Issues: (i) Whether the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944 was invocable in the absence of established deliberate suppression, where the Department had contemporaneous knowledge of the stock position and the demand rested on statutory records; (ii) Whether penalty under Section 11AC of the Central Excise Act, 1944 was imposable.

Issue (i): Whether the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944 was invocable in the absence of established deliberate suppression, where the Department had contemporaneous knowledge of the stock position and the demand rested on statutory records.

Analysis: The proviso requires the Revenue to establish that the non-levy or short-levy resulted from fraud, collusion, wilful misstatement, suppression of facts, or contravention with intent to evade duty. This jurisdictional enquiry is distinct from computation of the limitation period from the relevant date. Departmental knowledge cannot alter the statutory relevant date after the proviso is attracted, but contemporaneous knowledge is material evidence in deciding whether suppression existed at all.

Analysis: The stock verification was conducted in the presence of departmental officers after their invitation, and the demand was founded exclusively on the Cost Audit Report, a statutory record required to be maintained and producible to the Department. The prescribed returns did not require disclosure of the shortages or excesses. The notices neither identified a suppressed fact nor pleaded a breached disclosure obligation, deliberate concealment, or intent to evade duty. In the absence of a positive and deliberate act of withholding material information, mere non-reporting or discovery of a discrepancy cannot constitute suppression. The notices issued beyond the ordinary one-year period were therefore time-barred.

Conclusion: The extended period was not available; the demand was barred by limitation in its entirety, in favour of the assessee.

Issue (ii): Whether penalty under Section 11AC of the Central Excise Act, 1944 was imposable.

Analysis: Penalty under Section 11AC is conditional upon satisfaction of the ingredients that permit invocation of the proviso to Section 11A(1). Since no fraud, wilful suppression, or intent to evade duty was established, that condition failed.

Conclusion: Penalty under Section 11AC was not imposable, in favour of the assessee.

Final Conclusion: The extended-period duty demand and consequential interest and penalty liabilities could not be sustained; no finding was required on the merits of the underlying demand.

Ratio Decidendi: The extended limitation period under the proviso to Section 11A(1) is available only upon proof of deliberate suppression or other specified culpable conduct with intent to evade duty; departmental possession of statutory records and contemporaneous knowledge may demonstrate the absence of such suppression.

Issues: (i) Whether dolochar, fly ash, iron ore fines and other incidental waste materials arising during manufacture of sponge iron are liable to Central Excise duty merely because they are marketable and tariff-listed; (ii) Whether dolochar was alternatively covered by unconditional exemption notifications applicable to waste arising from manufacture of iron or steel; (iii) Whether the extended period of limitation, interest and penalties could be sustained.

Issue (i): Whether dolochar, fly ash, iron ore fines and other incidental waste materials arising during manufacture of sponge iron are liable to Central Excise duty merely because they are marketable and tariff-listed.

Analysis: Levy under Section 3 requires that goods be manufactured or produced. Marketability under the explanation to Section 2(d), sale value, or tariff coverage does not dispense with the independent requirement of manufacture. Dolochar and fly ash arose inevitably as residues from coal use, while iron ore fines arose from handling, screening or segregation; no independent process producing a new and distinct commodity with a separate name, character or use was established. The burden to establish manufacture remained unmet.

Conclusion: The disputed residues and waste materials were not excisable goods liable to duty; this finding is in favour of the assessee.

Issue (ii): Whether dolochar was alternatively covered by unconditional exemption notifications applicable to waste arising from manufacture of iron or steel.

Analysis: The relevant notification entries unconditionally exempt slag, dross, scaling and other waste from manufacture of iron or steel falling under Chapter 26. If dolochar were classified by the Department under that chapter as waste from sponge-iron manufacture, the exemption could not be denied.

Conclusion: On the alternative assumption of excisability and classification under Chapter 26, dolochar attracted unconditional exemption and no effective duty liability arose; this finding is in favour of the assessee.

Issue (iii): Whether the extended period of limitation, interest and penalties could be sustained.

Analysis: The dispute concerned the excisability of unavoidable residues and involved divergent administrative views, including a Board circular later rescinded. This demonstrated an interpretational dispute. No fraud, collusion, wilful misstatement, suppression of facts, or intent to evade duty was established.

Conclusion: The extended period was unavailable, and consequential interest and penalties, including personal penalties, could not survive; this finding is in favour of the assessee.

