Issues: (i) Whether the addition for unexplained cash deposits for AY 2014-15 warranted restoration for fresh adjudication; (ii) Whether reassessment for AY 2016-17, initiated after three years with approval of the PCIT rather than the PCCIT, was valid.

Issue (i): Whether the addition for unexplained cash deposits for AY 2014-15 warranted restoration for fresh adjudication.

Analysis: The cash-deposit addition under Section 69A of the Income-tax Act, 1961, was made in an ex parte reassessment, and the first appellate order was also ex parte. Effective opportunity to address the disputed addition had not been available; therefore, de novo adjudication after reasonable opportunity was warranted.

Conclusion: The cash-deposit addition is restored to the Assessing Officer for de novo adjudication after granting reasonable opportunity to the assessee, in favour of the assessee.

Issue (ii): Whether reassessment for AY 2016-17, initiated after three years with approval of the PCIT rather than the PCCIT, was valid.

Analysis: For reassessment initiated beyond three years from the end of the relevant assessment year, Section 151 of the Income-tax Act, 1961 requires sanction from the PCCIT for issuance of notice under Section 148. The approval was instead obtained from the PCIT, who was not the specified sanctioning authority; this jurisdictional defect vitiated the reassessment proceedings.

Conclusion: The reassessment for AY 2016-17 is invalid and stands quashed, in favour of the assessee.

Final Conclusion: The cash-deposit controversy for AY 2014-15 requires fresh adjudication, while the reassessment for AY 2016-17 cannot survive.

Ratio Decidendi: Where reassessment is initiated beyond the prescribed three-year period, sanction by the statutorily designated PCCIT is mandatory, and approval by a PCIT cannot validate the reassessment.

Issues: Whether exemption under Section 11 of the Income-tax Act, 1961 could be denied merely because the audit report in Form 10B was not filed along with the return, although it was filed before processing of the return.

Analysis: The return and the audit report were both filed within the prescribed statutory period, and the audit report was available when the return was processed under Section 143(1) of the Income-tax Act, 1961. Filing of Form 10B was a procedural requirement; with the substantive conditions for exemption otherwise fulfilled, exemption could not be refused solely because the report was filed separately from the return.

Conclusion: The assessee was entitled to exemption under Section 11 of the Income-tax Act, 1961; denial of the exemption was set aside and the issue was decided in favour of the assessee.

Issues: Whether revision under Section 263 of the Income-tax Act, 1961 was valid on the ground that the assessment was made without necessary enquiries and verification of search material.

Analysis: Section 263 permits revision only where the assessment order is both erroneous and prejudicial to the interests of the Revenue. Explanation 2(a) applies where enquiries or verification that ought to have been made were not made; it does not equate an enquiry regarded as inadequate with a complete absence of enquiry. The assessment record reflected examination of seized documents, statements, bills, vouchers, digital data, third-party responses, and the issuance of summons and notices. The Assessing Officer independently evaluated the material, rejected part of the explanation, adopted different rates for income estimation, and made a substantive addition. The objection to revision was therefore directed to the width and depth of verification rather than a lack of enquiry. No independent enquiry or positive finding established that the view adopted in assessment was erroneous or unsustainable in law; a direction for a further investigation into the same material could not substitute that requirement.

Conclusion: The conditions for exercise of revisionary jurisdiction were not satisfied; the revision order was invalid and the original assessment order was restored.

Issues: Whether the ad hoc disallowance of expenditure on cost of materials consumed and rates and taxes as capital expenditure was sustainable.

Analysis: The expenditure was supported by invoices and related to consumable items regularly used in business operations. The Assessing Officer had accepted the financial statements, identified no expenditure as bogus, non-genuine or fictitious, and neither rejected the books nor established any specific defect in the evidence. The mere quantum of expenditure or an unsupported assertion of enduring benefit could not justify its treatment as capital expenditure or an ad hoc percentage disallowance.

Conclusion: The expenditure on materials consumed and rates and taxes was allowable as revenue expenditure, and the ad hoc disallowances were unsustainable, in favour of the assessee.

