Issues: (i) Whether the reassessment was invalid for want of change of opinion. (ii) Whether the addition of the balance interest income of Rs. 50,00,000 on accrual basis in the relevant assessment year was sustainable.

Issue (i): Whether the reassessment was invalid for want of change of opinion.

Analysis: The original assessment did not show that the Assessing Officer had examined the taxability of the balance accrued interest income. A mere acceptance of the return, without any formed opinion on the specific issue, does not bar reopening on the ground of change of opinion. The reopening was supported by information emerging from the later proceedings, which constituted tangible material giving rise to a belief of escapement of income.

Conclusion: The reassessment was held to be valid and the objection based on change of opinion failed.

Issue (ii): Whether the addition of the balance interest income of Rs. 50,00,000 on accrual basis in the relevant assessment year was sustainable.

Analysis: The assessee followed the mercantile system of accounting, under which income is taxable on accrual basis. The record showed that the entire interest had accrued in the relevant year, while only part of it had been offered to tax. No corroborative material was produced to show that the balance amount had not accrued in that year. The earlier appellate finding for the later year also required verification to avoid double taxation, but that did not displace the accrual-based taxability in the relevant year.

Conclusion: The addition of Rs. 50,00,000 was upheld as taxable in the relevant assessment year on accrual basis.

Final Conclusion: The appeal was dismissed because both the reopening and the addition were sustained on merits and in law.

Ratio Decidendi: Reassessment is not barred by change of opinion unless the original assessment shows a formed opinion on the specific issue, and under the mercantile system income is taxable in the year of accrual even if it is actually received later.

Issues: Whether the addition made under section 68 on account of alleged bogus share sale transactions and accommodation entries was sustainable.

Analysis: The assessee had shown the investments in its audited balance sheets, produced sale notes, share bills, bank statements, confirmations, PAN details and income-tax particulars of the purchasers, and demonstrated reduction in investments corresponding to the sale proceeds. The department did not carry out independent verification by issuing notices or summons to the purchasers and relied mainly on Investigation Wing information and general banking patterns. The assessee was not given cross-examination of the persons whose material was relied upon. The documentary evidence, together with the scrutiny assessments of the purchaser entities in later years, was found sufficient to establish identity, creditworthiness and genuineness.

Conclusion: The addition under section 68 was unsustainable and was rightly deleted. The revenue's challenge failed.

Issues: Whether the rejection of the application for approval under section 80G and cancellation of provisional registration were vitiated for want of prior notice and opportunity to rebut the adverse computation and findings.

Analysis: The application was rejected and the provisional registration was cancelled on the basis of adverse findings, including the computation of religious expenditure, without confronting the assessee with the material or granting an effective opportunity to meet the proposed action. The statutory scheme under clause (ii)(b)(B) of the second proviso to section 80G(5) of the Income-tax Act, 1961 read with rule 11AA(5) of the Income-tax Rules, 1962 required notice before such adverse action. Since the assessee was denied a real and reasonable opportunity to rebut the basis of rejection, the action offended the principles of natural justice.

Conclusion: The rejection and cancellation could not be sustained and the matter was remanded to the Commissioner for fresh consideration after giving the assessee adequate opportunity to respond.

Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 for the assessment year 2015-16 was barred by limitation and consequently invalid.

Analysis: The assessee was issued notice under Section 148A(b) and the order under Section 148A(d) was passed thereafter, but the notice under Section 148 was issued after the expiry of six years from the end of the relevant assessment year. The amended reassessment regime under Section 149 was held to operate prospectively, and for assessment years beginning on or before 01.04.2021, the first proviso to Section 149(1) preserves the bar under the unamended six-year limitation where a notice could not have been issued earlier. The Tribunal followed binding jurisdictional precedent and held that the period between the show-cause notice and the order under Section 148A(d) could not extend the substantive limitation so as to validate an otherwise time-barred notice.

Conclusion: The notice under Section 148 was held to be barred by limitation and invalid, and the reassessment was quashed.

