Issues: Whether an assessment is valid where notices under Section 143(2) were issued by an Income-tax Officer despite the returned income exceeding the pecuniary jurisdiction assigned to that rank under the applicable CBDT instruction.

Analysis: CBDT Instruction No. 1/2011 required a non-corporate assessee declaring income above Rs. 20 lakh to be assessed by an Assistant Commissioner or Deputy Commissioner. The notices under Section 143(2) were issued by an Income-tax Officer notwithstanding the returned income exceeding that threshold. The objection under Section 124(3) concerning territorial jurisdiction did not apply to this defect of pecuniary jurisdiction. A notice under Section 143(2) issued by an officer lacking jurisdiction was an inherent illegality, not a procedural irregularity capable of cure under Section 292BB.

Conclusion: The notices under Section 143(2) were invalid for want of pecuniary jurisdiction, and the consequential assessment was void ab initio, in favour of the assessee.

Issues: Whether profit attributable to the assessee's Indian permanent establishment from offshore equipment supplies should be computed at 2.5% or 3.75%.

Analysis: The assessment adopted a 3.75% attribution principally by reference to findings concerning another group entity. The assessee agreed to offer profit at 2.5% to avoid further litigation. This rate was found reasonable on the record.

Conclusion: Profit attributable to the Indian permanent establishment shall be computed at 2.5% instead of 3.75%, in favour of the assessee.

Issues: (i) Whether the disallowance of purchases from the principal supplier as bogus was sustainable; (ii) Whether the disallowance of purchases from the other suppliers as bogus was sustainable; (iii) Whether an addition for an alleged supplier transaction was valid where no transaction had been undertaken.

Issue (i): Whether the disallowance of purchases from the principal supplier as bogus was sustainable.

Analysis: The assessment under Section 143(3) read with Section 153A of the Income-tax Act, 1961 could not rest on statements of personnel who were not responsible for procurement, particularly where their statements did not implicate the assessee and complete statements relied upon were not furnished. Such reliance was inconsistent with principles of natural justice. The supplier's subsequent non-existence, GST cancellation, non-filing of return, or its subsequent use of funds did not establish that supplies and labour services received by the assessee were fictitious, absent a nexus between the supplier's affairs and the assessee.

Analysis: The assessee discharged its burden of proof through the subcontract, invoices, purchase orders, delivery records, running bills, payment trail and evidence of utilisation in executed construction contracts. The books of account were not rejected under Section 145(3) of the Income-tax Act, 1961. The material did not establish that the payments had returned to the assessee or that the documented supplies were not received.

Conclusion: The purchases from the principal supplier were genuine and their disallowance as bogus was deleted, in favour of the assessee.

Issue (ii): Whether the disallowance of purchases from the other suppliers as bogus was sustainable.

Analysis: GST registration cancellation after the relevant transactions, non-filing of income-tax returns by a supplier, later non-availability at its address, differing HSN codes, or discrepancies in vehicle particulars could not, without evidence of non-delivery or sham transactions, justify an adverse inference against the purchaser. Section 29 of the Central Goods and Services Tax Act, 2017 permits cancellation of registration in multiple circumstances; cancellation alone did not prove that the preceding transactions were fictitious.

Analysis: Purchase orders, invoices, e-way bills, delivery challans, attendance and employee-wise records for manpower services, GST portal entries, photographs where available, and payments through banking channels established the actual receipt of goods or services. Supplier-side compliance defaults required action against the respective supplier and did not displace the evidence supporting the assessee's purchases.

Conclusion: The purchases from the other suppliers were genuine and the related additions were deleted, in favour of the assessee.

Issue (iii): Whether an addition for an alleged supplier transaction was valid where no transaction had been undertaken.

Analysis: The assessee had specifically denied any transaction with the alleged supplier, and the assessment contained no basis for the quantified addition. No verification was undertaken to contradict the denial. The assessee could not be required to prove a negative fact.

Conclusion: The unsupported addition for the alleged supplier transaction was deleted, in favour of the assessee.

