court, where the impugned notification is challenged. Petition disposed off.

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• 2025 (5) TMI 379
  Cancellation of a GST registration fraudulently obtained by Respondent No. 4 - misuse of his PAN Card - HELD THAT:- There are two competing entities, one is the Petitioner and the other is Respondent No. 4. The Petitioner is a resident of Delhi and is registered with the GSTIN number in Delhi. The cause of action insofar as the Petitioner is concerned, arises in Delhi as any demands that may be raised, may be reflected against the Petitioner s account in Delhi due to the PAN number which has been used. In this view of the matter, there is damage being caused to the Petitioner. Accordingly, it is directed that Respondent No. 2, which is the concerned Commissionerate based in Lucknow shall look into the matter on an urgent basis and take a decision within a period of 45 days. Petition disposed off.

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• 2025 (5) TMI 378
  Entitlement to claim Input Tax Credit (ITC) on IGST paid on imports despite discrepancies between GSTR-2A and GSTR-3B returns for the tax period April 2018 to March 2019 - HELD THAT:- The petitioner should be afforded with an opportunity to appropriately explain the discrepancy that had occurred including the difference in relation to the GSTR-2A and GSTR-3B filed by the transferor company. Further, taking note of the fact that no opportunity of hearing was given, which is mandatorily required to be provided under Section 75 (4) of the said Act, the respondents should decide the matter afresh upon offering the petitioner opportunity of personal hearing and by noting the petitioners response. Considering the peculiar facts as noted hereinabove, while setting aside the order passed on February 5, 2024 and May 15, 2024, the matter remanded back to the proper officer for a fresh decision on merits. The petitioners shall be entitled to file an explanation before the proper officer on or before the date fixed for personal hearing to be notified by the proper officer in advance. Petition disposed off.

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• 2025 (5) TMI 377
  Challenge to SCN and N/N. 9/2023-Central Tax dated 31st March, 2023 issued by the Central Board of Indirect Taxes - extension of time limits for adjudication of show cause notices and passing of orders under Section 73 of the CGST Act - HELD THAT:- A perusal of the record reveals that a reply to the SCN was filed by the Petitioner on 08th October, 2023. However, no supporting documents were filed. Subsequently, the order dated 31st December, 2023 has been passed which also appears to be quite sketchy. Considering the circumstances that no documents were filed by the Petitioner along with the reply to the SCN and keeping in mind the order dated 28th December, 2023 passed by this Court, this Court is of the opinion that the Petitioner shall be given an opportunity to file a fresh reply along with any relevant documents within a period of 30 days. The reply filed by the Petitioner to the SCNs along with the submissions made by the Petitioner during the personal hearing proceedings shall be duly considered by the Adjudicating Authority and fresh orders with respect to the SCNs shall be passed accordingly - Petition disposed off.

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• 2025 (5) TMI 376
  Challenge to order passed by the respondent and the order of rejection of the rectification application - personal hearing not provided to the petitioner - Violation of principles of natural justice - HELD THAT:- In the case on hand, the respondent issued a show cause notice dated 26.04.2023. Unfortunately, the same was unnoticed by the petitioner since the same was uploaded in the GST Portal but not directly served on the petitioner, hence, the petitioner failed to file reply, however, the respondent, without affording an opportunity of personal hearing to the petitioner, passed the impugned order dated 29.08.2024. This Court is not inclined to set aside the impugned order passed by the respondent dated 29.08.2024, however, considering the fact that the issue pertains to the wrong entries made in the GSTR-3B (Tbl:6A) and GSTR-3B (Tbl:6I), as the value that has to be specified in GSTR-3B (Tbl:6A) was wrongly indicated in GSTR-3B (Tbl: 6I) and vice versa and the said errors could be rectified if an opportunity of hearing is granted to the petitioner, this Court deems that it would be appropriate to set aside the order dated 26.12.2024 and remand the matter for re-consideration The order of rejection of the rectification application filed by the petitioner dated 26.12.2024 is set aside - Petition allowed by way of remand.

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• 2025 (5) TMI 375
  Direction to consider the stay petition filed in Ext.P3 to be considered and disposed of in a time bound manner - H ELD THAT:- Petitioner was assessed for the year 2022-23 under Section 73 of the Kerala General Sales Tax Act, 2017 as per Ext.P1 order. An appeal has been preferred before the 2nd respondent as Ext.P2 and a stay petition has also been appended thereon, which is produced as Ext.P3. There will be a direction to the 2nd respondent to consider and pass appropriate orders on Ext.P3 stay petition, as expeditiously as possible, at any rate, within a period of one month from the date of receipt of a copy of this judgment - Petition disposed off.

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• 2025 (5) TMI 374
  Levy of GST - transfer of leasehold rights of industrial land by the petitioner to a third party - applicability of N/N. 09/2023 dated 31.03.2023 and N/N. 56/2023-Central Tax dated 28.12.2023 - HELD THAT:- It is an admitted factual position that the petitioner transferred the leasehold rights of its industrial plots to one M/s. Dayaram Pharma Chem based upon which the Corporation has issued final transfer order No. GIDC/RM/ANK/TRF/FTO/DAH5/118 dated 24.12.2019 in favour of the purchaser of such leasehold rights. In view of such undisputed factual position, the decision of this Court in the case of Gujarat Chamber of Commerce and Industry Vs. Union of India [ 2025 (1) TMI 516 - GUJARAT HIGH COURT] will squarely apply. In Gujarat Chamber of Commerce, this Court has held that assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party-assignee who would become lessee of GIDC in place of original allottee-lessee. In such circumstances, provisions of section 7 (1) (a) of the GST Act providing for scope of supply read with clause 5(b) of Schedule II and Clause 5 of Schedule III would not be applicable to such transaction of assignment of leasehold rights of land and building and same would not be subject to levy of GST as provided under section 9 of the GST Act. The order passed by the Respondent No. 3 is hereby quashed and set aside - petition allowed.

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• 2025 (5) TMI 373
  Refund of accumulated ITC - time limitation - petitioner submits that it is entitled to file such refund claims within a period of two years from the relevant date, as contemplated under Section 54 (1) of the CGST Act - refund rejected on the ground that Petitioner was not eligible to file refund applications after the date of Notification No. 09/2022 Central Tax (Rate), i.e., 18.07.2022 - HELD THAT:- In Patanjali [ 2025 (3) TMI 367 - GUJARAT HIGH COURT] , this Court has held that Mere fact that the refund application was filed after 13.7.2022 cannot result in denial of refund to the Petitioner even though the refund application was filed within the statutory period of limitation. The circular creates an artificial class amongst assessees based on the date of filing of refund application even though the refund application is filed within the statutory period of limitation and the refund is pertaining to the same period. Conclusion - It is seen that the petitioner s case is squarely covered in the petitioner s favour by this Court s decision in Patanjali. Therefore, the rejection orders impugned herein dated 24.02.2023 and 30.01.2023 are hereby quashed and set aside Petiiton allowed.

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• 2025 (5) TMI 372
  Credit sought 11 days beyond to maximum time available under Section 16(4) of the CGST Act - HELD THAT:- By virtue of Section 16(4) of the CGST Act, and by virtue of the non-obstante clause available in this provision, the petitioner would be entitled to avail the credit, which was rejected by the respondents 1 2, as the credit that is sought to be availed relates to the Financial Years- 2017-2018, 2018-2019, 2019-2020 2020-2021. Apart from this, the petitioner sought to avail the credit, on 31.10.2019, which is within the time of 30.11.2021. This Writ Petition is allowed setting aside the order of the appeal, dated 13.10.2022 as well as the order of assessment, dated 05.08.2021 and the matter is remanded back to the 1st respondent to pass fresh assessment order keeping in view the provision of Section 16(5) of the CGST Act.

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• 2025 (5) TMI 371
  Obligation to comply with the appellate authority s order directing release of the refund amount despite the Commissioner s decision to file an appeal against that order - interest on refund claim - HELD THAT:- The plain language in which Section 54(11) stands couched and which refers to a contingency where an order giving rise to a refund is the subject matter of an appeal - the mere decision to prefer or institute an appeal would not qualify Section 54(11). This is held since a decision taken by the Commissioner to assail an order cannot ipso facto or automatically result in the principal order being placed in abeyance. Reliance placed in the decision which had been rendered by the Division Bench of the Court in Alex Tour Travel (P) Ltd. vs. Commr. (CGST) [ 2023 (5) TMI 505 - DELHI HIGH COURT] where it was held that Undisputedly, the Revenue is entitled to file an appeal under section 112 of the Central Goods and Services tax Act, 2017, within a period of three months from the date of the order. We are informed that the said period has been extended as the Appellate Tribunal has not been constituted as yet. However, the respondent cannot refuse to comply with the appellate orders on this ground. The respondents are commanded to affect the refund to the writ petitioner forthwith together with statutory interest, as payable - petition allowed.

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• 2025 (5) TMI 370
  Failure on the part of the respondents to process the refund application of the petitioner submitted in consequence to the order dated 10 May 2024 passed by the Objection Hearing Authority, the Additional Commissioner - HELD THAT:- The respondent states that subject to due verification of all facts and contentions on merits being kept open, the respondent shall ensure that the claim for refund is disposed of with expedition and preferably within a period of three weeks from today. The statement so made is recorded and accepted. Petition disposed off.

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• Income Tax

• 2025 (5) TMI 390
  Rejecting the application for granting approval u/s 10(23C)(iii) - technical mistake in choosing an incorrect sub-clause for provisional registration - CIT (E) refused to grant the registration, since it was noticed that the provisional approval could not have been granted to the assessee as the appellant has already commenced its activities in 2015 and, thus, it was stated by the CIT (Exemptions) that provisional approval being bad in law and, thus, rejected the application of the assessee - HELD THAT:- The facts are not disputed that the appellant is an Institute of National Importance and no doubt have been raised about the aims and objects of the said Institute. We find that it was only on account of choosing wrong sub-section for claiming approval under clause (iii) of first proviso to clause (23C) of section 10, the mistake has been committed. Even the CIT (Exemptions), while denying the said approval has given a finding that since on account of wrong sub- clause under which the provisional approval was granted is bad in law, therefore, the application as filed by the assessee for grant of approval under clause (iii) of first proviso to clause (23C) of section 10 is rejected. The appellant Institute is existing since 2015 and, as such, the approval was refused only on account of technical mistake on the part of the counsel of the assessee, who inadvertently had choosen wrong subsection while moving the application for approval under clause (iii) of first proviso to clause (23C) of section 10. ITAT in similar facts and circumstances, in the case of The Harbrol Cooperative Agricultural Service Society Ltd. [ 2024 (9) TMI 1696 - ITAT CHANDIGARH ] where a similar issue was there has taken a view that if there is mistake by the assessee for claiming legitimate deduction, the AO is duty bound to consider such legitimate deduction to the assessee even if, it was not claimed or claimed under wrong section. Decided in favour of assessee.

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• 2025 (5) TMI 389
  Levy of late fee u/s 234E - intimations u/s 200A - HELD THAT:- On similar facts in the case of Om Prakash Sons vs ITO (TDS), Dehradun [ 2022 (4) TMI 1654 - ITAT DEHRADUN] has held that amendments brought in the statute in section 200A by insertion of sub-clause (c) w.e.f. 01.06.2015 are prospective in nature and as such, notices issued u/s 200A of the Act for computation and intimation of payment of late filing fee u/s 234E of the Act relating to the period of tax deduction prior to 01.06.2015 was not maintainable. Similar view has been taken in the case of Olari Little Flower Kuries (P) Ltd. [ 2022 (2) TMI 1061 - KERALAHIGH COURT ] Therefore, respectfully following the above decisions, the levy of late fee u/s 234E of the Act amounting to Rs. 2,05,950/- for AY 2014-15 which is prior to 01.06.2015 is not sustainable and the same is deleted. Appeal of the assessee is allowed.

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• 2025 (5) TMI 388
  TP Adjustment - Comparable selection - Infosys BPO Ltd. - HELD THAT:- We find that in assessee s own case for the AY 2012-13 the Tribunal [ 2018 (6) TMI 1639 - ITAT DELHI ] excluded Infosys BPO Ltd. from final set of comparables for this assessment year also. Working capital adjustment - AO/TPO is directed to look into the workings furnished by the assessee and appropriate relief may be granted in accordance with law after providing adequate opportunity of being heard to the assessee.

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• 2025 (5) TMI 369
  Validity of reopening of assessment u/s 147 - period of limitation - petitioner contends that the proceedings initiated pursuant to the impugned notice are required to be set aside in view of the concession made by the Revenue before the Supreme Court in Union of India and Ors. v. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB)] HELD THAT:- The notice dated 23.07.2022 issued under Section 148 of the Act stands quashed and set aside. Concededly, the controversy is covered in favour of the petitioner by the decision of this court in Makemytrip India Pvt. Ltd [ 2025 (4) TMI 46 - DELHI HIGH COURT ] wherein the impugned notice was issued on 27.07.2022, which was admittedly beyond the period of limitation as prescribed under Section 149 (1). Since TOLA was not applicable in respect of the said notices u/s 148 of the Act for AY 2015-16 as conceded by the Revenue in the case of Union of India v. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ], thus the impugned notice is liable to be set aside.

