Outcome: The Special Leave Petition was dismissed, with four weeks granted to pursue the statutory appellate remedy.

Issues: Whether adjudication and appellate orders could stand where the show-cause notice was uploaded only under the portal tab 'Additional Notice and Orders', without separate intimation, resulting in the assessee being unable to respond.

Analysis: The notice was uploaded only in the specified portal tab and no separate intimation was given. The assessee was consequently unable to file a reply to the show-cause notice. Since the appellate authority had dismissed the appeal solely on limitation and had not considered the merits, the denial of an effective opportunity to respond constituted a breach of principles of natural justice warranting interference.

Conclusion: The adjudication and appellate orders could not be sustained; the assessee must be afforded an opportunity to reply to the show-cause notice and receive a fresh reasoned determination after hearing.

Issues: (i) Whether input tax credit blocked under Rule 86A of the Central Goods and Services Tax Rules, 2017 can be appropriated towards the statutory pre-deposit under Section 107(6) of the Central Goods and Services Tax Act, 2017; (ii) Whether the statutory appellate remedy should be preserved after rectification of an erroneous FORM GST DRC-07 and portal-related filing difficulties.

Issue (i): Whether input tax credit blocked under Rule 86A of the Central Goods and Services Tax Rules, 2017 can be appropriated towards the statutory pre-deposit under Section 107(6) of the Central Goods and Services Tax Act, 2017.

Analysis: Section 107(6) requires payment of the prescribed pre-deposit, while Section 49(4) permits utilisation of credit in the electronic credit ledger subject to statutory restrictions. A restriction under Rule 86A prevents debit of the blocked credit for discharge of liability; blocking neither constitutes payment nor appropriation against an adjudicated demand. The adjudication order contained no appropriation of the petitioner's blocked credit. The subsisting restrictions were imposed by an authority not impleaded in the writ proceedings, and the underlying orders, recorded reasons, and current running credit balance were unavailable for review.

Conclusion: Against the assessee, the blocked credit could not be treated as payment of, or appropriated towards, the statutory pre-deposit unless the competent authority removes or modifies the Rule 86A restriction. Credit otherwise lawfully available and capable of debit may be used for the pre-deposit.

Issue (ii): Whether the statutory appellate remedy should be preserved after rectification of an erroneous FORM GST DRC-07 and portal-related filing difficulties.

Analysis: The erroneous summary order had caused the portal to compute the pre-deposit on the combined tax and penalty amount, and the error was rectified only after the petitioner had attempted to file its appeal and pursued rectification. The merits of the input tax credit demand involve disputed factual questions requiring consideration by the statutory appellate authority.

Conclusion: In favour of the assessee, the petitioner was permitted to file the statutory appeal within four weeks without rejection on limitation, subject to compliance with Section 107(6). Necessary electronic filing assistance was directed, with manual filing available if the portal continued to prevent filing despite compliance.

Final Conclusion: The challenge to the tax demand and to the validity of the Rule 86A restrictions remains open for adjudication before the competent forum, while the petitioner's access to the statutory appeal is protected.

Ratio Decidendi: Input tax credit blocked from debit under Rule 86A cannot satisfy a statutory pre-deposit requirement merely because it is unavailable to the registered person; it must be lawfully debit-able or the restriction must first be removed or modified by the competent authority.

Outcome: Application for condonation of delay and the Special Leave Petition dismissed.

Issues: Whether unconditional return of a detained yellow metal chain could be directed in writ jurisdiction on the asserted non-issuance of notice within the period under Section 110(2) of the Customs Act, 1962.

Analysis: The statutory safeguards under Sections 110(2) and 124 of the Customs Act, 1962 must operate according to the applicable factual and procedural record. Article 226 of the Constitution of India confers discretionary and equitable jurisdiction, which is not ordinarily exercised where there is unexplained delay and laches, suppression of material facts, and disputed questions of fact requiring statutory adjudication. The delayed petition omitted the contemporaneous statement under Section 108 of the Customs Act, 1962, which recorded non-declaration of the article, acceptance of departmental appraisement, and waiver of written notice and personal hearing. The article's nature as used personal jewellery, its composition, value, baggage treatment, and consequential customs liability remained disputed and required determination through the statutory process. Article 300A of the Constitution of India does not warrant unconditional release while lawful customs proceedings remain to be completed.

Conclusion: The petitioner was not entitled to an unconditional writ for return of the article or to annul its detention; appraisement and consequential proceedings are to be completed under the Customs Act, 1962.

Issues: Whether NOIDA's time-extension charges for delay in completing the housing projects could be imposed on the successful resolution applicant and homebuyers as Corporate Insolvency Resolution Process costs.