Issues: (i) Whether reassessment initiated beyond three years was without jurisdiction when the material available at the stage of reopening indicated escapement exceeding the monetary threshold. (ii) Whether the cash deposits of Rs. 10,08,800 were rightly treated as unexplained investment under section 69, and if not, to what extent relief was allowable.

Issue (i): Whether reassessment initiated beyond three years was without jurisdiction when the material available at the stage of reopening indicated escapement exceeding the monetary threshold.

Analysis: The validity of reopening is to be tested with reference to the material available before the Assessing Officer at the time of initiation of proceedings, and not by the final additions ultimately sustained in the assessment. At the commencement stage, the Assessing Officer had information that the assessee, a non-filer, had purchased immovable property for Rs. 1.10 crore and had also made cash deposits of Rs. 10,08,800. The subsequent non-addition of the property investment did not retrospectively invalidate the jurisdiction already assumed.

Conclusion: The reopening beyond three years was held to be valid and was not without jurisdiction.

Issue (ii): Whether the cash deposits of Rs. 10,08,800 were rightly treated as unexplained investment under section 69, and if not, to what extent relief was allowable.

Analysis: The explanation that the cash deposits were sourced from consultancy income and funds from the assessee's husband was not supported by any material. The explanation was therefore not accepted. However, on a reasonable and pragmatic view, some availability of cash in hand out of accumulated savings and incidental receipts was accepted to the extent of Rs. 2,50,000.

Conclusion: The addition was sustained to the extent of Rs. 7,58,800, while relief of Rs. 2,50,000 was allowed to the assessee.

Final Conclusion: The assessee obtained only partial relief, with the reassessment upheld and the addition reduced to the extent indicated.

Ratio Decidendi: The legality of reassessment is determined from the material available at the time of initiation, and an unexplained cash deposit addition may be partly sustained where the explanation is unsubstantiated but a limited cash availability is reasonably accepted.

Issues: (i) whether an addition can be sustained solely on the basis of a document seized from the premises of a third party without corroborative evidence in the hands of the assessee; (ii) whether an alleged receipt connected with a joint development agreement can be taxed under section 56 of the Income-tax Act, 1961 instead of being examined under the capital gains provisions.

Issue (i): Whether an addition can be sustained solely on the basis of a document seized from the premises of a third party without corroborative evidence in the hands of the assessee.

Analysis: The assessee had denied receipt of cash, the seized document was found from a third party, and no independent material such as cash trail, withdrawal evidence, confirmation, or acknowledgment was brought on record. The presumption under section 132(4A) read with section 292C of the Income-tax Act, 1961 was held inapplicable against the assessee for third-party material in the absence of corroboration.

Conclusion: The addition based solely on third-party seized material without corroborative evidence was held unsustainable, in favour of the assessee.

Issue (ii): Whether an alleged receipt connected with a joint development agreement can be taxed under section 56 of the Income-tax Act, 1961 instead of being examined under the capital gains provisions.

Analysis: The receipt was linked to a joint development agreement under which the consideration was stated to be built-up area in future. The assessment did not determine whether a transfer within section 2(47) had occurred or the correct year of taxability under section 45, but proceeded to tax the amount under section 56 as income from other sources. On these facts, the amount was held not to be taxable under section 56.

Conclusion: The addition under section 56 was held legally unsustainable, in favour of the assessee.

Final Conclusion: Both appeals were allowed and the additions made by the lower authorities were deleted.

Ratio Decidendi: Material seized from a third party cannot, corroborative evidence, form the sole basis of an addition against an assessee, and a receipt arising from a joint development agreement must be tested under the capital gains provisions by examining transfer and timing of taxability rather than being arbitrarily brought to tax under income from other sources.

Issues: (i) Whether the delay in filing the appeal deserved condonation in view of the exclusion of limitation ordered during the Covid-19 period. (ii) Whether revision under section 263 of the Income-tax Act, 1961 was valid where the assessment was made without proper enquiry into the taxability of capital gains arising from the registered sale deed and its cancellation.

Issue (i): Whether the delay in filing the appeal deserved condonation in view of the exclusion of limitation ordered during the Covid-19 period.

