Issues: Whether cash deposits stated to arise from recorded cash sales during the demonetisation period could be assessed as unexplained money under Section 69A of the Income-tax Act, 1961 when the books of account were audited, supported by contemporaneous records, and not rejected.

Analysis: Section 69A applies to money not recorded in the books of account and not satisfactorily explained. The cash deposits were recorded in the cash book and were supported by audited books, purchase and sales registers, stock records, sales bills and VAT returns. No defect was found in the books, stock, purchases or sales, and no independent verification produced material discrediting the recorded sales. The increased turnover and lower gross-profit rate were satisfactorily attributable to the shift from job work to lower-margin jewellery trading and seasonal sales. In the absence of rejection of the books under Section 145(3) or evidence disproving the sales, recorded cash receipts could not selectively be treated as unexplained money. Reassessment of cash already reflected as sales would also result in double taxation.

Conclusion: The cash deposits were fully explained by genuine recorded sales; the addition under Section 69A of the Income-tax Act, 1961 was unsustainable and was deleted in favour of the assessee.

Issues: (i) Whether the reassessment notice issued under Section 148 was barred by limitation under the surviving-time rule and whether a void reassessment could be revised under Section 263; (ii) Whether the Principal Commissioner's revision under Section 263 was sustainable on the alleged failure to investigate the long-term capital-gain claim.

Issue (i): Whether the reassessment notice issued under Section 148 was barred by limitation under the surviving-time rule and whether a void reassessment could be revised under Section 263.

Analysis: Under the transitional reassessment framework, the time surviving after the deemed notice had to be computed with the applicable exclusions, and the proceedings under Section 148A and issuance of the fresh Section 148 notice had to be completed within that balance period. Only five days remained available when the original notice was issued, making 09.06.2022 the last permissible date for issuance of the fresh notice. The notice issued on 29.07.2022 was beyond that period and barred by limitation under Section 149. Revision under Section 263 requires a valid and subsisting assessment order; an assessment founded on a time-barred notice is void ab initio and cannot be revised.

Conclusion: The Section 148 notice was time-barred, the consequential reassessment was void ab initio, and the Section 263 revision was unsustainable. This is in favour of the assessee.

Issue (ii): Whether the Principal Commissioner's revision under Section 263 was sustainable on the alleged failure to investigate the long-term capital-gain claim.

Analysis: The assessment record showed that the Assessing Officer called for and considered material concerning the acquisition and sale of shares, contract notes, demat records, bank statements, securities transaction tax, audited accounts, and the exempt long-term capital gain claim. The transactions were conducted through a recognised stock exchange and sale consideration was received through banking channels. The requirements of Section 263 are that the assessment order must be both erroneous and prejudicial to the interests of the Revenue. An actual inquiry and application of mind cannot be treated as absence of inquiry merely because the revisional authority considers a further or different inquiry desirable.

Conclusion: The assessment order was neither erroneous nor prejudicial to the interests of the Revenue, and revision under Section 263 was independently invalid. This is in favour of the assessee.

Final Conclusion: The revisional jurisdiction failed because the underlying reassessment was void and, independently, the statutory conditions for revision were not established.

Ratio Decidendi: Revision under Section 263 can operate only on a valid assessment order that is both erroneous and prejudicial to the interests of the Revenue; a void reassessment or an assessment made after actual inquiry cannot be revised merely because a different view or further inquiry is preferred.

Issues: Whether unsecured loans could be treated as unexplained cash credits under Section 68 of the Income-tax Act, 1961 despite documentary evidence establishing the lenders and the movement of funds.

Analysis: Section 68 requires the assessee to satisfactorily explain the nature and source of credits recorded in its books. The assessee furnished lender confirmations, PAN details, bank statements, instruction letters and affidavits, evidencing identity, financial capacity and genuineness of the loan transactions through banking channels. No material established that these documents were false, fabricated, or that the direct lenders were fictitious. The alleged diversion or misuse of funds at an earlier stage of the transaction chain did not, without a demonstrated nexus to the credits received by the assessee, render those credits unexplained. The non-production of lenders and earlier unserved notices could not, in isolation and without further enquiry, displace the evidentiary value of the documentary material.

