Issues: (i) Whether a penalty order under Section 270A of the Income-tax Act, 1961 could be revised under Section 264 of the Income-tax Act, 1961 despite the order being appealable. (ii) Whether penalty for under-reporting of income was leviable on the disallowance relating to employees' contribution to PF/ESI.

Issue (i): Whether a penalty order under Section 270A of the Income-tax Act, 1961 could be revised under Section 264 of the Income-tax Act, 1961 despite the order being appealable.

Analysis: Section 264 confers wide revisional power over any subordinate order, subject only to the express restrictions in sub-section (4). An order is barred from revision only where an appeal lies and the time to appeal has not expired without waiver, or where an appeal is pending or has been filed. Outside those statutory exceptions, the mere fact that an order is appealable does not exclude revision. The assessee is entitled to choose between the appellate remedy under Section 246A and the revisional remedy under Section 264.

Conclusion: The revision application was maintainable, and the refusal to entertain it on the ground of availability of appeal was not justified.

Issue (ii): Whether penalty for under-reporting of income was leviable on the disallowance relating to employees' contribution to PF/ESI.

Analysis: Penalty under Section 270A is discretionary and is not automatic upon addition. Under-reporting, in the context of a return already processed under Section 143(1)(a), requires the assessed income to exceed the income determined in that processing. Here, the same disallowance had already been made at the processing stage and was merely reiterated in assessment, so the statutory ingredients of under-reporting were not satisfied. The claim was also made on the basis of then-prevailing jurisdictional law, the issue was debatable, and all material facts had been disclosed with a bona fide explanation.

Conclusion: Penalty under Section 270A was not leviable and was liable to be deleted.

Final Conclusion: The writ petition succeeded, the revisional rejection and penalty order were quashed, and the assessee obtained complete relief.

Ratio Decidendi: A penalty order under the Income-tax Act may be revised under Section 264 unless expressly barred by sub-section (4), and penalty for under-reporting cannot be sustained where the same disallowance was already reflected in processing under Section 143(1)(a) and the claim was bona fide on a debatable legal issue fully disclosed by the assessee.

Issues: (i) Whether the deletion of the addition of Rs. 20,00,000/- made on the basis of GST data was justified. (ii) Whether the deletion of the addition of Rs. 2,68,17,674/- under section 69C was justified.

Issue (i): Whether the deletion of the addition of Rs. 20,00,000/- made on the basis of GST data was justified.

Analysis: The addition was founded on GST-related material, but the assessee denied the alleged payment. The record showed no payment, no claim of input tax credit, and no booking of corresponding expenditure. In the absence of evidence that any expenditure had actually been incurred, the basis for making an addition was not established.

Conclusion: The deletion of the addition of Rs. 20,00,000/- was upheld.

Issue (ii): Whether the deletion of the addition of Rs. 2,68,17,674/- under section 69C was justified.

Analysis: The assessee produced agreements, invoices, ledger accounts, bank statements, TDS records, confirmations and related material to support the impugned payments. The payments were found to have been made through banking channels and linked to the underlying business arrangement. Section 69C applies where expenditure is incurred but its source remains unexplained; it does not sustain an addition merely because vendors did not respond or third-party compliance was incomplete, when the assessee's own source of payment and business expenditure stand explained.

Conclusion: The deletion of the addition of Rs. 2,68,17,674/- under section 69C was upheld.

Final Conclusion: The Revenue failed to dislodge the factual findings recorded by the first appellate authority, and both additions were correctly deleted.

Ratio Decidendi: Section 69C can be invoked only where actual expenditure is shown to have been incurred and its source remains unexplained; additions cannot rest solely on third-party non-compliance or suspicion when the assessee substantiates the transactions and source by documentary evidence.

Issues: Whether the margin agreed under the Bilateral Advance Pricing Agreement could be adopted for determining the arm's length price of international transactions with associated enterprises not covered by that agreement.

Analysis: The assessee's non-US associated enterprise transactions formed only a small portion of total revenue, and no separate benchmarking was undertaken for those transactions. The record did not show any material difference in the functional, asset, and risk profile of the non-covered transactions vis-a -vis the transactions covered by the Bilateral Advance Pricing Agreement. In such a situation, the agreed margin under the agreement was treated as a reliable and persuasive benchmark for determining the arm's length price, particularly where the same assessee had been subjected to a uniform transfer pricing approach and the principle of consistency supported adoption of the accepted margin.