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• 2025 (5) TMI 368
  Disallowing write-off of the deposits and interest thereon as the business loss incurred by the appellant company u/s. 28 of the Act in the course of its business - Disallowing miscellaneous expenses incurred u/s 37 of commercial expediency as well as on the ground of the expenses where so incurred in order to preserve the reputation of estate and business of the assessee - HELD THAT:- The Supreme Court, in CIT VS DELHI SAFE DEPOSIT CO. LTD. [ 1982 (1) TMI 2 - SUPREME COURT ] examined the question, whether an expenditure incurred on account of commercial expediency is admissible as deduction u/s 37 of the 1961 Act. The Supreme Court held that the expenditure incurred was a deductible expenditure. Admittedly, MMC is a subsidiary of the assessee and assessee holds 27% equity capital of MMC since its incorporation. The assessee promoted the MMC on 15th May 1946. From the date of incorporation of the assessee, it was the managing agent of the MMC and the assessee has acted as a managing agent till 1974 when the Companies Act, 1974 abolished the Managing Agency System. However, due to severe recession in the textile industry, MMC started making losses. Thereupon, the MMC was wound-up. The assessee, in its board meeting held on 27th March 1989 agreed to incur expenditure for maintenance of MMC. Thereafter on 10th July 1990 the Board of Directors of the assessee agreed to resolve the dispute to meet the expenditure till the affairs of MMC were wound-up. The Board of Directors approved the expenditure made by the assessee in the previous relevant Assessment Year 1990-91. The assessee held substantial portion of equity capital of MMC and MMC was regarded in public and official circles as a Mahindra Company. The assessee, in order to protect and preserve the assets and to protect the value of goodwill attached to the assessee by various sections of the society and on the ground of commercial expediency, incurred expenditure, which is permissible as deduction. The contention urged on behalf of the revenue in opposition to the aforesaid claim has already been dealt with by a Division Bench of this Court. Therefore, even otherwise, the assessee is entitled to deduction. For the reasons assigned by us supra, we agree with the view taken in assessee s own case in MAHINDRA MAHINDRA LTD. [ 2023 (6) TMI 884 - BOMBAY HIGH COURT ] in respect of the previous assessment year, which even otherwise squarely applies in respect of the first and additional substantial question of law. We, therefore, find force in the submissions made by assessee that the first substantial question of law as well as additional substantial question of law deserves to be answered in favour of the assessee. Determining the book profit u/s 115J - Section 115J of the 1961 Act mandates that in case of a company whose total income as computed under the provisions of the Act 1961 is less than 30% of the book profit, the total income chargeable to tax will be 30% of the book profit, as shown in the profit and loss account prepared in accordance with the provisions of Part II and III of Schedule VI of the Companies Act 1956, after certain adjustments. Explanation to Section 115J (1A) provides that net profit so computed is to be increased by certain amounts and it is to be reduced by certain amounts which are mentioned therein. The provision does not contain any reference to concept of above the line or below the line . Sub section (1A) of Section 115J mandates the company to maintain its accounts in accordance with the requirements of Companies Act and is bodily lifted from the Companies Act into the Act of 1961 for the limited purpose of making the said account so maintained as a basis for computing the company s income for levy of income-tax. It was also held that the provision does not empower the authority under the Act to probe into the account accepted by the authorities under the Companies Act. It was also held that if the legislature intended the Assessing Officer to reassess the company s income, then it would have stated in Section 115-J that income of the company is accepted by the Assessing Officer . The aforesaid principle was reiterated by the Supreme Court in MALAYALA MANORAMA COMPANY LIMITED [ 2008 (4) TMI 20 - SUPREME COURT ]. Thus, it is evident that the Assessing Officer does not have jurisdiction to go behind the net profit shown in profit and loss account except to the extent provided in Explanation to Section 115J. For the aforementioned reasons the second substantial question of law also deserves to be answered in favour of the assessee.

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• 2025 (5) TMI 367
  Entitlement to exemption provided under the provisions of Section 10 (26) - refund of the income tax deducted from the salary of the sole respondent - HELD THAT:- Sole respondent, herein, belongs to a notified Scheduled Tribe community of the State of Rajasthan. The respondent, during his service career, had been posted out of the State of Rajasthan and had also rendered service in areas specified under the provisions of Section 10 (26) of the Income Tax Act, 1961. Although appellants, herein, had, earlier in the course of consideration of the present proceeding, raised an issue as to whether the sole respondent, herein, would be entitled to claim such income tax exemption for the period he was posted at Silchar, Assam; the said position was clarified sole respondent, by contending that the respondent is not claiming income tax exemption for the period he was posted at Silchar, Assam, which is not a specified area under the provisions of Section 10 (26) of the Income Tax Act, 1961, but, the respondent, herein, is claiming income tax exemption relating to the period he was posted at Agartala, Tripura, which is a specified area under the provisions of Section 10 (26) of the Income Tax Act, 1961. The said aspect of the matter was recorded by this Court in its order, dated 20.02.2024, passed in the present proceeding. While being posted at Agartala, Tripura; was so posted in a specified area in terms of the provisions of Section 10 (26) of the Income Tax Act, 1961, it is to be held that he would be entitled to the benefits of exemption from income tax flowing from the provisions of Section 10 (26) of the Income Tax Act, 1961. The above aspect of the matter, is no longer res integra, and has been laid to rest by the decision of the Full Bench of this Court in the case of Pradip Kr. Taye ors.[ 2009 (12) TMI 285 - GAUHATI HIGH COURT] Thus, conclusions drawn by the learned Single Judge in the order [ 2023 (3) TMI 217 - GAUHATI HIGH COURT] to the effect that the respondent was entitled to the benefits accruing to him under the provisions of Section 10 (26) and that, he would be entitled to the exemption from income tax flowing therefrom; we are of the considered view that given the facts and circumstances involved in the matter as well as the Scheduled Tribe status of the sole respondent, herein, the order would not mandate an interference from this Court. Accordingly, the directions passed by the learned Single Judge for refund of the income tax deducted from the salary of the sole respondent, herein, cannot also be said to be erroneous.

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• 2025 (5) TMI 366
  Income Tax Department entitlement to requisition and retain muddamal cash seized during a criminal investigation u/s 132A - HELD THAT:- Department is entitled to retain the cash till final conclusion of the proceedings under the provision of the Income Tax Act but subsequently, it was modified and ordered that the department shall be free to undertake all actions permitted under the law and shall deposit the entire in the P.D. Account in accordance with the provisions and Rules of the Income Tax. Respondent no.2 herein, who is the first informant, has lodged an FIR before the police station for the theft committed by the accused in his house for the golden and silver ornaments worth of Rs. 90,000/-, however subsequently, the respondent no.2 informed about the theft of his passport and cash worth of Rs. 1,40,00,000/- and accordingly, the investigation was carried out and during the investigation, the police has recovered Rs. 60,29,000/- and Swift Car worth of Rs. 1,75,000/- purchased from the stolen rupees out of total Rs. 1,40,00,000/- as also golden and silver ornaments, to which, interrogation of the respondent no.2 was done, wherein he gave satisfactory reply to the police authority, however when the interrogation by the petitioner department was made, the respondent no.2 has failed to give satisfactory explanation for an amount of Rs. 35,28,000/-, which is the disputed amount in the present case. Therefore, the petitioner issued warrant of authorization under Section 132A(1)(c) of the Income Tax Act to the Police Inspector, Pranjit Police Station for requisition of seized cash, which was not accepted as the matter is pending before the learned Magistrate, therefore, the petitioner appeared before the court of learned Magistrate and upon request being made by the department, the learned Magistrate passed an order on 18.10.2022 holding that the Income Tax Department is free to take all actions permissible under the law including to make fixed deposit of Rs. 35,28,000/- in the name of the complainant i.e. the respondent no.2 herein with any Nationalize Bank initially for a period of two years renewable from time to time, however, the said order was challenged before Sessions Court inter alia praying for permission to allow them to deposit the aforesaid amount in a fixed deposit in the name of the Income Tax Department, however, the said request has been rejected by impugned order. As found out that the case of the petitioner department is squarely covered by the decision of the Coordinate Bench of this Court, whereby the petitioner department is allowed to deposit the entire amount in the PD Account in accordance with the law. Therefore, the present application deserves to be allowed. Present petition is allowed. The order dated 10.08.2023 passed by the learned Additional Chief Judicial Magistrate, Sabarkantha at Pranjit and the order dated 18.10.2022 passed by the learned Principal Senior Civil Judge Chief Judicial Magistrate Sabarkantha at Pranjit are hereby quashed and set aside. Accordingly, the petitioner department is free to undertake all actions permitted under the law, however, he shall deposit the entire amount of Rs. 35,28,000/- in the P.D. Account in accordance with the provisions and Rules of the Income Tax Act within a period of four weeks from the date of the receipt of this order.

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• 2025 (5) TMI 365
  Reopening of assessment u/s 147 beyond period of limitation - notice u/s 148A (b) - scope of new regime - HELD THAT:- As notice was deemed to be a notice under Section 148A (b) of the Act by virtue of the decision of the Supreme Court in Union of India Ors. v. Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT ]. The Supreme Court also granted further time to provide the material required to accompany such a notice. As explained by the Supreme Court in the case of Union of India v. Rajeev Bansal [ 2024 (10) TMI 264 - SUPREME COURT (LB) ] the period from the date of issuance of the notice till 04.05.2022, the date on which the Supreme Court rendered its decision in Union of India Ors. v. Ashish Agarwal (supra), was required to be excluded. Additionally, the time provided until the material required to accompany the notice u/s 148A (b) of the Act, as well as the time available to the Assessee to respond to the said notice, was also required to be excluded by virtue of the Third Proviso to Section 149 (1) of the Act, as applicable at the material time. In the present case, the AO had seven days to issue the notice u/s 148 of the Act after receipt of the reply of the Assessee. The said period expired on 18.06.2022. However, the impugned notice was issued on 11.07.2022, which is beyond the prescribed period. Therefore, the notice issued was beyond the period of limitation. Concededly, the said controversy is covered in favour of the Assessee by the decision of this court in Ram Balram Buildhome Pvt. Ltd. [ 2025 (2) TMI 55 - DELHI HIGH COURT]

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• 2025 (5) TMI 364
  Assessment u/s 153C - whether no incriminating material was found pursuant to the search conducted u/s 132 or a requisition made u/s 132A in respect of any other person (other than the petitioner) which would have a bearing on the income of the petitioner? - HELD THAT:- The petitioner does not dispute that it had dispatched the parcel containing 49 gms. of gold to Rajesh Kumar Mohan Lal for job work. The petitioner also claims that the same is duly reflected in its books. In view of the explanation, the fact that a parcel containing 49 gms. of gold was said by the petitioner could not be considered as incriminating material for reopening the concluded assessments. The seizure of the parcel could not be considered as incriminating material having any bearing on the income of the petitioner in previous years relating to AYs 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 and 2017-2018. Further the AO having jurisdiction in case of the petitioner had not recorded any satisfaction to the said effect. A plain reading of the satisfaction note indicates that the AO did not record any finding to the effect that the material handed over had bearing on the income of the petitioner for AYs 2012-13 to 2017-18. Concededly, absent any incriminating material for the relevant assessment years, the proceedings under Section 153C of the Act could not be initiated for the said years. The aforesaid issue is covered by the decision of this court in Saksham Commodities Ltd. [ 2024 (4) TMI 461 - DELHI HIGH COURT ] and Sinhgad Technical Education Society [ 2017 (8) TMI 1298 - SUPREME COURT ] as well as M/s U.K. Paints (Overseas) Ltd. [ 2023 (5) TMI 373 - SC ORDER ] Thus the impugned notices and the impugned order are set aside. Assessee appeal allowed.