Conclusion: The unsecured loans were satisfactorily explained for the purposes of Section 68 of the Income-tax Act, 1961, and the addition was unsustainable and deleted.

Issues: Whether share application money received from identified corporate investors was liable to be treated as unexplained cash credit under Section 68 of the Income-tax Act, 1961.

Analysis: Section 68 requires a satisfactory explanation of the nature and source of a credit. The assessee furnished PAN details, board resolutions, bank statements, financial statements and confirmations establishing the identity of the investors, their available funds and the receipt of share application money through banking channels. The documentary evidence was neither discredited nor contradicted through independent enquiry. Reliance solely on an investigation report and on a subsequently retracted third-party statement, without allowing cross-examination, did not provide a sustainable evidentiary basis for the addition. Suspicion or presumption could not substitute material evidence after the assessee had discharged its initial onus.

Conclusion: The share application money was satisfactorily explained; the addition under Section 68 of the Income-tax Act, 1961 was unsustainable and was directed to be deleted.

Issues: Whether the addition of the alleged cash amount returned against recorded sales was sustainable.

Analysis: The sales had already been recorded in the books and considered while computing taxable profits. The audited books, sale bills, vouchers and stock records supporting the sales were produced, and no defect in those records was identified. Treating the recorded sales as bogus while retaining them in the profit computation and separately adding the alleged cash return resulted in taxation of the same amount twice.

Conclusion: The cash addition was deleted as unsustainable on account of double taxation, in favour of the assessee.

Issues: Whether penalty for concealment of income or furnishing inaccurate particulars was sustainable under Section 271(1)(c) of the Income-tax Act, 1961.

Analysis: Section 271(1)(c) creates distinct defaults of concealment of particulars of income and furnishing inaccurate particulars. A penal provision requires clear identification and proof of the particular default invoked. Furnishing inaccurate particulars concerns incorrect, erroneous, or false details supplied in the return; mere non-disclosure, if established, falls under a different default. The penalty order inconsistently referred to concealment and furnishing inaccurate particulars without conclusively identifying either default. Explanation 1 was also inapplicable because an explanation had been furnished during assessment, was not found false, and the addition was computed by adopting figures contained in that explanation. The civil nature of penalty removes the requirement of mens rea but does not make penalty automatic upon an addition or dispense with satisfaction of the statutory conditions.

Conclusion: The conditions for imposition of penalty under Section 271(1)(c), read with Explanation 1, were not established, and the penalty could not be sustained.

Issues: Whether a direct appeal to the Tribunal against an Assessing Officer's rectification order under section 154 was maintainable.

Analysis: The admitted position was that the intended challenge was to the Assessing Officer's rectification order and that no appeal against that order had been filed before the Commissioner (Appeals). The reference in the appeal form to the Commissioner (Appeals)' order was acknowledged to be erroneous. The statutory appellate forum had therefore not been approached in the prescribed sequence.

Conclusion: A direct appeal to the Tribunal against the Assessing Officer's order under section 154 is non-maintainable; the challenge must first be brought before the Commissioner (Appeals).

Issues: (i) Whether the seized cash was rightly treated as unexplained money under Section 69A of the Income-tax Act, 1961; (ii) Whether the special rate under Section 115BBE of the Income-tax Act, 1961 was applicable; (iii) Whether penalty under Section 271AAB(1A)(b) of the Income-tax Act, 1961 was sustainable.

Issue (i): Whether the seized cash was rightly treated as unexplained money under Section 69A of the Income-tax Act, 1961.

Analysis: Section 69A permits money owned by an assessee to be deemed income where it is not recorded in the books and its nature and source are not satisfactorily explained. The asserted source remained unsupported by a cash book, ledger, income-expenditure statement, or other corroborative material. A bare and unsubstantiated explanation did not shift the evidentiary burden to the Revenue.

Conclusion: The addition of Rs. 25 lakh as unexplained money under Section 69A of the Income-tax Act, 1961 was sustained, against the assessee.

Issue (ii): Whether the special rate under Section 115BBE of the Income-tax Act, 1961 was applicable.

Analysis: The special rate under Section 115BBE applies to income validly assessed as unexplained money under Section 69A. As the unexplained-money addition was sustained and no basis was shown to displace its application, the special-rate taxation followed.

Conclusion: Taxation under Section 115BBE of the Income-tax Act, 1961 was sustained, against the assessee.

