Issues: Whether penalty for contravention of the restriction on cash repayment of deposits was sustainable.

Analysis: Section 269T of the Income-tax Act, 1961 restricts repayment of deposits otherwise than through prescribed banking modes, and Section 271E provides for penalty upon its contravention. The assessee did not deny the cash repayments, establish that the amounts constituted chit bid amounts paid to successful subscribers, or show reasonable cause within Section 273B of the Income-tax Act, 1961 for making the repayments in cash.

Conclusion: The penalty under Section 271E of the Income-tax Act, 1961 was rightly sustained; the issue was decided against the assessee.

Issues: Whether, after a search initiated on or after 1 April 2021, an assessment could validly be completed under section 143(3) rather than by following the procedure under section 147 read with section 148.

Analysis: Explanation 2(i) to section 148 deems the Assessing Officer to possess information suggesting escapement of income where a search is initiated after 1 April 2021. The search-triggered assessment mechanism under sections 147 and 148 is the special statutory route and prevails over the general scrutiny-assessment procedure under section 143(3). Once the search had occurred, the Assessing Officer was required to discontinue the section 143(3) proceedings and initiate proceedings under section 148. Non-compliance with the prescribed statutory procedure constituted a jurisdictional defect.

Conclusion: The assessment framed under section 143(3) was invalid and was quashed, in favour of the assessee.

Issues: Whether reassessment of a completed scrutiny assessment on the alleged bogus long-term capital gain from sale of shares was valid.

Analysis: Section 147 of the Income-tax Act, 1961 permits reassessment only upon a reason to believe founded on tangible material and does not authorise a review on a mere change of opinion. Where the original assessment was completed under Section 143(3), the statutory protection against reopening after the prescribed period also requires failure by the assessee to make a full and true disclosure of material facts. The original scrutiny had considered the assessee's share transactions and supporting purchase, demat and sale documents; while an addition was made regarding another scrip, the long-term capital gain from the relevant scrip was accepted. The subsequent investigation report neither specifically identified the assessee nor was reconciled with the material already on record. Full and true disclosure by the assessee remained uncontroverted.

Conclusion: The reassessment was invalid as it was based on a mere change of opinion without fresh tangible material establishing escapement of income; the issue was decided in favour of the assessee.

Issues: Whether the ex parte GST demand and the appellate order could stand where there was no material establishing service of the show-cause notice upon the registered person.

Analysis: A notice under Section 73(1) of the Central Goods and Services Tax Act, 2017 read with Rule 142(1)(a) of the Central Goods and Services Tax Rules, 2017 must be served in a manner recognised by Section 169 of the Act. The record contained no material showing service of the show-cause notice through the GST portal, registered post, or e-mail. The demand was consequently confirmed without allowing the registered person to submit objections or be heard, contrary to the principles of natural justice.

Conclusion: The ex parte adjudication and the consequential appellate order could not be sustained. The registered person was entitled to receive the show-cause notice, file objections, and obtain fresh adjudication after an opportunity of hearing.

Issues: (i) Whether the sanction under Section 151 for reopening assessment was valid; (ii) Whether a recorded loan/advance received through banking channels could be assessed as unexplained investment under Section 69 and sustained under Section 68 without enquiry into the creditor's creditworthiness.

Issue (i): Whether the sanction under Section 151 for reopening assessment was valid.

Analysis: The assessee had not filed a return of income and the approval recorded satisfaction on the basis of available information and material indicating escaped income. The cited decisions concerned assessees that had filed returns and undergone assessment and were factually distinguishable. The recorded satisfaction reflected application of mind and did not establish mechanical approval.

Conclusion: The sanction for reopening was valid, against the assessee.

Issue (ii): Whether a recorded loan/advance received through banking channels could be assessed as unexplained investment under Section 69 and sustained under Section 68 without enquiry into the creditor's creditworthiness.

Analysis: Section 69 concerns investments not recorded in the books of account. The impugned sum was a loan/advance recorded in the books and received through banking channels, supported by documentary material that was neither rejected with reasons nor rebutted by adverse evidence. No enquiry was made from the creditor before concluding that the creditor lacked creditworthiness; consequently, sustaining the addition under Section 68 could not cure the unsupported addition.