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• 2025 (5) TMI 363
  Rectification u/s 154 - Scope of powers of the Appellate Commissioner u/s 251 - whether the application is indeed filed for rectification of error apparent on the face of record and is not appeal in disguise? - Whether the Appellant/Assessee was precluded from pursuing the remedy under Section 154 merely because an Appeal u/s 246A was filed subsequently before the Appellate Commissioner against the same assessment order against which the Appellant/Assessee had earlier filed application u/s 154 of the Act? HELD THAT:- We are of the view that while powers are vested with the AO to pass the Order rectifying the Assessment Order u/s 154 even if appellate or revisional proceedings are pending, it would also not preclude the Appellate Commissioner to enhance the tax liability in respect of the issue which was the subject matter of the Assessment. Thus, it can be concluded as follows:- (i) In case, no appeal is pending before the Appellate Commissioner u/s 246A of the Act and if an order of rectification is passed u/s 154 of the Act, the remedy that is available to the Respondent/Income Tax Department is to invoke the power of revision under Section 263 of the Act if such an Order is erroneous and prejudicial to the interests of the Revenue. (ii) However, if an appeal is pending before the Appellate Commissioner, the Appellate Commissioner has wide powers to enhance the tax liability in respect of those aspects which was the subject matter of the Assessment Order although it was not raised before the Appellate Commissioner in view of the language in Section 251(1)(a) of the Act. Admittedly, in the Assessment Order the claim for adjusting the unabsorbed depreciation against the income arising from capital gains was the subject matter of assessment. Therefore, it has to be held that the Appellate Commissioner was justified in re-looking the same irrespective of the Order passed under Section 154 of the Act. Income Tax Department is not required to involve the machinery u/s 263 of the Act by the Jurisdictional Commissioner for holding that the consequential Assessment Order passed was erroneous and prejudicial to the interest of the Respondent/Income Tax Department. Therefore, we answer the 4th Substantial Question of Law as above by holding that the powers of the Appellate Commissioner under Section 251 of the Act are wide enough to include and to look into issues which was the subject matter of the Assessment Orders and Orders passed under Section 154 of the Act. Set off the unabsorbed depreciation against the profits arising from the long term capital gains - HELD THAT:- As per sub-clause (i) to subsection (2) to Section 32 of the Act, as it stood between 01.04.2001 to 31.03.2002, the unabsorbed depreciation could be set of against the profit and gains from business or any profession carried on by an Assessee which is assessable for that Assessment Year. If the unabsorbed depreciation cannot be set off against profit and gains of the business or any profession of an Assessee assessable for that AY, then such amount can be set off from the income under any other head, if any, assessable for that Assessment Year. This is clear from a reading of Section 32(2)(ii) of the Act. Thus, it is clear that Section 32(2) of the Act as it stood between 01.04.2001 and 31.03.2002 contemplated setting off the unabsorbed depreciation against profits and gains if any, not only from any business or profession carried on by an Assessee for that Assessment Year but also from any other head, if any, assessable for that assessment year. Unabsorbed depreciation was available for being set off against income from profit and gains from business or any profession of that Assessment Year and if the same is not feasible against any other income from that Assessment Year. Substantial Question of Law decided in favour of the Appellant/Assessee. MAT computation u/s 115JB - As matter has to be remitted back to the original authority to re-do the assessment by clearly examining the computation by comparing the income tax payable in both circumstances, viz., under the normal method of computation and under Section 115JB of the Act in terms of the book profit. As computation of the profit and loss account of the Appellant/Assessee which has been filed along with the Typed Set of Documents indicates that the Appellant/Assessee had a net income of Rs.115,29,30,526.54. However, the net profit before tax arrived at Rs.111,73,63,748.04. The income that was declared in the Return of Income that was filed under Section 139(1) of the Act on 31.10.2002 by the Appellant/Assessee, was confined to a fraction of the same for a tune of Rs.1,28,39,356/-. It is evident that the computation given by the Appellant/Assessee made under Section 115JB of the Act is erroneous. The Appellant/Assessee has not disclosed the correct book profit for the purpose of Section 115JB of the Act. Since the dispute pertains to the Assessment Year 2002-2003, it is expected that the Assessing Officer will complete the assessment within a period of six months from the date of receipt of a copy of this order. Needless to state, the appellant shall be heard, before final orders are passed. Income Tax Appellate Tribunal is right in holding that the provision for deferred tax liability as per AS 22 issued by the Institute of Chartered Accountants of India is an unascertained liability under Explanation (c) to sub-section (2) of Section 115JB for the purpose of computing minimum alternate tax, despite the standard being mandated by Section 211(3C) of the Companies Act, 1956.

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• 2025 (5) TMI 362
  Disallowance of agriculture income - unexplained cash credit u/s 68 - CIT(A) determining the disallowance of the balance amount at the rate of 15% of agriculture income out of the total disallowance being the estimate of 30% expenses of net agriculture income is quite illegal and unreasonable and wrong concept. HELD THAT:- We find that the assessee has submitted a list of agricultural produce, details of preparation of soil, fertilizer, irrigation, water, electricity charges etc. AR also submitted that the assessee had minimal requirement of labour and owned water facility. Hence, the expenses were minimal. The details of sale are neither doubted nor in question. The agricultural produce consists of mango, sapota, wheat, chickpea, corn, moong, guwar, juwar, tuvar, bajari which are regular commercial food crops grown in this area. The average agricultural income per acre on these crops ranges from Rs. 25,000/- to Rs. 30,000/-. The total acreage held by the assessee is approximately 40 acres. Since the sale receipt has not been disputed by the Revenue, we hold that restricting the expenditure to 15% by the Ld. CIT(A) is quite reasonable and no interference is called for on this issue. Appeal of the assessee is dismissed.

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• 2025 (5) TMI 361
  Estimation of income - bogus purchases - AO treated the purchases made from the two parties as bogus purchases they had not replied to the notices u/s 133(6) issued to them - AO estimated 3.92% GP thereon - disallowance @ 2% sustained by the CIT(A) - HELD THAT:- The books of account of the assessee are audited as per provisions of section 44AB of Act and the commodity-wise sales and purchases in value and in quantity are given in audited Trading Account and Tax Audit Report. As during the assessment proceedings and the appellate proceedings before Ld. CIT(A), the assessee has submitted the confirmation letters received from two parties regarding the purchases made. We have also noted that the CIT(A), while acknowledging the production of documentary evidence and maintenance of detailed trading records, still sustained 2% of the purchases as disallowance due to absence of third-party verification. It is pertinent to note that the Hon ble Courts have held time and again that addition cannot be sustained solely on the basis of third-party non-response, especially when the assessee has produced adequate primary evidence substantiating the transaction. No discrepancy or adverse inference has been pointed out in the assessee s books or audit findings. We are of the considered opinion that, having held the transactions are genuine by the Ld. CIT(A) and sustaining the disallowance @ 2% by the Ld. CIT(A) is an anathema to itself. The decision of the Ld. CIT(A) cannot be affirmed. Appeal of the assessee is allowed.

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• 2025 (5) TMI 360
  Validity of reassessment proceedings - reasons to believe - notice issued beyond period of four years - assessee contended that the reasons recorded by the AO do not meet the pre-requisites of assumption of jurisdiction and therefore, the notice issued u/s 148 of the Act pursuant to reasons spelt out is bad in law - HELD THAT:- From the body of reasons recorded, a bare reading thereof would show a total absence of any allegation towards failure of assessee to disclose material facts or to attract the first proviso to sec 147 of the Act. No allegation has been made against the assessee that there is a failure on the part of the assessee to disclose fully and truly all the material facts as necessary for completing the assessment. In the absence of such allegations at the threshold, the notice issued u/s 148 of the Act beyond four years is time barred and thus without jurisdiction and hence, bad in law. In the instant case, the AO has clearly mentioned in the reasons recorded that no assessment has been carried out which is contrary to facts on record. No allegation has been made against the assessee towards failure to disclose material facts contemplated in the first proviso to sec 147 of the Act. Thus, notice issued u/s 148 of the Act is clearly time barred and deserves to be quashed. The jurisdiction assumed u/s 147 is thus clearly without legal foundation. Consequent re-assessment framed based on nonest time barred notice u/s 148 of the Act is therefore, bad in law. The additions made in such re-assessment order thus requires to be cancelled and deleted at the threshold. Appeal of the assessee is allowed.

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• 2025 (5) TMI 359
  Validity of order passed u/s 143(3) - absence of a proper approval obtained by the AO as prescribed u/s 153D - HELD THAT:- In the case in hand the consolidated approval for the 21 cases was granted by the same day by the same order. AO sent a common letter for approval u/s 153D of the Act for assessment 2013-14 to 2019-20 to ACIT Meerut on 28-09-2021 and the ACIT granted approval for all assessment years 2013-14 to 2019-20 by a common letter dated 28-09-2023 i.e the same day. As observed that approval granted by the ACIT u/s 153D of the Act by way of single letter was without application of mind and mechanical in nature. Thus, approval granted u/s 153D of the Act by the Addl. Commissioner of Income Tax, Central Range Meerut in the instant case is mechanical and without due application of mind. Appeal of the assessee is allowed.

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• 2025 (5) TMI 358
  Penalty u/s 270A - under-reporting of income attributable to additions u/s 14A r.w. Rule 8D - HELD THAT:- Revenue in the instant case has computed an estimated disallowance under Section 14A solely due to existence of exempt income. It is not the case of the Revenue Authorities that assessee has, in fact, incurred any expenses to earn the exempt income and suppressed the facts thereon beyond any doubt. Revenue Authorities have determined the disallowances on the basis of deeming provisions of computation of disallowances provided under Rule 8D of the Income Tax Rules. A conspectus of Section 270A of the Act, makes it clear that the statute visualizes the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. While the Assessing Officer may be justified in making estimated disallowance in quantum proceedings, such disallowance of expenses and that too on estimated basis could not automatically fall within the mischief of Section 270A of the Act on the grounds of under-reporting. While the claim towards expenditure may not be found acceptable in quantum proceedings, such disallowance per se cannot invite rigors of penalty. Where all material facts relevant to the issue were placed on record, mitigating circumstances to disprove any culpability of any sort against the assessee is established by implication. In CIT vs. Liquid Investment Trading Co. [ 2010 (10) TMI 1021 - DELHI HIGH COURT ] observed that issue of disallowance u/s 14A is a debatable issue. Appeal of the assessee is allowed.

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• 2025 (5) TMI 357
  Correct head of income - whether the income from the two house properties should be treated as income from house property or income from business? - Disallowance of deduction under section 24(a) from rental income receipt - HELD THAT:- Unlike properties which are rented out on long term basis, individual rooms or tenements rented out for a day cannot be rented out as bare tenements, because the daily occupiers would not be persons who would be visiting with their entire complement of furniture and beddings etc. In the circumstances, whether it is stated or not, it is fairly evident that the assessee was not only renting out the property on a day-to-day basis but that the only way that he could do it, was also by providing certain facilities to those who would be taking the premises on rent or arranging for such facilities to be provided to them, by third parties. Therefore, it clearly seems to be an organized activity of a composite nature and the Courts have held that when the assessee runs an organized activity of a composite nature towards the earning of income, it is to be treated as income from business. We also note that the decision of the Ld CIT(A) to accept the income from House property in the case of the wife of the assessee does not in any way affect the treatment of income of this nature as income from business in the hands the assessee, firstly because of our findings on the nature of services that were necessarily to be offered and secondly because in that case the Ld CIT(A) did not consider this aspect of the matter. Therefore, we uphold the decision of AO to treat the income from the renting of properties at Katra and Hewett Road as income from business and to disallow the deductions under section 24(a). However, since the assessee is entitled to deduction on business assets, we accept the alternative argument of the ld. AR that the assessee must be allowed the depreciation on WDV on these buildings annually, in accordance with explanation 5 of section 32 of the Act. Ground No.7 is decided accordingly. Levy of tax u/s 115BBE with respect to the unrecorded investment in the purchase of the immovable property - Since the investment was not recorded in the books of accounts, it was not recorded in the audit report and it was not disclosed in the return of income at the time of computation of income, it can only be taken as a partly undisclosed investment under section 69B. We must also address the contentions of the Learned AR that because the assessee had offered an explanation the provisions of section 69 would not apply and if the explanation was not satisfactory a further opportunity was to have been given to the assessee to explain the nature and the source, otherwise the actions of the AO were vitiated. In the first place, we are in agreement with the Ld DR that explaining the source does not mean explaining just the head of income but must also state how the undisclosed investment was earned and when it was earned. Merely stating the head of income from which the unexplained investment was generated without stating the actual source and when it was earned would not amount to an explanation within the meaning of section 69. Therefore, the assessee cannot escape the rigours of section 69 on this account. Hon ble Supreme Court in the case of MAK Data Pvt. Ltd. [ 2013 (11) TMI 14 - SUPREME COURT] has held that the only valid disclosures are those which are made in accordance with the scheme laid down in the Act and that subsequent disclosures would not absolve the assessee from penal consequences, if the conduct of the assessee shows an intention to conceal and in the present case, we note that the conduct of the assessee over nearly two years shows the intention to conceal. AO was right in bringing that portion which had not been disclosed to tax under the special provisions of section 69 and would be bound to thereafter levy the tax under the provisions of section 115BBE. It could be argued that section 69B ought to be applied and not section 69, but since the actions of the AO are quite clearly in accordance with the intent and purpose of the Act, we hold that section 292B will apply and the addition would not be hit on that count We, therefore, find no infirmity in the order of the ld. AO on this account and we confirm his actions. Charging of a sum to tax under the provisions of section 68 - We observe that the assessee has submitted before the ld. CIT(A) that he has since repaid the amount. Accordingly, we restore this matter back to the file of the ld. AO with a direction to the assessee to provide evidence of such payment of the amounts to the sundry creditors, whereupon the ld. AO give the assessee necessary relief in this regard. Appeal of the assessee is partly allowed.

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• 2025 (5) TMI 356
  Validity of assessment order passed by AO/ACIT without issuing any notice u/s 143(2) - as argued assessment framed is bad and ab-initio and ex-facie nullity in law - HELD THAT:- We note that the assessment order was passed by the ld. ACIT Circle-11(2), Kolkata, without issuing the mandatory notice u/s 143(2) of the Act after the case records of the assessee was transferred to him by ACIT Circle-31, Kolkata, who issued the notice u/s 143(2) of the Act because he was not having any jurisdiction over the assessee. We note that the case file was transferred from one ACIT circle-31 to another AO i.e. ACIT Circle -11(2) without any administrative order passed by the PCIT having the administrative control over both the AOs. Therefore, on this count also the assessment framed cannot be sustained. We note that the assessment order was passed by the ld. ACIT Circle-11(2), Kolkata, without issuing the mandatory notice u/s 143(2) of the Act after the case records of the assessee was transferred to him by ACIT Circle-31, Kolkata, who issued the notice u/s 143(2) of the Act because he was not having any jurisdiction over the assessee. We note that the case file was transferred from one ACIT circle-31 to another AO i.e. ACIT Circle -11(2) without any administrative order passed by the PCIT having the administrative control over both the AOs. Therefore, on this count also the assessment framed cannot be sustained. See Kusum Goyal [ 2010 (4) TMI 655 - CALCUTTA HIGH COURT ] Appeal of the assessee is allowed.

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• 2025 (5) TMI 355
  Deduction raised u/s 80P(2)(d) - interest income earned from investment with Cooperative Banks - HELD THAT:- Tribunal in Pathare Prabhu Cooperative Housing Society Ltd. [ 2023 (7) TMI 1272 - ITAT MUMBAI ] considering the relevant provisions of the law and judgments concerning the issue, ultimately allowed identical deduction claimed u/s 80P(2)(d). Decided in favour of assessee.