Final Conclusion: No Central Excise duty, consequential interest, or penalties were sustainable in respect of the disputed clearances.

Ratio Decidendi: Marketability, saleability, or tariff classification cannot render an incidental waste or residue dutiable unless it emerges through a process amounting to manufacture or production.

Issues: (i) Whether C&F services rendered at depots/warehouses qualify as input services. (ii) Whether credit for transportation, delivery and unloading at customers' premises is admissible. (iii) Whether the extended period of limitation could be invoked. (iv) Whether equivalent penalty was sustainable.

Issue (i): Whether C&F services rendered at depots/warehouses qualify as input services.

Analysis: Section 4(3)(C) of the Central Excise Act, 1944 includes a depot or consignment agent's premises, from which goods are sold after factory clearance, within the place of removal. Receipt, unloading, storage, handling and loading at depots from which cement was sold had a direct nexus with manufacture and sale and were performed up to the place of removal.

Conclusion: Credit for C&F services performed at the depots/warehouses is admissible, in favour of the assessee.

Issue (ii): Whether credit for transportation, delivery and unloading at customers' premises is admissible.

Analysis: For FOR-destination sales, the place of removal cannot be inferred merely from that description. It depends on the contractual terms concerning transfer of title and risk, responsibility for freight and insurance, inclusion of freight in assessable value, and whether delivery at the customer's premises was an essential condition of sale. If ownership and risk remained with the assessee until delivery, the customer's premises would be the place of removal; otherwise, post-depot services would not qualify.

Conclusion: Eligibility of credit for post-depot transportation, delivery and unloading must be determined upon factual verification of the relevant contractual and transaction documents.

Issue (iii): Whether the extended period of limitation could be invoked.

Analysis: The credit was disclosed in statutory records and returns and the records had been subjected to departmental audit. The dispute involved interpretation of input service and place of removal, with divergent views on FOR-destination transactions. No fraud, collusion, wilful misstatement or deliberate suppression with intent to evade duty was established.

Conclusion: The extended period of limitation was not invocable, and the demand beyond the normal period is set aside, in favour of the assessee.

Issue (iv): Whether equivalent penalty was sustainable.

Analysis: As the requisite deliberate suppression or intent to evade duty was not established, the ingredients for penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 were absent.

Conclusion: The equivalent penalty is set aside in favour of the assessee.

Final Conclusion: Depot-level C&F credit stands admissible, while post-depot credit requires application of the contractual place-of-removal test; only any credit within the normal limitation period remains to be quantified.

Ratio Decidendi: In FOR-destination transactions, post-clearance service credit depends on the actual place of removal, determined from the contractual transfer of title and risk and the obligations governing delivery, freight and insurance.

Issues: (i) Whether Section 147A of the Income-tax Act, 1961, retrospectively validating issuance of reassessment notices by jurisdictional Assessing Officers, is constitutionally valid; (ii) Whether notices under Section 148 issued by jurisdictional Assessing Officers without randomized automated allocation and faceless procedure are valid under Section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022.

Issue (i): Whether Section 147A of the Income-tax Act, 1961, retrospectively validating issuance of reassessment notices by jurisdictional Assessing Officers, is constitutionally valid.

Analysis: A retrospective validating enactment may neutralise a judicial decision only by curing the defect or removing the statutory foundation on which that decision rests; it cannot merely declare a contrary legal position or directly override judicial determinations. Section 147A purported to exclude faceless assessment units from the meaning of Assessing Officer for Sections 148 and 148A, but left Section 151A, the scheme framed thereunder, and the scheme under Section 130 unamended. It neither addressed the mandatory randomized automated allocation requirement nor removed the basis of the decisions holding that reassessment notices could be issued only through the faceless mechanism. The provision consequently conflicted with the continuing statutory scheme and amounted to legislative encroachment upon judicial power, contrary to the rule of law and the constitutional principle of separation of powers.

Conclusion: Section 147A of the Income-tax Act, 1961 is unconstitutional and struck down, in favour of the assessees.

Issue (ii): Whether notices under Section 148 issued by jurisdictional Assessing Officers without randomized automated allocation and faceless procedure are valid under Section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022.

Analysis: Section 151A and Clause 3(b) of the e-Assessment of Income Escaping Assessment Scheme, 2022 expressly cover issuance of notices under Section 148 and require issuance through randomized automated allocation and in a faceless manner. The qualification referring to Section 144B applies to assessment or reassessment under Section 147 and cannot exclude issuance of notices under Section 148; such an interpretation would render the scheme ineffective. Notifications or executive instructions conferring concurrent jurisdiction cannot override the statutory scheme. Where the law prescribes a particular mode, the prescribed mode alone must be followed.

