Income Tax – Bogus Purchases – Disallowance of 10% – The appellant challenged the disallowance of 10% of purchases deemed bogus by the ITAT, despite the acceptance of sales as genuine by the Revenue – Held: The ITAT found no cogent or convincing evidence to support the Revenue's allegation that all purchases were bogus – The ITAT, however, upheld the CIT-A's disallowance of 10% of purchases as a convenient measure, without sufficient justification – The High Court held that disallowing 10% of the expenses without concrete evidence or proper analysis is arbitrary and unsustainable – The ITAT's decision is set aside, and the disallowance is fully reversed [Paras 13-24].

Burden of Proof – Purchases and Sales – Once the ITAT found no cogent evidence from the Revenue to prove the purchases were bogus, the burden shifted to the Revenue to justify any disallowance – Held: The ITAT’s failure to examine why the disallowance was justified, despite its finding that sales were genuine, reflects a flawed approach – The court reiterated that the law does not expect the assessee to prove a negative where no evidence is presented against them [Paras 20-22].

Reliance on Precedent – Nikunj Eximp Enterprises Case – The ITAT relied on CIT v. Nikunj Eximp Enterprises but failed to apply its principles correctly – Held: In cases where the Revenue has not conclusively proven that purchases are bogus, the disallowance should not be upheld merely as a compromise measure – The High Court emphasized the need for clear findings before any disallowance is sustained [Paras 16-18].

Decision: All three income tax appeals are allowed in favor of the appellant – The ITAT's decision to disallow 10% of purchases is set aside – No costs [Paras 24-25].

Fraud Classification – RBI Master Circular – Natural Justice – The petitioner company sought to quash PNB's action of declaring its account as 'fraud' without prior notice or hearing – The court held that the declaration of the petitioner's account as fraud, without following the principles of natural justice, violated RBI guidelines – Held: The petitioner was neither given a chance to respond nor was the fraud declaration substantiated through proper procedure, making the declaration invalid [Paras 18-21].

Suspension of Credit Facilities – Illegal Action – The court quashed SBI's letter suspending the petitioner's credit facilities based on PNB's fraud classification – It was held that since the fraud declaration itself was invalid, the consequent suspension of credit facilities by SBI could not stand – Held: The suspension of credit facilities was unlawful and must be reversed [Paras 19, 22].

Compensation for Damages – Costs Imposed – The court acknowledged the financial loss and reputational damage suffered by the petitioner due to PNB's wrongful action – As compensation, PNB was ordered to pay Rs. 5,00,000 to the petitioner, failing which an 18% per annum interest would apply from the date of filing the petition [Paras 23-24].

Decision: Petition allowed – The court directed PNB to remove the petitioner's account from the fraud list and notify RBI and SBI accordingly – SBI was instructed to restore the petitioner's credit facilities [Paras 22-24].

Service Law - Cancellation of Group-I Notification – Validity of Revised Notification No.02/2024 – The petitioners contended that the cancellation of Notification No.4/2022 by TSPSC was arbitrary and unconstitutional – Court held: The Commission has the authority to alter or withdraw notifications, as per para 13 of Notification No.4/2022 – The cancellation of the notification was justified to accommodate procedural changes and additional vacancies [Paras 7.a, 19, 21].

Delay in Challenging Cancellation – Laches – The petitioners challenged the cancellation of Notification No.4/2022 after a six-month delay – Court held: Given the nature of recruitment and time-sensitive processes, day-to-day delay matters – The petitioners' failure to challenge the cancellation earlier undermined their case [Paras 9-10].

Objections to Preliminary Key – Role of Expert Committees – Judicial Review – Petitioners objected to specific questions in the preliminary examination conducted on 09.06.2024 – Court held: Objections raised were thoroughly evaluated by the Subject Expert Committees, and the final key was prepared based on expert recommendations – Courts should not interfere in academic matters unless a glaring mistake is evident, which was not the case here [Paras 13, 20-21].

Decision – Both writ petitions dismissed – The Court upheld the validity of the cancellation of Notification No.4/2022 and the subsequent issuance of Notification No.02/2024 – The objections to the preliminary key were found to be without merit, and the Court declined to interfere with the expert opinion [Paras 22-25].