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• 2025 (5) TMI 354
  Rejection of books of accounts - estimation of GP - CIT(A) partly-allowed the appeal of the assessee by reducing the GP rate to 8% instead of 8.5% made by the AO - HELD THAT:- The Jodhpur Bench of the Tribunal in the case of ITO vs. Hitesh Kumar Panchori [ 2007 (9) TMI 317 - ITAT JODHPUR] had held that even while rejecting the books of accounts of the assessee, the AO has to adopt the GP rate that has been disclosed in the assessee s line of business for the immediately preceding assessment years. In the instant case, admittedly the GP rate declared for the relevant assessment year namely 2018-19 is more than the GP rate disclosed in the preceding assessment years namely 2014-15 to 2017-18. Even when the books of accounts are rejected, the addition is not automatic and if the GP rate declared in the relevant assessment year is better than the past years, no further addition can be made to the returned income. The omission is only of purchase and not of sales. The turnover and stock disclosed in the P L account is correct and the GP ratio disclosed is more in the relevant assessment year. Therefore, we see no reason to uphold the addition sustained by the CIT(A). Accordingly, we delete the addition sustained by the CIT(A) and allow the appeal of the assessee.

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• 2025 (5) TMI 353
  Addition u/s 68 - bogus LTCG - onus to prove - HELD THAT:- As the Assessee has been able to discharge his prima-facie onus cast u/s 68 and the Revenue Department has not rebutted the documents and/or claim of the Assessee by producing any corroborating material concerning directly and thus as relying on MR. RAMBILAS S AGARWAL [ 2025 (4) TMI 744 - ITAT MUMBAI] addition u/s 68 deleted. Unexplained expenditure addition u/s 69C calculated as commission on the alleged bogus transactions - As the substantive addition has been deleted and therefore the addition being commission @ 4% made on account of commission made u/s 69C of the Act also collapsed, consequently, the same is also deleted. Appeal filed by the Assessee is allowed.

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• 2025 (5) TMI 352
  Addition on the account of silver found during the course of search - as submitted the silver found during course of search was in his possession as head of the family and was duly covered by surrender of Rs. 5.00 crores made by assessee s younger brother staying jointly with the assessee - HELD THAT:- Neither the assessee nor his brother in his earlier statements made any mention of the aforesaid silver bars being either owned by the assessee s brother or being part of the aforesaid disclosure of Rs. 5 Cr. There is no supporting evidence for the claim that the silver bars belonged to the assessee s brother. An affidavit made after substantial lapse of time since date of search, aimed at helping the assessee does not have any credibility when weight of other evidences and facts is heavily against the assessee, and is to be treated as an after thought. AO of the assessee and the assessee s aforesaid brother was the same. Therefore, the contention of the assessee that in the assessment proceedings had accepted the ownership of the aforesaid silver bars in the hands of Shri Satrughan Man singh, the assessee s brother deserves to be rejected being baseless; because if the Assessing Officer had accepted the ownership of the silver bars in the hands of the assessee s brother, then, the Assessing Officer would not have added the amount in the hands of the assessee. Claim of the assessee that the silver bars found at his residence belonged to his brother, the claim being made solely on the basis of aforesaid affidavit is to be rejected in the absence of any supporting evidences. The impugned appellate order of the CIT(A) is found to be just and reasonable and in accordance with law, having regard to the specific facts and circumstances of the present case. No interference is called for in the impugned order of the CIT(A) and the aforesaid addition is confirmed. Therefore, the appeal of the assessee is dismissed.

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• 2025 (5) TMI 351
  Assessment against non-existent entity - notice u/s 143(2) issued in the name of company already amalgamated - HELD THAT:- It is crystal clear that soon after amalgamation, the assessee / appellant company intimated the Ld. AO regarding amalgamation of the company along with copy of order passed by the NCLT, but still the Ld. AO issued notice u/s 143(2) for the relevant assessment year in the name of Telenor India Communication Pvt. Ltd. Non est company and for which the Ld. AO was properly intimated well in time. After receiving the notice u/s 143(2) of the Act, the assessee / appellant company reiterated the fact of merger before the Ld. AO. It is relevant to mention here also that the TPO while passing order in the name of Telenor India Communication Pvt. Ltd., specifically mentioned in the title of the case regarding fact of merger and also in para no. 3 mentioned that the Telenor India Communication Pvt. Ltd. amalgamated with Bharti Airtel Ltd. with effect from 14.05.2018, and still this relevant fact ignored by the authority and draft order u/s 143(3) of the Act and final assessment order passed in the name of non-existent entity despite frequent intimation. Thus, we find that final assessment order passed by the Ld. AO u/s 143(3) of the Act seriously suffers from legal infirmity being framed by the ld. AO against non-existent entity despite proper in time written communication. Assessee appeal allowed.

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• 2025 (5) TMI 350
  Penalty u/s 271(1)(c) - difference in income declared in the return filed u/s 153A when compared with the original return - contention of the assessee that the difference was only on account of slight mistake in claiming the deduction u/s 80C - HELD THAT:- Contention of the assessee was completely overlooked by the authorities below. In my opinion this is not fit case of levy of penalty as there was no concealment of income or furnishing of inaccurate particulars of income was established. At best it is only a mere change of opinion and not a case of concealment of income or furnishing of inaccurate particulars of income. In the case of Pr. CIT Vs. Neeraj Jindal [ 2017 (2) TMI 1002 - DELHI HIGH COURT] held that when the returned income u/s 153A was accepted there was no concealment of income and there cannot be any levy of penalty u/s 271(1)(c) - Appeal of the assessee is allowed.

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• 2025 (5) TMI 349
  Validity of assessement against non existent/amalgamating company - Appeal filed by the original assessee, which was subsequently amalgamated into another entity - HELD THAT:- After going through the reasons given by the NFAC relying the judgement Maruti Suzuki India Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] , BMA Capfin [ 2018 (12) TMI 1467 - SC ORDER] and Sterlite Technologies Ltd. [ 2024 (5) TMI 397 - SC ORDER] we are of the considered view that the aforesaid decisions are only laying down the law that the final assessment order and the order of the appellate authority should not be passed in the name of a non-existing entity. Where during the pendency of any proceedings, the facts are brought on record of amalgamation, then, merely amendment of the title calling for amended Form No.35 would be sufficient. The ld. AR has explained that there is no provision in online portal to revise Form No.35 pursuant to merger and the e-appeal filing window is not activated in the portal of amalgamated entity i.e., IDP Education India Private Ltd.. Therefore, NFAC should have been cognizant of these factual aspects also before dismissing the appeal in limine and should have considered the manually filed revised appeal in Form No.35, during the course of appellate proceedings in the name of amalgamated company The impugned order thus cannot be sustained. Consequently, we sustain ground and allow the appeal of the assessee for statistical purposes.

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• 2025 (5) TMI 348
  Denial of benefit of exemption u/s 11 12 - assessee had paid interest at comparatively higher rate than from the rates paid to bank, to the persons specified u/s 13(3) - HELD THAT:- It is settled proposition of law that the income which has been applied in violation to section 13(1) of the Act could only be brought to tax and not the entire income. As in the case of Agrim Charan Foundation [ 2001 (8) TMI 78 - DELHI HIGH COURT ] has held that the legislature has clearly contemplated that in a case, where the whole or part of the relevant income is not exempted u/s 11 by virtue of violation of Section 13(1)(d) of the Act, tax shall be levied on the relevant income or a part of the relevant income at the maximum marginal rate. Thus, the entire income of the assessee society cannot be assessed for tax even for violation of Section 13(1)(c) of the Act. As in the case of Krupanidhi Education Trust [ 2021 (11) TMI 382 - KARNATAKA HIGH COURT ] has held in para 9 that the alleged breach of Section 13(1)(c) of the Act based on these factors was baseless, wholly untenable on the ground that the revenue cannot sit in the armchair of the assessee and decide the pattern of working / methodology to be adopted for the administration of the educational body. That the revenue cannot manage or control the managerial affairs of the educational body. These aspects would not come within the purview of the authorities to decide the income tax liability merely on suspicion that the assessee is claiming huge expenditures to get the corresponding benefits of allowable deductions. Thus, considering the fact that assessee under the circumstances beyond its control had obtained loans at a higher rate solely for the benefit of society thus it cannot be held that it had violated the provisions of section 13(1)(c) and 13(2) read with Section 13(3) of the Act with the sole intention to transfer any direct or indirect benefit to them. Accordingly, we set aside the orders of the AO and CIT(A) withdrawing the exemption available to the assessee u/s 11 12 which is hereby restored. Assessee appeal allowed.

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• 2025 (5) TMI 347
  Unexplained Cash Deposits/Credit Entries u/s 69A - assessee neither submitted any cogent evidences nor any details regarding the source of cash deposits and credit entries at the time of assessment - CIT(A) deleted addition - HELD THAT:- CIT(A) finds merits in the assessee s submissions that the deposits of / entries in his bank account are from regular sales from medical store and in such circumstances the CIT(A) in order to meet to the ends of justice and also to protect interest of the revenue direct AO to consider 75% of the total credit entries in his bank account as the sales turnover and compute a profit of 20% there upon and accordingly 75% of the total turnover of Rs. 1,26,31,017/- is calculated at Rs. 94,73,263/- on which the profit is computed @ 20% which comes to Rs. 18,94,653/- and accordingly by impugned order the AO directed to treat the same as income from business turn over and balance credit entries of Balance credit entries of Rs. 31,57,754/- (Rs. 1,26,31,017- Rs. 94,73,263/-) is treated as unexplained and the same is upheld and out of the total credit entries of Rs.1,26,31,017/- the Learned AO should delete the addition of (Rs.1,26,31,017- Rs. 18,94,653 Rs. 31,57,754) Rs. 75,78,610. Further, in respect of cash deposits during the year, the AO was directed to consider the cash deposits of Rs. 27,08,000/- made during the demonetization period as the unexplained cash deposits of the appellant for the AY and so. Therefore, the addition of Rs. 27,08,000/- stands confirmed and the balance of cash deposits (Rs.33,78,023-Rs.27,08,000) which comes to Rs. 6,70,023/- was deleted. Decided against revenue.

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• 2025 (5) TMI 346
  Unexplained cash deposits u/s 68 - enhancement by NFAC to an amount u/s 251 - invocation of section 115BBE - HELD THAT:- As concluded that no VAT was paid on cash scrap sales and also that veracity of accounts not beyond doubt. We do not find any significant force in the arguments propounded by the FAA. The hypothesis advanced has been found to be based upon mere principles of human probability and not backed by cogent demonstrative evidence. The assessee is a scrap dealer wherein cash dealings are of routine occurrence. Therefore, it cannot be concluded that there was no element of cash sales. As regards the issue of enhancement of addition on account of cash deposits, as noted that section 251(1)(a) empowers a CIT(A) to enhance the addition made by the AO, however, section 251(2) of the act mandates that while doing so he has to give a reasonable opportunity of being heard to the assessee. We have noted from order of the NFAC that no such opportunity was given. Accordingly, we have no hesitation in concurring with the arguments of the assessee. The enhancement made by the Ld.CIT(A) from Rs. 52,35,500/- to Rs. 57,25,500/- is therefore deleted and the ground of appeal No. 4 raised by the assessee is allowed. As regards the issue of addition on account of unexplained cash deposits, as indicated above, the amounts seem to have a close nexus with sales of the assessee. Invocation of section 115BBE - We are of the considered opinion that provisions of section 115BBE would not be applicable in this case. As in S.M.I.L.E MICROFINANCE LIMITED [ 2024 (11) TMI 1444 - MADRAS HIGH COURT] section 115BBE would be applicable for transactions undertaken w.e.f. 1/4/2017 and not of earlier period. In the present case undisputedly transaction were undertaken in FY 2016-17 and hence section115BBE could not have been invoked in this case. Be that as it may be we are of the view that interest of justice would be met if the addition is restricted to Rs. 5 lakhs being the estimated profit element in the impugned sales, deposited in the bank accounts by way of cash. The Ld.AO is directed to restrict the addition to Rs. 5 lakhs and delete the balance. The assessee succeeds in respect of ground of appeal nos.1 and 5 also and the same are allowed. Addition u/s 40A(3) and its corresponding enhancement by Ld.NFAC - We have noted from the order of Ld.NFAC that as far as action of the NFAC qua enhancement of income is concerned no opportunity of being heard was accorded and hence the action of the NFACcannot be sustained and deserves to be quashed. Accordingly, the action of Ld. NFAC in making the impugned enhancement is quashed. We have also found sufficient force in the argument of the assessee that without converting the case into complete scrutiny, the Ld. AO was not authorized to make any addition in a limited scrutiny case on an issue which was not part of the CASS selection. We have seen the notice u/s 143(2) issued by the Ld.AO, placed by the assesseethat it was limited scrutiny case for examination of cash deposits only. Accordingly, we are of the considered view that there is no merit in the addition made by the Ld.AO u/s 40A(3) as well as its further enhancement by the Ld. NFAC. Appeal of the assessee is partly allowed.