Final Conclusion: The purchase additions founded on supplier-side irregularities, unconnected third-party material, and an unsubstantiated alleged transaction could not be sustained where the assessee established actual procurement and utilisation through contemporaneous records.

Ratio Decidendi: A documented purchase cannot be disallowed as bogus merely because the supplier subsequently becomes non-compliant, untraceable, or has its GST registration cancelled, unless reliable evidence links the purchaser to a sham transaction or establishes non-receipt of goods or services.

Issues: Whether a reassessment initiated through a notice under section 148 issued by an Income-tax Officer, despite the returned income exceeding the pecuniary limit assigned to that officer under CBDT Instruction No. 1/2011, was valid.

Analysis: CBDT Instruction No. 1/2011 assigned jurisdiction over non-corporate assessees with returned income exceeding Rs. 20 lakh to an Assistant Commissioner or Deputy Commissioner. The notice under section 148 was issued by an Income-tax Officer although the returned income exceeded that threshold. The objection under section 124(3), concerning territorial jurisdiction, did not apply to the defect of pecuniary jurisdiction. A notice under section 148 issued by an officer lacking jurisdiction was an inherent illegality rather than a procedural irregularity and could not be cured under section 292BB.

Conclusion: The notice under section 148 and the consequential reassessment were void ab initio. The issue was decided in favour of the assessee.

Issues: (i) Whether the employer was liable to deduct tax at source on foreign leave travel concession paid to employees and could be treated as an assessee in default for non-deduction; (ii) Whether interest under Section 201(1A) was chargeable in respect of the TDS default.

Issue (i): Whether the employer was liable to deduct tax at source on foreign leave travel concession paid to employees and could be treated as an assessee in default for non-deduction.

Analysis: Foreign leave travel concession was not exempt under Section 10(5) and formed part of salary liable to tax deduction at source under Section 192. The obligation to deduct tax was distinct from recovery of the tax from employees. Interim protection against recovery did not extinguish the statutory duty to deduct tax, particularly during periods when no restraint order operated. The taxability of foreign LTC had been settled in favour of the Revenue.

Conclusion: The employer was rightly treated as an assessee in default for failure to deduct tax at source on foreign LTC; this issue was decided against the assessee.

Issue (ii): Whether interest under Section 201(1A) was chargeable in respect of the TDS default.

Analysis: Interest under Section 201(1A) is mandatory and consequential to the TDS default. Relief could be sought through an appropriate petition for periods covered by judicial stay of recovery or where the concerned employee had discharged the tax liability through self-assessment tax.

Conclusion: Interest under Section 201(1A) remained chargeable, with limited consideration available through an appropriate petition for the specified periods or payments; this issue was partly in favour of the assessee.

Final Conclusion: The tax-deduction default concerning foreign LTC remained enforceable, while the computation or recovery of consequential interest could be reconsidered in accordance with judicial stays and tax paid by employees.

Ratio Decidendi: A judicial restraint on recovery from employees does not, by itself, displace an employer's statutory obligation to deduct tax at source on taxable salary income; interest for non-deduction is consequential and mandatory.

Issues: Whether the ad hoc disallowance of expenses at 10% was justified in the assessee's petrol and diesel outlet business.

Analysis: The disallowance was made because a portion of the expenses was not completely substantiated. Having regard to the high volume of transactions, the assessee's consistently low profit and gross-profit margins, and the ad hoc nature of the disallowance, a 10% disallowance would produce an abnormal profit margin disproportionate to the business.

Conclusion: Restriction of the expense disallowance to 5% was reasonable; the issue is decided in favour of the assessee.

Issues: Whether the assessee's advertising, marketing and promotion expenditure constituted an international transaction with its associated enterprises, permitting transfer-pricing adjustment through the Bright Line Test or the Cost Plus Method.

Analysis: Chapter X permits adjustment only after the Revenue establishes, on tangible material, the existence of an international transaction and its transaction price. The Bright Line Test has no statutory mandate for determining either the existence of an international transaction involving advertising, marketing and promotion expenditure or its arm's length price. The transfer-pricing officer had not established any arrangement or understanding requiring the assessee to incur such expenditure for brand promotion on behalf of its associated enterprises. The assessee's international transactions had otherwise been accepted at arm's length.