Conclusion: Notices under Section 148 issued by jurisdictional Assessing Officers otherwise than through randomized automated allocation and the faceless mechanism are invalid and liable to be set aside, in favour of the assessees.

Final Conclusion: The statutory faceless reassessment regime mandates that reassessment notices be issued only through the automated and faceless process prescribed under Section 151A and the applicable scheme.

Ratio Decidendi: A retrospective validating law is unconstitutional where it merely negates judicial rulings without curing the statutory defect underlying them; a reassessment notice must be issued in the mandatory faceless and randomized automated-allocation manner prescribed by the governing statutory scheme.

Issues: (i) Whether gold is a prohibited item within the meaning of the Customs Act, 1962; (ii) Whether the adjudicating authority was correct in imposing penalty under Section 112(i) of the Customs Act, 1962.

Issue (i): Whether gold is a prohibited item within the meaning of the Customs Act, 1962.

Analysis: Section 2(33) includes goods whose import or export is subject to a prohibition under the Customs Act, 1962 or any other law in force; it is not confined to goods prohibited through a notification under Section 11. Import of gold was regulated by Reserve Bank of India notifications and circulars, and bulk import was restricted to authorised agencies, while passenger import was governed by the Baggage Rules. The persons concerned did not fall within either permitted category, and the gold was brought through an unauthorised land route.

Conclusion: Gold imported in contravention of applicable import restrictions is prohibited goods within Section 2(33) of the Customs Act, 1962, in favour of the Revenue.

Issue (ii): Whether the adjudicating authority was correct in imposing penalty under Section 112(i) of the Customs Act, 1962.

Analysis: Once the seized gold was prohibited goods, Section 112(i) governed the applicable penalty. The adjudicating order identified the goods as prohibited and imposed penalty on that basis. Failure to expressly specify the invoked clause does not invalidate an order where the authority possessed the statutory power and the order disclosed the basis for its exercise.

Conclusion: The adjudicating authority validly imposed penalty under Section 112(i) of the Customs Act, 1962, in favour of the Revenue.

Final Conclusion: The modification of the penalties was unsustainable, and the original confiscation and penalty adjudication remains operative.

Ratio Decidendi: Goods subject to import restrictions under any law in force are prohibited goods under Section 2(33) of the Customs Act, 1962, and their improper importation attracts the penalty regime under Section 112(i).

Issues: (i) Whether the addition for alleged on-money receipts could rest on WhatsApp chats and seized material without examining material witnesses and giving a meaningful opportunity of cross-examination; and (ii) whether a consolidated satisfaction note under Section 153C for seven assessment years was valid where seized material related only to limited years.

Issue (i): Whether the addition for alleged on-money receipts could rest on WhatsApp chats and seized material without examining material witnesses and giving a meaningful opportunity of cross-examination.

Analysis: The evidentiary framework under Section 131 of the Income-tax Act, 1961 and the principles of natural justice required meaningful confrontation and cross-examination where third-party evidence constituted the foundation of the proposed addition. The WhatsApp chats contained figures without specific admissions, while the other seized material did not contain a complete and enforceable agreement concerning on-money payments. Material witnesses were summoned on different dates, preventing an effective opportunity of cross-examination, and no summons was issued to the person whose statement and documents formed the primary basis of the inference. Untested material of this nature could not furnish relevant and admissible evidence; it remained no more than a suspicious circumstance.

Conclusion: In favour of the assessee: the addition based on the untested chats, statements and seized material could not be sustained.

Issue (ii): Whether a consolidated satisfaction note under Section 153C for seven assessment years was valid where seized material related only to limited years.

Analysis: Section 153C of the Income-tax Act, 1961 requires year-specific satisfaction demonstrating how the seized material bears upon determination of the assessee's income for each assessment year proposed for assessment. A consolidated satisfaction note covering seven assessment years, including years for which no incriminating material was alleged, lacked the required nexus between the material and the relevant assessment years.

Conclusion: In favour of the assessee: the consolidated satisfaction note was invalid and could not sustain initiation of proceedings under Section 153C.

Final Conclusion: The absence of dependable, tested evidence and the invalid year-spanning satisfaction note removed the legal foundation for the impugned assessment and consequential penalty.