Family Law – Guardianship – Jurisdiction of Family Court – The appellant, Amit Dhansing Jagtap & Ors., challenged the jurisdiction of the Family Court, Navsari, which rejected their application under Exh.14 – The custody of minor Varad was disputed between the father and maternal grandparents after the death of the mother – Appellants claimed that Varad resided in Maharashtra, making Navsari Court incompetent – The court held that the issue of whether Navsari was the ordinary place of residence of the child needed further factual inquiry and could not be determined solely on past residence in Navsari – Order quashed and remanded to the Family Court for re-consideration [Paras 5-9].

Interpretation of "Ordinarily Resides" – The Family Court relied on the father's claim that Varad was forcibly taken to Pune by the maternal grandparents and that his past residence was at Navsari – Appellants argued that Varad had been residing in Maharashtra since his mother's death – The High Court emphasized that the term "ordinarily resides" under Section 9 of the Guardians & Wards Act must be determined based on a factual inquiry, considering both the child's welfare and actual place of residence before custody was contested [Paras 8.9-8.12].

Welfare of the Child – The court reiterated that the welfare of the child is paramount in custody disputes, and the factual situation, including the forced removal and current residence, should guide jurisdictional determinations – The case was sent back for the Family Court to decide the issue afresh, with the current custody arrangement (with maternal grandparents) remaining until further orders [Paras 8.12-9].

Decision: First Appeal No. 1268 of 2023 allowed – Order of Family Court quashed – Case remanded for fresh consideration of jurisdiction – First Appeal No. 4464 of 2023 not pressed by the respondent-father and dismissed accordingly – Family Court directed to expedite proceedings and decide within six months [Paras 9-10].

Civil Procedure – Recall of Witness – Change of Counsel – Ineffectiveness of Previous Cross-examination – Petitioners sought to recall the respondent-landlord for further cross-examination after changing their counsel, arguing that the previous counsel had not effectively cross-examined the witness – Rent Controller dismissed the application, holding that inefficiency or omission by previous counsel does not warrant recall of the witness – Held: The Court found that the petitioners had ample opportunity for cross-examination, and allowing the recall application would lead to unnecessary delays – Application for recall rejected – Revision petition dismissed [Paras 3, 4, 7, 10, 11].

Powers of Court – Order 18 Rule 17 CPC – Court's Discretion to Recall Witness – It was reiterated that Order 18 Rule 17 CPC is intended for the convenience of the Court and not for parties to re-open or fill lacunae in their case – Recalling a witness cannot be allowed merely due to a change of counsel or dissatisfaction with the previous cross-examination – Reference made to various judgments reinforcing this principle [Paras 7, 8, 9].

Eviction Proceedings – Personal Necessity – Delay Tactics – Petitioners accused of delaying the proceedings by filing repeated applications for further cross-examination – Held: The application was a tactic to delay the eviction proceedings, filed more than eight months after the previous cross-examination – Repeated adjournments were noted in the order [Paras 3, 10].

Decision:

The revision petition was dismissed as meritless, upholding the Rent Controller's order rejecting the application for recalling the witness. The Court found no error of jurisdiction and emphasized that the petitioners had sufficient opportunity for cross-examination previously [Paras 11, 12].

Civil Law – Second Appeal – Permanent Injunction – The appellant sought a permanent injunction to restrain the respondent from interfering with possession of the disputed property – The trial court dismissed the suit, and the first appellate court confirmed the dismissal – Held: Both the trial court and the first appellate court did not err in dismissing the suit as the appellant failed to identify and prove possession of the property on the ground – The appeal was dismissed [Paras 1-9].

Burden of Proof – Failure to Prove Possession – In a suit for permanent injunction, the burden is on the plaintiff to prove possession of the property as on the date of filing the suit – Held: The appellant failed to provide sufficient evidence, such as the exact location of the property, and was unable to identify the property on the ground when the Advocate Commissioner visited – The suit and appeal were rightly dismissed [Paras 10-20].