Conclusion: The advertising, marketing and promotion expenditure was not an international transaction; consequently, the substantive Cost Plus Method adjustment and the protective Bright Line Test adjustment were deleted, in favour of the assessee.

Issues: (i) Whether advertising, marketing and promotion expenditure, already included in operating costs while benchmarking interconnected international transactions under the Transactional Net Margin Method, could be separately benchmarked and adjusted; (ii) Whether a separate adjustment for interest on outstanding receivables was sustainable despite a claimed working-capital adjustment; (iii) Whether the addition for mismatch between returned income and Form 26AS receipts required verification where the receipts were claimed to belong to associated enterprises and to have been assessed in their hands.

Issue (i): Whether advertising, marketing and promotion expenditure, already included in operating costs while benchmarking interconnected international transactions under the Transactional Net Margin Method, could be separately benchmarked and adjusted.

Analysis: The international transactions concerning agency commission, advertising sales and marketing services had been benchmarked under TNMM, with AMP expenditure forming part of operating costs. The declared margins were accepted as being at arm's length. Under TNMM, once the interconnected transactions and their net margins have been accepted after functional comparability, a horizontal cost item forming part of those transactions cannot be separately benchmarked without segregation. Applying another method to that component would distort the selected most appropriate method. The Bright Line Test was also inapplicable for a separate protective adjustment.

Conclusion: The substantive and protective AMP adjustments were deleted in favour of the assessee.

Issue (ii): Whether a separate adjustment for interest on outstanding receivables was sustainable despite a claimed working-capital adjustment.

Analysis: The assessee asserted that working-capital adjustments had already been made both in its margins charged to associated enterprises and in the comparable companies' financials. The claim required factual verification to determine whether a separate receivables adjustment would result in duplication.

Conclusion: The issue was remitted for verification; if the working-capital-adjustment claim is verified, no separate interest adjustment shall be made.

Issue (iii): Whether the addition for mismatch between returned income and Form 26AS receipts required verification where the receipts were claimed to belong to associated enterprises and to have been assessed in their hands.

Analysis: The assessee produced additional material concerning assessment of the associated enterprises' Indian receipts, including material relating to resolution under the mutual agreement procedure. Since the receipts were asserted not to constitute the assessee's income and the claim required factual examination, the additional evidence was admitted for verification.

Conclusion: The mismatch addition was remitted for verification and fresh decision in accordance with law.

Final Conclusion: Separate transfer-pricing adjustment of AMP expenditure cannot survive where the expense has already been absorbed in accepted TNMM benchmarking, while the receivables and income-mismatch matters require factual verification.

Ratio Decidendi: Where AMP expenditure is included in the operating costs of interconnected international transactions benchmarked and accepted under TNMM, it cannot be separately subjected to an arm's-length adjustment without proper segregation.

Issues: (i) Whether interest on foreign-currency loans advanced to associated enterprises was correctly benchmarked at LIBOR plus 300 basis points; (ii) Whether Techno Electric & Engineering Company Ltd. and Keltron Component Complex Ltd. were rightly excluded from the comparable set under the transactional net margin method; (iii) Whether an arm's length adjustment for interest on delayed receivables from associated enterprises was warranted; and (iv) Whether disallowance under section 14A could be made where no exempt income was earned during the relevant year.

Issue (i): Whether interest on foreign-currency loans advanced to associated enterprises was correctly benchmarked at LIBOR plus 300 basis points.

Analysis: The loans were repayable in US dollars. The currency of repayment determines the appropriate market interest benchmark. The earlier orders in the assessee's own case, applying the jurisdictional precedent, had accepted LIBOR-based benchmarking for such loans. The direction to apply LIBOR plus 300 basis points was therefore consistent with the applicable benchmark.

Conclusion: LIBOR plus 300 basis points was correctly applied for benchmarking the foreign-currency loans. The conclusion is against the assessee.

Issue (ii): Whether Techno Electric & Engineering Company Ltd. and Keltron Component Complex Ltd. were rightly excluded from the comparable set under the transactional net margin method.