Issues: (i) Whether contractual deductions from mining-transport bills for shortfall in performance were disallowable as a penalty under Explanation 1 to Section 37(1) of the Income-tax Act, 1961; and (ii) Whether cash payments, none of which exceeded Rs. 20,000 on a single day, attracted disallowance under Section 40A(3) of the Income-tax Act, 1961.

Issue (i): Whether contractual deductions from mining-transport bills for shortfall in performance were disallowable as a penalty under Explanation 1 to Section 37(1) of the Income-tax Act, 1961.

Analysis: Explanation 1 to Section 37(1) excludes expenditure incurred for an offence or for a purpose prohibited by law. The deductions were recovered under contractual terms for failure to transport the agreed minimum quantity of material and were quantified with reference to the shortfall in contractual performance. They were not imposed for infringement of any law.

Conclusion: The contractual deductions were allowable business expenditure and were not disallowable under Explanation 1 to Section 37(1), in favour of the assessee.

Issue (ii): Whether cash payments, none of which exceeded Rs. 20,000 on a single day, attracted disallowance under Section 40A(3) of the Income-tax Act, 1961.

Analysis: Section 40A(3) was inapplicable because the record established that no individual cash payment to either payee exceeded Rs. 20,000 on a single day.

Conclusion: No disallowance under Section 40A(3) was warranted, in favour of the assessee.

Final Conclusion: The contractual recovery remains deductible, and the cash-payment addition cannot be sustained where the prescribed single-day threshold was not crossed.

Ratio Decidendi: A contractual recovery for failure to perform agreed obligations, unconnected with an offence or a purpose prohibited by law, is not hit by Explanation 1 to Section 37(1).

Issues: Whether the extended period of limitation could be invoked for the service-tax demand and whether consequential penalties were sustainable.

Analysis: The service tax had been self-assessed, declared and paid, albeit belatedly, and the application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 for interest and penalty was ultimately accepted. These facts established that the material particulars were within the Department's knowledge. The extended period was therefore unavailable, while the show-cause notice was issued beyond the normal limitation period.

Conclusion: The service-tax demand was time-barred and the consequential penalties were not imposable.

Issues: Whether the delay in filing the first appeal should be condoned and the ex parte assessment, appellate, and consequential penalty matters restored for adjudication on merits.

Analysis: The reassessment had resulted in a best-judgment assessment under Sections 147 and 144 of the Income-tax Act, 1961, with an addition under Section 69A. The first appeal was dismissed without condoning a delay of 163 days and without a merits adjudication. The affidavit explaining the assessee's lack of familiarity with tax proceedings, non-receipt of effective assistance, and difficulty in filing the appeal was considered alongside the need to determine taxable income under due process. The assessee was also required to cooperate fully, provide current contact details, attend hearings, and furnish the information sought.

Conclusion: The delay was condoned, the impugned appellate orders were set aside, and the assessment and consequential penalty matters were restored to the Assessing Officer for de novo adjudication on merits.

Issues: Whether service tax can be recovered under the reverse charge mechanism from the service recipient under Section 73(1) where the service provider has already discharged the entire tax liability on the same manpower recruitment agency service.

Analysis: Section 73(1) of the Finance Act, 1994 permits recovery only where service tax has not been levied or paid, or has been short-levied or short-paid. The undisputed payment of the entire service tax by the service provider, accepted by the Revenue, meant that no unpaid or short-paid tax remained in respect of the same taxable service. A further demand from the recipient would result in duplicate recovery of service tax.

Conclusion: Service tax was not recoverable from the service recipient under Section 73(1) after the service provider had discharged the full tax liability on the same service.

Issues: Whether construction of a residential group-housing project involving use and transfer of materials was classifiable as Works Contract Service or as Construction of Complex Service.

Analysis: Where construction activity involves both rendition of service and transfer or deemed transfer of property in materials, it constitutes a composite works contract rather than a service simpliciter. The undisputed use of goods in the project, payment of VAT, filing of VAT returns, and VAT assessment established its composite character. The burden to establish that the service was not Works Contract Service rested on Revenue. A works contract is a distinct species of contract and, from 1 July 2010, is chargeable specifically under the Works Contract Service category; Construction of Complex Service cannot displace that classification merely because the works contract concerns construction of a residential complex.

Conclusion: The service was correctly classified as Works Contract Service, and the dropping of the service-tax demand was sustained in favour of the assessee.