Conclusion: The margin under the Bilateral Advance Pricing Agreement was directed to be applied to the transactions with non-US associated enterprises, and the assessee succeeded.

Final Conclusion: The transfer pricing adjustment was reduced by applying the agreed APA/BAPA margin to the remaining international transactions, and all the connected appeals were allowed.

Ratio Decidendi: Where transactions not covered by an APA or BAPA are functionally indistinguishable from covered transactions and no separate benchmarking is carried out, the agreed APA or BAPA margin may be adopted as a persuasive arm's length benchmark on the principle of consistency.

Issues: (i) whether, for computing disallowance under section 14A read with Rule 8D, only those investments which yielded exempt income during the year are to be considered; (ii) whether ESOP expenditure was allowable as a deduction under section 37(1); and (iii) whether the disallowance of sales incentive expenditure under Explanation 1 to section 37(1) was sustainable.

Issue (i): whether, for computing disallowance under section 14A read with Rule 8D, only those investments which yielded exempt income during the year are to be considered.

Analysis: The assessee had earned exempt dividend income and made a suo motu disallowance, but the Assessing Officer computed the disallowance by taking all investments into account. The Tribunal followed the Special Bench ruling that, for Rule 8D computation, the relevant base is confined to investments which actually yielded exempt income during the year.

Conclusion: The disallowance under section 14A read with Rule 8D was to be recomputed by considering only investments that yielded exempt income, in favour of Revenue for statistical purposes.

Issue (ii): whether ESOP expenditure was allowable as a deduction under section 37(1).

Analysis: The Tribunal relied on the binding High Court view that ESOP discount represents a real and ascertained business liability incurred over the vesting period and is not disallowed merely because the liability is quantified later. The expenditure was treated as incurred for the purposes of business and not as a contingent or capital outlay.

Conclusion: The deletion of the ESOP disallowance was upheld, against Revenue.

Issue (iii): whether the disallowance of sales incentive expenditure under Explanation 1 to section 37(1) was sustainable.

Analysis: The Tribunal noted that the claim required party-wise verification, including the nature of the recipients, the agreements, and whether any payment was in substance prohibited by law. As the factual inquiry was incomplete, the issue was restored for fresh adjudication by the Assessing Officer after examining each recipient and the supporting material.

Conclusion: The issue was remanded to the Assessing Officer for de novo consideration, resulting in a limited allowance of Revenue's ground for statistical purposes.

Final Conclusion: The consolidated order granted Revenue relief on the section 14A computation issue, sustained the deletion of the ESOP disallowance, and sent the sales incentive issue back for fresh adjudication, leaving the appeals partly allowed or allowed for statistical purposes as recorded.

Ratio Decidendi: For Rule 8D computation under section 14A, only those investments that actually yielded exempt income during the relevant year can be taken into account.

Issues: Whether the writ petition should be entertained on the basis that a part of the cause of action arose within Delhi, and whether the Court should decline jurisdiction on the ground of forum conveniens.

Analysis: The Court held that although some part of the cause of action arose within Delhi, that circumstance was not, by itself, determinative of territorial jurisdiction under Article 226 of the Constitution of India. The relevant consideration was the substance of the lis and the material, essential and integral facts giving rise to the dispute. Where the underlying events and operative injury were substantially connected outside Delhi, the mere location of the respondent-authority or the passing of the impugned order in Delhi did not justify entertaining the writ petition. The doctrine of forum conveniens could be invoked to decline exercise of discretionary writ jurisdiction, and the petitioner was relegated to the jurisdictional High Court.

Conclusion: The petition was not entertained in Delhi and was dismissed by declining to exercise territorial and discretionary writ jurisdiction.

Final Conclusion: The ruling affirms that a writ petition cannot be maintained merely because the impugned order was issued in Delhi when the real and dominant cause of action lies elsewhere.