Issues: Whether the deduction claimed for a contribution to a registered unrecognised political party under Section 80GGC of the Income-tax Act, 1961 was allowable.

Analysis: A deduction under Section 80GGC requires a genuine political contribution. The donation receipt and banking-channel payment were outweighed by investigation material, un-retracted statements recorded under Section 132(4), bank-trail analysis, and the established modus operandi showing that the recipient party provided accommodation entries through layered funds. Applying the test of human probabilities and preponderance of probabilities, the apparent documentation did not establish a genuine donation.

Conclusion: The contribution was not genuine and was not eligible for deduction under Section 80GGC of the Income-tax Act, 1961; finding against the assessee.

Issues: Whether the purchase addition required fresh verification of the supplier's post-assessment clarification and supporting evidence.

Analysis: The purchase discrepancy arose from the supplier's response to verification under Section 133(6) of the Income-tax Act, 1961 during assessment under Section 143(3) of the Income-tax Act, 1961. The supplier's subsequent clarification concerning omitted Jaipur-unit sales, along with invoice, payment, GST and delivery material, had not been verified by the Assessing Officer. The differing explanation earlier offered by the assessee also required factual verification. A reasonable opportunity of hearing was necessary before determining the allowability of the disputed purchase.

Conclusion: Fresh factual verification of the purchase claim and the supplier's clarification was required before a lawful determination of the addition.

Issues: Whether revision under Section 263 of the Income-tax Act, 1961 was valid where the scrutiny assessment order did not disclose the nature or extent of enquiries or verification undertaken.

Analysis: Section 263 of the Income-tax Act, 1961 permits revision where an assessment order is erroneous and prejudicial to the interests of the revenue. Explanation 2(a) treats an order passed without enquiries or verification that ought to have been made as erroneous and prejudicial. The assessment order was cryptic, non-speaking and contained no factual particulars demonstrating enquiry into the transactions, claimed expenses, or profit disclosed in the return. The record did not establish application of mind by the Assessing Officer, while the revisional authority had examined the relevant financial details and submissions.

Conclusion: The assessment order was rightly treated as erroneous and prejudicial to the interests of the revenue, and the exercise of revisionary jurisdiction under Section 263 of the Income-tax Act, 1961 was valid. The issue was decided against the assessee.

Issues: Whether the assessee's slump-sale capital-loss computation under the statutory net-worth mechanism could be rejected and the entire transfer consideration taxed as capital gains.

Analysis: Section 50B of the Income-tax Act, 1961 provides a self-contained mechanism for computing capital gains on a slump sale, treating the undertaking's net worth as the cost of acquisition and fair market value determined in the prescribed manner as the full value of consideration. The assessee furnished Form 3CEA and adopted the valuation under Rule 11UAE of the Income-tax Rules, 1962. No defect in the valuation methodology, accountant's report, or conformity with Rule 11UAE was established. The Assessing Officer therefore could not substitute the prescribed valuation by making extraneous adjustments to reduce the undertaking's net worth to nil. Further, the addition ultimately made exceeded the amount proposed in the show-cause notice, contrary to principles of natural justice and CBDT Instruction No. 20/2015.

Conclusion: The assessee's statutory computation of the slump-sale capital loss was upheld, and the deletion of the addition was sustained.

Issues: (i) Whether the JSK Server data recovered from the purported pen-drive, and the associated employee statements, were admissible and reliable bases for additions; (ii) Whether uncorroborated WhatsApp chats could sustain an addition for unexplained money; (iii) Whether the disputed bad-debt, repair, maintenance, software, prior-period, electricity and printing expenses were allowable business expenditure; (iv) Whether software installation and support costs covering more than one accounting period were fully deductible in the year incurred; (v) Whether disallowance for non-deduction or short deduction of tax at source was sustainable; (vi) Whether the reduction of deduction under section 80JJAA was justified; (vii) Whether cash-payment disallowance under section 40A(3) could be imposed on aggregate payments to multiple recipients; and (viii) Whether the assessment for AY 2021-22 could be completed under section 143(3) after the search.