Issues: (i) Whether the scrutiny notice under section 143(2) was invalid because it was issued by a non-jurisdictional officer; (ii) Whether seized electronic records and search statements could be excluded or relied on without a statutory certificate and procedural safeguards; (iii) Whether additions for alleged unaccounted student fees, room rent, mess fees, hostel fees and caution deposits were sustainable; (iv) Whether disallowances of construction expenditure, awards and welfare expenditure, consultancy fees and a vendor payment were sustainable; (v) Whether appellate enhancement under section 251(1)(a) for alleged diversion to group concerns was within jurisdiction and justified under section 13.

Issue (i): Whether the scrutiny notice under section 143(2) was invalid because it was issued by a non-jurisdictional officer.

Analysis: Under section 143(2) of the Income-tax Act, 1961, the objection was governed by binding jurisdictional precedent which did not treat the stated issuance of the notice as invalidating the assessment.

Conclusion: The scrutiny notice was valid; this challenge is decided against the assessee.

Issue (ii): Whether seized electronic records and search statements could be excluded or relied on without a statutory certificate and procedural safeguards.

Analysis: Assessment proceedings are quasi-judicial proceedings to which the strict technical rules of the Indian Evidence Act, 1872 do not apply. Accordingly, a certificate under section 65B, or compliance with the CBDT Digital Evidence Investigation Manual, 2014, is not a condition precedent for receiving electronic material in assessment. The absence of those safeguards nevertheless remains relevant to the genuineness, authenticity and probative value of the data.

Analysis: A statement under section 132(4) is relevant evidence, but an admission that is reasonably shown to be incorrect, involuntary or contradicted by contemporaneous material cannot alone sustain an addition without independent corroboration. Where a materially relied-upon statement is disputed, denial of cross-examination offends natural justice.

Conclusion: The certificate-based objection to admissibility fails against the assessee; however, the reliability of digital material and untested search statements remains subject to substantive scrutiny and corroboration, in favour of the assessee.

Issue (iii): Whether additions for alleged unaccounted student fees, room rent, mess fees, hostel fees and caution deposits were sustainable.

Analysis: The symbols appearing in the seized spreadsheets did not, by themselves, establish unaccounted cash collections. The author of the sheets lacked knowledge of their accounting character, and the working based on standard fee tariffs less recorded collections ignored subsequent banking receipts, documented scholarships, fee waivers, pending dues and refunds. The reconciliation established that substantial amounts had either been received through banking channels in later years or validly waived. No independent enquiry from students or parents was undertaken, and the statements relied upon were either hearsay, untested, or contradicted by the books.

Analysis: The student-management software entries marked as "by bank" were not shown to uniformly represent cash receipts; they also captured banking receipts without instrument details, scholarships, fee waivers and receivables. Likewise, the academic-support software tag "Others" was a residuary field and the cash collections identified thereunder were substantially reconciled with bank deposits and regular books. In respect of hostel collections, the student-wise records and identical tariff rates showed that the alleged receipts had already been credited in the accounts. Refundable caution deposits were liabilities and could not be assessed as income.

Conclusion: In favour of the assessee, the additions for unaccounted tuition fees of Rs. 20,37,06,875, room and mess fees of Rs. 5,48,97,101, and hostel fees and caution deposits of Rs. 1,65,75,000 are deleted. Of the addition of Rs. 11,80,82,994 for alleged fee suppression, only Rs. 1,62,68,000 is sustained as unreconciled; the balance of Rs. 10,18,14,994 is deleted.

Issue (iv): Whether disallowances of construction expenditure, awards and welfare expenditure, consultancy fees and a vendor payment were sustainable.

Analysis: The construction expenditure was supported by books, vouchers, invoices, contractor bills and the undisputed existence of the constructed assets. Bearer cheques issued as site imprest to an authorised campus in-charge for onward payments to labour and suppliers did not themselves constitute the expenditure contemplated by section 40A(3). The payments fell within Rule 6DD(k) of the Income-tax Rules, 1962 and were supported by business expediency.

Analysis: The awards, prizes and welfare expenditure was supported by underlying bills and vouchers and was connected with student and faculty welfare, academic awards and institutional activities. The identity of vendors supplying jewellery, watches, clothing or related items did not establish personal use, particularly when no personal benefit to any specified person was shown.

Analysis: The additional invoices, party-wise details, tax-deduction records and banking evidence for consultancy fees were material to the controversy and ought to have been admitted under Rule 46A. Their verification had not been undertaken by the Assessing Officer. The bank proof and voucher for the isolated vendor payment also substantiated that payment.

