Income Tax Law – Penalty under Section 271D – Bar of Limitation – Revenue's Appeal Dismissed – ITAT’s Decision Upheld – Limitation for Penalty Proceedings – Distinction Between Initiation and Completion – Section 275(1)(c) of the Income Tax Act, 1961 – Whether initiation of penalty proceedings under Section 271D is time-barred – Held: Penalty proceedings initiated based on a reference by the ITO to the Additional Commissioner must be reckoned from the date of reference (16.11.2016 in this case) – Completion of penalty proceedings was beyond the prescribed limitation period, rendering the penalty order invalid [Paras 6.1–6.9].

Doctrine of Delay and Laches – Absence of Statutory Provision – Courts cannot create limitations – Initiation of penalty proceedings cannot be left to the discretion of authorities, as it defeats legislative intent – Reference by the ITO is the triggering point for initiation of penalty proceedings [Paras 6.4–6.7].

Interpretation of Section 275(1)(c) – Purposive Interpretation – Statutory language does not prescribe limitation for initiating penalty proceedings but emphasizes timely conclusion of proceedings once initiated – Delay in issuing show-cause notice (nearly a year) demonstrates lack of diligence by the Revenue [Paras 6.6–6.7].

Case Law Analysis – Delhi High Court's Interpretation – Turner General Entertainment Networks and Clix Capital Services Pvt. Ltd. analyzed to establish that penalty proceedings are initiated at the first step (reference to competent authority) – Distinguished Grihalakshmi Vision case as fact-specific and not applicable in the present context [Paras 6.2–6.8].

Reliance on CBDT Circular – Departmental View – Circular No. 9/DV/2016 found inapplicable where High Court decisions conflict with departmental interpretation – Legislative amendment recommended for clarity [Para 6.9].

Decision: Questions of law reframed in favor of the Assessee – Initiation of penalty proceedings reckoned from the date of ITO's reference (16.11.2016).
Penalty proceedings held time-barred – Appeal by Revenue dismissed – Costs made easy.
 

Writ – Taxation Law - Exemption under Section 80G – Denial of Renewal – Non-Charitable Use of Funds Not Proven – The Commissioner of Income Tax rejected the petitioner-Trust’s application for continuation of exemption under Section 80G of the IT Act on grounds that the Trust allegedly did not engage in charitable activities and misused funds by making donations to unrelated entities – Held: The denial was based on assumptions and lacked substantial evidence – The Trust’s donations to registered charitable societies, also exempt under Section 80G, could not be held to contravene its objects without proving personal benefits or diversion of funds – Renewal of exemption allowed [Paras 14-18, 20].

Section 12A Registration – Foundation for Charitable Activities – Interference with Exemption Improper Without Revoking Registration – The Trust’s registration under Section 12A(a) was not revoked by the authorities – Once registration is valid, denial of exemption based on alleged deviation from objects is untenable unless supported by substantial evidence of misuse or deviation – Respondents failed to establish that the Trust acted beyond its objectives or for non-charitable purposes [Paras 12-15, 17].

Reassessment under Section 147 – Notice Invalid in Light of Exemption – Reassessment Quashed – The notice for reassessment under Section 147 for the AY 1995-96 was based on the same grounds as the denial of exemption under Section 80G – Since the denial of exemption was found invalid, reassessment notice was also quashed – Held: No substantive grounds existed for reopening the assessment [Paras 8-10, 20].

Charitable Objects and Donations – Ancillary Activities Permissible – Donations Not a Bar to Exemption – Donations made by the Trust to other registered charitable organizations (e.g., Sardarni Uttam Kaur Education Society) were in line with its ancillary charitable objects and were neither prohibited nor demonstrated to benefit trustees personally – Held: Ancillary activities supporting main objects qualify as charitable and do not disentitle exemption [Paras 14-17, 19].

Decision: Writ petitions allowed – Orders denying exemption under Section 80G and reassessment notice under Section 147 quashed – Exemption under Section 80G restored.
 

Civil Law - Specific Performance – Readiness and Willingness – Non-Compliance – Relief Denied - The agreement holder sought specific performance of a sale agreement executed in 1973 but issued a legal notice to the owners only in 1996, after a delay of 23 years. Readiness and willingness, being distinct and essential elements for seeking specific performance under Section 16(c) of the Specific Relief Act, were not established. The unexplained delay in taking steps to complete the transaction disentitled the plaintiff from claiming specific performance. [Paras 27-28, 36].