Ratio Decidendi: For purposes of Article 226, the mere situs of the respondent or the impugned order within the forum State is not decisive where the substantive and dominant facts arise outside that territory, and the Court may refuse to exercise writ jurisdiction on the ground of forum conveniens.

Issues: Whether the assessment order and notice of demand for Assessment Year 2023-24 were barred by limitation because they were digitally signed after the expiry of the period prescribed under section 153(1) of the Income-tax Act, 1961, and whether an order can be said to be made only when it is signed by the competent authority.

Analysis: The assessment year in question attracted the twelve-month limitation under the fourth proviso to section 153(1), making 31 March 2025 the outer limit for completion of the assessment. The assessment order, computation sheet, and notice of demand were all dated 21 March 2025 but were digitally signed only on 25 December 2025, 24 December 2025, and 12 December 2025 respectively. The governing principle applied was that an assessment or other operative order is made only when it is signed and thereby ceases to remain within the authority's locus poenitentiae. The Court also relied on the statutory requirement that notices or documents issued under the Act must be signed, and treated the absence of timely signature as fatal to validity where the act is time-bound. On that basis, documents signed after the limitation period could not be regarded as having been made within time.

Conclusion: The assessment order, computation sheet, and notice of demand were held to be time-barred and invalid, and were quashed.

Ratio Decidendi: For a time-limited assessment under section 153(1) of the Income-tax Act, 1961, the order is made only upon signature by the competent authority, and any assessment-related document signed after expiry of the prescribed limitation is invalid.

Issues: Whether the short-term capital loss arising from sale of compulsorily convertible debentures was genuine and allowable for set-off against long-term capital gains, or whether the arrangement was a colourable device lacking commercial substance.

Analysis: The documentary record showed that the company had undertaken a real business project, had borrowed from banks for execution, and that the assessee had raised funds by mortgaging jointly owned property to meet the liabilities. The subscription to the debentures, their transfer, and the later sale were supported by loan documents, bank statements, the subscription agreement, and an independent valuation report by a SEBI-registered merchant banker. The record did not disclose any adverse material proving sham, collusion, or money flow back to the assessee. The mere fact that the debentures were subscribed at par, or that the transaction ultimately produced a loss set off against capital gains, did not by itself establish tax evasion. In the given distress-driven commercial setting, the test of human probabilities did not displace the otherwise credible and evidenced explanation.

Conclusion: The short-term capital loss was held to be genuine, and the set-off and carry forward claimed by the assessee were upheld.

Issues: (i) Whether the disallowance under section 14A read with Rule 8D(2)(iii) of the Income Tax Rules, 1962 was warranted on the facts of the case. (ii) Whether education cess, including secondary and higher education cess, was allowable as a deduction under section 37 of the Income-tax Act, 1961 in view of Explanation 3 to section 40(a)(ii).

Issue (i): Whether the disallowance under section 14A read with Rule 8D(2)(iii) of the Income Tax Rules, 1962 was warranted on the facts of the case.

Analysis: The assessee accepted that the disallowance was computed in conformity with the earlier directions and that only investments yielding exempt income were considered. The finding of the first appellate authority sustaining the disallowance therefore required no interference.

Conclusion: The disallowance under section 14A read with Rule 8D(2)(iii) was upheld and the issue was decided against the assessee.

Issue (ii): Whether education cess, including secondary and higher education cess, was allowable as a deduction under section 37 of the Income-tax Act, 1961 in view of Explanation 3 to section 40(a)(ii).

Analysis: Explanation 3 inserted by the Finance Act, 2022 clarifies that tax includes surcharge and cess for the purposes of section 40(a)(ii). Following the Supreme Court ruling that education cess is not allowable as an expenditure, the deduction claimed by the assessee could not be sustained.

Conclusion: The deduction of education cess, including secondary and higher education cess, was disallowed and the issue was decided in favour of the Revenue.

Final Conclusion: The assessee's appeal failed, while the Revenue's appeal succeeded on the deduction of education cess.

Ratio Decidendi: Education cess and secondary and higher education cess are not deductible as business expenditure, and disallowance under section 14A is sustainable where the computation is confined to investments yielding exempt income.

Issues: Disallowance of labour charges paid to five parties was justified on an ad hoc basis.