Conclusion: In favour of the assessee, the disallowances of construction expenditure of Rs. 1,47,69,000, awards and welfare expenditure of Rs. 86,45,860, and vendor payment of Rs. 10,000 are deleted. The consultancy-fee disallowance of Rs. 7,74,03,339 is restored to the Assessing Officer solely for verification of the admitted evidence and fresh determination.

Issue (v): Whether appellate enhancement under section 251(1)(a) for alleged diversion to group concerns was within jurisdiction and justified under section 13.

Analysis: Section 251(1)(a) permits enhancement only in respect of a source of income considered by the Assessing Officer from the standpoint of taxability. A collateral enquiry or show-cause notice during assessment, followed by no addition or adverse finding, does not permit the appellate authority to discover and assess a new source of income through enhancement; the statutory remedies for such matters lie elsewhere.

Analysis: Independently, the agricultural-land payments were consistently recorded as land advances, were supported by regulatory requirements for establishing agricultural courses, an executed tripartite arrangement, the landowner's audited disclosures and a subsequent registered sale agreement. The lease advances were backed by the seized memorandum revising an old nominal lease, an independent valuation, consistent audited disclosures and statutory tax compliance. The lease advances were reflected as assets and had not been claimed as application of income. No benefit to a specified person was established.

Conclusion: In favour of the assessee, the enhancement was without jurisdiction and was also unsustainable on merits. The enhancements of Rs. 1,72,81,32,598 and Rs. 94,47,70,000 are deleted.

Final Conclusion: The taxable computation must retain only the limited unreconciled fee amount sustained, exclude the additions and disallowances deleted on the above findings, and be revised after the directed verification of the consultancy-fee evidence.

Issues: Whether an order under Section 148A(3) and a consequential notice under Section 148, based on alleged undisclosed business turnover, were valid without examination of the assessee's explanation and supporting documents showing that the amount represented loans.

Analysis: The reassessment framework requires the authority to consider the assessee's response before forming a reasoned opinion that the case is fit for issuance of a notice under Section 148. The explanation, ledgers and bank statements asserted that the alleged turnover was loan funding obtained from known entities. The impugned order did not examine that material before recording that further investigation was required. Approval under Section 151 having preceded the assessee's reply also indicated predisposition. Issuance of a reassessment notice without such application of mind would amount to a fishing expedition.

Conclusion: The order under Section 148A(3) and the consequential notice under Section 148 were vitiated for failure to consider the assessee's explanation and documents, requiring fresh consideration by the assessing authority.

Issues: (i) Whether the Section 263 revision was valid when the limited-scrutiny assessment had not been converted into complete scrutiny; (ii) Whether the Section 263 revision could validly rest on an audit objection and the Assessing Officer's proposal; (iii) Whether the assessment accepting exemption for interest awarded under Section 28 of the Land Acquisition Act, 1894 was erroneous and prejudicial to the interests of the Revenue.

Issue (i): Whether the Section 263 revision was valid when the limited-scrutiny assessment had not been converted into complete scrutiny.

Analysis: The assessment was selected for limited scrutiny and had not been converted into complete scrutiny in accordance with the applicable CBDT instructions. The majority accepted that the revisionary authority could not travel beyond the permissible scope of the limited-scrutiny proceedings by invoking Section 263 of the Income-tax Act, 1961.

Conclusion: The Section 263 revision was invalid on this ground, in favour of the assessee.

Issue (ii): Whether the Section 263 revision could validly rest on an audit objection and the Assessing Officer's proposal.

Analysis: Section 263 of the Income-tax Act, 1961 requires the Principal Commissioner to independently call for and examine the assessment record and form the requisite opinion. The revision was found to have been initiated on the audit objection and the Assessing Officer's proposal, rather than upon an independent statutory examination by the revisional authority.

Conclusion: The revision initiated on the audit objection and the Assessing Officer's proposal was invalid, in favour of the assessee.

Issue (iii): Whether the assessment accepting exemption for interest awarded under Section 28 of the Land Acquisition Act, 1894 was erroneous and prejudicial to the interests of the Revenue.