Conclusion: The addition was unsustainable and was directed to be deleted, in favour of the assessee.

Final Conclusion: The reopening remains valid, but no addition can be retained in respect of the recorded loan/advance.

Ratio Decidendi: A recorded loan or advance cannot be treated as unexplained investment under Section 69, and an adverse finding on the creditor's creditworthiness requires supporting enquiry or evidence.

Issues: Whether penalty for contravention of Section 269SS was sustainable where jewellery purchased from the disclosed income of a company was kept in the managing director's residence and locker for safe custody.

Analysis: The disclosed income belonged to the company, and the jewellery acquired from those funds was kept with the assessee, its managing director, for safe custody. This arrangement did not establish that the assessee had accepted a cash loan or deposit exceeding the statutory threshold. Treating the amount as a cash loan was founded on assumptions, presumptions and surmises rather than the established facts.

Conclusion: The penalty under Section 271D for alleged violation of Section 269SS was unsustainable and was directed to be deleted, in favour of the assessee.

Issues: (i) Whether the agricultural receipts claimed by the assessee could explain cash deposits beyond the net agricultural income; and (ii) Whether the balance of the cash deposits claimed as gifts was satisfactorily explained.

Issue (i): Whether the agricultural receipts claimed by the assessee could explain cash deposits beyond the net agricultural income.

Analysis: For purposes of the addition under Section 69A of the Income-tax Act, 1961, the agricultural source had to be supported by the financial records and represent net income available for deposit. The agricultural land holding reflected in the balance sheet did not support treating the entire claimed gross agricultural receipts of Rs. 9.75 lakh as available cash. After accounting for the declared agricultural expenses of Rs. 5.42 lakh, only net agricultural income of Rs. 4.33 lakh was available to explain the deposits.

Conclusion: Only the net agricultural income was accepted as an explained cash source; rejection of the excess claimed agricultural source was upheld, against the assessee.

Issue (ii): Whether the balance of the cash deposits claimed as gifts was satisfactorily explained.

Analysis: The claimed gifts lacked donor confirmations, identity proof, and material establishing the donors' relationship and financial capacity. The partial acceptance of 50% of the gifts on benefit of doubt was found justified, while the remaining claim was unsupported for purposes of explaining the cash deposits under Section 69A of the Income-tax Act, 1961.

Conclusion: The balance of the claimed gifts remained unexplained money, against the assessee.

Final Conclusion: The agricultural and gift sources were confined to the amounts already accepted, leaving the remaining cash-deposit addition undisturbed.

Ratio Decidendi: An explanation for cash deposits as agricultural income or gifts must be supported by reliable evidence; agricultural receipts are reckoned net of expenses, and gifts require proof of donor identity, relationship, and financial capacity.

Issues: Whether an order under section 201 passed in the name of an amalgamating company, after its cessation upon amalgamation and despite prior intimation to the Revenue, is valid.

Analysis: The amalgamating company had ceased to exist from the appointed date under the approved scheme of amalgamation. The Revenue had been informed of the amalgamation before initiation of the section 201 proceedings and again during those proceedings. Although a show-cause notice was issued to the amalgamated company, the final order was addressed to, recorded the TAN of, and was served upon the erstwhile entity. Mere reference to the amalgamated company in the body of the order did not cure the defect. The authorities relied upon by the first appellate authority were distinguishable because they concerned a curable notice defect or absence of timely intimation of amalgamation.

Conclusion: The order under section 201 passed in the name of the non-existent amalgamating entity was without jurisdiction, void ab initio, and quashed in favour of the assessee.

Issues: Whether, in the circumstances of ex parte reassessments and dismissal of the first appeals in limine for delayed filing, the assessee should be afforded a further opportunity to substantiate the transactions.

Analysis: The assessments were framed under Sections 147, 144 and 144B of the Income-tax Act, 1961 after non-compliance, while the first appellate authority dismissed the appeals without examining the additions on merits because of delay. The peculiar circumstances warranted a further opportunity in the interest of substantial justice for production of evidence concerning the impugned transactions.