Analysis: Techno Electric & Engineering Company Ltd. operated in engineering procurement and construction across sectors distinct from the assessee's manufacturing and telecom-services activities. Keltron Component Complex Ltd. manufactured aluminium electrolytic capacitors, whose product mix was materially different from that of the assessee. Under the transactional net margin method, broad functional similarity does not dilute the requirement of meaningful functional and product comparability under Rule 10B(2).

Conclusion: Both companies were rightly excluded from the comparable set. The conclusion is in favour of the assessee.

Issue (iii): Whether an arm's length adjustment for interest on delayed receivables from associated enterprises was warranted.

Analysis: The assessee did not charge interest on delayed payments from either associated enterprises or unrelated parties, and the margins were already factored into the prices charged to associated enterprises. Consistent with the earlier orders in the assessee's case, no separate adjustment was required for outstanding receivables.

Conclusion: No arm's length adjustment for interest on delayed receivables was warranted. The conclusion is in favour of the assessee.

Issue (iv): Whether disallowance under section 14A could be made where no exempt income was earned during the relevant year.

Analysis: It was undisputed that the assessee had not earned dividend or other exempt income during the relevant year. The requirement of income not forming part of total income contemplates actual receipt or accrual of exempt income in that year; consequently, Rule 8D could not be invoked in its absence.

Conclusion: No disallowance under section 14A was permissible where no exempt income was earned. The conclusion is in favour of the assessee.

Final Conclusion: The transfer-pricing and disallowance relief granted to the assessee on comparables, delayed receivables and absence of exempt income remains intact, while the LIBOR-based loan benchmarking is sustained.

Ratio Decidendi: In transfer-pricing analysis, the loan currency governs interest benchmarking, and comparables under the transactional net margin method must satisfy meaningful functional and product comparability; further, no separate receivables adjustment or section 14A disallowance arises on the stated facts where pricing already factors margins and no exempt income is earned.

Issues: Whether revisionary jurisdiction could be exercised where the reassessment order had examined the assessee's share transactions and accepted the returned short-term capital gains.

Analysis: The reassessment was initiated on information concerning alleged penny-stock transactions. Specific queries were issued, and the assessee furnished contract notes, broker and ledger details, bank statements and supporting material. The assessment order reflected consideration of this material and acceptance of the short-term capital gains offered to tax. The assessment view was therefore a plausible view based on inquiry and verification. No inadequacy in the inquiry or basis to displace the assessment view was established; consequently, the deeming fiction for absence of inquiry was inapplicable.

Conclusion: The revision order was unsustainable because the assessment order was not erroneous and prejudicial to the interests of the Revenue.

Issues: Whether the approval for reassessment beyond three years was valid where the recorded escaped income was below the statutory threshold and approval was granted by an incompetent sanctioning authority.

Analysis: For assessment year 2019-20, the three-year period expired on 31.03.2023. The approval record stated escaped income of Rs.49,50,259 while invoking the extended reassessment period applicable only where escaped income is Rs.50 lakh or more. It also recorded approval by the Principal Commissioner although, after expiry of three years, approval was required from the higher authority specified under the applicable provision. These discrepancies established non-application of mind and rendered the sanction invalid.

Conclusion: The reassessment notice issued pursuant to the invalid sanction was bad in law, and the consequential assessment was quashed, in favour of the assessee.

Issues: Whether arrangement fees paid to the Asian Development Bank and the International Finance Corporation for processing overseas loans were liable to service tax under the reverse charge mechanism.

Analysis: The statutory immunities under the Asian Development Bank Act, 1966 and the International Finance Corporation (Status, Immunities and Privileges) Act, 1958 exempted the operations and transactions of those institutions from taxation. The applicable exemption was also clarified through CBIC Circular No. 83/02/2019-GST dated 01.01.2019, extended mutatis mutandis to service tax by the circular dated 15.01.2019. The earlier decision applying these immunities to services supplied by ADB and IFC remained undisturbed after withdrawal of Revenue's civil appeals.

Conclusion: Arrangement fees paid to ADB and IFC were exempt from service tax, and no reverse-charge liability arose on the recipient.