Analysis: The assessee produced labour bills, confirmations, issue and receipt vouchers, bank records, and replies from the labour contractors to notices issued under Section 133(6) of the Income-tax Act, 1961. The books were not rejected under Section 145(3) of the Income-tax Act, 1961, and no discrepancy was found in the stock records. Labour charges were found to be an integral part of the jewellery manufacturing business, and there was no evidence that the cash withdrawals by the contractors were returned to the assessee. The field verification reports were found to be flawed and could not, by themselves, sustain a conclusion of bogus expenditure. An ad hoc percentage disallowance, unsupported by a specific finding of inflated or non-business expenditure, was held to be arbitrary.

Conclusion: The disallowance of Rs. 16,71,940 was deleted and the assessee succeeded on the merits of the labour-charge issue.

Issues: (i) whether the transfer pricing adjustment on account of advertisement, marketing and sales promotion expenditure, including the protective adjustment based on the bright line test, was sustainable; (ii) whether disallowance of daughter marriage fund expenditure was justified; (iii) whether foreign tax credit was to be allowed or restored for verification; (iv) whether deduction for the warranty-related unwinding of discount expenditure was to be admitted as an additional ground and examined afresh.

Issue (i): whether the transfer pricing adjustment on account of advertisement, marketing and sales promotion expenditure, including the protective adjustment based on the bright line test, was sustainable.

Analysis: The adjustment was examined in the light of the settled position that AMP expenditure, by itself, does not constitute an international transaction in the absence of a demonstrated arrangement with the associated enterprise. The bright line test was also rejected as a basis for inferring such a transaction. On the facts, no material change was shown to justify a different view from the earlier years in the assessee's own case.

Conclusion: The transfer pricing adjustment and the protective adjustment on AMP expenditure were deleted and the issue was decided in favour of the assessee.

Issue (ii): whether disallowance of daughter marriage fund expenditure was justified.

Analysis: The expenditure was treated as a business-related employee welfare claim, and the matter had earlier been sent back in the assessee's own case for verification of details. The same approach was followed here, with the claim to be examined in accordance with the earlier directions.

Conclusion: The disallowance was not finally sustained and the issue was remitted for verification, with relief granted in favour of the assessee for statistical purposes.

Issue (iii): whether foreign tax credit was to be allowed or restored for verification.

Analysis: The claim was considered to be capable of verification from the certificates and reconciliation statement, and the matter was treated as one requiring factual examination rather than outright rejection.

Conclusion: The issue was restored to the Assessing Officer for verification and was decided in favour of the assessee for statistical purposes.

Issue (iv): whether deduction for the warranty-related unwinding of discount expenditure was to be admitted as an additional ground and examined afresh.

Analysis: The additional claim was treated as arising from the same warranty liability framework and from the assessee's mercantile method of accounting. The liability was regarded as an ascertained business liability, and the claim was not treated as a wholly new issue but as one requiring proper verification and computation.

Conclusion: The additional ground was admitted and restored to the Assessing Officer for fresh examination, with the issue sustained in favour of the assessee for statistical purposes.

Final Conclusion: The appeal was partly allowed, with the AMP-related transfer pricing addition deleted and the remaining disputed claims either remitted or restored for verification.

Ratio Decidendi: AMP expenditure cannot be treated as an international transaction or adjusted by the bright line test without demonstrated material showing an arrangement with the associated enterprise, and deductible business claims requiring factual verification may be restored for fresh examination rather than rejected outright.

Issues: Whether payments made to Singapore-based entities for architectural, consultancy, and structural design services constituted fees for technical services under Article 12(4) of the India-Singapore Double Taxation Avoidance Agreement so as to trigger tax deduction under section 195 of the Income-tax Act, 1961 and disallowance under section 40(a)(i) of the Income-tax Act, 1961.

Analysis: The services were confined to drawings, designs, and consultancy for a specific real estate project. The relevant treaty provision applied only where managerial, technical, or consultancy services also made available technical knowledge, experience, skill, know-how, or processes enabling independent use by the recipient, or involved development and transfer of a technical plan or technical design. The services here were project-specific and were not shown to have transferred any such usable technical knowledge or skill to the assessee. The factual position was found to be identical to the assessee's earlier year, where the same issue had been decided in its favour.