Issue (i): Whether the JSK Server data recovered from the purported pen-drive, and the associated employee statements, were admissible and reliable bases for additions.

Analysis: Section 65B of the Indian Evidence Act, 1872, and the Digital Evidence Investigation Manual, 2014, require reliable authentication of electronic material, including valid certification, proper seizure documentation, hash values and an unbroken chain of custody. The record disclosed irreconcilable inconsistencies concerning the date and premises of recovery, absence of a seizure memo and chain-of-custody record, absence of hash values, defective certification by a person not shown to control the device, and an apparently fictional device serial number. The search witnesses did not meet the prescribed local-witness requirement. The server contents also lacked independent corroborative evidence connecting any alleged cash transaction or ledger entry with the assessee. The rebuttable presumption under section 292C could not cure these foundational defects. Employee statements obtained without cross-examination could not be used consistently with natural justice, and the tentative, subsequently retracted income offer was unsupported by material evidence.

Conclusion: The JSK Server data and associated statements had no reliable evidentiary value; additions founded solely on that material, including alleged commission and interest income and alleged cash credits, were deleted in favour of the assessee.

Issue (ii): Whether uncorroborated WhatsApp chats could sustain an addition for unexplained money.

Analysis: The WhatsApp material was not supported by a section 65B certificate for the source device and did not identify, establish or corroborate the alleged receipt of cash. The chats, viewed independently, did not provide a reliable and verifiable link with undisclosed money.

Conclusion: The WhatsApp chats could not independently sustain the addition for unexplained money, which was deleted in favour of the assessee.

Issue (iii): Whether the disputed bad-debt, repair, maintenance, software, prior-period, electricity and printing expenses were allowable business expenditure.

Analysis: Expenditure entries linked to the rejected JSK Server-based income could not be disallowed after the underlying additions failed. Routine repairs to leased premises, including shutters and slabs, did not create a capital asset. Annual software licence and customisation charges were incurred for operating an existing accounting system and were revenue expenditure. Prior-period invoicing alone did not justify disallowance where the claim had not been made earlier and the business purpose was not disputed. Electricity, printing and stationery expenses at business locations were supported by business use and could not be disallowed merely because an address differed from the GST registration address.

Conclusion: The relevant disallowances were not sustainable and the deletions of those business expenditure claims were affirmed in favour of the assessee.

Issue (iv): Whether software installation and support costs covering more than one accounting period were fully deductible in the year incurred.

Analysis: The expenditure related to a software licence and support period extending beyond the relevant accounting year. The accrual and matching principle required allocation of the expenditure to the respective periods benefiting from the services.

Conclusion: The proportionate disallowance relating to later periods was sustained in favour of the Revenue.

Issue (v): Whether disallowance for non-deduction or short deduction of tax at source was sustainable.

Analysis: Lease-line payments did not require deduction of tax under sections 194C or 194J. A payment on which tax had been deducted at a lower rate did not attract disallowance under section 40(a)(ia). However, for other maintenance payments, no satisfactory explanation for non-deduction of tax was available.

Conclusion: Disallowance for lease-line payments and payments subject to short deduction was deleted, while the disallowance for unexplained non-deduction on other payments was sustained; the issue was resolved partly in favour of the assessee and partly in favour of the Revenue.

Issue (vi): Whether the reduction of deduction under section 80JJAA was justified.

Analysis: The deduction was quantified on the basis of the audit report and supporting calculation, and no new material or basis was shown to displace the lower authorities' quantification.

Conclusion: The reduction of the deduction under section 80JJAA was sustained against the assessee.

Issue (vii): Whether cash-payment disallowance under section 40A(3) could be imposed on aggregate payments to multiple recipients.

Analysis: Section 40A(3) applies where payment to a single payee on a single day exceeds the prescribed limit. Most payments were separately made to different recipients and could not be aggregated, but two salary-settlement payments to individual payees exceeded the statutory threshold.

Conclusion: The disallowance was confined to Rs. 30,740, with the balance deleted in favour of the assessee.

Issue (viii): Whether the assessment for AY 2021-22 could be completed under section 143(3) after the search.