Conclusion: The assessee is entitled to a further opportunity before the Assessing Officer to present its case and furnish supporting evidence; failure to comply permits assessment on the material available in accordance with law.

Issues: Whether statutory interest on refund under Section 244A of the Income-tax Act, 1961 was payable on refunds arising from belated returns processed after condonation of delay.

Analysis: The return originally filed beyond the statutory due date, without a valid condonation order, was invalid. The refunds arose from fresh returns filed pursuant to condonation under Section 119(2)(b) of the Income-tax Act, 1961. Clause (ii) of paragraph 6 of CBDT Circular No. 11/2024 dated 01.10.2024 provides that interest is not admissible on belated refund claims. That condition applies to belated refund claims generally and is not confined to supplementary refund claims.

Conclusion: The assessee was not entitled to interest under Section 244A of the Income-tax Act, 1961 on the refunds; the issue is decided in favour of the Revenue.

Issues: (i) Whether reassessment after a completed scrutiny assessment was invalid as a change of opinion where the alleged loan had been examined on the same material; (ii) Whether a Section 148 notice served on 1 April 2021, without following the procedure under Section 148A, could sustain reassessment.

Issue (i): Whether reassessment after a completed scrutiny assessment was invalid as a change of opinion where the alleged loan had been examined on the same material.

Analysis: Sections 147 and 148 permit reassessment but not a review founded merely on a change of opinion. The loan confirmation, bank statements and balance sheet had been furnished and scrutinised during the original assessment under Section 143(3), and no new tangible material was identified. The earlier deletion of the addition in proceedings under Section 153A for want of incriminating material did not itself prevent legally available remedial action, but could not cure the absence of fresh material for reopening.

Conclusion: The reopening was an impermissible change of opinion and was invalid, in favour of the assessee.

Issue (ii): Whether a Section 148 notice served on 1 April 2021, without following the procedure under Section 148A, could sustain reassessment.

Analysis: The e-filing record indicated that the notice, though dated 31 March 2021, was served on 1 April 2021. A notice issued on or after 1 April 2021 under the erstwhile procedure was required to be treated as a deemed show-cause notice under Section 148A(b), followed by supply of material, consideration of the response and an order under Section 148A(d) before issuance of a notice under Section 148. That mandatory process was not followed.

Conclusion: The notice and consequential reassessment were invalid for non-compliance with Section 148A, in favour of the assessee.

Final Conclusion: The reassessment notice and consequential reassessment order were quashed on the independent grounds of change of opinion and non-compliance with the mandatory Section 148A procedure.

Issues: Whether reassessment proceedings were valid where the notice initiating reassessment was issued by an Income-tax Officer contrary to the jurisdiction allocated under CBDT Instruction No. 1/2011.

Analysis: The Instruction allocated assessment jurisdiction over non-corporate assessees reporting income of Rs. 20 lakh or more in metropolitan cities to the Deputy Commissioner or Assistant Commissioner. The assessee's returned income exceeded that threshold, yet the reassessment notice and consequential assessment were issued and made by the Income-tax Officer. The applicable precedents establish that a reassessment notice must be issued by the officer vested with jurisdiction by the Board, and a breach of the jurisdictional instruction is not curable.

Conclusion: The reassessment proceedings and consequential assessments were invalid for want of jurisdiction and were quashed.

Issues: Whether delayed filing of Form 67 can bar foreign tax credit claimed under Sections 90 and 90A of the Income-tax Act, 1961.

Analysis: Rule 128(9) of the Income-tax Rules, 1962 prescribes the time for furnishing Form 67 but does not provide that a delay results in forfeiture of foreign tax credit. The filing requirement is a directory procedural requirement rather than a mandatory condition, and non-compliance with it cannot defeat the substantive entitlement to foreign tax credit.

Conclusion: Delayed filing of Form 67 does not by itself extinguish entitlement to foreign tax credit; the form must be admitted and the claim determined after verification in accordance with law.