Conclusion: The payments did not constitute fees for technical services under Article 12(4) of the treaty, no liability to deduct tax at source arose under section 195 of the Income-tax Act, 1961, and the disallowance under section 40(a)(i) of the Income-tax Act, 1961 was rightly deleted.

Issues: Whether a return filed in response to a notice under section 148 of the Income-tax Act, 1961, though beyond the time mentioned in the notice, remained a valid return and whether the Assessing Officer could frame reassessment without issuing notice under section 143(2) of the Income-tax Act, 1961.

Analysis: A return furnished in response to a notice under section 148 is to be treated as a return required under section 139 and does not become non-est merely because it is filed belatedly, provided the assessment proceedings are still pending. Once such a return is filed, the statutory procedure for framing assessment applies, and notice under section 143(2) is mandatory before completing the reassessment. The failure to issue that notice goes to the root of jurisdiction and cannot be treated as a curable irregularity.

Conclusion: The reassessment framed without issuing notice under section 143(2) was invalid and was quashed, with the appeal allowed.

Issues: Allowability of ESOP expenditure as deductible business expenditure under section 37(1) of the Income-tax Act, 1961.

Analysis: The issue was already decided in the assessee's own case for earlier assessment years and that view had been affirmed by the jurisdictional High Court. In view of the binding decision covering the same question, the disallowance of ESOP expenditure could not be sustained merely because the Revenue had carried the matter further before the Supreme Court in another case.

Conclusion: ESOP expenditure was allowable, and the Revenue's objection to its deduction failed.

Issues: Whether amendment of the shipping bills to change the reward column from "No" to "Yes" for claiming MEIS benefit could be allowed on the basis of documentary evidence existing at the time of export.

Analysis: Section 149 of the Customs Act, 1962 permits amendment of shipping bills on the strength of documentary evidence that existed when the goods were exported. The dispute concerned an inadvertent omission in the reward column, while the exports themselves were admitted to be genuine and eligible for the MEIS scheme. The record showed that the exporters had manifested their claim through surrounding export documents and that the competent authority had already issued MEIS scrips. The Tribunal held that such an error was procedural and could not defeat the substantive benefit of a beneficial export incentive scheme. Reliance was placed on the consistent approach that technical lapses, once supported by contemporaneous evidence and corrected in accordance with law, should not override the exporter's entitlement.

Conclusion: Amendment of the shipping bills was permissible and the rejection of the request was unsustainable. The appeals succeeded in favour of the assessee.

Ratio Decidendi: An inadvertent and rectifiable error in a shipping bill cannot defeat entitlement to an export incentive where contemporaneous documentary evidence supports the claim and the amendment is sought under Section 149 of the Customs Act, 1962.

Issues: Whether the direction requiring the Resolution Professional to ensure full access to the premises could be sustained when the Resolution Professional's possession and access had already attained finality.

Analysis: The possession and access secured by the Resolution Professional were treated as final by the earlier order and the dismissal of the appeal against that order. In that setting, the Respondent could not re-agitate the same question of possession and access. The order under challenge, so far as it required the Resolution Professional to ensure full access, could not stand. At the same time, any separate grievance of third parties claiming access to conduct business from the premises was left open to be pursued before the Adjudicating Authority in appropriate proceedings.

Conclusion: The direction to ensure full access was set aside and the appeal was partly allowed in favour of the Appellant.

Issues: (i) Whether the personal guaranty stood invoked so as to sustain the proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. (ii) Whether service of the demand notice and the notice issued by the Resolution Professional was valid and in compliance with the applicable rules and the guarantee deed.

Issue (i): Whether the personal guaranty stood invoked so as to sustain the proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016.

Analysis: The debt against the personal guarantors had already been the subject of proceedings before the Debt Recovery Tribunal, which culminated in a decree holding the defendants jointly and severally liable and permitting recovery against the person and properties of the guarantors. The decree remained operative and had not been shown to have been set aside. In these circumstances, the contention that the personal guarantee was never invoked could not be accepted.

Conclusion: The objection failed and was decided against the appellants.