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• 2025 (5) TMI 345
  Addition u/s 68 and u/s 69C - sales receipts credited in the bank account treating the same as bogus HELD THAT:- In the instance case, originally the assessment was completed u/s 143(3) of the Act, wherein all the details with respect to purchase and sales were filed by the Assessee and the same were examined by the then AO. Stock records maintained by the Assessee Company on day to day basis were also examined by the AO and after such examination, the AO accepted the books of accounts. However, in reassessment proceedings despite of all the material available on record, the A.O. alleged that very same sale made by the Assessee to these two parties as bogus, which is solely on the basis of their statements, wherein they stated that they are providing accommodation entries for bogus bills of sales. No opportunity of cross-examination has been given to the Assessee. Assessee has demonstrated that goods were actually delivered to the parties. It is also seen that the goods so sold were out of the regular stock maintained for which necessary entries are also found recorded in the records. Thus, merely on the fact that the other party had refused and denied the transaction, without providing the opportunity to the Assessee to cross-examination of those persons, no addition could be made holding that the sales are not genuine. Appeal of the Assessee is allowed.

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• 2025 (5) TMI 344
  Addition on account of capital gains - sale of immovable property - Exemption u/s 54F - HELD THAT:- The fact of sale of shop and purchase of flat is established from the documents placed on record by the assessee. For the purpose of computation of capital gains, under the provisions of section 50C of the Act the assessee has adopted stamp value rate, whereas, the actual consideration received by the assessee is much less. Considering the facts supported by documentary evidences on record, I find merit in the submissions of the assessee and accept capital gain of Rs. 42,754/- declared by the assessee. Exemption u/s. 54F - Assessee has purchased a new capital asset i.e. a residential flat and has claimed benefit of exemption u/s. 54F of the Act. As per the provisions of section 54F of the Act for claiming benefit of exemption u/s. 54F of the Act, the assessee was required to purchase new asset within a period of one year before or two years after the date on which transfer of long term capital asset took place. In the present case it is emanating from documents on record that the assessee had sold shop in February 2012 and purchased residential flat in April 2016. The contention of assessee is that though the registered sale deed was executed in April 2016, the assessee had booked the flat in December 2010 (23.12.2010) and had made substantial payment for the same in Financial Year 2011-12. Restore this issue to the AO for verification of payments made by the assessee for purchase of flat. If substantial payment is made during the relevant period or within two years from the date of sale of Shop and subject to other conditions laid down u/s. 54F of the Act being satisfied, the benefit of section 54F of the Act be allowed to the assessee.

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• 2025 (5) TMI 343
  Rejecting the application of assessee for approval u/s 80G(5) - spent more than 5% for religious purposes from its total income - CIT(E) observed that the objectives/objects of the assessee-trust are also religious in nature, which put the assessee under the category of composite trust i.e., religious-cum-charitable trust - HELD THAT:- As decided in Upper Ganges Sugar Mills Ltd. [ 1997 (8) TMI 4 - SUPREME COURT ] if one purpose within the institution s overall charitable purposes is wholly, or substantially wholly, of a religious nature, then it falls outside the scope of section 80G of the Act. In the present case, we have found that one of the purposes was of religious in nature. The expenditure for such object was more than 5% of the total income. In view of the facts discussed above and respectfully following the decisions cited supra, the ground of the assessee are dismissed.

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• 2025 (5) TMI 342
  Penalty u/s 271CA - non-deduction of TCS on sale of coal and lignite by the appellant - HELD THAT:- Penalty u/s 271CA is leviable for failure to collect tax at source by any person as required by or under the provisions of Chapter XVII BB of the Act. In the present case, the appellant deposited TCS of Rs. 87,750/- in the same FY.2012-13, albeit belatedly. The reason for the delay was the person for collection of Form No. 27C was on leave due to illness. Though the assessee was not required TCS but still had paid TCS of Rs. 87,750/-. Copies of challans evidencing the payment submitted. In our view, there was reasonable cause u/s 273B of the Act for failure to comply with the relevant provisions including section 271CA of the Act. Decisions relied upon by the AR support the case of the appellant on the ground of reasonable cause u/s 273B of the Act and the order of AO being time barred. Order of CIT(A) is set aside and AO is directed to delete levy of penalty. Accordingly, this ground of assessee is allowed.

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• 2025 (5) TMI 341
  Additions on account of undisclosed receipts after reducing amount of expenditure which are allowable expenditure under the Income Tax Act - AO has disallowed those expenses which are in violation to section 40A(3), 40(a)(ia) and under other provisions of the Act - HELD THAT:- Admittedly, the undisclosed receipts as well as undisclosed expenditures were found noted in the loose papers and excel sheets etc. found and seized during the course of search. It is settled proposition that in case where undisclosed receipts were found as a result for search such entire receipt cannot be taxed as income. As in the case of The Godhara Electricity Co. Ltd. [ 1997 (4) TMI 4 - SUPREME COURT] as held it is not possible to hold that there was real accrual of income to the assessee-company in respect of the enhanced charges for supply of electricity which were added by the income tax officer while passing the assessment orders in respect of the assessment years under consideration. The Appellate Assistant commissioner was right in deleting the said addition made by the income tax officer and the tribunal had rightly held that the claim at the increased rates as made by the assessee-company on the basis of which necessary entries were made represented only hypothetical income and the impugned amounts as brought to tax by the income tax officer did represent the income which had really accrued to the assessee-company during the relevant previous years. The High court in our option was in error in upsetting the said view of the Tribunal. As in the case of CIT vs. President Industries [ 1999 (4) TMI 8 - GUJARAT HIGH COURT] has held that only profit in embedded in undisclosed receipts could be taxed and not the entire undisclosed receipts. Before us, the Ld. CIT-DR failed to controvert the findings given by Ld. CIT(A) made while deleting the additions by applying profit rate of 10% as against the addition of entire undisclosed receipts. CIT(A) has deleted the amount of unaccounted expenditure recorded in the same pages by holding the same are not required since net profit rate on undisclosed receipts was applied and addition of Rs. 68,21,171/- is sustained as profit on such undisclosed receipts. Accordingly, we find that no infirmity in the orders of the Ld. CIT(A) which is hereby upheld. Decided against revenue.

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• 2025 (5) TMI 340
  Condonation of delay - appeal before the learned CIT(A) was filed belatedly by 1570 days - HELD THAT:- Delay was explained by the assessee on the basis that it had chosen to pursue a rectification route rather than the appellate remedy, due to a bona fide belief that the disallowance was a clear mistake apparent from the record and could be rectified u/s 154 of the Act. The rectification application was filed in good faith and was pending for over two years before it was finally closed. Given this background, we find that the explanation for delay is a genuine and under the bona-fide belief and not due to negligence or deliberate non-compliance. Therefore, in the interest of substantial justice, we deem it appropriate to condone the delay. Deduction u/s 80P(2)(a)(i) - appellant is registered under the Karnataka Souharda Sahakari Act, 1997 - Claim denied as assessee had not filed its return of income within the due date as prescribed u/s 139(1) - HELD THAT:- Assessee being subject to audit under the Karnataka Souharda Sahakari Act, 1997, is covered within the scope of the said clause and is entitled to the benefit of the extended due date of 31.10.2019. Consequently, the return filed on 25.09.2019 was well within the extended due date, and the denial of deduction u/s 80P of the Act on the sole ground of late filing is unsustainable in law. In conclusion, we hold that the assessee s appeal deserves to be allowed.

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• 2025 (5) TMI 339
  Revision u/s 263 - penalty proceedings are separately initiated for concealment of particulars of income and furnishing inaccurate particulars of income in respect of claim of deduction u/s 80GGC, claim of deduction on professional and legal fee expenses, receipts from Toyota Lakozy P. Ltd and with regard to personal expenses - HELD THAT:- While passing the order u/s 143(3) r.w.s 254 it was specifically that penalty proceedings u/s 271(1)(c) initiated which were kept in abeyance till the disposal of the appeal by Hon ble Tribunal by the then AO was revived by virtue of provisions of section 275 of the IT Act, 1961. Accordingly, penalty proceedings u/s 271(1)(c) were taken afresh with respect to additions viz. Professional Legal Fees 2) Receipt from Toyota Lakozy Pvt. Ltd.) Personal expenses separately for each issue for furnishing inaccurate particulars of income. However even before us, there is no justification for not levying the penalty in respect of three issues. It is worth mentioning here that in the case of CIT Vs. Braj Bhushan Cold Storage [ 2005 (1) TMI 58 - ALLAHABAD HIGH COURT ] and Shabbir T. Chass [ 2008 (10) TMI 588 - ITAT HYDERABAD ] had held that even dropping of penalty proceedings u/s 271(1)(c) of the Act is erroneous and prejudicial to the interest of the revenue. Therefore, we found thatCIT was rightly satisfied that the penalty order is erroneous in so far as it is prejudicial to the interest of revenue. Therefore, while exercising of powers u/s 263 of the Act rightly directed the AO to re-examine the penalty order and modify the same, if necessary, after following the principles of natural justice. We see no reasons to interfere into the lawful orders passed by Ld. Pr. CIT. Hence we uphold the same by dismissing the appeal of the assessee.

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• 2025 (5) TMI 338
  Assessment u/s 153A - As argued assessee was not the person searched within the meaning of section 153A - HELD THAT:- The law is well settled that in cases where assessments have attained finality prior to the date of search, no addition can be made u/s 153A in the absence of incriminating material unearthed during the search. In the present case, the year under consideration i.e. A.Y. 2018-19 is an unabated assessment as the time limit to issue notice u/s 143(2) was already expired on 30th September 2019 whereas the search was conducted as on 12th March 2020. Hence, the validity of the proceedings u/s 153A of the Act on this count also is vitiated. Disallowing the benefit of presumptive taxation u/s 44ADA - AO has erroneously treated the sum received by the assessee from Hospital as salary income, thereby disallowing the benefit of section 44ADA which allows for presumptive taxation of professional receipts. AO s assumption that a fixed monthly payment necessarily implies an employer-employee relationship is legally and factually incorrect. It is pertinent to note that the assessee is a qualified consultant gynecologist and for rendering the professional services received fee which is evident from the deduction of tax at source on the payments received by the assessee as the deduction was made u/s 194J and not u/s 192 (salary). Further, there is no evidence brought on record by the revenue to establish any employer-employee relationship between the assessee and the hospital, such as control, supervision, or eligibility for employment benefits. In such circumstances, the income must be rightly classified as professional receipts. Assessee, having opted for presumptive taxation under section 44ADA of the Act, was entitled to offer 50% of gross professional receipts as income. There is no material on record to discredit the applicability of this provision in her case. The AO s rejection of the claim and addition of the entire amount to taxable income, coupled with the disallowance of claimed expenditure, is arbitrary and contrary to the settled legal position. CIT(A) erred in dismissing the appeal without adjudicating it on merits, merely citing non-compliance with hearing notices. An appellate authority is expected to dispose of appeals judiciously by addressing issues raised and evaluating them on facts and law, which was not done in this case. We hold that the proceedings u/s 153A are invalid in the absence of a valid search warrant in the name of the assessee. The assessment is also, in the absence of incriminating material found during the search is not sustainable being unabated assessment year. We further hold that the income received by the assessee from Dr. Jayachandran Co Hospital was in the nature of professional fees and not salary, hence eligible for presumptive taxation under section 44ADA of the Act. Accordingly, we hereby set aside the finding of the ld. CIT(A) and quash the assessment order. Hence the ground of appeal of the assessee is hereby allowed.

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• 2025 (5) TMI 337
  Suppression of sale consideration - assessee had understated the sale consideration arising from the sale of non-agricultural land - HELD THAT:- As on perusal of the sale deed documents and the reply filed by the assessee in response to notices it is evident that the said property was not solely owned or sold by the assessee. The sale was effected jointly by the assessee along with three other co-owners. The assessee was a confirming party in the transaction and had received only a proportionate share of the sale proceeds, which was duly declared in the return of income and is also reflected in Form 26AS. Notably, this fact of joint ownership and proportionate receipt of consideration was also part of the very information on the basis of which the AO had initiated proceedings u/s 147. Despite being aware of this fact, the AO erroneously attributed the entire sale consideration of Rs. 4.91 crore to the assessee and concluded that he had suppressed income. This approach is factually and legally untenable and does not sustain. Assessee had filed response to the notices issued u/s 142(1) prior to the passing of the assessment order, which have not been considered by the AO. These replies contain the explanation of the assessee about the declaration of the sale consideration, supporting documents such as detail of TDS deducted, sale deed extracts, etc. The failure of the AO to examine these submissions renders the assessment order erroneous and unsustainable. As assessee has declared income correctly corresponding to his share in the transaction, we hold that the addition made by the AO is unsustainable. The assessee cannot be taxed on the entire sale consideration when it is factually established that the sale was a joint transaction and only a part of the proceeds accrued to him. The addition is, therefore, directed to be deleted. Appeal of the assessee is hereby allowed.

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• 2025 (5) TMI 336
  Depreciation disallowed in respect of the goodwill as generated due to amalgamation - HELD THAT:- AR did not object for the issue to be remanded to the CIT(A). In any event the issues needs to be analysed in the light of the decision of CIT vs. Smifs Securities Ltd. [ 2012 (8) TMI 713 - SUPREME COURT] . We therefore remand this issue back to the Ld. CIT(A) with the direction to passed the detailed order on merits after considering the submissions advance and evidences filed by the assessee in support of its claim.