Issue (iii): Whether penalty under Section 271AAB(1A)(b) of the Income-tax Act, 1961 was sustainable.

Analysis: The penalty was linked to the sustained addition arising from the search-related cash seizure. No material was placed to justify interference with the penalty determination.

Conclusion: The penalty of Rs. 15 lakh under Section 271AAB(1A)(b) of the Income-tax Act, 1961 was sustained, against the assessee.

Final Conclusion: The determinations concerning unexplained cash, consequential special-rate taxation, and search-related penalty remain operative.

Ratio Decidendi: For Section 69A purposes, a bare assertion of a source, without supporting books or evidence, does not satisfactorily explain seized cash.

Issues: Whether the claimed exempt long-term capital gain from sale of equity shares was established as a genuine transaction so as to displace the addition under Section 68 of the Income-tax Act, 1961.

Analysis: The documentary trail of merger-based allotment, dematerialisation and sale through a recognised intermediary did not, by itself, establish the genuineness of the claim. The scrip was subject to investigation findings, and its abnormal price movement, trading pattern and lack of corresponding financial fundamentals were inconsistent with ordinary market behaviour. The assessee did not furnish material demonstrating the company's intrinsic financial strength or rebutting the adverse findings concerning the scrip. No new facts or evidence were produced to dislodge the appellate findings.

Conclusion: The long-term capital gain claim was not proved to be genuine, and the addition under Section 68 of the Income-tax Act, 1961 was sustained against the assessee.

Issues: (i) Whether expenditure recorded in the books and paid through banking channels could be added as unexplained expenditure merely because vendors did not respond to verification notices or allegedly did not file returns; (ii) Whether the first appellate authority violated the rules governing additional evidence by deciding the appeal without obtaining a remand report.

Issue (i): Whether expenditure recorded in the books and paid through banking channels could be added as unexplained expenditure merely because vendors did not respond to verification notices or allegedly did not file returns.

Analysis: The legal framework for unexplained expenditure concerns the source of expenditure, rather than a mere doubt about the authenticity of an expense. The expenditure was recorded in unrejected books, paid through banking channels, and supported by vendor identity particulars, invoices, ledger accounts, agreements, GST records and transaction data. Non-response by vendors to verification notices and their subsequent return-filing status did not establish either that the expenditure was fictitious or that its source was unexplained. Once the assessee supplied contemporaneous documentary evidence, the evidentiary burden required the Revenue to bring positive material discrediting the transactions. The verification notices issued by the Assessing Officer did not, without further investigation or adverse material, meet that burden.

Conclusion: The addition as unexplained expenditure was unsustainable; the deletion of the addition was affirmed, in favour of the assessee.

Issue (ii): Whether the first appellate authority violated the rules governing additional evidence by deciding the appeal without obtaining a remand report.

Analysis: The rule governing additional evidence applies only where material not previously produced is admitted by the first appellate authority. No specific document qualifying as additional evidence was identified. The material relied upon had either been furnished during assessment proceedings or was an analysis or explanation of material already on the assessment record; consequently, the requirement of a remand report was not triggered.

Conclusion: There was no violation of the rules governing additional evidence, and a remand report was unnecessary, in favour of the assessee.

Final Conclusion: Documented business expenditure reflected in unrejected books cannot be treated as unexplained solely on third-party non-compliance with verification notices, absent positive material discrediting the transactions.

Ratio Decidendi: Where the source of expenditure is evidenced by unrejected books and banking records, third-party non-response to verification notices, without independent adverse material, does not justify an addition for unexplained expenditure.

Issues: Whether the cash deposits in the bank account were satisfactorily explained by the cash-flow statement and prior withdrawals.

Analysis: The opening cash balance was unsupported by evidence of the preceding year's closing cash. The purported withdrawals during April and May 2016 were cheque payments and could not constitute cash available for later deposits. However, deposits of Rs. 18 lakhs on 1 July 2016 were supported by equivalent withdrawals on 29 and 30 June 2016. The interim deposits of Rs. 8.10 lakhs and agricultural expenditure of Rs. 5 lakhs remained unexplained.

Conclusion: The addition was restricted to Rs. 13.10 lakhs, with consequential relief to the assessee.