Limitation vs. Readiness and Willingness – Suit Within Time but Performance Delayed – While the suit for specific performance was filed within three years of issuing the legal notice (1996), the 23-year delay in initiating any action prior to filing the suit reflected the plaintiff’s lack of readiness and willingness to perform the agreement. Readiness and willingness were to be adjudged based on conduct and attending circumstances, which the plaintiff failed to establish. [Paras 28, 29].

Section 53A of the Transfer of Property Act – Protection Denied - The agreement holder claimed protection under Section 53A to retain possession of the suit property. However, the mandatory condition of demonstrating continuous willingness to perform the agreement was not met. Consequently, the protection under Section 53A was denied, and the agreement holder was directed to vacate and hand over possession of the property to the owners. [Paras 39-42].

Owners’ Rights – Declaration of Ownership and Refund Ordered - The owners, being the legal heirs of the deceased seller, were declared absolute owners of the suit property. The agreement holder was directed to vacate the property and hand over possession to the owners. Additionally, the owners were directed to refund the advance payment of ₹5,000 received under the sale agreement along with 12% interest from the date of the suit till payment. [Paras 42-44].

Discretion in Granting Specific Performance – Principles Reiterated - The court reiterated that specific performance is a discretionary relief and will not be granted where the plaintiff fails to act diligently or demonstrate readiness and willingness to perform contractual obligations. Delay and inaction on the part of the agreement holder disentitled him from claiming specific performance. [Paras 27-28, 36, 40].

Decision: The appeals were allowed. The judgment and decree dated 22/06/2006 passed by the First Appellate Court in RA Nos. 24, 25, and 27 of 2003, as well as the judgment and decree dated 28/01/2003 passed by the Trial Court in OS Nos. 60/1997 and 162/1996, were set aside. The suit for specific performance (OS No. 60/1997) was partly decreed by directing the owners to refund the advance amount of ₹5,000 with 12% interest per annum from the date of the suit till the date of payment. The agreement holder was directed to vacate the suit property and hand over possession to the owners. The suit for declaration (OS No. 162/1996) was decreed by declaring the plaintiffs (owners) as the absolute owners of the suit property and directing the revenue authorities to update the revenue records to reflect the ownership of the plaintiffs.

Specific Relief – Possession under Section 6 – Requirement of Settled Possession – Suit Dismissed – The respondent/plaintiff filed a suit under Section 6 of the Specific Relief Act, claiming illegal dispossession by the petitioner from two rooms on the ground floor of the suit property – High Court held that the respondent failed to prove settled physical possession or dispossession without due process of law – Possession of the plaintiff in the remaining portions of the property was not disputed – Held: Section 6 relief denied as joint possession with the deceased owner was unsubstantiated [Paras 40, 44-46].

Rights of Legal Heirs – Class II Heirs – Defendant's Occupation – The petitioner, as a Class II legal heir, occupied the suit property after the demise of the original owner, Smt. Shanti Rani Gupta – High Court emphasized that any claim to title or share in the property should be pursued in appropriate legal proceedings – Possession after the owner’s death was not unlawful under Section 6 of the Specific Relief Act [Paras 44-45].

Documentary Evidence – Insufficient Proof of Possession – Voter ID and correspondence addressed to the plaintiff’s daughter at the suit property were produced – High Court held these insufficient to prove settled possession of the two rooms on the ground floor, which were exclusively occupied by the deceased [Paras 42-43].

Will and Separate Suit for Title – Impact on Section 6 Proceedings – Plaintiff referenced a registered Will claiming 1/3 ownership of the property – High Court observed that the Will’s validity and title were not issues in the Section 6 suit – Plaintiff’s separate title suit for ownership was already pending [Paras 34, 44].

Trial Court's Misapplication of Section 6 – Trial Court presumed dispossession and settled possession without cogent evidence – High Court reversed the decision, emphasizing the burden on the plaintiff to prove settled possession and illegal dispossession [Paras 28, 46].

Decision – Revision Petition Allowed – The impugned judgment and decree dated 05/08/2023 passed by the Trial Court is set aside – The respondent’s suit under Section 6 of the Specific Relief Act is dismissed – Held: Parties may pursue ownership claims through appropriate legal proceedings [Paras 47-48].