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• 2025 (5) TMI 335
  Unexplained cash deposits - as argued share transactions concluded through a SEBI-registered broker - HELD THAT:- As assessee submitted that the earlier counsel who was dealing with the matter has wrongly reported before the AO at the time of remand proceedings by submitting that the assessee dealt with shares through registered broker of SEBI, but the fact remains as has been disclosed in the sworn in affidavit filed by the assessee before the bench that the assessee has never ever made any transaction through any broker of SEBI. Assessee is only having agricultural income. These facts were also accepted by the Ld. Sr. DR. The Ld. Sr. DR could not provide any evidence refuting these facts or could not show that the assessee did transact in shares. Thus, in the interest of justice, the factual matrix needs to be revisited through proper verification at the level of the CIT(Appeals)/NFAC to understand what exactly is the source of income of the assessee. That as has been claimed in the affidavit that the assessee is only having income from agriculture proceeds, these facts needs to be verified. Further, as contented that the amount which was deposited in the account of the assessee was not a single transaction. Rather, it is the culmination of small amounts which was regularly deposited in the bank account of the assessee. These are the essential facts whose examination goes to the root of the matter. Thus assessee deserves one final opportunity before the CIT(Appeals)/NFAC to properly represent the facts.Grounds of appeal raised by the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 334
  Reopening of assessment - Deduction u/s 80G on account of expenses made as corporate social responsibility - HELD THAT:- We have noticed that there is nothing to suggest that the ld. AO has examined the issue of deduction claimed u/s 80G on the funds which were also claimed to be spent for the purpose of CSR. We have also examined the reasons for reopening and approval given by the ld. PCIT. Thus, no reason to disbelieve the opinion of the CIT(A) as extracted above and the approval given by the ld. PCIT u/s. 151. The issue whether the amount claimed under as contribution towards social responsibility (CSR) expenses can also be claimed by deduction u/s 80G was not brought to the notice of the AO in the original assessment order and for reason that opening of the assessment, in our opinion, is neither bad in law nor void as is being claimed by the assessee. The finding recorded by the CIT(A) as extracted above are found to be apt and opposite which is based on said legal principle and settled precedents of law. For these reasons, we do not find any merit in the ground no. 1 and the same is accordingly dismissed. Deduction claimed u/s 80G for amounts spent on Corporate Social Responsibility (CSR) activities - We find ourselves in respectful agreement with the finding of the Hon ble Jurisdiction Tribunal M/s. Alubound Dacs India Limited [ 2024 (7) TMI 636 - ITAT MUMBAI ] to the effect that the amendment brought out by the Finance Act, 2015 to Section 80G(2)(a) of the Act which had inserted the sub Clauses (iiihk) and (iiihl) to be the only exception for qualifying a donation for claiming u/s. 80G of the Act pertaining to Swatch Bharat Kosh and Clean Ganga Fund where donation made pursuant to CSR is not an allowable deduction. This fact substantiate that CSR expenditure which falls under the nature specified in Section 30 to 36 of the Act are an allowable deduction u/s. 80G of the Act. We accordingly, direct the AO to allow the claim of the assessee subject to condition that the assessee has satisfied the other requirements under Section 80G.

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• 2025 (5) TMI 333
  Validity of reassessment notice u/s 147 - notice as unsigned by AO - HELD THAT:- A bare perusal of the notice reveals that the same unsigned. The notice is neither digitally signed nor physically signed by the AO. The note at the bottom of the page specifies that, If digitally signed, the date of digital signature may be taken as the date of the document. Since the notice issued u/s 148 is unsigned, it is invalid, and hence, the proceedings arising from the said notice are vitiated. No material has been placed on record by the Department to controvert the submissions for the assessee with regard to notice u/s.148 of the Act being unsigned. In light of the fact that the notice issued u/s. 148 is unsigned, the same is held to be invalid. Once bedrock for initiating proceedings u/s. 148 r.w.s 147 is eroded, the subsequent proceedings arising therefrom would not survive. Appeal of assessee allowed.

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• 2025 (5) TMI 332
  Denial of deduction u/s 80P(2)(a)(i) - assessee did not file the return of income within the due date which is specified in Section 139(1) - CIT(A)/NFAC dismissed the appeal on the ground that the assessee is hit by section 80AC of the Act which provides that from AY 2018-19 onwards, the deductions that come under part C of Chapter VI A can be allowed only if the assessee has furnished a return on or before the due date u/s.139 of the Act. HELD THAT:- PCCIT, Kerala has condoned the delay in filing the return of income for the AY 2019-20 beyond the due date specified u/s. 139(1) of the Act in exercise of the powers conferred upon him under clause (b) of subsection (2) of section 119 of the Act r.w.s. CBDT Circular No. 13/2023, dated 26.07.2023 with a direction that the assessee is not eligible for interest on refund if any, arising on such return of income filed belatedly. Being so, in the interest of justice and equity, we remit the issue in dispute to the file of the AO with a direction to give effect of the above order of the ld. PCCIT, Kerala vide its order dated 02.01.2025 and pass necessary order after the due verification allowing the deduction as claimed by the assessee u/s. 80P in accordance with the law. It is ordered accordingly. Appeal filed by the assessee is partly allowed for statistical purposes.

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• 2025 (5) TMI 331
  Reopening of assessment - Addition u/s 69A - HELD THAT:- We notice that both the authorities have not referred to the materials that actually refer to the assessee and the escapement of income in the hands of the assessee. Hence, in the absence of material which formed the basis for making the impugned order in all the four years, it would be difficult for the Tribunal to adjudicate the grounds, both legal and merits, raised by the assessee. Accordingly, we are of the view that all the issues contested before us require fresh examination at the end of the AO. Accordingly, we set aside the order passed by CIT(A) in all the four years under consideration and restore all the issues to the file of the AO for examining them afresh. AO is also directed to furnish the material which formed the basis for making the addition to the assessee. We also direct the assessee to fully co-operate with the AO for the expeditious completion of the assessment. After affording adequate opportunity of being heard to the assessee, AO may take appropriate decision in accordance with law.

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• 2025 (5) TMI 330
  TP Adjustment - comparable selection - TPO considered provision for doubtful debts and bank charges, as non-operating item while determining operating profits of tested party as well as comparables - Relying on the TP analysis undertaken by the TPO, AO determined the ALP of the international transactions of the Assessee to be greater than the ALP determined by the Assessee, resulting in an addition to the income of the Assessee. HELD THAT:- We find no reason to interfere in the aforesaid conclusions as there is nothing on record to support any contrary view. As with regard to the remaining grounds also there is nothing to substantiate the case of the assessee that the disallowances were otherwise not called for. Appeal of the assessee is dismissed.

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• 2025 (5) TMI 329
  Addition u/s 69B - assessee has failed to establish the linkage of the cash deposited with the transaction of sale of property of the company - HELD THAT:- In order to substantiate the receipt of payment in cash purportedly for the sale of the immovable property belonging to the company in which the assessee is the Managing Director, the assessee furnished the confirmation from the purchasers. As evident from the record that the lower authorities did not find the confirmation to be sufficient evidence to substantiate the claim of the assessee. CIT(A) enlisted the list of information/documents which could substantiate the receipt of cash deposited in assessee s bank account. There is neither any mention of any notice being issued to the assessee to furnish these documents nor any opportunity having been granted to the assessee to furnish the details as mentioned. We further find that the lower authorities have disputed the identity of the persons from whom the assessee has received the amount of INR 25 lakh in cash. As evident from the record that neither the assessee was directed to produce the said persons nor was any summon issued to them for necessary examination. Thus, restore this issue to the file of the jurisdictional AO for de novo adjudication with a direction to the assessee to furnish the documents/information as mentioned in the impugned order. Ground decided in favour of the assessee for statistical purposes. Rejection of the claim of exemption u/s 10(1) - addition on account of profit from the sale of an undivided share of land - We find that the land admeasuring 41.47 acres of land in RSY No. 312/8 and 312/6 at Nedumassery village was sold vide two sale deeds, executed during the financial year 2014-15 and 2015-16. We find that while considering a similar issue in assessee s own case in ITO v/s Babu Chandrathil George [ 2024 (5) TMI 693 - ITAT COCHIN ] as held burden to provide the primary information is on the assessee, which though the AO has the right to verify, and be satisfied with. Where not, he shall, state his reasons for the same, i.e., for not agreeing with that advanced by the assessee, forward both the set of coordinates, along with reasons, to KSREC, seeking it s opinion in the matter, and shall decide on the basis of it s report, unless of course the AO effectively rebuts it with an expert opinion, duly confronting the assessee therewith. As afore-noted, the matter warrants and, in fact, admits of a precise measurement, and the scope for an opinion in the matter is extremely limited. The AO s right to take a different view, which though cannot, inasmuch as he is to abide by law, be excluded, is to, for it to be judicially sustainable, be reasoned and supported by credible evidence. Thus we restore this issue to the file of the jurisdictional AO to comply with the directions as rendered by the coordinate bench in the decision cited supra. Appeal by the assessee is allowed for statistical purposes.

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• 2025 (5) TMI 328
  Denial of registration u/s 80G and 12AA on account of non-compliance by the assessee - HELD THAT:- As in the interest of justice, it was considered imperative that the assessee may be granted another opportunity to file its submission in response to the notice issued by the Ld. CIT (Exemption) for justifying the genuineness of the activities and claim of exemption. Hence, both the orders of the CIT (Exemption) are set aside and the matter is remanded to him for deciding the application afresh after granting an opportunity of being heard to the assessee and seeking the reply from the assessee in respect of the queries raised and in accordance with law. Appeals filed by the assessee are allowed for statistical purposes.

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• 2025 (5) TMI 327
  Revision u/s 263 - Principal CIT set aside the reassessment order directing the AO to treat the amount undisclosed income - HELD THAT:- We are of the considered view that in the instant case there was an evident omission on part of the Assessing Officer in passing assessment order, without considering / analysing material aspects concerning the assessee s case, while passing the assessment order. Accordingly, we find no infirmity in the order of Principal CIT so as to call for any interference. Whether Principal CIT is empowered to suo moto pass 263 order thereby enhancing the assessment, as in the instant case ? - As evident from plain language of section 263 Principal CIT if he consider deems fit in appropriate cases, may also pass an order enhancing the assessment order and thereby directing fresh assessment. Penalty imposed u/s 271(1)(c) in relation to the aforesaid transaction - As looking into the facts of the assessee s case, we find no infirmity in the order of Principal CIT so as to call for any interference. Assessee appeal dismissed.

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• 2025 (5) TMI 326
  Revision u/s 263 - CIT(A) setting aside the reassessment order u/s 147 r.w.s. 144 and 144B for unsecured loan transaction - HELD THAT:- It is seen from balance sheet, the other incomes declared by the assessee in which loan account written off is offered for taxation under the head Other Income . During the reassessment proceedings as informed by assessee the said amount was received in their bank a/c. through other firm. Instead of payment to respective loanee, the said amount was directly received from M/s. Anand Infrastructure. Unsecured loan received from Mayur Mavji was squared off during the year and accounted as income for that year. When we were comfortable for repayment, the said party could not be contacted and hence firm at the end of the year it was decided to write off the said amount and accounted as income for that year. Based on the same, the A.O. has not made addition on this count and passed reassessment order accepting the returned income. Since the assessee has voluntarily offered to tax, there is no question of any prejudicial to the interest of Revenue and Ld. PCIT failed to demonstrate how the reassessment order passed by the A.O. as erroneous, but without verification of records, documents, and evidences produced by the assessee during the assessment proceedings. Therefore the entire Revision proceedings is without legal basis and is liable to be quashed. Assessee appeal allowed.

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• 2025 (5) TMI 325
  Rejecting the application for grant of registration u/s 12A and cancelling the provisional registration granted earlier u/s 12AB - Assessee did not clarify properly regarding the advance and no documentary evidence or legal agreement which supports the claim of an understanding between the trust and Smt. Sushma Naik regarding the naming of the pharmacy college after her late husband s name. Also assessee did not provide any documentary evidence to substantiate the nature and purpose of the transaction with Yovak Kalyan Patsanstha HELD THAT:- As stated by assessee, the assessee has already applied before the Charity Commissioner for permission to avail loans and advances. However, no action has been taken till now. We find it is the allegation of the CIT(E) that the assessee has failed to provide any documentary evidence which supports the claim of understanding between the trust and Smt. Sushma Naik regarding the naming of pharmacy college after her late husband s name. Similarly, it is also his allegation that the trust failed to provide any documentary evidence to substantiate the nature and purpose of the transaction with Yovak Kalyan Patsanstha. It is the submission of assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details before the Ld. CIT(E) to his satisfaction. We deem it proper to restore the issue to the file of the Ld. CIT(Exemption) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue as per fact and law. The grounds raised by the assessee are accordingly allowed for statistical purposes.

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• 2025 (5) TMI 324
  Dismissal of appeal by CIT(A) on account of non-prosecution - Validity of reassessment proceedings - HELD THAT:- Admittedly, the first notice for response in the appellate proceedings before the FAA was issued on 03.11.2022 towards which the assessee requested for adjournment, thereafter the second notice was issued on 14.01.2024, again the assessee requested for adjournment for which the next date for representation was granted on 07.11.2024, but the assessee yet again requested for adjournment though there was no whisper about this adjournment in the order of CIT(A). CIT(A) on the other hand had observed that there was no compliance by the assessee towards the notice dated 07.11.2024. In our considered opinion reasonable opportunities are not afforded to the assessee, as the adjournment application of the assessee was not considered or referred by the Ld. CIT(A), and before us also, there was no rebuttal by the revenue on this aspect, therefore, we find it appropriate, in the interest of justice, that the assessee should be provided with one last opportunity of representing itself before the First Appellate Authority, therefore, the matter is restore back to the files of Ld. CIT(A) with the directions to decide the issues raised in the appeal within the period of 3 months from the date of receipt of this order.