Issues: Whether the value of materials supplied free of cost by the service recipient forms part of the gross value for service-tax determination and for denial of the 67% abatement.

Analysis: Under the service-tax valuation framework and the applicable abatement notification, the gross amount charged cannot include the value of materials supplied free by the recipient unless such inclusion is specifically provided by law. The binding position confirms that free supplies of steel and cement are not part of the consideration charged by the service provider.

Conclusion: The cost of materials supplied free of cost by the service recipient does not form part of the gross value of taxable services; denial of the 67% abatement on that basis is unsustainable.

Issues: Whether an application for registration under section code 4A could be rejected as non-maintainable solely because returns were filed in Form ITR-7.

Analysis: Section code 4A corresponds to item (B) of section 12A(1)(ac)(vi), which requires that no income or part of income should previously have been excluded from total income under sections 11 or 12 or the specified provisions of section 10(23C). The statutory test is actual exclusion of income, not the mere choice of return form. Form ITR-7 may be relevant evidence, but cannot conclusively establish availment of exemption without examination of the returns, relevant schedules, computations, and processing or assessment records.

Conclusion: Mere filing of Form ITR-7 does not conclusively prove that exemption under sections 11 or 12 was availed; the application cannot be treated as non-maintainable solely on that basis.

Issues: Whether gross profit estimated on unrecorded sales inferred solely from a shortage of stock constitutes undisclosed income for levy of penalty under section 271AAB of the Income-tax Act, 1961.

Analysis: Explanation (c) to section 271AAB requires the income to be represented by money, bullion, jewellery, other valuable article or thing, or an entry, document or transaction found during the search. A stock shortage is an absence revealed by comparison of physical inventory with book stock, rather than material found during the search. The alleged unrecorded sales and the resulting income rested on inference, followed by estimation through application of the gross-profit rate; no search material evidencing an outside-the-books sale or false expense entry was identified. Penalty proceedings are independent of assessment proceedings, and acceptance of an assessment addition is not conclusive of undisclosed income. As a penal provision, section 271AAB requires strict construction, with the burden on the Revenue to establish the statutory conditions.

Conclusion: The estimated gross profit did not constitute undisclosed income within Explanation (c) to section 271AAB, and the penalty levied under section 271AAB(1A)(b) was unsustainable.

Issues: Whether a difference between turnover disclosed in service-tax returns and revenue reported under the Income-tax Act, 1961, justified an addition where real-estate revenue was recognised under the Percentage of Completion Method.

Analysis: Service tax under the erstwhile regime applied to advances received, whereas income under the Income-tax Act, 1961 was to be computed according to the regularly followed mercantile method and the Percentage of Completion Method under Section 145(1). Amounts received as customer advances were reflected as liabilities until the relevant stage of project completion. The audited books, financial statements and project-wise workings supported the revenue recognised for the year. No discrepancy in the books was established, and the books were not rejected under Section 145(3). The difference between service-tax turnover and income-tax turnover therefore represented a timing and accounting-basis difference.

Conclusion: The mismatch could not be treated as unaccounted turnover or taxable income, and deletion of the addition was sustained.

Issues: Whether regular bail should be granted in the alleged offence concerning wrongful availment and utilisation of input tax credit.

Analysis: The complaint had been submitted; the applicant had no criminal antecedents, had remained in custody since 15.06.2026, and the trial was likely to take time.

Outcome: Regular bail granted.

Issues: Whether penalty for contravention of Section 269SS could be imposed merely because cash deposits in the bank account were treated as unexplained, without evidence establishing acceptance of a loan, deposit, or specified sum from another person.

Analysis: Penalty provisions require strict construction. For penalty under Section 271D, the competent authority must first record specific findings establishing the conditions under Section 269SS: a transaction with an identifiable person, its character as a loan, deposit, or specified sum, and satisfaction of the monetary threshold. The burden shifts to the assessee under Section 273B only after these foundational conditions are established. Mere cash deposits in a bank account, or rejection of the explanation of their source in quantum proceedings, does not by itself establish a violation of Section 269SS.

Conclusion: In the absence of evidence identifying any person from whom a loan, deposit, or specified sum was accepted in cash, the penalty under Section 271D was not sustainable; the deletion of the penalty was upheld in favour of the assessee.