Analysis: Interest awarded under Section 28 of the Land Acquisition Act, 1894 is discretionary, arises from the judicial enhancement of compensation, and represents accretion to the value of the acquired land. It consequently forms part of enhanced compensation taxable, if at all, under Section 45(5) of the Income-tax Act, 1961. The amendments in Section 145A(b), Section 56(2)(viii), and Section 57(iv) of the Income-tax Act, 1961 were treated as addressing the timing and computation of receipts otherwise characterised as interest; they did not recharacterise the Section 28 receipt as income from other sources. As the acquired agricultural land qualified for the exemption, the assessment view was legally sustainable. In any event, the issue was debatable and the Assessing Officer had adopted a plausible view, so the cumulative requirements of error and prejudice under Section 263 were not established.

Conclusion: The assessment was neither erroneous nor prejudicial to the interests of the Revenue, and the Section 263 revision was unsustainable, in favour of the assessee.

Dissenting Opinion: The Judicial Member would have sustained the revision on the basis that the post-2010 statutory amendments required interest on compensation or enhanced compensation to be assessed as income from other sources, rendering the assessment erroneous and prejudicial to the interests of the Revenue.

Final Conclusion: The assessment accepting the exemption for the Section 28 receipt remains protected from revision because the revisional jurisdiction was invalidly invoked and no statutory error causing revenue prejudice was established.

Ratio Decidendi: Revision under Section 263 of the Income-tax Act, 1961 is unavailable where the assessment reflects a legally plausible view and the revisional authority has not independently established both error and prejudice to the interests of the Revenue.

Issues: (i) Whether PBDIT should be adopted as the profit level indicator under the Transactional Net Margin Method where depreciation materially affected profitability because of the assessee's substantially higher fixed-asset base; (ii) Whether working capital adjustment was allowable in determining the arm's length price; (iii) Whether brought-forward business losses and unabsorbed depreciation were required to be set off against assessed income.

Issue (i): Whether PBDIT should be adopted as the profit level indicator under the Transactional Net Margin Method where depreciation materially affected profitability because of the assessee's substantially higher fixed-asset base.

Analysis: The Transactional Net Margin Method requires comparison of the functions, assets and risks of the tested party and comparables. The assessee's fixed assets and depreciation-to-operating-cost ratio were substantially higher than those of the comparables. Since the depreciation differential materially affected the OP/OC margin, and a reliable depreciation adjustment to comparable margins was not feasible, the unadjusted OP/OC comparison was unsuitable. PBDIT removes the distortion caused by materially different depreciation charges and provides a reliable basis for comparison.

Conclusion: PBDIT shall be adopted as the most appropriate profit level indicator for the assessee and the comparables, and the arm's length price shall be recomputed accordingly. In favour of the assessee.

Issue (ii): Whether working capital adjustment was allowable in determining the arm's length price.

Analysis: Differences in working-capital levels between the tested party and the final comparables affect operating margins and require adjustment for an accurate comparability analysis.

Conclusion: Working capital adjustment shall be computed and allowed on an actual basis. In favour of the assessee.

Issue (iii): Whether brought-forward business losses and unabsorbed depreciation were required to be set off against assessed income.

Analysis: Sections 70, 71 and 72 of the Income-tax Act, 1961 require statutory set-off of eligible brought-forward losses. No reason was recorded for denying the claimed brought-forward business losses and unabsorbed depreciation.

Conclusion: The brought-forward business losses and unabsorbed depreciation shall be verified and allowed in accordance with law. In favour of the assessee.

Final Conclusion: The transfer-pricing computation must be redetermined using PBDIT with working capital adjustment, and the assessed income must give effect to the verified statutory set-off of losses and depreciation.

Ratio Decidendi: Where material depreciation differences arising from substantially dissimilar fixed-asset profiles cannot be reliably adjusted under the Transactional Net Margin Method, PBDIT is the appropriate profit level indicator for arm's length comparison.

Issues: Whether the notice for reassessment issued under Section 148 more than three years after the end of the relevant assessment year was barred by limitation where the assessee's attributable share of the sale consideration was below Rs. 50 lakh.

Analysis: The sale deeds disclosed ten vendors and established that the assessee's one-tenth share of the total sale consideration of Rs. 98 lakh was Rs. 9.80 lakh. This amount was also accepted in the reassessment order. The extended limitation period under Section 149(1)(b) could not be invoked by treating the total transaction value as income escaping assessment in the hands of the assessee when the correct facts showed that the amount attributable to her was below Rs. 50 lakh.

Conclusion: The notice issued under Section 148 was barred by limitation and was quashed; the reassessment order consequently stood vitiated.