Analysis: The limitation for filing the appeal fell within the period covered by the Supreme Court's exclusion of limitation directions, and the appeal was filed within the extended time computed from those directions.

Conclusion: The delay was condoned and the appeal was admitted.

Issue (ii): Whether revision under section 263 of the Income-tax Act, 1961 was valid where the assessment was made without proper enquiry into the taxability of capital gains arising from the registered sale deed and its cancellation.

Analysis: The registered sale deed recorded receipt of consideration and handing over of possession, while the cancellation deed itself and the purchaser's statement indicated that the cancellation was executed to overcome capital gains liability. The assessment order accepted the assessee's explanation without adequate independent verification of the revenue records, bank transactions, and the legal validity of the cancellation deed. In such circumstances, the order was treated as having been passed without making enquiries or verification which ought to have been made, attracting Explanation 2(a) to section 263(1).

Conclusion: The exercise of revisionary jurisdiction under section 263 was upheld and the assessment was not interfered with.

Final Conclusion: The revisional order was sustained on the ground of inadequate enquiry in the assessment, and the assessee's appeal failed.

Ratio Decidendi: An assessment order passed without making enquiries or verification which should have been made is deemed erroneous and prejudicial to the interests of revenue, warranting revision under section 263.

Issues: Whether the addition made under section 69A for repayment of an unsecured loan could be sustained when the reassessment was initiated on the basis of alleged bogus accommodation entries of unsecured loan, and no addition was ultimately made on that recorded ground.

Analysis: The reassessment was founded on information that the assessee had taken accommodation entries of bogus unsecured loan. The addition, however, was made on a different footing, namely, repayment of the loan treated as unexplained money under section 69A. The recorded reason for reopening did not culminate in any addition, and the loan transaction itself had not been doubted in earlier years. In these circumstances, the reassessment could not be used to sustain an addition wholly disconnected from the basis on which the proceedings were initiated.

Conclusion: The addition under section 69A was unsustainable and was deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: In reassessment proceedings, an addition cannot be sustained on a ground entirely different from the recorded reasons where the original reason for reopening does not survive in assessment.

Issues: Whether the order passed under Section 73 of the Uttar Pradesh Goods and Services Tax Act, 2017 was liable to be quashed for want of proper service of notice after cancellation of registration, thereby violating natural justice.

Analysis: The registration of the petitioner had already been cancelled and no business was being carried on thereafter. In such circumstances, mere uploading of the show cause notice on the GST portal was not regarded as sufficient service, because the petitioner was not under an obligation to keep checking the portal after cancellation of registration. Proper notice ought to have been served by an alternative and effective mode before proceeding further.

Conclusion: The impugned order was quashed and set aside for violation of natural justice, with liberty to the department to issue a proper notice and proceed in accordance with law.

Issues: (i) Whether the exclusion of I Services India Private Limited from the set of comparables was sustainable when the related party transaction details were available in the record; (ii) whether Cheers Interactive India Private Limited could be included as a comparable after excluding payments to key managerial personnel in India from the related party transaction computation; and (iii) whether the addition of Rs. 23,972/- towards interest on TDS resulted in a duplicate addition requiring deletion.

Issue (i): Whether the exclusion of I Services India Private Limited from the set of comparables was sustainable when the related party transaction details were available in the record.

Analysis: The related party transaction computation depended on the profit and loss items and balance sheet figures already extracted in the transfer pricing order. The reason recorded for exclusion, namely absence of complete details, was found to be inconsistent with the material on record. Since the exact computation of the related party transaction percentage required verification, the issue called for fresh examination.

Conclusion: The issue was set aside to the file of the Transfer Pricing Officer for verification of the record, recomputation of the related party transaction filter, and reconsideration of inclusion of the comparable in accordance with law.

Issue (ii): Whether Cheers Interactive India Private Limited could be included as a comparable after excluding payments to key managerial personnel in India from the related party transaction computation.