Issues: Whether a show-cause notice issued after expiry of the limitation applicable to non-fraud cases could be sustained under the extended limitation provision on a bare allegation of fraud or concealment of facts.

Analysis: The limitation for a notice under Section 73 for the relevant financial year, after accounting for extension of the annual-return filing date and exclusion of the COVID-19 period, expired on 28.02.2025. The impugned notice dated 13.06.2025 was consequently time-barred under that provision. Invocation of Section 74 required the notice itself to disclose allegations and material indicating fraud, wilful misstatement or suppression of facts. A counter affidavit could not supplement deficiencies in the notice. The notice merely used the expression "fraud or concealment of facts" without identifying how either was inferred or detected, demonstrating an unsupported and mechanical invocation of the extended limitation.

Conclusion: The show-cause notice could not validly be sustained under Section 74 and was barred by limitation; the issue was decided in favour of the assessee.

Ratio Decidendi: Extended limitation founded on fraud, wilful misstatement or suppression of facts is invocable only where the show-cause notice itself sets out the allegations and material supporting that basis; such defects cannot be cured through pleadings filed before the Court.

Issues: Whether penalty for transport of goods without an e-way bill at the time of interception could be sustained where the e-way bill was generated shortly thereafter and the transaction was genuine, fully documented and unaccompanied by evidence of intent to evade tax.

Analysis: Section 129(3) of the Central Goods and Services Tax Act, 2017 and the Uttar Pradesh Goods and Services Tax Act, 2017 was invoked because the e-way bill required under Rule 138(1) had not been generated when the vehicle was intercepted. The e-way bill was generated about nine minutes later and produced immediately. The motorcycles were traceable through invoices, engine and chassis numbers and registration requirements; purchase and sale invoices, challans, ledgers and bank records supported the transaction. No discrepancy in quantity, value or classification, or material indicating suppression, undervaluation, fake documents, unaccounted goods or tax evasion, was established. The lapse was therefore bona fide and procedural rather than part of an attempt to evade tax.

Conclusion: The penalty under Section 129(3) was not sustainable and the penalty orders were liable to be set aside.

Issues: Whether reassessment could be initiated on the basis of alleged incorrect computation of loss following a share split when the underlying share transactions and valuation had already been scrutinised in the original assessment.

Analysis: The original scrutiny assessment specifically sought details of the purchase and sale of the relevant shares, the disparity between their purchase and sale prices, the applicable rates, unquoted-share holdings, and the capital gain or loss. Complete transaction, valuation, allotment and banking records were furnished, following which the assessment was completed. The reopening reasons relied on the same share transactions and the consequence of their 1:10 split, without identifying fresh tangible material or any non-disclosure of material facts.

Conclusion: Reopening on the self-same issue constituted an impermissible change of opinion and was in favour of the assessee.

Ratio Decidendi: A completed scrutiny assessment cannot be reopened merely by revisiting material and transactions already examined; reassessment requires fresh tangible material indicating escaped income and, where applicable, failure to make full and true disclosure.

Issues: Whether reassessment notices alleging that the partner had failed to disclose taxable interest on capital and remuneration purportedly receivable from the partnership firm were valid.

Analysis: The partnership deeds made payment of interest and remuneration dependent on mutual agreement and were therefore enabling rather than mandatory. The amended deed effective from 01.04.2009 expressly provided that no interest on partners' capital was payable, and no material established actual receipt of interest or remuneration by the petitioner. The reopening proceeded on an erroneous assumption that such amounts were necessarily payable merely because earlier deed clauses contemplated them. The identical basis for reopening the firm's assessments had already been found legally unsustainable.

Conclusion: The reassessment notices were without jurisdiction and were quashed, in favour of the assessee.

Issues: Whether cash deposits made during the demonetisation period, stated to represent cash sales already reflected in the assessee's business results, could be assessed as unexplained cash credit.