Analysis: The time-extension charges under the lease and the subsequent policy were penal charges intended to deter a defaulting developer and secure timely completion. The developer's default led to insolvency, while the homebuyers funded continuation of construction and the successful resolution applicant was to implement an approved resolution plan. Requiring them to bear charges arising from the corporate debtor's past default would penalise parties not responsible for the delay and defeat the developmental purpose of the lease and completion of the housing projects.

Conclusion: In the peculiar facts, NOIDA's time-extension penalty charges cannot validly be imposed on the successful resolution applicant or homebuyers as Corporate Insolvency Resolution Process costs, including charges claimed beyond three years.

Issues: Whether bail could be granted despite the restrictive bail regime under the Prevention of Money Laundering Act, 2002, owing to prolonged pre-trial incarceration and the unlikelihood of an early conclusion of trial.

Analysis: Article 21 protects an undertrial against detention becoming punitive merely because of delay in trial. The restrictive rigours governing bail under Section 45 of the Prevention of Money Laundering Act, 2002 may be relaxed where continued custody infringes personal liberty. The petitioner had remained incarcerated for over a year, had obtained bail in the scheduled offences, the matter remained at the pre-cognizance stage, and the documentary evidence was already in the Enforcement Directorate's custody, leaving little scope for tampering. The prospect of an early completion of trial was remote.

Conclusion: The petitioner was entitled to conditional bail on the touchstone of Article 21 of the Constitution of India, without any determination on the merits of the money-laundering allegations.

Issues: (i) Whether the service-tax demand under the reverse charge mechanism, founded on the appellant's expense heads and accounting records, was sustainable; (ii) Whether the extended period of limitation and penalty for suppression with intent to evade were invocable where reverse-charge tax was available as Cenvat credit.

Issue (i): Whether the service-tax demand under the reverse charge mechanism, founded on the appellant's expense heads and accounting records, was sustainable.

Analysis: The expense heads of business promotion, conveyance, legal expenses and freight had been examined, classified and quantified in the appellate order. Comparison of ST-3 returns with the assessee's own balance sheets and Form 26AS was a valid basis for verification. Where the returns did not reconcile with those records and adequate particulars were not furnished despite requisitions, determination on the available material was justified.

Conclusion: The reverse-charge service-tax demand is sustainable against the assessee, but only for the normal limitation period.

Issue (ii): Whether the extended period of limitation and penalty for suppression with intent to evade were invocable where reverse-charge tax was available as Cenvat credit.

Analysis: Tax paid under reverse charge would have been available as Cenvat credit, correspondingly reducing the cash liability under forward charge. This revenue-neutral position negated an intent to evade, which is an essential requirement both for invoking the proviso to Section 73(1) and for imposing penalty under Section 78.

Conclusion: The extended-period demand and the penalty under Section 78 are unsustainable in favour of the assessee.

Final Conclusion: The tax liability is confined to the normal period with applicable interest, and the liability must be recomputed accordingly; the remaining penalty is retained.

Ratio Decidendi: Where reverse-charge tax is fully available as Cenvat credit to the same taxable person, revenue neutrality negates the intent to evade required for the extended limitation period and the corresponding suppression penalty.

Issues: Whether further time should be granted to pursue the statutory appeal against the tax order.

Outcome: The petitioner was granted 30 days to file the statutory appeal without objection as to limitation; all contentions, including pre-deposit, were kept open.

Issues: Whether receipts and bank transactions of a telecom recharge-voucher distributor operating on commission constitute turnover requiring tax audit and warrant penalty for failure to obtain audit.

Analysis: The assessee acted as a distributor for telecom recharge vouchers and received commission, as supported by tax deduction on commission. Amounts routed through the bank for obtaining vouchers and supplying them to customers were not purchases and sales of the assessee; only the commission accrued from the transactions was its business turnover. The commission income did not exceed the prescribed tax-audit threshold.

Conclusion: The assessee was not required to have its accounts audited, and the penalty for failure to obtain audit was unsustainable. The issue is decided in favour of the assessee.

Issues: Whether the appellate authority could set aside and remit an assessment framed under Section 147 read with Section 144C(3) to the Assessing Officer without deciding the assessee's grounds on merits.

Analysis: The assessment was not a best judgment assessment under Section 144. The power under the proviso to Section 251(1)(a) to set aside an assessment and remit it for fresh assessment was therefore inapplicable. The appellate authority was required to adjudicate the grounds raised in appeal on merits by a speaking order, after granting reasonable opportunity to the parties and following Rule 46A where applicable.

Conclusion: The order remitting the matter to the Assessing Officer was set aside, and the appeal was restored to the appellate authority for merit-based adjudication. This issue was decided in favour of the assessee.

Issues: Whether penalty for misreporting of income could be sustained without identifying the applicable clause or satisfying the ingredients of Section 270A(9).