Analysis: The audited financial statements disclosed the related party transactions, but the computation had included payments to key managerial personnel in India. Such payments were treated as not constituting international transactions for the purpose of the related party transaction filter. Fresh factual verification and recomputation were therefore necessary.

Conclusion: The issue was set aside to the Transfer Pricing Officer with a direction to exclude the payments to key managerial personnel in India while computing the related party transaction percentage and then reconsider inclusion of the comparable in accordance with law.

Issue (iii): Whether the addition of Rs. 23,972/- towards interest on TDS resulted in a duplicate addition requiring deletion.

Analysis: The return of income already reflected a disallowance of the said amount, and the processing under section 143(1) again added the same sum. This indicated a possible duplicate addition, but the record required verification at the assessment stage before relief could be granted.

Conclusion: The issue was remitted to the Assessing Officer to verify whether the amount had been added twice and, if so, to delete the duplicate addition in accordance with law.

Final Conclusion: The assessee obtained partial relief on all surviving issues, but the substantive relief was granted by way of remand for verification and fresh consideration, leaving the transfer pricing comparables and the TDS interest adjustment open for recomputation.

Ratio Decidendi: Where the record already contains the material necessary for related party transaction computation or indicates possible duplicate taxation, the matter may be restored for factual verification and recomputation rather than being finally decided on the existing assessment record.

Issues: Whether a common approval granted under section 153D for multiple assessment years, without indicating independent consideration of the draft assessment orders, was valid and whether such approval vitiated the assessments framed under section 153C.

Analysis: The common approval was found to be a mere omnibus sanction for all the assessment years, with no indication that the approving authority had examined the draft orders or applied an independent mind to each assessment. The decision relied on the settled principle that approval under section 153D cannot be a mechanical rubber-stamp exercise and must reflect some consideration of the draft orders. In the absence of such indication, the approval was treated as invalid and incapable of sustaining the assessments.

Conclusion: The combined section 153D approval was held invalid and the assessments framed under section 153C were quashed.

Final Conclusion: All the connected appeals succeeded and the impugned assessments for the relevant assessment years did not survive.

Ratio Decidendi: An approval under section 153D of the Income-tax Act, 1961 must reflect independent application of mind to the draft assessment orders for the relevant year or years, and a mechanical common approval vitiates the consequential assessment.

Issues: (i) Whether the first appellate authority was justified in remanding the matter without deciding the legal ground challenging the assumption of jurisdiction under section 147 of the Income-tax Act, 1961. (ii) Whether reassessment proceedings were vitiated because the recording/approval process referred to a non-existent provision, showing non-application of mind.

Issue (i): Whether the first appellate authority was justified in remanding the matter without deciding the legal ground challenging the assumption of jurisdiction under section 147 of the Income-tax Act, 1961.

Analysis: A legal ground challenging jurisdiction must be decided first. The remand order proceeded on the basis that the assessee had not participated in the assessment, but the jurisdictional objection remained unanswered. The appellate authority was required to adjudicate that foundational issue instead of sending the matter back for fresh assessment.

Conclusion: The remand without deciding the jurisdictional ground was held unsustainable, against the Revenue.

Issue (ii): Whether reassessment proceedings were vitiated because the recording/approval process referred to a non-existent provision, showing non-application of mind.

Analysis: The reasons and sanction papers referred to section 147(a), a provision not in existence at the relevant time. Such reference was treated as more than a clerical mistake and as evidence that the Assessing Officer and the approving authorities acted mechanically without verifying the statutory basis for reopening. The defect went to the root of the assumption of jurisdiction and was not cured by section 292B.

Conclusion: The reassessment proceedings and the consequential assessment were quashed in favour of the assessee.

Final Conclusion: The jurisdictional challenge succeeded, the reassessment was held invalid, and the assessee's appeal was allowed.

Ratio Decidendi: Where the reopening of assessment is founded on a non-existent statutory provision and the approving authority accords sanction mechanically, the assumption of jurisdiction under section 147 fails and the reassessment cannot be sustained.