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• 2025 (5) TMI 323
  TP Adjustment - MAM selection - TNMM or CUP - whether TNMM method is the most appropriate method applied by the appellant assessee as against the Comparable Uncontrolled Price (CUP) method applied by the revenue in determining the total income of the assessee? - HELD THAT:- We hold that TNMM method (as against the Comparable Uncontrolled Price (CUP) method) adopted by the assessee was the most appropriate method for benchmarking the international transaction of sale/exports of goods. The impugned order related to the transfer pricing adjustment is accordingly set aside. The matter is restored to the file of learned assessing officer for determination of ALP of the assessee s transaction of export of goods to its AE (Omni Active Health Inc. USA) as per TNMM method as adopted by the appellant. The aforesaid point is accordingly determined in positive in favour of the appellant assessee and against the respondent revenue. Assessee s appeal is allowed for statistical purposes.

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• 2025 (5) TMI 322
  Validity of reopening of assessment beyond period of limitation - contentions of revenue that the period of 14 days to be considered from the date of letter / email communication issued HELD THAT:- Apropos, the contentions of revenue that the period of 14 days to be considered from the date of letter / email communication issued on 08.06.2022 attached therewith the copy of SCN u/s 148A(b) dated 26.05.2022, was only a reminder letter/ communication and the same cannot substitute or extend the date for issuance of SCN u/s 148A(b). Further, the revenue was not permitted to allow the assessee to respond within two weeks time from the date of such reminder communication, which in accordance with the judgment of Ashish Agarwal [ 2022 (5) TMI 240 - SUPREME COURT] was to be calculated from the date of SCN u/s 148A(b) (issued within 30 days from 04.05.2022). In view of such observations, it is incomprehensible to concur with the contention placed before us by the revenue as per report of the Ld. AO dated 07.02.2025 we, thus, find no substance in such argument by the revenue, accordingly, the same stands rejected. Thus issue is squarely covered by the decision of this tribunal in the case of Kachrulal Jitendra Kumar [ 2025 (2) TMI 865 - ITAT RAIPUR ] in terms of our decision and findings in the said case. In this case presently as the order u/s 148A(d) of the Act was issued on 26.07.2022 and the notice u/s 148 (new regime) of the Act was issued on 29.07.2022, much beyond the period of limitation as was available with him up to 14.06.2022, therefore, the contentions raised by Ld. AR found to be of substance that the order u/s 148A(d) as well as the notice u/s 148 (new regime) are barred by limitation, accordingly, the assessment order passed by the Ld. AO u/s 147 r.w.s. 144B of the Act dated 30.05.2023, dehors a valid notice issued u/s 148 of the Act cannot be sustained, liable to be quashed, and we do so. Decided in favour of assessee.

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• 2025 (5) TMI 321
  Validity of order passed u/s 143(3) r.w.s.144C(3) as passed beyond the period of limitation provided u/s 153 - DR has contested to make out a case that since it is a case of amalgamation of Legrand into Novateur, ultimately the onus is on Novateur only and therefore has no bearing even if a combined order has been passed by the TPO HELD THAT:- TP order, dated 12.01.2015 passed in the case of Legrand had merged into the final assessment order, dated 20.04.2015 passed in the case of Legrand itself for Assessment Year 2011-12. Moreover, CIT(A) in the case of Legrand has quashed the final assessment order on the ground that the same has been passed in the name of non-existent entity. Thus, when the aforesaid TP order which got merged into the final assessment order of Legrand, which has been quashed, it has no legality on its standalone basis and cannot be referred into the proceedings of Novateur for the purpose of passing draft assessment order and thereafter the final assessment order. Accordingly, the extended time limit of 12 months cannot be made available for passing the final assessment order in the case of Novateur, i.e., the assessee. We, thus find that the final assessment order ought to have been passed on or before 31.03.2015, which in fact has been passed on 12.05.2015 and is thus beyond the period of limitation, liable to be quashed. We hold that the impugned order passed u/s.143(3) r.w.s. 144C, dated 12.05.2015 is barred by limitation as it ought to have been passed on or before 31.03.2015. Thus, assessee succeeds on ground No.1 contesting on the validity of final assessment order.

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• Customs

• 2025 (5) TMI 320
  Validity of the order of High Court in Quashing the SCN due to delayed adjudication - it was held by High Court that The issuance of innumerable notices would also not absolve the respondents of their statutory obligation to proceed with promptitude bearing in mind the overarching obligation of ensuring that disputes are resolved in a timely manner and not permitted to fester - HELD THAT:- Counsel for the Revenue argued that, the impugned judgment and order passed by the High Court of Delhi needs to be suspended from its operation as the same is creating lot of problems for the Revenue. Since we are looking into the larger issues involved in this matter, we may only say that if any matter comes up for hearing before the Tribunal or any of the High Courts on the subject in question, the hearing may be deferred till we take an appropriate call in the matter. List the matter after Summer Vacation.

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• Insolvency & Bankruptcy

• 2025 (5) TMI 319
  Maintainability of petition - writ petition not filed through proper authority - Retrospective enhancement of the annual value of the petitioner s property by the municipal corporation - recovery of government dues from the petitioner for the period prior to the approval of the Resolution plan. Maintainability of petition - HELD THAT:- Perusal of the record reveals that the present writ petition has been filed by petitioner No. 1 through petitioner No.2 who is duly authorized by the Board of Directors of the petitioner No. 1 to represent the petitioner No. 1 in the present proceedings. This Court finds no infirmity in the said authorization and therefore, rejects the preliminary objection raised by the respondent corporation qua the maintainability of the present writ petition. Recovery of government dues from the petitioner for the period prior to the approval of the Resolution plan - HELD THAT:- The Hon ble Supreme Court, in Ghanshyam Mishra Sons Pvt. Ltd. [ 2021 (4) TMI 613 - SUPREME COURT] , examined the specific question of whether any creditor including the Central Government, State Government, or any local authority is bound by the resolution plan once it is approved by the Adjudicating Authority under Section 31 (1) of the Insolvency and Bankruptcy Code (IBC). The Hon ble Apex Court held that once a resolution plan is duly approved under Section 31 (1) of the IBC, the claims as provided in the resolution plan shall be frozen and will be binding on the corporate debtor and its employees, members, creditors (including the Central Government, any State Government, or any local authority), guarantors, and other stakeholders - The Hon ble Supreme Court further declared that all dues, including statutory dues owed to the Central Government, any State Government, or any local authority, if not included in the resolution plan, shall stand extinguished, and no proceedings in respect of such dues for any period prior to the date of approval by the Adjudicating Authority under Section 31 may be continued. It is evident that all dues, including statutory dues owed to the Central Government, any State Government, or any local authority, if not included in the resolution plan, shall stand extinguished, and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 of the IBC may be continued. Thus, the demand raised by the respondent corporation up to the date of approval of the Resolution Plan stands extinguished. As regards the subsequent period, i.e., period after 11.08.2023, the respondent corporation is entitled to make assessment in accordance with law. Conclusion - i) The writ petition filed by the petitioner through an authorized representative is maintainable. ii) The municipal corporation s claims for property tax dues prior to the date of approval of the Resolution Plan, which were not included in the Resolution Plan, stand extinguished by operation of law. Petition disposed off.

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• 2025 (5) TMI 318
  Maintainability of application u/s 60(5) of the IBC - applications filed by the ex-employees seeking payment of outstanding dues from the new entity that acquired the erstwhile company under the resolution process - HELD THAT:- There are substance in the objection raised by the respondent. The entity under which the applicants are claiming their employment and their dues against erstwhile entity has been resolved with the approval of the NCLT by order dated 02.02.2021. The grievance, if any, shall arise out of the said order and appropriate remedy available to the applicant was to file application before the NCLT in the CA 1163/2020 in C.P. 3638/MB/2018. Section 60(5) which has been referred to by the applicant in the application could have been availed before the NCLT Mumbai, where the erstwhile entity in which the applicants were working has been resolved. The above applications filed by the applicant need not be entertained by the Appellate Tribunal. Application are disposed of with liberty to the applicant to raise grievances, if any - Both the applications stand disposed of.

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• PMLA

• 2025 (5) TMI 317
  Money Laundering - scheduled offences - mainatinability of Provisional Attachment Order - whether the amount was forefeited before the attachment as per forfeiture clause, namely, Clause 8 thereof - overriding effect given to the provisions of PMLA, 2002 over the agreement clause - kite flying - duping the State Bank of India, Main Branch, Kanpur of Rs. 46.42 crore in connivance with certain officers of the branch by availing credit facilities without having sufficient funds. Whether or not the amount could still be validly attached by the directorate in view of the overriding effect given to the provisions of PMLA, 2002, notwithstanding the fact that the amount already stood forfeited by the appellant? HELD THAT:- There is little room for any doubt that the provisions of the Act, including those relating to attachment of properties under Section 5, would definitely prevail over the agreement signed by the parties in exercise of the general law provisions. This position would prevail even where the party holding the property (the FDs) in question was otherwise neither found to be involved nor complicit in the commission of the scheduled offence in any manner and was not even aware of the tainted nature of the property. The Hon ble Supreme Court in its landmark judgment in Vijay Madanlal Choudhary Ors. v. Union of India Ors. [ 2022 (7) TMI 1316 - SUPREME COURT (LB) ] has categorically held that the sweep of Section 5(1) is not limited to the accused named in the scheduled offence. It was further held by the Apex Court in that case that the objective of enacting the Act was the attachment and confiscation of proceeds of crime which is the quintessence, so as to combat the evil of money-laundering, by reaching the proceeds of crime in whosoever s name they are kept or by whosoever they are held. Therefore, so long as there is material to indicate that the source of the money was proceeds of crime as defined by the Act, it can be validly attached by the Directorate in exercise of powers under the Act, regardless of whether the current holder of the property (the appellant herein) himself stood charged of any offence or not or even knew about its tainted nature. In the present case, the material on record clearly indicates that Shri Hinish Ramchandani and other partners of M/s SRS Investment Company, having duped the State Bank of India, Main Branch, Kanpur of Rs. 46.42 crore in connivance with certain officers of the branch by availing credit facilities and also by resorting to the practice of kite-flying without having sufficient funds in the account of the said company. There are valid reasons to believe that the funds passed on by the company to the present appellant as earnest money was out of the said proceeds of crime obtained by duping the bank, though this fact may have been unknown to the present appellant while entering into the agreement for the sale of the property. As such, the amount clearly answers to the description of proceeds of crime as defined under section 2(1)(u). A contention has been raised by the appellant that a part of the money (Rs. 7 lacs) out of the earnest money was spent by the Appellant out of the amount of Rs. 2.02 crores - it is found that although a contention has been raised, there is nothing on record to prove the authenticity of the claim. Moreover, once it has been held that the appellant had received an amount of Rs. 2.02 crores out of the proceeds of crime generated by the company, even if it was without knowledge of its tainted nature, the fact that he had utilized a part of the amount and made good the same by adding his own funds would not make the amount immune from attachment under the Act since the definition of proceeds of crime under the Act expressly includes the value of such property. The next contention is that PMLA does not have retrospective operation. About Rs. 1.51 crores were received by the Appellant in May, 2009 and Sections 120-B 420 IPC and Section 13 of the Prevention of Corruption Act, 1988 were added into the Schedule of the PMLA, 2002 on 01.06.2009 through an amendment. Thus, in any event, on the date on which the said amount came into the hands of the Appellant, there was no offence within the meaning of the PMLA, 2002. It is by now well-settled that the issue of retrospectivity or otherwise insofar as the offence of money laundering is concerned, has to be examined with reference to the time of commission of the act which constitutes money laundering under Act and not with reference to the time of commission of the act which constituted the scheduled offence. In other words, regardless of whether the predicate offence was committed before or after it was added to the Schedule to the PMLA, the commission of the offence of money laundering has to be reckoned with reference to the date or dates on which any of the actions which constitute money laundering were committed. This would include concealment/ possession/ acquisition/ use/ projecting or claiming of proceeds of crime to be untainted property. If any of these actions take place after the offence from which the proceeds were derived was added to the Schedule, the offence of money laundering would be committed. There is nothing on record to support the claim of the Bank that the amount of earnest money paid by the company was Rs. 4.02 crores and not Rs. 2.02. No doubt, a claim to this effect has been made in the letter dated 04.09.2010 written by the Advocate representing Sh. Hinish Ramchandani to the appellant. However, the same is just a bland averment in writing without any supporting material. The amount mentioned in the impugned order is Rs. 2.02 crores only, which is the subject matter of attachment and therefore, the subject matter of this appeal. The issues averred in these contentions are outside the mandate of this Tribunal, nor do they arise out of the impugned order. Needless to say, the property attached by the directorate was the amount of Rs. 2.02 crores lying in the form of FDRs which has been challenged in this appeal. The immovable property referred to has not been attached and the manner in which the appellant, as its owner, has dealt with it, is not before this Appellate Tribunal. Conclusion - The earnest money paid under the Agreement to Sell stood forfeited prior to attachment. The forfeited amount nonetheless constituted proceeds of crime under the PMLA and was validly attached. The overriding effect of the PMLA prevails over contractual forfeiture and findings of other fora. Appeal dismissed.