Issue (ii): Whether service of the demand notice and the notice issued by the Resolution Professional was valid and in compliance with the applicable rules and the guarantee deed.

Analysis: The guarantee deed contained a deeming clause that treated dispatch of notice by registered post or certificate of posting to the guarantor's address, or any other address intimated to the bank, as sufficient service. The record showed dispatch to the Masab Tank address, which was treated as the correct address in the earlier decree, and the postal tracking report was read with the notice itself. On that basis, service was held to be complete. The subsequent filing of material relating to the alternate address did not vitiate the proceedings, and no non-compliance with the service requirements was found. The Resolution Professional's notice under Section 99(2) was also treated as duly dispatched and served.

Conclusion: The objection to service was rejected and held to be without merit.

Final Conclusion: The appellate challenge to the admission of the personal guarantor insolvency application failed, while the Resolution Professional was expected to afford the appellants an opportunity to place a repayment plan in accordance with law.

Ratio Decidendi: Where a guarantee deed provides for deemed service on dispatch to the guarantor's address, and the record shows dispatch to the correct address supported by the decree and postal record, service cannot be defeated by disputing actual receipt; an operative decree fixing liability against the personal guarantor also defeats the plea that the guarantee was never invoked.

Issues: Whether the demand of central excise duty and penalty for alleged clandestine removal was sustainable when the case rested mainly on third-party records and statements, and whether such statements could be relied upon without compliance with the mandatory procedure under Section 9D of the Central Excise Act, 1944.

Analysis: The proceedings were founded on records recovered from a buyer and statements recorded during investigation, while no incriminating material, stock discrepancy, excess raw material consumption, transport evidence, sale proceeds trail, or power-consumption evidence was gathered from the appellant's premises. The statements relied upon were not tested in the manner required by Section 9D of the Central Excise Act, 1944, and the adjudication also lacked the broader corroboration necessary to establish clandestine removal, which is a serious charge requiring cogent evidence rather than assumption and presumption. The absence of proper investigation into production, procurement, movement and clearance of goods further weakened the demand.

Conclusion: The demand of duty and the consequential penalty were unsustainable. The impugned order was set aside and the appeal was allowed in favour of the assessee.

Issues: (i) Whether the reassessment notice for AY 2013-14 was valid when the reasons recorded did not show income escaping assessment in the nature of an asset; (ii) Whether the reassessment notice for AY 2015-16 was barred by limitation; (iii) Whether the special audit direction for AY 2013-14 could survive after the reassessment notice for that year was set aside; (iv) Whether the special audit direction for AY 2015-16 was justified under the statutory preconditions.

Issue (i): Whether the reassessment notice for AY 2013-14 was valid when the reasons recorded did not show income escaping assessment in the nature of an asset.

Analysis: The reasons recorded for AY 2013-14 referred to the allowability and genuineness of the provision for customer claims, but did not record any material showing escapement of income represented as an asset. The Court held that reassessment beyond three years required the jurisdictional condition under the fourth proviso to Section 153A to be satisfied, namely that escaped income must be in the form of an asset. Since the recorded reasons did not identify any receivable or other asset for AY 2013-14, and the Revenue could not rely on reasons recorded for a different year to cure that defect, the notice lacked jurisdiction.

Conclusion: The reassessment notice for AY 2013-14 was invalid and was quashed in favour of the assessee.

Issue (ii): Whether the reassessment notice for AY 2015-16 was barred by limitation.

Analysis: The reasons recorded for AY 2015-16 stated that the provision for warranty expenses gave rise to a corresponding receivable from the Associated Enterprise, and that such receivable constituted an asset. The Court held that receivables arising from a contractual right to reimbursement are assets for the purpose of the limitation condition. On that footing, the notice fell within the permissible extended period and satisfied the statutory threshold for reopening.

Conclusion: The reassessment notice for AY 2015-16 was within limitation and was upheld against the assessee.

Issue (iii): Whether the special audit direction for AY 2013-14 could survive after the reassessment notice for that year was set aside.

Analysis: The special audit direction for AY 2013-14 was issued in aid of the reassessment proceedings for that year. Once the reassessment notice itself was held to be without jurisdiction, the consequential special audit direction for the same year could not stand independently.