Issues: Whether foreign tax credit under Section 90 could be denied solely because the return and Form No. 67 were filed belatedly.

Analysis: Section 90 of the Income-tax Act, 1961 provides substantive double-taxation relief, while Rule 128 of the Income-tax Rules, 1962 prescribes the procedure and documentation for foreign tax credit. The assessee was otherwise undisputedly entitled to the credit and had fulfilled the requirements concerning its quantum and supporting formalities. The filing requirement for Form No. 67 under Rule 128(9) was treated as directory and procedural; a delay in filing a return under Section 139(4) or Form No. 67 could not curtail the substantive entitlement under Section 90. As subordinate legislation, Rule 128 could not operate to defeat the statutory foreign tax credit claim.

Conclusion: Foreign tax credit cannot be denied merely on account of delayed filing of the return or Form No. 67 where the substantive entitlement and quantum of the credit are undisputed.

Issues: (i) Whether the addition for the sole property admittedly purchased could be based on stamp-duty value when the valuation report was not received within the statutory time limit; (ii) Whether additions under Section 56(2)(x) of the Income-tax Act, 1961 could be made for three alleged properties without confronting the assessee with the system data or corroborative material.

Issue (i): Whether the addition for the sole property admittedly purchased could be based on stamp-duty value when the valuation report was not received within the statutory time limit.

Analysis: A reference for valuation of the admittedly purchased property had been made to the Departmental Valuation Officer, but no valuation report was received before completion of assessment. The six-month period under Section 142A(6) of the Income-tax Act, 1961 had elapsed. In the absence of the valuation report, the stamp-duty value could not replace the stated purchase consideration for applying Section 56(2)(x) of the Income-tax Act, 1961.

Conclusion: The addition relating to the admittedly purchased property was unsustainable and was deleted, in favour of the assessee.

Issue (ii): Whether additions under Section 56(2)(x) of the Income-tax Act, 1961 could be made for three alleged properties without confronting the assessee with the system data or corroborative material.

Analysis: The assessee denied purchasing the three properties. The system data and any corroborative material on which the alleged acquisitions rested were not supplied or confronted to the assessee. An addition could not rest on undisclosed material where the alleged transactions themselves were denied.

Conclusion: The additions relating to the three alleged properties were unsustainable and were deleted, in favour of the assessee.

Final Conclusion: The entire addition under Section 56(2)(x) of the Income-tax Act, 1961 lacked a valid evidentiary and valuation basis.

Ratio Decidendi: An addition under Section 56(2)(x) of the Income-tax Act, 1961 based on stamp-duty valuation requires legally available valuation evidence and disclosure of the material supporting the alleged property acquisition to the assessee.

Issues: (i) Whether penalty for concealment under Section 271(1)(c) was sustainable after the appeal-effect order deleted the underlying additions; (ii) Whether penalty for non-compliance under Section 271(1)(b) was sustainable in the circumstances of the assessee's failure to comply with statutory notices.

Issue (i): Whether penalty for concealment under Section 271(1)(c) was sustainable after the appeal-effect order deleted the underlying additions.

Analysis: Penalty for concealment requires the existence of concealed income. The appeal-effect order, passed before the penalty order, deleted the additions forming the basis of the penalty; consequently, no concealed income remained when the penalty was imposed.

Conclusion: The penalty under Section 271(1)(c) was deleted, in favour of the assessee.

Issue (ii): Whether penalty for non-compliance under Section 271(1)(b) was sustainable in the circumstances of the assessee's failure to comply with statutory notices.

Analysis: The affidavits showed that the assessee was not conversant with tax laws and depended on a professional for compliance, who possibly failed to make the required compliances. These circumstances warranted relief in the interest of justice.

Conclusion: The penalty under Section 271(1)(b) was deleted, in favour of the assessee.

Final Conclusion: Both impugned penalties were set aside, as the basis for the concealment penalty no longer existed and the non-compliance was explained by the assessee's circumstances.

Ratio Decidendi: A concealment penalty cannot survive where the additions constituting its basis have been deleted through an appeal-effect order before imposition of the penalty.