Analysis: The penalty was imposed under Section 270A(8) solely because of the capital-gains addition. The penalty order neither identified any clause of Section 270A(9) nor recorded how the addition constituted misreporting of income. Mere use of the expression "misreporting" without particulars establishing the statutory ingredients rendered the penalty action manifestly arbitrary.

Conclusion: The penalty for misreporting of income was unsustainable and was deleted, in favour of the assessee.

Issues: Whether the addition for online gaming winnings under Section 115BB could be computed on gross winnings without adjusting the assessee's buy-in amounts.

Analysis: Section 115BB applies to winnings from games, while Section 58(4) bars deductions of expenditure connected with such winnings. However, the amount of winnings must first be determined on a net basis by comparing the amounts paid for participation with the gross amounts won. The gaming-platform information showed total buy-ins exceeding gross winnings, resulting in a net loss. Treating gross receipts alone as winnings disregarded the underlying transaction data and did not establish taxable gaming income.

Conclusion: The addition computed on gross gaming winnings was unjustified and was deleted, in favour of the assessee.

Issues: Validity of reassessment notice where it was not dispatched or served within the prescribed limitation period.

Analysis: Section 149 of the Income-tax Act, 1961 requires more than merely signing a reassessment notice; it must be transmitted to the proper person within the statutory period. The postal record established that the notice, though digitally signed before the deadline of 31.03.2021, was booked only on 05.04.2021. The assessee had objected to non-service during the assessment proceedings; consequently, the deeming provision under Section 292BB of the Income-tax Act, 1961 was unavailable. The claimed dispatch was therefore not compliant with Section 282 of the Income-tax Act, 1961 read with Rule 127 of the Income-tax Rules, 1962.

Conclusion: The reassessment notice was barred by limitation, and the consequential reassessment was invalid.

Issues: (i) Whether penalty under Section 271AAC(1) could survive after deletion of the underlying addition for unexplained money; and (ii) whether penalty under Section 272A(1)(d) was sustainable despite the assessee's non-compliance with statutory notices.

Issue (i): Whether penalty under Section 271AAC(1) could survive after deletion of the underlying addition for unexplained money.

Analysis: Section 271AAC(1) is linked to additions taxable under Section 115BBE, including an addition under Section 69A. The cash transactions represented amounts received and deposited by the assessee as a bank business correspondent on behalf of customers and the bank, and were not unexplained money of the assessee. Since the underlying addition under Section 69A had been deleted, the consequential penalty lacked any basis.

Conclusion: The penalty under Section 271AAC(1) was not sustainable and was deleted in favour of the assessee.

Issue (ii): Whether penalty under Section 272A(1)(d) was sustainable despite the assessee's non-compliance with statutory notices.

Analysis: Penalty for non-compliance with statutory notices is subject to Section 273B and is not automatic. The assessee, a small rural banking business correspondent, was not adequately conversant with electronic tax proceedings and did not appreciate the significance of notices issued through the tax portal or email. The record did not establish that the non-compliance was deliberate or intended to obstruct the assessment proceedings, constituting reasonable cause under Section 273B.

Conclusion: The penalty under Section 272A(1)(d) was not sustainable and was deleted in favour of the assessee.

Final Conclusion: Both penalty liabilities were set aside on the respective grounds of absence of a surviving quantum foundation and reasonable cause for the notice-related default.

Ratio Decidendi: A penalty consequential upon an addition cannot survive when that addition is deleted, and penalty for non-compliance with statutory notices is excluded where the assessee establishes reasonable cause under the statutory saving provision.

Issues: Whether an addition for unexplained investment in construction could be sustained solely on the basis of the Departmental Valuation Officer's estimated cost exceeding the declared cost.

Analysis: A departmental valuation is an estimate and is not conclusive proof of actual undisclosed expenditure. The valuation difference was approximately 19.89%; after accounting for the additional allowable benefit for personal supervision, the effective difference was 12.39%, which could be attributable to higher CPWD rates as compared with applicable local PWD rates. The assessee's valuation was based on Haryana PWD rates, and no cogent basis was furnished for rejecting it. No independent material established that expenditure exceeding the disclosed construction cost had actually been incurred.

Conclusion: The estimated valuation difference, without corroborative evidence of actual unexplained expenditure, could not sustain the addition for unexplained investment under Section 69 of the Income-tax Act, 1961.

Issues: (i) Whether omission of section 92BA(i), effective from assessment year 2017-18, invalidates the transfer-pricing assessment and adjustment for assessment year 2013-14; (ii) Whether the selection and rejection of comparables for determining the arm's length price of specified domestic transactions was valid; (iii) Whether the disallowance relating to exempt income under section 14A read with Rule 8D was sustainable; (iv) Whether preliminary expenditure incurred for exploring an ultimately abandoned new business venture was allowable as revenue expenditure.