Issues: (i) Whether the salary paid to the Chairperson of the charitable trust was excessive so as to attract section 13(2)(c) of the Income-tax Act, 1961 and justify the addition; (ii) whether the rent-related addition for repairs undertaken in rented premises was sustainable; (iii) whether the assessment for AY 2022-23 required remand because the appellate authority did not consider the written submissions, additional evidence and Rule 46A application.

Issue (i): Whether the salary paid to the Chairperson of the charitable trust was excessive so as to attract section 13(2)(c) of the Income-tax Act, 1961 and justify the addition.

Analysis: The remuneration had been accepted in earlier and later scrutiny assessments, and the record did not show any material change justifying a different view for the year under appeal. The comparative exercise adopted by the tax authorities was not found sufficient to establish that the payment was unreasonable or beyond the permissible limit having regard to the services rendered.

Conclusion: The addition on account of salary was deleted, in favour of the assessee.

Issue (ii): Whether the rent-related addition for repairs undertaken in rented premises was sustainable.

Analysis: The explanation that the expenditure related to repairs carried out once in five years was found acceptable. No material was shown to establish that the repairs conferred any personal benefit on a specified person, and the commercial expediency of the expenditure was not displaced.

Conclusion: The addition on account of rent-related repair expenditure was deleted, in favour of the assessee.

Issue (iii): Whether the assessment for AY 2022-23 required remand because the appellate authority did not consider the written submissions, additional evidence and Rule 46A application.

Analysis: The appellate order did not deal with the written submissions, additional evidence or the application under Rule 46A of the Income-tax Rules, 1962. In the interest of natural justice, the matter required fresh consideration by the appellate authority with opportunity of effective representation and disposal in terms of section 250(6) of the Income-tax Act, 1961.

Conclusion: The matter for AY 2022-23 was set aside to the appellate authority for fresh adjudication, in favour of the assessee.

Final Conclusion: The additions for AY 2018-19 were deleted, while the dispute for AY 2022-23 was restored to the appellate authority for fresh decision after due opportunity.

Ratio Decidendi: Where remuneration to a specified person has consistently been accepted in scrutiny assessments and no material change is shown, an excessive-benefit addition cannot be sustained; and failure to consider material submissions and additional evidence warrants remand for fresh adjudication in accordance with natural justice.

Issues: (i) Whether reassessment for A.Y. 2018-19 was invalid for want of sanction by the proper specified authority under the reassessment regime; (ii) Whether the addition made for A.Y. 2019-20 on account of alleged bogus purchase/sale transactions under section 69C could be sustained.

Issue (i): Whether reassessment for A.Y. 2018-19 was invalid for want of sanction by the proper specified authority under the reassessment regime.

Analysis: The notice and order under the reassessment provisions had been issued after expiry of three years from the end of the relevant assessment year. On the facts recorded, the approval had been taken from the Principal Commissioner instead of the authority prescribed for notices issued beyond the three-year period. In view of the controlling principle that the proper sanctioning authority is mandatory for validity of the reassessment notice, the reassessment initiation was found to be without valid sanction.

Conclusion: The reassessment proceedings for A.Y. 2018-19 were held to be invalid and liable to be quashed, in favour of the assessee.

Issue (ii): Whether the addition made for A.Y. 2019-20 on account of alleged bogus purchase/sale transactions under section 69C could be sustained.

Analysis: The assessment addition was based mainly on information from the investigation/survey material. The appellate order recorded that the assessee had furnished purchase details, stock register and sales particulars, while the assessing authority had not made independent enquiry or pointed out discrepancies in the documentary evidence. The Tribunal accepted the appellate finding that, on the material placed, the addition could not rest only on the investigation report and unsupported presumptions.

Conclusion: The addition for A.Y. 2019-20 was not sustained and the assessee was granted relief, in favour of the assessee.

Final Conclusion: The Revenue's appeals failed, while the assessee succeeded on the reassessment validity issue and on the merits of the addition, resulting in complete relief to the assessee.

Ratio Decidendi: Reassessment initiation must be backed by sanction from the authority prescribed for the relevant time period, and an addition based on alleged bogus transactions cannot be sustained without independent enquiry where the assessee's documentary evidence is not found defective.