Analysis: Explanation 2 to section 148 deems income to have escaped assessment for prescribed assessment years following a search initiated after 1 April 2021. The special post-search procedure under sections 147, 148 and 148B prevails over the general scrutiny procedure under section 143(3). The assessment had not been initiated or completed through that mandatory special procedure.

Conclusion: The assessment for AY 2021-22 framed under section 143(3) was invalid and was quashed in favour of the assessee.

Final Conclusion: Digital-data-based tax adjustments were eliminated for want of authenticated and corroborated evidence; routine business expenditure remained allowable, subject only to the limited surviving adjustments for period allocation, specified tax-deduction defaults, deduction quantification and cash payments exceeding the statutory threshold.

Ratio Decidendi: Electronic material relied upon to fasten tax liability must be authenticated through a valid section 65B certificate and substantially compliant preservation procedures, including a reliable chain of custody; absent such safeguards and independent corroboration, it cannot form the sole basis of an addition.

Issues: Whether credit for tax deducted at source from salary can be refused solely because the deduction is not reflected in Form 26AS.

Analysis: The governing approach to TDS credit does not permit rejection of a salary-related claim solely for want of reflection in Form 26AS. Relevant satisfactory material may include salary slips, employment documents read with bank records, employer payroll or tax workings, and communications concerning deduction or deposit of tax. The evidentiary material supporting the claimed salary deduction requires evaluation.

Conclusion: TDS credit cannot be denied merely because the claimed deduction is absent from Form 26AS; where deduction from salary is satisfactorily established, credit must be granted.

Issues: (i) Whether the fresh assessments were barred by limitation under Section 153(3) of the Income-tax Act, 1961; (ii) Whether the additions as income from undisclosed sources required fresh assessment in light of the assessee's non-compliance with directions to furnish the status of the CBI prosecution.

Issue (i): Whether the fresh assessments were barred by limitation under Section 153(3) of the Income-tax Act, 1961.

Analysis: Section 153(3) permits a fresh assessment pursuant to an order under Section 254 within nine months from the end of the financial year in which that order is received. An order under Section 254 includes both an appellate order under Section 254(1) and an order rectifying a mistake apparent from the record under Section 254(2). The later rectification order issued operative directions for de novo assessment; therefore, limitation ran from that order. The assessments were made before expiry of the resulting period. This construction also accords with lex non cogit ad impossibilia, since the Assessing Officer could not be required to complete the assessment before the later directions were issued.

Conclusion: The fresh assessments were within limitation; the limitation challenge fails against the assessee.

Issue (ii): Whether the additions as income from undisclosed sources required fresh assessment in light of the assessee's non-compliance with directions to furnish the status of the CBI prosecution.

Analysis: The assessee had not fully complied with the direction to periodically furnish the status of the CBI prosecution, which led to completion of the assessments within the limitation period. A detailed status report and any supporting material remain material for determining the taxable income. Non-compliance with the renewed directions permits the Assessing Officer to draw an adverse inference.

Conclusion: The additions are to be reconsidered through a fresh assessment after the assessee furnishes the required status report and material; this issue is partly in favour of the assessee.

Final Conclusion: The limitation objection does not invalidate the assessments, but the quantum determination is reopened for lawful reconsideration on the relevant prosecution status and available evidence.

Ratio Decidendi: For limitation under Section 153(3), an operative rectification order under Section 254(2) that issues fresh assessment directions is an order under Section 254 from which the period for completing the fresh assessment is reckoned.

Issues: Whether detention and imposition of tax and penalty for alleged reuse of invoices and e-way bills were sustainable on toll-plaza movement records and photographs.

Analysis: Section 129(3) of the Central Goods and Services Tax Act, 2017 and the corresponding State enactment require a demonstrated contravention relating to the movement of goods. The goods were accompanied by invoices and a valid e-way bill, without discrepancy in their description, quantity, value or ownership. Toll-plaza photographs and vehicle-movement data, without independent and cogent proof that the same goods had already been delivered and re-transported, were insufficient to establish reuse of the documents. The explanation and invoice concerning an earlier transport of cotton cuttings were not verified. Suspicion or a presumed intention to evade tax cannot substitute proof.