Criminal Conspiracy - Bail Application – Petitioner accused of involvement in an international conspiracy with links to Pakistan's ISI – Investigation revealed monetary transactions in the petitioner’s account at the direction of a Pakistani national – Held: Prima facie evidence indicates involvement in a network involving foreign intelligence officers, raising concerns of national security – Bail denied in the larger interest of justice and national security [Paras 3, 7-8].

Parity in Bail - Differentiation Based on Role – Petitioner argued for parity with co-accused granted bail – Court found the petitioner’s case distinct due to direct financial links with a Pakistani intelligence officer – Held: Parity in bail cannot be claimed when the gravity of the allegations and role differ significantly [Paras 5-7].

Prima Facie Evidence - Consideration in Bail Refusal – The Court noted transfer of money into the petitioner’s account, involvement in OTP sharing networks, and seizure of SIM cards used in illicit transactions – These factors established prima facie culpability, justifying denial of bail [Paras 7-8].

Decision: Bail application dismissed – Court emphasized the seriousness of the allegations, potential security threats, and ongoing investigation as reasons for rejecting the bail plea.

Contempt Jurisdiction – Applicability of Section 19 of Contempt of Courts Act – Appeal Maintained – The appellant challenged the order of the Contempt Court imposing costs of ₹50,000 for alleged non-compliance with a prior judgment. Held: The appeal is maintainable under Section 19 of the Contempt of Courts Act when the impugned order is incidental to or inextricably connected with punishment for contempt [Paras 24(a)-(b), 27].

Contempt Proceedings – Premature Coercive Action – Requisite Procedural Safeguards Ignored – Contempt Court imposed costs without framing charges, affording an opportunity to file affidavits, or considering extenuating explanations. Held: Such action violates the procedural requirements under Rule 10 of the Punjab and Haryana High Court Contempt of Court Rules, 1974 [Paras 34-35].

Appealability of Contempt Orders – Principles from Midnapore Case Applied – An appeal lies under Section 19 where an order is connected with contempt punishment or aims to enforce compliance through coercive means. Held: The impugned order is appealable as it indirectly seeks compliance by imposing costs, equating to punitive action [Paras 26-27].

Stay of Compliance Pending Appeal – Need for Judicial Prudence – Contempt jurisdiction is to be exercised sparingly, particularly where appeals or reviews are pending against the primary order. Held: Contempt action must await the outcome of such appellate or corrective proceedings [Paras 18-21].

Decision: The appeal is allowed. The order dated 21/11/2024, imposing costs on the appellants, is quashed. The appellants are discharged from contempt proceedings. Liberty is reserved for the respondent to file a fresh contempt petition if the final decision in the LPA remains unimplemented.
 

Criminal Contempt Proceedings – Quashing - Jurisdiction and Scope – Appellate Court’s Intervention – Appeal under Section 19 of the Contempt of Courts Act, 1971 allowed – Contempt proceedings initiated and costs imposed without affording adequate opportunity to explain compliance with the Court’s order – Held: Contempt jurisdiction must be exercised sparingly and cautiously, prioritizing adherence to procedural safeguards under Contempt of Court (Punjab and Haryana) Rules, 1974 – Costs imposed at the initial stage without framing charges or considering defenses is unjustified [Paras 18–20, 41].

Maintainability of Appeal – Section 19 of Contempt of Courts Act, 1971 – Appeal maintainable as impugned order indicated inclination to impose punishment for contempt – Court clarified that appellate jurisdiction is invoked when orders, even at an intermediate stage, manifest tendencies to penalize contemnors – Reliance placed on Midnapore Peoples’ Coop. Bank Ltd. v. Chunilal Nanda, (2006) 5 SCC 399 [Paras 27–29].

Contempt Powers – Compliance vs. Coercion – Contempt jurisdiction cannot be used as a substitute for execution of decrees or for coercion when appeals against the underlying orders are pending – Any relief granted must align strictly with the explicit directions of the judgment being enforced – Contempt courts must refrain from assuming the role of appellate or executing courts [Paras 21–23].