Issues: (i) Whether partners' capital recorded as a notional journal entry, without actual receipt of money, could be added under section 68; (ii) Whether administrative expenditure incurred after business set-up was allowable despite no revenue during the year; (iii) Whether the consequential tax, interest, and penalty demanded on the deleted additions survived.

Issue (i): Whether partners' capital recorded as a notional journal entry, without actual receipt of money, could be added under section 68.

Analysis: The capital contribution was reflected as receivable from partners and not as an actual cash or bank inflow. The entries were passed as book adjustments in accordance with the LLP agreement and the double-entry system. Section 68 applies where a sum is found credited in the books as an actual receipt and the assessee fails to explain its nature and source. On the facts, there was no real inflow of funds, and the identity of the partners was otherwise established.

Conclusion: The addition under section 68 was unsustainable and was rightly deleted.

Issue (ii): Whether administrative expenditure incurred after business set-up was allowable despite no revenue during the year.

Analysis: The execution of the LLP agreement, opening of the bank account, regulatory filings, and professional engagements showed that the business had been set up and was ready to commence. Once business is set up, expenditure incurred for its purposes is allowable even if no income is earned in the year. The claimed expenses were supported by documentary evidence and statutory compliance.

Conclusion: The disallowance of administrative expenditure was rightly deleted.

Issue (iii): Whether the consequential tax, interest, and penalty demanded on the deleted additions survived.

Analysis: The consequential demand and penalty were based entirely on the additions that did not survive. Once the main additions were deleted, the foundation for the consequential liabilities also ceased to exist.

Conclusion: The consequential tax, interest, and penalty did not survive.

Final Conclusion: The assessee succeeded on all substantive grounds, the additions were deleted, and the revenue's appeal failed.

Ratio Decidendi: Section 68 cannot be invoked for mere notional or contra book entries without actual receipt of money, and expenditure incurred after a business is set up remains allowable even if no revenue is earned in that year.

Issues: (i) Whether the reassessment notice for A.Y. 2015-16 issued under Section 148 of the Income-tax Act, 1961 was barred by limitation under Section 149(1) of the Income-tax Act, 1961. (ii) Whether the order under Section 148A(d) of the Income-tax Act, 1961 for A.Y. 2017-18 was invalid for want of proper prior approval under Section 151(ii) of the Income-tax Act, 1961.

Issue (i): Whether the reassessment notice for A.Y. 2015-16 issued under Section 148 of the Income-tax Act, 1961 was barred by limitation under Section 149(1) of the Income-tax Act, 1961.

Analysis: The notice dated 30.07.2022 was issued after expiry of six years from the end of the relevant assessment year. The time limit prescribed by the proviso to Section 149(1) was therefore exceeded, rendering the reassessment proceedings unsustainable.

Conclusion: The reassessment notice and the consequential assessment for A.Y. 2015-16 were quashed in favour of the assessee.

Issue (ii): Whether the order under Section 148A(d) of the Income-tax Act, 1961 for A.Y. 2017-18 was invalid for want of proper prior approval under Section 151(ii) of the Income-tax Act, 1961.

Analysis: The notice dated 29.07.2022 was issued beyond three years from the end of the relevant assessment year, so approval had to be obtained from the authority specified in Section 151(ii). The approval recorded was from the Principal Commissioner of Income Tax, Rohtak, which did not satisfy the statutory requirement for such a case, resulting in a jurisdictional violation.

Conclusion: The order under Section 148A(d) and the consequential assessment for A.Y. 2017-18 were quashed in favour of the assessee.

Final Conclusion: Both reassessment proceedings failed on separate statutory grounds, and the connected appeals succeeded in full.

Ratio Decidendi: Reassessment proceedings are invalid where the notice is issued beyond the statutory limitation period or where the mandatory prior approval is obtained from an authority not specified by the governing provision.

Issues: (i) Whether cash deposits made during the demonetisation period, claimed to be out of recorded jewellery sales, could be added as unexplained cash credits under section 68 of the Income-tax Act, 1961. (ii) Whether share application money received through banking channels could be added under section 68 merely because the shares were not allotted in accordance with the procedural requirements under the Companies Act, 2013.