Conclusion: The special audit direction for AY 2013-14 was set aside in favour of the assessee.

Issue (iv): Whether the special audit direction for AY 2015-16 was justified under the statutory preconditions.

Analysis: The Court held that Section 142(2A) applies to reassessment proceedings as well, and that the statutory triggers include volume of accounts, doubts about correctness, multiplicity of transactions, specialised nature of business activity, and the interests of revenue. On the facts, the ERP data, discrepancies, duplication and missing entries, inability to produce proper books in the manner required, and the revenue's doubts about the correctness of the accounts furnished sufficient basis for directing special audit.

Conclusion: The special audit direction for AY 2015-16 was upheld against the assessee.

Final Conclusion: The challenge succeeded only in part: the reassessment and special audit for AY 2013-14 were quashed, while the reassessment and special audit for AY 2015-16 were sustained.

Ratio Decidendi: For reassessment beyond three years in search cases, the recorded reasons must themselves show that the escaped income is represented in the nature of an asset for the relevant year, and a later year's reasoning cannot cure the absence of such jurisdictional material; however, receivables arising from an enforceable right to reimbursement may constitute an asset, and special audit may validly be ordered in reassessment proceedings where the statutory conditions of complexity, volume, or doubtful correctness of accounts are objectively met.

Issues: Whether the amount transferred by the assessee to the credit of the Central Government under section 23(2) of the Export-Import Bank of India Act, 1981 constituted dividend so as to attract dividend distribution tax under section 115-O of the Income-tax Act, 1961.

Analysis: The assessee's transfer to the Central Government was held to be a statutory and mandatory transfer of funds under section 23(2) of the Export-Import Bank of India Act, 1981, and not a distribution of profit to shareholders. The Tribunal noted that dividend, in its ordinary and statutory sense, presupposes share capital and shareholders, which were absent in the present facts. The conclusion of the Commissioner (Appeals) was consistent with the Tribunal's own earlier decision in the assessee's case, and no change in facts or law was shown for the years under appeal.

Conclusion: Section 115-O was not applicable to the impugned transfer, the amount was not taxable as dividend under section 2(22), and the Revenue's challenge to the deletion failed.

Ratio Decidendi: A compulsory statutory transfer to the Central Government, made otherwise than by way of distribution to shareholders, does not constitute dividend and therefore does not attract dividend distribution tax under section 115-O of the Income-tax Act, 1961.

Issues: (i) Whether a jurisdictional objection to reopening could be entertained despite the assessee not pressing it before the first appellate authority; (ii) whether the reassessment proceedings were invalid for want of approval from the correct specified authority under section 151(ii) of the Income-tax Act, 1961.

Issue (i): Whether a jurisdictional objection to reopening could be entertained despite the assessee not pressing it before the first appellate authority.

Analysis: A defect going to jurisdiction strikes at the root of the proceedings and cannot be cured by consent, waiver, acquiescence, or abandonment of a ground before an earlier appellate authority. Where the objection concerns the very authority to initiate reassessment, it remains open to be raised at a later appellate stage on the basis of the existing record.

Conclusion: The jurisdictional objection was rightly entertained and was not barred by the earlier non-pressing of the ground.

Issue (ii): Whether the reassessment proceedings were invalid for want of approval from the correct specified authority under section 151(ii) of the Income-tax Act, 1961.

Analysis: For the relevant assessment year, the order under section 148A(d) and the consequential notice under section 148 were issued after the expiry of three years from the end of the assessment year. In such a case, the statute required approval of the higher specified authority under section 151(ii), and approval by the Principal Commissioner was insufficient. Since valid sanction from the prescribed authority is a condition precedent for assumption of jurisdiction to reopen, non-compliance vitiates the proceedings.

Conclusion: The reassessment was invalid and the notice and consequential proceedings were void ab initio.

Final Conclusion: The jurisdictional challenge succeeded, the reassessment proceedings were quashed, and the revenue's appeal ceased to survive on merits.

Ratio Decidendi: A reopening of assessment is void where the sanction for issuance of notice is obtained from an authority not competent under the applicable clause of section 151, and such a jurisdictional defect may be raised notwithstanding an earlier waiver or non-pressing of the ground.