Appointment of Advocate Commissioner – Delayed Petition – The appellant filed a petition for the appointment of an Advocate Commissioner after a delay of 12 years, claiming that the respondent had obstructed the survey – Held: The court rejected the application as the delay was unexplained, and the appellant had opportunities to appoint a commissioner earlier but failed to do so [Paras 21-30].

Decision: Second appeal and interlocutory applications dismissed – No costs awarded to either party.

Anticipatory Bail - Offenses under Sections 120B, 406, 420 IPC and Trade Marks Act - Custodial Interrogation Not Required - The accused were charged with conspiracy, cheating, and breach of trust involving the development and delivery of software. The court found no necessity for custodial interrogation, considering that the first accused was already granted anticipatory bail. Petitioners were granted bail on the condition of cooperating with the investigation [Paras 5-8].

Conditions for Bail - Cooperation with Investigation Mandated - The court imposed conditions requiring the petitioners to surrender for interrogation and cooperate with the investigation, including deemed custody for recovery purposes. Petitioners are to appear before the Investigating Officer as required and are prohibited from contacting witnesses or leaving India without court permission [Paras 9-10].

Murder - Conviction Based on Circumstantial Evidence - Chain of Events Incomplete - The accused was convicted of murdering the deceased based on circumstantial evidence. The prosecution failed to establish a continuous chain of events leading exclusively to the guilt of the accused, leaving room for doubt. The court emphasized that circumstantial evidence must form a complete chain without any reasonable hypothesis of innocence. The conviction was overturned, and the accused was acquitted [Paras 25, 28, 33, 49].

DNA Evidence - Delay in Collection and Chain of Custody - Acquittal - The prosecution relied on DNA evidence linking the accused to the crime. However, due to significant delays in collecting and forwarding samples for DNA testing, and a broken chain of custody, the court found the DNA evidence unreliable. The absence of proper documentation for the transfer of samples further weakened the prosecution's case, leading to acquittal [Paras 42, 44, 46].

Absence of Corroboration - “Last Seen Theory” Insufficient to Convict - The prosecution’s reliance on the “last seen theory” was insufficient for conviction due to a significant time gap between the accused being seen with the deceased and the time of death. The court held that in the absence of corroborative evidence, the accused could not be held guilty of murder solely based on the last seen theory [Paras 52, 55].

Benefit of Doubt - Evidence Inconsistent with Prosecution's Case - The evidence provided by witnesses, particularly the minor son of the deceased, was inconsistent with the prosecution's case of enmity and animosity between the accused and the deceased. The court granted the accused the benefit of the doubt due to inconsistencies and contradictions in the testimonies and evidence [Paras 58, 62].

Decision - The appeal was allowed, and the conviction under Section 302 IPC was set aside. The accused was acquitted and ordered to be released if not required in any other case [Paras 67, 69].

Bail under UAPA – Long Custody – Article 21 of the Constitution – The appellant has been in custody for over 2 years, 4 months, and 17 days. The appellant was nominated based on a co-accused’s disclosure statement, and despite serious allegations, no charges have been framed yet. Held: The appellant’s right to a speedy trial under Article 21 of the Constitution was being violated due to prolonged custody. The court emphasized that long custody without trial progress is grounds for bail under UAPA, as affirmed by the Supreme Court in Union of India vs K.A. Najeeb and similar cases. Bail was granted, subject to conditions [Paras 6-8].

Serious Allegations Alone Not Sufficient to Deny Bail – The court referred to the principle that serious charges alone cannot justify the denial of bail if the accused’s prolonged incarceration infringes on their constitutional rights. The court highlighted that other co-accused had been granted bail and noted the lack of progress in the trial as a critical factor in granting the appellant bail [Paras 9-10].

Decision:

Bail Granted – The court allowed the appeal and set aside the impugned order. The appellant was released on regular bail subject to conditions, including furnishing a bond of ₹1 lakh with two sureties, surrendering his passport, and adhering to court dates. The court underscored that the observations made were limited to the bail appeal and did not affect the merits of the ongoing trial [Paras 12-14].