Issue (i): Whether cash deposits made during the demonetisation period, claimed to be out of recorded jewellery sales, could be added as unexplained cash credits under section 68 of the Income-tax Act, 1961.

Analysis: The books of account were not rejected and the trading results were accepted. The assessee produced sale bills, cash book entries, VAT returns, bank records and reconciliation material to show that the cash deposits had a direct nexus with disclosed business sales. Where sales are not doubted and the corresponding stock and cash records remain accepted, a separate addition on the premise of unexplained cash deposit cannot be sustained.

Conclusion: The addition under section 68 in respect of cash deposits was not sustainable and was deleted in favour of the assessee.

Issue (ii): Whether share application money received through banking channels could be added under section 68 merely because the shares were not allotted in accordance with the procedural requirements under the Companies Act, 2013.

Analysis: The investor's identity and banking trail were not disputed, and no adverse material was brought on record against its creditworthiness or the genuineness of the receipt. A procedural lapse under company law, including non-allotment within the prescribed period, may invite consequences under that law, but by itself it does not justify treating the receipt as unexplained cash credit under section 68 in the absence of material showing a failure of the statutory ingredients of that provision.

Conclusion: The addition relating to share application money was not sustainable and was deleted in favour of the assessee.

Final Conclusion: Both additions were set aside, and the assessee obtained complete relief on the issues decided.

Ratio Decidendi: A receipt cannot be taxed as unexplained cash credit under section 68 when the books are accepted and the assessee substantiates the source through regular business records, and a mere breach of company-law procedure does not, without more, establish that a share application receipt is bogus or unexplained.

Issues: Whether the addition made under section 68 of the Income-tax Act, 1961 on account of cash deposits during the demonetisation period was sustainable where the assessee claimed that the deposits represented recorded business receipts from sales, service income, and spare parts transactions.

Analysis: The assessee produced day-wise cash books, sales invoices, bank statements, and reconciliation showing correspondence between cash collections and bank deposits. The books of account were audited and were neither rejected nor found to contain unverifiable or fictitious entries. The Assessing Officer had proceeded mainly on presumption and did not bring any contrary material to show unaccounted purchases, on-money transactions, or diversion of funds. Once the assessee supported the nature and source of the credits with primary records, the burden shifted to the department to dislodge the explanation. On those facts, the deposits could not be treated as unexplained merely because the business involved high-value products.

Conclusion: The addition under section 68 was rightly deleted and the Revenue's challenge failed.

Issues: Whether the addition made under section 68 in respect of unsecured loans was liable to be deleted on the ground that the same amounts were subsequently forfeited and offered to tax in a later assessment year, making the earlier year's addition result in double taxation.

Analysis: The assessee demonstrated from its later year profit and loss account and computation that the loan amounts had been forfeited and included in other income in the subsequent assessment year. On that basis, taxing the same receipts in the year of borrowing would lead to taxation of the same amount twice. The later offer to tax showed that the revenue was not deprived of tax, and the addition for the earlier year became unsustainable on the facts presented.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the merits of the addition.

Issues: Whether the reassessment notice issued under section 148 and the consequent reassessment order were valid when prior approval was obtained from PCIT instead of the prescribed authority under section 151(ii) of the Income-tax Act, 1961.

Analysis: The reassessment for A.Y. 2016-17 was initiated after 1 April 2021, when the new regime of section 151 applied. For notices issued beyond the relevant period, prior approval had to be taken from the higher specified authority mandated by section 151(ii). Since the notice dated 30.07.2022 had been issued with approval of PCIT(Central), Kanpur and not the authority required by section 151(ii), the statutory condition for valid reopening was not satisfied. Once the notice itself was invalid, the reassessment order based on it could not survive, and the remaining grounds in both appeals became infructuous.

Conclusion: The notice under section 148 and the reassessment order were quashed. The assessee succeeded and the Revenue's cross appeal did not survive.