Conclusion: Alleged reuse of the e-way bill and contravention of the GST law were not established; the detention and penalty proceedings were unsustainable in favour of the assessee.

Issues: Whether a penalty order under Section 129(3), passed 445 days after issuance of notice, is legally sustainable.

Analysis: Section 129(3) mandates that the penalty order be passed within seven days from service of the notice. The notice was issued on 16.08.2021, whereas the order was made only on 04.11.2022. In a fiscal statute, the prescribed timeline is mandatory and requires strict compliance; the substantial breach vitiated the detention and penalty proceedings.

Conclusion: The order passed under Section 129(3) was void ab initio and a nullity; the appellate order affirming it was set aside.

Issues: (i) Whether the revision proceedings were barred by limitation under Section 108(2)(b) of the Karnataka State Goods and Services Tax Act, 2017; (ii) Whether reversal of the appellate order and restoration of penalty under Section 129 of the Karnataka State Goods and Services Tax Act, 2017 were justified.

Issue (i): Whether the revision proceedings were barred by limitation under Section 108(2)(b) of the Karnataka State Goods and Services Tax Act, 2017.

Analysis: Section 108(2)(b) prescribes a three-year limit for exercise of revisionary power. The pandemic-related exclusion of the period from 15 March 2020 to 28 February 2022 applies to judicial, quasi-judicial and departmental proceedings. On exclusion of the applicable period, the revisional order fell within the extended limitation period.

Conclusion: The revision proceedings were not barred by limitation, against the assessee.

Issue (ii): Whether reversal of the appellate order and restoration of penalty under Section 129 of the Karnataka State Goods and Services Tax Act, 2017 were justified.

Analysis: Section 68(1) requires the person in charge of a conveyance to carry the prescribed documents, and Rule 138(1) requires generation of the e-way bill before commencement of movement. The goods were unloaded at a location different from that covered by the available tax invoice and e-way bill. The requisite documents for delivery at that location were generated only after interception, and no evidence substantiated the asserted technical glitch. The absence of statutory documents in these circumstances established a wilful attempt to evade tax rather than a minor procedural lapse.

Conclusion: Penalty under Section 129(1) was legally valid, in favour of Revenue.

Final Conclusion: The revisional order restoring the statutory penalty for undocumented movement of goods remains operative.

Issues: (i) Validity of applying a turnover filter of Rs. 1 crore to Rs. 200 crores for selecting transfer-pricing comparables; (ii) Whether a software-product company was functionally comparable to a captive software-development service provider; (iii) Whether exclusion of comparables required a fresh arm's-length-price and comparability exercise on remand.

Issue (i): Validity of applying a turnover filter of Rs. 1 crore to Rs. 200 crores for selecting transfer-pricing comparables.

Analysis: Section 92C(2) of the Income-tax Act, 1961 does not prescribe a turnover filter. However, the Rs. 1 crore to Rs. 200 crores filter had a rational basis because comparability must be assessed with reference to functional profile, assets, risks, and material differences in the size and turnover of the tested party and comparable entities. A substantial variation in turnover can affect transaction pricing.

Conclusion: The turnover filter was valid and the issue was decided in favour of the assessee.

Issue (ii): Whether a software-product company was functionally comparable to a captive software-development service provider.

Analysis: The assessee provided software-development services to its associated enterprise and neither owned intellectual property nor developed or marketed software products. The proposed comparable was engaged in software-product development and in providing technology solutions and consultancy; its functional profile was therefore materially different.

Conclusion: The software-product company was not a valid comparable and was rightly excluded, in favour of the assessee.

Issue (iii): Whether exclusion of comparables required a fresh arm's-length-price and comparability exercise on remand.

Analysis: The transfer-pricing officer had already completed the comparability exercise and selected the final set of comparables. The remand required effect to be given to the exclusions directed on the identified grounds, and did not warrant reopening the entire determination of the arm's-length price.