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• Service Tax

• 2025 (5) TMI 316
  Levy of service tax on the remuneration paid to the directors of the appellant company - such remuneration is claimed to be salary paid to whole-time directors in an employer-employee relationship - negative listed service in terms of section 66D of the Act or exempted service under Mega Exemption N/N. 25/2012-ST dated 20-06-2012 - HELD THAT:- The adjudicating authority has chosen to ignore the appellant s contention that there is an employer employee relation on the grounds that no appointment order has been produced. It is also seen that the adjudicating authority has noted the definition of salary as defined under Section 17(1) of the Income Tax Act, 1961 yet has chosen to hold that the directors are not employees as in his view, the term salary does not include remuneration, sitting fee etc., paid to the directors and thereby the exclusive clause of Section 65B(44) is inapplicable. Strangely, he has chosen to do so, without controverting the evidence adduced by the appellant along with its reply, by way of resolutions passed by the Board of Directors in accordance with the Companies Act which stated inter-alia that the directors concerned in the notice have been appointed as whole time directors and will be entitled to a salary as may be fixed from time to time. He has also ignored the Form 16 issued as a Certificate under Section 203 of the Income Tax Act, 1961 for tax deducted at source on salary in respect of these directors that was adduced in evidence. This Tribunal in Maithan Alloys Ltd v. Commissioner of C.Ex ST, Bolpur [ 2019 (4) TMI 1595 - CESTAT KOLKATA] has held that demand of service tax on remuneration paid to whole-time directors cannot be sustained and hence set aside. The appellant has enclosed the very same evidence of Board Resolutions as well as Form 16 of the concerned Directors, along with the appeal records, which given the earlier decisions of this Tribunal, evidence the employer employee relationship between the appellant and the directors involved in this notice. There is no contrary evidence let in that the Directors mentioned in the notice are rendering any other services to the appellant - the adjudicating authority has grossly erred in his finding that these directors were not employees of the appellant and in confirming the demand made along with applicable interest on the appellant and imposing penalty on the appellant. Conclusion - Services rendered by such directors fall within the employer-employee relationship and are excluded from service tax under Section 65B(44)(b) of the Finance Act. Appeal allowed.

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• 2025 (5) TMI 315
  Calculation of service tax of tour operator service - inclusion of value of air and train ticket charges collected from clients in the taxable value of the Tour Operator service - HELD THAT:- The issue involved in the present appeal has already been covered by the decision of the Tribunal Chennai in the Appellant s own case [ 2023 (9) TMI 78 - CESTAT CHENNAI] where it was held that the demand of Service Tax on the consideration and for booking of tickets in respect of domestic travel is not a taxable event and hence, to this extent, the direction of the Commissioner (Appeals) cannot sustain. Conclusion - Mere booking or trading of air/train tickets without arranging or organizing a tour does not constitute a taxable Tour Operator service under the Service Tax regime. The value of such ticket bookings cannot be included in the taxable value for service tax computation under the Tour Operator category. Appeal allowed.

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• Central Excise

• 2025 (5) TMI 314
  Levy of penalty u/r 26 of the Central Excise Rules, 2002 on appellant company - main assesses has settled the issue under SVLDRS - suppression of facts or not - extended period of limitation - HELD THAT:- It is found that M/s. Super Auto Electricals Pvt. Ltd. who was a Job Worker and the main party against whom the demand of duty along with interest and penalty was confirmed and the said job worker has already settled the issue of demand of duty along with interest and penalty under SVLDRS and this Tribunal vide its order dated 22.01.2021 dismissed the appeal as withdrawn under SVLDRS. CESTAT in various decisions has set aside the penalty on co-assessees when the main assessee has settled the issue under scheme but co-assessees failed to submit the required declaration. Conclusion - The imposition of penalty on co-assessees was set aside, once the main assesses has settled the issue under SVLDRS. The impugned order is set aside - appeal allowed.

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• CST, VAT & Sales Tax

• 2025 (5) TMI 313
  Recovery of dues - priority of claim over the dues - secured creditor (Petitioner-Bank), having registered its security interest under the SARFAESI Act with CERSAI prior to the attachment order by the Sales Tax/M-VAT Department, has priority over the State s claim and charge on the secured asset or not - HELD THAT:- The core issue involved in the present matter is no more res integra in the light of the view taken by this Court in the Full Bench Judgment of Jalgaon Janta Sahakari Bank Ltd [ 2022 (9) TMI 163 - BOMBAY HIGH COURT ]. Once the security interest of the creditor is registered under the provisions of the SARFAESI Act with CERSAI Act, the priority as provided under Section 26-E comes into play. In the present matter admittedly, the security interest is registered with CERSAI on 09/07/2011 and much thereafter, on 02/02/2015, the order of attachment of secured asset has been passed by the Tax Officer. Respondent No. 1 has only produced attachment order and one 7/12 extract of the secured asset with its reply. Nothing else is produced. Not even Mutation Entries under which the encumbrance is recorded. No material in support of any steps for proclamation is produced. It is noted here that nothing is brought to notice that the attachment order was registered with CERSAI by the Respondent Tax Authorities as required under section 26B(4) of the SARFAESI Act. The authorities were bound by the said requirement after 24/01/2020 when chapter IVA was brought on the statute book including section 26B to 26E thereof. It is material to note that the sale has taken place as e-auction sale under notice dated 06/12/2022 and there was sufficient time in the interregnum for the Respondent Authorities to register its attachment order. Undisputedly, it is also not shown of steps taken by the Respondent State to undertake the proclamation of attachment order as contemplated with beat of drum or other customary mode or its copy being affixed on some conspicuous part of the secured asset and also on the notice board of concerned Talathi office. Therefore it cannot be said that Respondent No. 8 had either constructive or actual notice of the State dues. In that view of the matter, Respondent No. 8 can not be held bound to pay the State dues and it can not be said that the encumbrance will continue on the secured asset. Conclusion - The Petitioner-Bank has a priority over Respondent Nos. 1 and 2, who do not have charge over the secured asset sold to the Respondent No. 8. The Petitioner-Bank having sold the secured asset to the Respondent No. 8 during the enforcement of the security interest under the provisions of SARFAESI Act, it gives clear title to the Respondent No. 8, free from encumbrance claimed by the Respondent Nos. 1 and 2 Tax Authority. Petition allowed.

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• 2025 (5) TMI 312
  Condonation of delay of 29 days in payment of the last two installments under the Vera Samadhan Yojna, 2019 amnesty scheme, due to Covid-19 pandemic hardships - HELD THAT:- It is the uncontroverted position that after paying a substantial amount of approximately a little less than Rs. 3,00,000/-, the Petitioner was unable to pay an amount of Rs. 55,780/-, only within the time within which he was required to pay, but nevertheless paid the entire amount under the Scheme. In this circumstances, it can be inferred that the Petitioner must have succumbed to dire and compelling necessity and reasons beyond the control of the Petitioner that the timeline for the last two installments only could not be adhered to by the Petitioner. The clear and unequivocal intention to avail the Scheme can be noticed from the fact that the Petitioner although belatedly paid up the entire amount. In Sunflowers [ 2020 (1) TMI 265 - GUJARAT HIGH COURT] , this Court discussed the object and purpose of the Amnesty Scheme as the object of the amnesty scheme is to bring about expeditious and effective resolution of old disputes and recoveries of old outstanding dues of the Government and reduction of administrative costs. Since such scheme is applicable to all pending cases, the officers acting under the relevant statutes are expected to respect the object of the scheme and to ensure that the assessees get the benefit under the scheme. From the Order of the Hon ble Apex Court in Yashi Construction [ 2022 (3) TMI 110 - SC ORDER] , it is not apparent whether Covid hardship etc. were either pleaded before the Court or whether the amount concerned was fully paid up by the Assessee in the said case. Hence, this Court in these circumstances deems it more appropriate to follow the decision of the Hon ble Apex Court in the case of Dalchandra Rastogi Vs. CBDT [ 2019 (2) TMI 420 - SC ORDER] , which has been referred to and relied upon by a Division Bench of the Hon ble Delhi High Court in IA Housing [ 2022 (11) TMI 1308 - DELHI HIGH COURT] . This Court is accordingly of the view that the Petitioner, due to demonstrable hardships was unable to pay the last two installments under the said Scheme after having diligently paid the first ten installments within the stipulated time, cannot be said to have rewritten or modified the Vera Samadhan Yojna 2019 in any manner. As held in the catena of decisions of this Court, the Hon ble Delhi High Court as well as the Hon ble Supreme Court, the object and purpose of an Amnesty Scheme has to be seen from that angle which furthers the object of the Scheme, than which merely renders the Scheme illusory and denies the benefit to the Assessee and adds to the pendency of conflicts with the State. In such view of the matter, the present petition succeeds. The delay of 29 days in making the payment under the aforesaid scheme is hereby condoned. Conclusion - The Petitioner, due to demonstrable hardships was unable to pay the last two installments under the said Scheme after having diligently paid the first ten installments within the stipulated time, cannot be said to have rewritten or modified the Vera Samadhan Yojna 2019 in any manner. The delay is condoned. Application allowed.

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• Indian Laws

• 2025 (5) TMI 311
  Claim for specific performance of the agreement of sale - Validity of the Forfeiture of Advance Money - Law on the Alternative Relief of Refund of Earnest Money under Section 22 of the 1963 Act. Validity of the Forfeiture of Advance Money - Difference between Earnest Money and Advance Money - HELD THAT:- In the case of Videocon Properties Ltd. v. Bhalchandra Laboratories [ 2003 (12) TMI 592 - SUPREME COURT ], while assessing the difference between advance and earnest , this Court took the view that the words used in the agreement alone cannot be determinative of the true nature of the amount advanced. Instead, the intention of the parties and the surrounding circumstances serve as more apt indicators. Further, the Court observed that earnest money fulfils a dual purpose: first, it operates as part-payment of the purchase price and; secondly, as security for the performance of the contractual obligations. Thus, its true character and purpose can only be canvassed on a close reading of the agreement, and the relevant contextual factors. In Satish Batra v. Sudhir Rawal, [ 2012 (10) TMI 595 - SUPREME COURT ], this Court emphatically held that it is only the earnest money , paid as a pledge for the due performance of the contract, that can be forfeited by the seller on account of the buyer s default. In the same vein, earnest money can also be doubled and paid back to the buyer if the contract falls through due to the seller s default. An amount which is in nature of an advance or serves as part-payment of the purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. The Court further held that despite the existence of an outright forfeiture clause, it shall not apply if the amount stipulated in the contract is found to be only in the nature of part-payment of the purchase price. Consequently, the forfeiture of advance money as part of earnest money can only be justified if the terms of the contract are clear and explicit to that effect. The amount of Rs.20,00,000/- termed as advance money in the ATS, was essentially earnest money . In other words, it was in the nature of a guarantee for the due performance of the contract. In a fashion akin to earnest money, the said amount was paid at the very execution of the ATS. It was meant to be adjusted against the total sale consideration of Rs.55,50,000/- if the transaction was carried out, which is evident from the ATS clause that states the balance sale consideration to be as Rs.35,50,000/-. Further, it was liable to be forfeited in the event that the transaction fell through by reason of the default on part of the purchaser. Consequently, when the appellantpurchaser failed to comply with the contractual stipulation of paying the balance sale consideration within a period of four months from the date of the agreement, the respondent nos. 1-4 (vendors) were justified in forfeiting the advance money. It can be sufficiently inferred that the inclusion of the forfeiture clause in the ATS was intended to bind the contracting parties and ensure the due performance of the contract. This is particularly significant given the stipulated four-month period for completing the sale transaction and the primary object of executing the ATS, being the urgency of the respondent nos. 1 4 regarding the OTS, which was known to the appellant, as recorded by the Trial Court. The findings of the Trial Court, along with the impugned judgment affirming that time was of the essence, further substantiate the said intent. Permissible Extent of Forfeiture - HELD THAT:- A clause for the forfeiture of earnest money is not penal in the ordinary sense, rendering Section 74 of the 1872 Act, inapplicable. In the present case, the stipulated amount under the ATS was in the nature of an earnest money deposit and thus, Section 74 of the 1872 Act cannot apply to the same. Further, the forfeiture clause was fair and equitable rather than one-sided and unconscionable, as it imposed liabilities on both the appellantpurchaser and respondent-sellers, wherein the seller was obligated to pay twice the advance amount paid by the buyer in case of his default - the forfeiture of the entire amount of advance money by the respondent nos. 1-4 would still be justified on the ground that there was breach of contract by the appellant, which led to financial losses for the respondent nos. 1-4. Such losses, as specifically pleaded and proved by the evidence led before the Trial Court, far exceeded the amount forfeited under the ATS, a position that was duly noted and accepted by the Trial Court. Law on the Alternative Relief of Refund of Earnest Money under Section 22 of the 1963 Act - HELD THAT:- It is a settled position of law that the plaint may be amended at any stage of the proceedings to enable the plaintiff to seek an alternative relief, including that of refund of earnest money, and the courts have been vested with wide judicial discretion to permit such amendments. However, under Section 22 of the 1963 Act, the courts cannot grant such relief suo moto, since the inclusion of the prayer clause remains a sine qua non for the grant of such a relief. In other words, when an appropriate case exists for seeking the said relief under this provision, it must be specifically sought either in the original plaint or by way of an amendment. The law contained under Section 22(2) of the 1963 Act is adequately broad and flexible to allow the appellant to seek an amendment of the plaint for the said relief, even at the appellate stage. However, no such application for an amendment of the plaint was moved either before the trial court or during the course of the first appeal before the High Court. That is to say, the appellant never prayed for the refund of the advance money. Here, it would be redundant to state that the law aids the vigilant, not those who sleep over their rights. Conclusion - The forfeiture of advance money by the respondent nos. 1-4 was justified. The purchaser s claim that the vendor failed to produce probate certificate is held to be false and irrelevant as the ATS did not require such production. Appeal dismissed.

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