Issue (i): Whether omission of section 92BA(i), effective from assessment year 2017-18, invalidates the transfer-pricing assessment and adjustment for assessment year 2013-14.

Analysis: The statutory omission was expressly made applicable prospectively from assessment year 2017-18. Applying strict construction of taxing statutes, the omission could not be extended to an earlier assessment year. A decision of a High Court outside the Tribunal's territorial jurisdiction was treated as persuasive only and did not displace this conclusion.

Conclusion: The transfer-pricing assessment and adjustment concerning specified domestic transactions were legally valid for assessment year 2013-14, against the assessee.

Issue (ii): Whether the selection and rejection of comparables for determining the arm's length price of specified domestic transactions was valid.

Analysis: Accumulated losses or abnormal profitability do not by themselves justify exclusion of a comparable where suitable comparability adjustments are possible. The manufacturing activities of the assessee's proposed comparables warranted their acceptance in principle. Entities engaged in manufacturing plastic containers, bottles and moulded plastic products were functionally dissimilar and unsuitable comparables.

Conclusion: The assessee's two proposed comparables were accepted in principle, and the two functionally dissimilar comparables were directed to be excluded; consequential arm's length price computation was directed, in favour of the assessee.

Issue (iii): Whether the disallowance relating to exempt income under section 14A read with Rule 8D was sustainable.

Analysis: The challenge based on absence of recorded satisfaction was not accepted because the assessee had not substantiated its own administrative-expense estimate. However, the computation did not clearly establish whether it was confined to investments yielding exempt dividend income.

Conclusion: The disallowance was directed to be recomputed by considering only dividend-yielding investments, partly in favour of the assessee.

Issue (iv): Whether preliminary expenditure incurred for exploring an ultimately abandoned new business venture was allowable as revenue expenditure.

Analysis: The expenditure was incurred in exploring the possibility of a new business venture connected with manufacturing activity; the venture ultimately did not materialise. Such exploratory expenditure retained its revenue character.

Conclusion: The preliminary-expenditure disallowance was deleted, in favour of the assessee.

Final Conclusion: The specified-domestic-transaction adjustment remains legally sustainable, while its quantum requires consequential recomputation after revisiting the comparable set; the exempt-income disallowance requires fresh quantification, and the preliminary-expenditure claim is allowable.

Issues: (i) Whether the CIT(A)'s directions on inclusion and exclusion of comparables for ITES/BPO transfer-pricing analysis were sustainable; (ii) Whether disallowance under section 14A read with Rule 8D could be made where no exempt income was earned during the relevant year; (iii) Whether foreign-exchange fluctuation loss arising from normal business transactions is an operating item for determining the margin under TNMM.

Issue (i): Whether the CIT(A)'s directions on inclusion and exclusion of comparables for ITES/BPO transfer-pricing analysis were sustainable.

Analysis: Inclusion of R Systems International Ltd. was conditional upon production of publicly available quarterly financial data enabling alignment with Rule 10B(4). Accentia Technologies Ltd. failed the functions, assets and risks analysis because of product development and sales activities and absence of segmental data. Acropetal Technologies Ltd. had already been excluded on the same basis in an earlier year. Eclerx Services Ltd. performed KPO functions, materially distinct from BPO activities. Infosys BPO Ltd. underwent an extraordinary acquisition during the relevant year, while TCS E-Serve Ltd. was not functionally comparable in the ITES segment.

Conclusion: The comparability directions were sustained, in favour of the assessee and against the Revenue.

Issue (ii): Whether disallowance under section 14A read with Rule 8D could be made where no exempt income was earned during the relevant year.

Analysis: No exempt income was derived during the relevant previous year; consequently, the factual foundation for expenditure disallowance relating to exempt income was absent.

Conclusion: No disallowance under section 14A read with Rule 8D was warranted, in favour of the assessee and against the Revenue.

Issue (iii): Whether foreign-exchange fluctuation loss arising from normal business transactions is an operating item for determining the margin under TNMM.

Analysis: Foreign-exchange gain or loss directly arising from trading transactions is integral to the related purchase or sale activity. Such fluctuation is a recurring incident of ordinary business operations and is not rendered non-operating or extraordinary merely because of the extent of the exchange-rate movement. Under TNMM, operating margin is determined from accounts maintained on the mercantile basis without recasting transactions according to actual receipts or payments.

Conclusion: Foreign-exchange fluctuation loss was an operating item and had to be included in the assessee's operating costs, in favour of the assessee.

Final Conclusion: The transfer-pricing computation is required to treat the foreign-exchange fluctuation loss as operating cost, while the directions concerning the selected comparables and the inapplicability of disallowance in the absence of exempt income remain effective.