Conclusion: No fresh comparability exercise was required; the issue was decided in favour of the assessee.

Final Conclusion: The transfer-pricing computation must be given effect using comparables selected through a rational turnover and functional-comparability analysis, without reopening the completed exercise merely because specified entities are excluded.

Ratio Decidendi: Transfer-pricing comparables must be selected by reference to functional profile, assets, risks, and material scale; a rational turnover filter is permissible, and a software-product company cannot be compared with a captive software-development service provider where their functions materially differ.

Issues: (i) Maintainability of the writ petitions despite the statutory remedy under FEMA; (ii) Applicability of Section 37A to an arrangement originating before its commencement but involving later payments; (iii) Whether the connected fund movements supplied jurisdictional facts for action under Section 4 read with Section 37A; (iv) Whether the seizure order recorded a valid reason to believe and could be supported by subsequent explanatory material; (v) Effect of regulatory and income-tax treatment of the transactions on the FEMA seizure; (vi) Validity of the NOC refusal under Rule 10 in the absence of disclosed reasons and a demonstrable nexus, including reliance on a subsequent seizure order.

Issue (i): Maintainability of the writ petitions despite the statutory remedy under FEMA.

Analysis: The alternative-remedy rule is discretionary and does not exclude writ review where the challenge concerns jurisdictional facts or the legality of the decision-making process. The seizure challenge raised the threshold applicability of Section 37A and the existence of recorded reasons, while the NOC rejection was challenged for absence of reasons and lacked an appellate remedy.

Conclusion: Both writ petitions were maintainable. Review of the seizure was confined to jurisdictional and decision-making issues, while the NOC rejection was amenable to review for breach of fair administrative action.

Issue (ii): Applicability of Section 37A to an arrangement originating before its commencement but involving later payments.

Analysis: Section 37A is prospective and cannot be applied to transactions completed before its commencement merely because their consequences continued. However, actual payments made after the provision came into force were distinct subsequent acts, not merely the subsistence of an earlier liability, and were alleged to be part of the connected arrangement under investigation.

Conclusion: Section 37A could not retrospectively govern the completed transactions of 2015, but it could be invoked with reference to the subsequent payments made after its commencement. This issue was decided against the assessee.

Issue (iii): Whether the connected fund movements supplied jurisdictional facts for action under Section 4 read with Section 37A.

Analysis: The foreign borrowings, NCD subscription, immediate onward transfer of NCD proceeds, share acquisition, subsequent amalgamation and later repayment of principal and interest were capable of being assessed as one connected arrangement under the substance-over-form approach. The rupee denomination of the NCDs, FPI status of the subscriber, and formal regulatory compliance did not preclude scrutiny of the alleged closed-loop movement of funds and round-tripping. These circumstances provided a prima facie basis to examine whether foreign exchange had been dealt with in contravention of Section 4; final proof remains for the statutory authority.

Conclusion: The material supplied the jurisdictional factual foundation for action under Section 37A and examination under Section 4. This issue was decided against the assessee, without finally determining the alleged contravention.

Issue (iv): Whether the seizure order recorded a valid reason to believe and could be supported by subsequent explanatory material.

Analysis: The seizure order itself recorded the connected movement of funds, their return to the foreign lender, the alleged absence of genuine capital infusion, and the closed-loop structure. Charts and diagrams placed before the Court only collated transactions already appearing in the order and did not add a new factual foundation. The delay and the operational character of the seized premises did not invalidate the threshold exercise of jurisdiction, though they remained relevant to continuation of seizure before the Competent Authority.

Conclusion: The recorded material supported the preliminary reason to believe under Section 37A(1), and the seizure was not vitiated by impermissible supplementation of reasons. This issue was decided against the assessee, subject to statutory confirmation proceedings.

Issue (v): Effect of regulatory and income-tax treatment of the transactions on the FEMA seizure.

Analysis: RBI and SEBI communications addressed identified features of the NCD transaction, while the income-tax proceedings concerned separate statutory questions. None of those proceedings determined whether the complete connected arrangement contravened Section 4 of FEMA. Their findings and regulatory treatment remain relevant material requiring fair consideration in the statutory proceedings.