Issues: Validity of an assessment order passed against a deceased sole proprietor without involving the legal representative.

Analysis: An assessment proceeding can be initiated only against a living person; an order made against a person who had died before its issuance lacks legal efficacy. Section 93 of the GST Act permits recovery of the deceased person's dues from the business or estate, but does not validate an assessment made in the deceased person's name. A fresh assessment may be undertaken after notice to, and hearing of, the legal representative, with recovery confined to the deceased's estate.

Conclusion: The assessment order passed against the deceased proprietor was invalid and was set aside; fresh assessment proceedings may be initiated after involving the legal representative.

Issues: Whether GST/IGST refund disclosed in Clause 16(b) of Form 3CD could be treated as taxable income through processing and rectification.

Analysis: The GST/IGST amount represented a refund of tax previously paid. GST liability and input tax credit were accounted for through balance-sheet ledgers and had not been debited to the profit and loss account or claimed as a deduction. Disclosure of the refund in the tax audit report was only a reporting disclosure and did not establish its taxability. Applying the Real Income principle, return of tax paid without any prior deduction did not contain a taxable gain.

Conclusion: The GST/IGST refund is not taxable income, and the adjustment or addition attributable to it cannot be sustained.

Issues: (i) Whether the service-tax demand for the period up to 30.06.2012 was sustainable where the show-cause notice did not classify the alleged services under a specific sub-clause of Section 65(105) of the Finance Act, 1994; (ii) Whether the demand for the period from 01.07.2012 was sustainable without invocation of Section 66B of the Finance Act, 1994; and (iii) Whether the extended period of limitation could be invoked solely on the basis of differences between ST-3 returns and audited balance sheets or Form 26AS data.

Issue (i): Whether the service-tax demand for the period up to 30.06.2012 was sustainable where the show-cause notice did not classify the alleged services under a specific sub-clause of Section 65(105) of the Finance Act, 1994.

Analysis: Under the positive-list regime, liability depended upon classification of the activity under the applicable taxable-service category. The notice merely aggregated job-contract, labour-contract and machine-hire receipts, deducted the value disclosed in ST-3 returns, and demanded tax on the difference without identifying the taxable service or the relevant statutory sub-clause. Such failure deprived the assessee of a meaningful opportunity to establish that the receipts were not taxable or were differently classifiable. A defective notice could not be cured through findings in adjudication.

Conclusion: The demand for the period up to 30.06.2012 was unsustainable for want of classification of the alleged taxable service, in favour of the assessee.

Issue (ii): Whether the demand for the period from 01.07.2012 was sustainable without invocation of Section 66B of the Finance Act, 1994.

Analysis: From 01.07.2012, service-tax liability was governed by the negative-list framework and Section 66B was the charging provision. The notice and adjudication proceeded under the earlier positive-list provisions and service categories, without invoking Section 66B. Liability for the post-01.07.2012 period could not be sustained under repealed or inapplicable charging provisions, nor could the missing statutory basis be supplied beyond the notice.

Conclusion: The demand for the period from 01.07.2012 was unsustainable because Section 66B of the Finance Act, 1994 was not invoked, in favour of the assessee.

Issue (iii): Whether the extended period of limitation could be invoked solely on the basis of differences between ST-3 returns and audited balance sheets or Form 26AS data.

Analysis: The differential demand was founded only on a comparison of disclosed ST-3 values with audited balance-sheet receipts and Form 26AS data, without independent verification from service recipients or examination of work orders, invoices, or agreements. The assessee was registered, had filed returns, and had paid service tax during the relevant period. Audited financial statements and departmental income-tax data did not establish concealment or a wilful intent to evade tax; no evidence supporting such intent was recorded.

Conclusion: Invocation of the extended period under the proviso to Section 73(1) of the Finance Act, 1994 was unsustainable, in favour of the assessee.

Final Conclusion: The service-tax demand lacked a valid statutory foundation for both the pre-negative-list and negative-list periods, and was also barred from reliance on the extended limitation period; the consequential interest and penalties therefore could not survive.