Principles of Procedural Justice – Duty to Frame Charges and Consider Replies – As per Rules 9, 10, and 11 of the Contempt of Court (Punjab and Haryana) Rules, 1974, framing of charges and consideration of replies on affidavit are mandatory before findings of contempt – Failure to adhere to these procedural safeguards vitiates contempt proceedings [Paras 39–41].

Judicial Discipline – Stay of Proceedings and Pending Appeals – Trial court's action in proceeding with contempt proceedings, despite an explicit stay by the appellate court, amounts to judicial overreach – Held: Courts must respect stays and await appellate adjudication on substantive appeals [Paras 33–35].

Decision – The impugned order dated 29.10.2024 imposing costs and proceeding with contempt action set aside – Appeal allowed with directions to the Contempt Bench to comply with procedural norms and await the outcome of pending LPA [Paras 42–43].
 

Money Laundering – Bail Application – Role in Proceeds of Crime – Applicant sought regular bail after being charged for his involvement in the money laundering activities of the "Mahadev Online Book" betting syndicate – Prosecution alleged that the applicant actively facilitated operations, including managing funds, handling visas for associates, and holding assets linked to proceeds of crime – Held: The applicant's denial of involvement is insufficient to rebut prima facie evidence – Organized and large-scale economic offences require a stricter approach to bail – Bail denied [Paras 6–13].

Economic Offences – Organized Crime – Stringent Scrutiny for Bail – The Court emphasized that economic offences, particularly those involving large-scale money laundering, deeply impact the nation's financial health and society – Held: The applicant’s prima facie role in facilitating illegal betting operations and laundering proceeds of crime makes him ineligible for bail at this stage – Supreme Court precedents in Vijay Madanlal Choudhary v. Union of India and Y.S. Jagan Mohan Reddy v. CBI applied [Paras 10–12].

Money Laundering – Proceeds of Crime – Evidence of Involvement – Evidence revealed the applicant’s active role in managing funds and operations of the betting syndicate, including his association with its promoters – Statements of co-accused and witnesses under Sections 161 and 164 CrPC, along with financial transactions, established prima facie involvement – Held: Material evidence and the nature of organized crime weigh against granting bail [Paras 8–12].

Bail Considerations – Economic Offences – Scope of Judicial Review – The Court clarified that at the bail stage, it does not delve deeply into merits but examines prima facie evidence of involvement – Statements of witnesses, financial transactions, and the applicant's association with promoters established a reasonable case against him – Held: Organized nature of the crime and its severity require rejecting bail to ensure a fair trial and prevent misuse of liberty [Paras 6–12].

Decision: The bail application under Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023, is rejected. The Court held that prima facie evidence, including the applicant's role in managing funds and facilitating operations for the "Mahadev Online Book" syndicate, sufficiently established his involvement in the alleged offences. The severity of the organized crime and its societal impact necessitated denial of bail to maintain public interest and prevent tampering with evidence [Paras 11–13].
 

Civil Law - Specific Performance – Prima Facie Case – Insufficient Evidence – Temporary Injunction Denied - Plaintiffs sought specific performance for agreements involving flats under a Joint Development Agreement (JDA) but failed to demonstrate a prima facie case. The discrepancies between the property descriptions in the agreements and the plaint schedules, coupled with unverified claims of advance payments, undermined the case. Held: Injunction cannot be granted [Paras 10-12].

Temporary Injunction – Identification of Suit Property – Essential for Relief – Lack of Clarity - Plaintiffs failed to identify the properties clearly as there were inconsistencies in flat descriptions and measurements between the plaint schedule and agreements. Held: Lack of identifiable property negates relief [Paras 10-12].

Admissibility of Documents – Insufficient Stamp Duty – Section 34 of the Karnataka Stamp Act - Sale agreements executed on insufficiently stamped paper are inadmissible as evidence without payment of duty and penalty. Held: Agreements lacked admissibility, weakening the plaintiffs’ case [Para 11].

Balance of Convenience – Favors Defendants – Pending Arbitration - Plaintiffs, partners in the developer firm, did not complete the owner's share of construction as required under the JDA and could not show irreparable harm. The disputes were referred to arbitration as per the JDA's arbitration clause. Held: Balance of convenience is against the plaintiffs; injunction denied [Paras 10-12].

Decision: The appeals were dismissed, affirming the trial court’s rejection of the injunction applications.