Conclusion: The prior regulatory and tax treatment did not foreclose the FEMA inquiry or invalidate the seizure at the threshold. This issue was decided against the assessee.

Issue (vi): Validity of the NOC refusal under Rule 10 in the absence of disclosed reasons and a demonstrable nexus, including reliance on a subsequent seizure order.

Analysis: Rule 10 contemplates applications by persons under investigation; pendency of an investigation alone cannot justify refusal. Although the proposed overseas treasury activities were capable of having a rational connection with the investigation, the rejection communication disclosed no reason or nexus. Confidentiality concerns could justify withholding sensitive particulars but not an entirely unreasoned decision. A seizure order made after the NOC refusal could not retrospectively supply its missing reasons. Since a response had been issued within the prescribed period, no deemed NOC arose.

Conclusion: The NOC refusal was unsustainable and was set aside in favour of the petitioner. The application must receive fresh, reasoned consideration; no entitlement to the NOC was determined.

Final Conclusion: The seizure remains subject to consideration by the Competent Authority, with the petitioner permitted to continue ordinary business operations from the secured premises without creating third-party interests. The NOC application requires a fresh and time-bound decision based on disclosed substantive grounds, and the regulatory authority must consider extension of the period for the proposed investment in accordance with law.

Ratio Decidendi: Section 37A does not retrospectively govern completed pre-commencement transactions, but recorded post-commencement payments alleged to form part of the same arrangement may provide the statutory basis for preliminary seizure, subject to confirmation proceedings.

Issues: (i) Whether a composite construction contract involving use of materials could be taxed as Commercial or Industrial Construction Service; (ii) Whether penalty for failure to pay service tax under reverse charge on Goods Transport Agency services was sustainable.

Issue (i): Whether a composite construction contract involving use of materials could be taxed as Commercial or Industrial Construction Service.

Analysis: A contract involving rendition of services together with materials constitutes a distinct composite works contract. Commercial or Industrial Construction Service can apply only to services simpliciter. Such composite works contracts were not taxable before 01.06.2007 and, thereafter, could be taxed only as Works Contract Service if they satisfied the applicable definition; they could not be classified as Commercial or Industrial Construction Service.

Conclusion: The demand under Commercial or Industrial Construction Service, with consequential interest and penalties, was set aside in favour of the assessee.

Issue (ii): Whether penalty for failure to pay service tax under reverse charge on Goods Transport Agency services was sustainable.

Analysis: The tax demand and interest relating to Goods Transport Agency services were not contested. Section 80 of the Finance Act, 1994 was invoked in relation to the penalty imposed under Section 76.

Conclusion: The penalty under Section 76 for Goods Transport Agency services was set aside in favour of the assessee.

Final Conclusion: A material-inclusive composite construction contract cannot sustain a levy under Commercial or Industrial Construction Service, while the Goods Transport Agency tax liability remains unaffected and the related penalty is waived.

Ratio Decidendi: A composite contract involving services and materials is a works contract and cannot be subjected to service tax under Commercial or Industrial Construction Service, which applies only to services simpliciter.

Issues: Whether a penalty order under Section 129(3), issued 28 days after service of notice, is valid.

Analysis: Section 129(3) mandates that the proper officer pass the penalty order within seven days from service of notice. The statutory use of "shall" makes the prescribed timeline mandatory, particularly under a fiscal statute requiring strict construction. Since the notice was issued on 28.06.2019 and the penalty order was made only on 26.07.2019, the mandatory time limit was breached.

Conclusion: The penalty order issued beyond the mandatory period under Section 129(3) is void ab initio and a nullity in law.

Issues: (i) Whether the taxpayer's unutilised input tax credit had accumulated because the GST rate on inputs exceeded the rate on output supplies, within clause (ii) of the first proviso to Section 54(3) of the Central Goods and Services Tax Act, 2017; and (ii) Whether paragraph 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 barred the taxpayer's refund claim.