Analysis: The purchases, stock-in-trade and sales were not doubted. Given the nature of the trading business, undisputed purchases reasonably supported corresponding sales. The increased bank deposits during demonetisation could result from the inability to use demonetised currency for cash purchases or expenditure, requiring available cash to be deposited in the bank. Since the profit embedded in the cash sales had already been offered to tax, treating the sale proceeds again as unexplained income would result in double taxation.

Conclusion: The cash deposits could not be treated as unexplained cash credit; the addition was deleted in favour of the assessee.

Issues: Whether the entire gross professional receipts could be assessed as professional income where no return was filed and the assessee had offered 50% of such receipts as income.

Analysis: The assessment of professional income must reflect net income and not automatically the entire gross receipts merely because the assessee did not file a return or comply with assessment notices. Although acceptance of presumptive income in subsequent years under Section 44ADA does not itself confer the statutory benefit for the year in question, it is relevant in assessing the reasonableness of the income offered where the same profession continued and no material change in the earning activity was shown. The assessee's offer of 50% of receipts, payment of tax thereon, and the Revenue's consistent acceptance of that basis in subsequent years supported a reasonable estimation at 50% of gross receipts.

Conclusion: Professional income was directed to be assessed at 50% of gross professional receipts, amounting to Rs. 17,50,750, in favour of the assessee.

Issues: Whether the Appellate Tribunal may refuse to admit an assessee's appeal solely because the amount involved is below two lakh rupees, without giving reasons on the merits.

Analysis: The second proviso to Section 35B(1) confers discretion on the Appellate Tribunal to refuse admission of specified appeals involving fine or penalty not exceeding two lakh rupees. That discretion does not dispense with the Tribunal's obligation, as a statutory quasi-judicial forum, to provide reasons. Reasons are integral to a valid adjudicatory decision. The Tribunal must consider the appeal and, if it finds on merits that admission is unwarranted, record reasons for refusing admission.

Conclusion: The Tribunal could not dismiss the appeals merely on the monetary limit without a reasoned consideration; the matter was decided in favour of the assessee.

Issues: (i) Whether sponsorship receipts from a women's marathon constituted receipts from trade, commerce or business so as to attract the proviso to section 2(15) and section 13(8); (ii) Whether furnishing Form No. 10BB instead of Form No. 10B with the return precluded exemption under section 11.

Issue (i): Whether sponsorship receipts from a women's marathon constituted receipts from trade, commerce or business so as to attract the proviso to section 2(15) and section 13(8).

Analysis: The marathon was directly connected with the charitable objects concerning women's health, fitness, awareness and empowerment. An object clause need not enumerate every programme or means adopted to fulfil its charitable ends. The treatment of sponsorship payments as advertising expenditure by sponsors did not determine the character of receipts in the hands of the charitable recipient. The quantum of sponsorship or surplus was not, by itself, determinative of commerciality; the decisive inquiry was the intrinsic nature, purpose and manner of the activity. No independent commercial undertaking or commercial services distinct from the charitable event were established. The 20% receipts test applied by the appellate authority was also inapplicable to the relevant assessment year.

Conclusion: The sponsorship receipts did not arise from trade, commerce or business; the proviso to section 2(15) and section 13(8) were inapplicable. This issue was decided in favour of the assessee.

Issue (ii): Whether furnishing Form No. 10BB instead of Form No. 10B with the return precluded exemption under section 11.

Analysis: The accounts had been audited before the return was filed, the assessee held valid registration under section 12A, and the correct Form No. 10B was furnished during assessment proceedings before completion of assessment. The incorrect form resulted from an erroneous claim under section 10(23C)(iv), and did not affect the substantive availability of the exemption claim or prevent its examination on merits.

Conclusion: The procedural error in furnishing the incorrect audit form did not extinguish the assessee's entitlement to exemption under section 11. This issue was decided in favour of the assessee.

Final Conclusion: The assessee was entitled to exemption under section 11 and the surplus assessed on denial of such exemption was liable to be deleted.

Ratio Decidendi: Sponsorship associated with an activity genuinely and integrally undertaken to achieve charitable objects does not become trade, commerce or business merely because sponsors obtain promotional benefit or the activity generates substantial receipts or surplus; a curable procedural defect cannot defeat a substantively valid charitable exemption claim.