Issues: (i) Whether additions in a completed or unabated assessment under Section 153A of the Income-tax Act, 1961 could be made without incriminating material found during the search; (ii) Whether the unsecured loan received from the lender was liable to be added as unexplained cash credit.

Issue (i): Whether additions in a completed or unabated assessment under Section 153A of the Income-tax Act, 1961 could be made without incriminating material found during the search.

Analysis: The assessment for the relevant year stood completed on the search date. In respect of an unabated assessment, an addition under Section 153A must rest on incriminating material found during the search. The loan was already disclosed in the regular books and balance sheet. Statements and information obtained through subsequent collateral enquiries, including a statement recorded under Section 131 of the Income-tax Act, 1961 at the lender's premises, were not material found during the search. No seized document or material demonstrated that the disclosed loan was bogus or an accommodation entry.

Conclusion: The jurisdictional condition for making the loan addition under Section 153A of the Income-tax Act, 1961 was not fulfilled; this issue is decided in favour of the assessee.

Issue (ii): Whether the unsecured loan received from the lender was liable to be added as unexplained cash credit.

Analysis: The assessee furnished the lender's confirmation, PAN, income-tax return acknowledgement, audited financial statements and bank statements. The loan and interest payments moved through banking channels, tax was deducted at source on interest, the lender confirmed the transaction in remand proceedings, and the loan was subsequently repaid through banking channels. This documentary and banking evidence supported the identity, creditworthiness and genuineness of the transaction.

Conclusion: The unsecured-loan addition under Section 68 of the Income-tax Act, 1961 was unsustainable and was deleted; this issue is decided in favour of the assessee.

Final Conclusion: The disclosed loan failed to attract an addition either within the limited scope of a search assessment for a completed year or on the evidentiary record; the related interest disallowances consequently had no independent basis.

Ratio Decidendi: In a completed search assessment, an addition under Section 153A must be founded on incriminating material found during the search, and adverse material generated through post-search collateral enquiries cannot substitute for that requirement.

Issues: Whether the omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 by Notification No. 20/2024 dated 08.10.2024 applies to pending proceedings and invalidates the erroneous-refund demands raised in Issues 1 and 2.

Analysis: The omission of Rule 96(10) was not accompanied by a savings clause or a legal fiction preserving proceedings initiated under the omitted rule. In the absence of an enabling provision permitting continuation of such proceedings, the omission enures to the benefit of assessees in pending proceedings.

Conclusion: The omission applies to the pending proceedings; the demands raised under Issues 1 and 2 could not survive and were quashed.

Issues: Whether criminal proceedings for alleged false statements during income-tax search proceedings could be quashed in exercise of inherent jurisdiction after settlement of tax liability, notwithstanding that immunity under the settlement provisions was unavailable for a prosecution already instituted.

Analysis: Section 245H(1) of the Income-tax Act, 1961 permits immunity in settlement proceedings but its first proviso bars such immunity where prosecution was instituted before receipt of the settlement application under Section 245C. The Settlement Commission therefore validly excluded the pending locker-related prosecution from the immunity granted. However, the inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 remained available for an independent assessment of whether continuation of the prosecution served any meaningful purpose. The settlement order had attained finality, the tax liability stood paid, and no challenge to the settlement or non-compliance with its terms was shown. In the circumstances, including the pendency of the prosecution for nearly seventeen to eighteen years, continued proceedings were merely academic and the deterrent purpose of the penal provisions had already been served.

Conclusion: Continuation of the criminal prosecution constituted an abuse of process of law; the complaint, summoning order, orders refusing discharge and affirming the summoning order, and consequential proceedings were quashed.

Issues: Whether Infosys Limited, Wipro Limited and LTI Mindtree Limited were valid comparables for benchmarking the software-development services of a captive, limited-risk service provider.

Analysis: Under the transfer-pricing comparability exercise based on FAR analysis, a captive service provider operating on a cost-plus basis cannot be compared with entities having materially different functions, assets and risks. Infosys Limited, Wipro Limited and LTI Mindtree Limited carried on diversified operations, owned substantial brands, goodwill, patents and other intangibles, incurred significant research and development expenditure, assumed substantial business and intellectual-property risks, and lacked standalone segmental information for comparable service activities. Their scale and functional profile were materially distinct from captive software-development services.

Conclusion: Infosys Limited, Wipro Limited and LTI Mindtree Limited must be excluded from the comparable set, and the transfer-pricing adjustment must be recomputed accordingly.