Issue (i): Whether the taxpayer's unutilised input tax credit had accumulated because the GST rate on inputs exceeded the rate on output supplies, within clause (ii) of the first proviso to Section 54(3) of the Central Goods and Services Tax Act, 2017.

Analysis: Clause (ii) permits refund of unutilised input tax credit where it has accumulated because the tax rate on inputs is higher than that on output supplies. The inputs, including perfumes, fragrances, chemicals and packaging materials, were commercially distinct from the outward supply of agarbati. Those inputs attracted GST at 12% to 18%, whereas the output attracted GST at 5%, resulting in an inverted duty structure.

Conclusion: The refund arose from an inverted duty structure under clause (ii) of the first proviso to Section 54(3) of the Central Goods and Services Tax Act, 2017 and was admissible in favour of the assessee.

Issue (ii): Whether paragraph 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 barred the taxpayer's refund claim.

Analysis: The circular clarification concerns cases in which input and output supplies are the same goods attracting different rates at different points of time. The later clarification preserved refund where a contemporaneous rate differential exists, including specified concessional supplies. Since the inputs and output supplies were distinct goods, the same-goods clarification did not apply. CBIC circulars bind departmental officers but have only persuasive value before the Tribunal.

Conclusion: Paragraph 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 did not bar the refund claim, in favour of the assessee.

Final Conclusion: The statutory requirements for refund of accumulated input tax credit due to the input-output tax rate differential were satisfied, and the circular clarification could not displace that entitlement.

Ratio Decidendi: Refund of unutilised input tax credit is available where a higher rate of tax on inputs than on commercially distinct output supplies creates an inverted duty structure; a circular confined to same-goods rate changes cannot enlarge the statutory restriction on such refund.

Issues: (i) Whether the rejection of condonation by applying the general CBDT circular instead of the specific circular governing delayed returns claiming Section 80P deduction was valid; (ii) Whether the 34-day delay in filing the return for assessment year 2020-21 warranted condonation under CBDT Circular No. 13/2023 dated 26.07.2023

Issue (i): Whether the rejection of condonation by applying the general CBDT circular instead of the specific circular governing delayed returns claiming Section 80P deduction was valid

Analysis: Section 80AC(ii) of the Income-tax Act, 1961 bars deductions under the relevant Chapter unless the return is filed within the time prescribed by Section 139(1). However, CBDT Circular No. 13/2023 dated 26.07.2023 specifically authorises consideration of applications by cooperative societies for condonation of delayed returns claiming deduction under Section 80P for assessment years 2018-19 to 2022-23. CBDT Circular No. 09/2015 dated 09.06.2015 concerns delayed refund claims and claims for carry-forward or set-off of losses, and could not govern this specialised category. The refusal also failed to address the specific circular expressly relied upon and improperly treated the earlier appellate disallowance as a bar despite preservation of the condonation remedy. The specific beneficial circular therefore prevailed over the general circular.

Conclusion: The rejection of the condonation application was invalid and unsustainable; this issue is decided in favour of the assessee.

Issue (ii): Whether the 34-day delay in filing the return for assessment year 2020-21 warranted condonation under CBDT Circular No. 13/2023 dated 26.07.2023

Analysis: Clauses 6(i) and 6(ii) of CBDT Circular No. 13/2023 require examination of whether delay resulted from circumstances beyond the assessee's control and, where relevant, delayed statutory audit. The audit report, which had to be routed through the State Audit Department, was received after the due date during COVID-19 restrictions. The subsequent interval was explained by the application for condonation, the departmental response advising filing under Section 139(4), and filing shortly thereafter. These circumstances established genuine hardship. The beneficial condonation scheme required liberal application and not a hypertechnical approach.

Conclusion: The 34-day delay is liable to be condoned; this issue is decided in favour of the assessee.

Final Conclusion: The delayed return is eligible for consideration of the claim for deduction under Section 80P of the Income-tax Act, 1961 in accordance with law.

Ratio Decidendi: A specific CBDT circular governing condonation for cooperative societies claiming Section 80P deduction prevails over a general circular, and documented circumstances beyond the assessee's control establishing genuine hardship warrant liberal condonation of delay.