Issues: (i) Whether stock-exchange charges imposed for operational and procedural lapses are deductible as business expenditure notwithstanding Explanation 1 to section 37(1) of the Income-tax Act, 1961.
(ii) Whether penalty under section 270A of the Income-tax Act, 1961 is leviable for a deduction of health and education cess claimed before the retrospective insertion of Explanation 3 to section 40(a)(ii) of that Act.

Issue (i): Whether stock-exchange charges imposed for operational and procedural lapses are deductible as business expenditure notwithstanding Explanation 1 to section 37(1) of the Income-tax Act, 1961.

Analysis: Explanation 1 excludes expenditure incurred for an offence or a purpose prohibited by law. The charges arose under stock-exchange bye-laws and regulations for delivery, reporting, deposit, margin and client-code lapses. Their substance was compensatory and regulatory, rather than a statutory sanction for an offence; classification in the tax-audit report as a penalty or fine did not alter that character.

Conclusion: The charges are allowable business expenditure and do not attract Explanation 1 to section 37(1). This issue is decided in favour of the assessee.

Issue (ii): Whether penalty under section 270A of the Income-tax Act, 1961 is leviable for a deduction of health and education cess claimed before the retrospective insertion of Explanation 3 to section 40(a)(ii) of that Act.

Analysis: Explanation 3 to section 40(a)(ii), introduced by the Finance Act, 2022 with retrospective operation, subsequently removed deductibility of health and education cess. When the returns were filed, the claim followed the prevailing judicial interpretation and was made with full disclosure of material facts. A bona fide disclosed claim cannot constitute under-reporting or misreporting merely because a later retrospective amendment makes it inadmissible; the saving mechanism in section 155(18) further supports that position.

Conclusion: Penalty under section 270A is not leviable for the cess claim and is deleted. This issue is decided in favour of the assessee.

Final Conclusion: The computation must give effect to the deductibility of regulatory stock-exchange charges, and the disclosed cess claim made under the then-prevailing legal position carries no liability to penalty.

Issues: (i) Whether additions under section 69A could be sustained despite the DVO report finding that the declared values corresponded with fair market value; (ii) Whether penalties under section 271B for failure to obtain audit could be sustained in the absence of proof of reasonable cause.

Issue (i): Whether additions under section 69A could be sustained despite the DVO report finding that the declared values corresponded with fair market value.

Analysis: The reference for valuation resulted in a DVO report finding that the declared sale and purchase values of the properties matched their fair market value. This factual position remained unrebutted. The binding nature of the favourable DVO report precluded the departmental authorities from sustaining contrary unexplained-money additions.

Conclusion: The section 69A additions are deleted, in favour of the assessees.

Issue (ii): Whether penalties under section 271B for failure to obtain audit could be sustained in the absence of proof of reasonable cause.

Analysis: The assessees neither pleaded nor established a reasonable cause for failure to have their books of account audited due to circumstances beyond their control.

Conclusion: The section 271B penalties are sustained, against the assessees.

Final Conclusion: The uncontroverted valuation findings govern the determination of the disputed property values, while failure to prove reasonable cause leaves the audit-default penalties intact.

Issues: Whether the unaccounted cash consideration recorded in seized digital material could be assessed as unexplained investment despite denial of payment, non-grant of cross-examination, co-ownership of the property, registration in a subsequent year, and presumptive-tax treatment.

Analysis: Section 69 permits assessment where the assessee does not satisfactorily explain the source of an investment. The seized digital records from the seller specifically matched the unit and purchaser details and were supported by statements recorded under Section 132(4) from key personnel admitting unaccounted cash transactions. The material was disclosed to the assessee, whose bare denial did not displace the documentary evidence or explain the source of the cash payment. Cross-examination was not indispensable where the addition rested principally on seized and corroborated documentary material rather than statements alone. The absence of departmental action concerning another flat or co-owner was immaterial to the evidentiary material relating to the concerned property. Presumptive-tax treatment and absence of an obligation to maintain books did not relieve the assessee from explaining the source of the investment, and the later registration date did not affect the finding that the cash payment was made in the relevant year.

Conclusion: The cash payment of Rs. 12,50,000 was assessable as unexplained investment under Section 69; the challenge based on denial of cross-examination and related objections failed.