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.

Issues: Whether accumulation of a charitable trust's unspent income exceeding 15% under Section 11(2) can be denied because the trustees' resolution was passed after the end of the previous year, despite timely furnishing of Form 10 and compliance with the prescribed conditions.

Analysis: Section 11(2) permits accumulation or setting apart of income not applied for charitable or religious purposes where the prescribed statement specifies the purpose and period of accumulation, is furnished within the stipulated time, and the accumulated income is invested or deposited in the permitted modes. Rule 17(2) requires the prescribed statement in Form 10 to be furnished by the due date for filing the return under Section 139(1). These provisions do not prescribe that a trustees' resolution authorising accumulation must be passed before the close of the relevant previous year. Once the statutory conditions were fulfilled, an additional timing requirement for the resolution could not be implied.

Conclusion: Accumulation under Section 11(2) cannot be denied solely because the trustees' resolution was passed after the end of the previous year. The claim for accumulation was allowable in favour of the assessee.

Issues: (i) Whether the Dispute Resolution Panel directions and consequential assessment were invalid because the directions did not quote a Document Identification Number; (ii) Whether the assessment order, passed after giving effect to the earlier Tribunal remand, was barred by limitation.

Issue (i): Whether the Dispute Resolution Panel directions and consequential assessment were invalid because the directions did not quote a Document Identification Number.

Analysis: Circular No. 19/2019 makes DIN quoting mandatory. A separate intimation bearing its own DIN and identifying the DIN of the enclosed directions establishes the identity and traceability of the communication and constitutes substantial compliance with the Circular's purpose. Retrospective section 292BA prevents invalidation of an assessment for a mistake, defect, or omission in quoting DIN where the assessment order is referenced by DIN in any manner. Objections concerning DIN generation or authentication, and the contention that the DRP directions were not assessment orders, did not affect this position where the accompanying communication sufficiently identified the relevant documents.

Conclusion: The DRP directions and consequential assessment were not invalid for want of DIN in the directions; this issue is decided against the assessee.

Issue (ii): Whether the assessment order, passed after giving effect to the earlier Tribunal remand, was barred by limitation.

Analysis: The remand required verification and an opportunity of hearing; consequently, the second proviso to section 153(5) attracted the limitation prescribed by section 153(3). As the appellate order was received on 18 November 2019, the permissible period expired on 31 March 2021. Rule 28 permitted remand only to the authority from whose order the appeal arose or to the Assessing Officer. The reference to the AO/TPO in the earlier remand did not convert the recomputation into a fresh transfer-pricing reference under section 92CA(1), and therefore did not permit the Revenue to claim the additional extension under section 153(4).

Conclusion: The assessment order was barred by limitation and was quashed; this issue is decided in favour of the assessee.

Final Conclusion: The DIN-related objection did not affect the validity of the proceedings, but expiry of the statutory limitation rendered the impugned assessment legally unsustainable.

Ratio Decidendi: A remand for recomputation of arm's length price does not enable an extension of assessment limitation through a fresh transfer-pricing reference where the recomputation is not initiated on the Assessing Officer's fresh satisfaction under section 92CA(1).

Issues: (i) Whether reassessment orders under sections 144/147 were valid without a notice under section 143(2) after the returns under section 139(1) were requested to be treated as returns in response to section 148 notices; (ii) Whether cash-payment entries in a digital property ledger could be assessed as the assessee's unexplained investment when the registered sale deed showed that the property was purchased by another person.

Issue (i): Whether reassessment orders under sections 144/147 were valid without a notice under section 143(2) after the returns under section 139(1) were requested to be treated as returns in response to section 148 notices.

Analysis: Sections 147 and 148 of the Income-tax Act, 1961 govern reassessment proceedings, and issuance of notice under section 143(2) is mandatory where a return is treated as having been furnished in response to a notice under section 148. The record established that returns were submitted with online replies requesting that the earlier returns under section 139(1) be treated as returns in response to the section 148 notices. The assessing authority also relied upon the income declared in those returns while computing reassessed income. Having taken cognizance of the returns, the absence of a notice under section 143(2) was fatal to reassessment jurisdiction.

Conclusion: The reassessment orders were invalid and quashed for non-issuance of notice under section 143(2), in favour of the assessee.

Issue (ii): Whether cash-payment entries in a digital property ledger could be assessed as the assessee's unexplained investment when the registered sale deed showed that the property was purchased by another person.

Analysis: An addition for undisclosed investment requires material establishing a nexus between the assessee and the alleged investment. Although the digital ledger recorded cash-payment entries concerning a property, the registered sale deed showed that the property was purchased by another person and that the assessee was neither its buyer nor seller. The ledger description alone did not establish that the assessee made the payments or acquired the property.

Conclusion: The cash-payment entries could not be assessed as the assessee's unexplained investment, in favour of the assessee.

Final Conclusion: The reassessment proceedings for the relevant assessment years were nullified for want of the mandatory statutory notice, and the property-ledger entries for the remaining year were insufficient to sustain an investment addition.

Ratio Decidendi: Once a return is treated as furnished in response to a reassessment notice, issuance of the statutory scrutiny notice is indispensable to the validity of the reassessment proceedings.

Issues: Whether the application for renewal of approval under section 80G(5), filed under clause (ii) of the first proviso, was valid and maintainable when regular approval was subsisting on the filing date.

Analysis: Clause (ii) of the first proviso to section 80G(5) applies where an institution already holds approval that is due to expire, whereas clause (iii) applies to an institution holding provisional approval. The applicable clause is determined by the nature of approval subsisting on the date of application. The record showed that regular approval had been granted before the application was filed, and its registration particulars and approval order were disclosed in the application and supporting material. The premise that only provisional approval existed was therefore contrary to the record.

Conclusion: The application filed under clause (ii) of the first proviso to section 80G(5) was valid and maintainable, in favour of the assessee.

Issues: Whether a penalty under Section 271D, imposed by an Assessment Unit after the Penalty Unit became operational under the Faceless Penalty Scheme, 2021, was without jurisdiction.

Analysis: Section 271D vested the power to impose the penalty in the competent prescribed authority. The Standard Operating Procedure dated 06.09.2022 operationalised the Penalty Unit for penalties under Chapter XXI of the Income-tax Act, 1961. The transitional arrangement under Paragraph 4(4) of the Faceless Penalty Scheme, 2021, permitting an Assessment Unit to act as a Penalty Unit, ceased to apply once the Penalty Unit became operational. Since the penalty order was issued thereafter by the Assessment Unit, that unit lacked jurisdiction to impose the penalty.

Conclusion: The penalty order under Section 271D was without jurisdiction and was quashed, in favour of the assessee.

Issues: Whether a developer claiming under a joint development agreement, without established title or proof of payment for the landowner's share, could obtain release or substitution of land provisionally attached as proceeds of crime.

Analysis: Under the provisional-attachment regime of the Prevention of Money Laundering Act, 2002, the claimant relied on a joint development agreement for part of the attached land. No registered sale deed established its ownership, and no material proved payment of the agreed consideration for the landowner's share under the supplementary arrangement. Despite an earlier opportunity to crystallise its rights through appropriate legal proceedings, no such title was established. The claimant had also conveyed plots to purchasers and did not furnish sufficient particulars of the unsold plots or its subsisting share. Its proposed deposit for substitution could not be accepted without proof of right and title in the relevant land.

Conclusion: The claimant's uncrystallised contractual interest did not justify exclusion of the land from attachment or substitution of the attached property.

Issues: Whether an adjudication order passed pursuant to a show-cause notice contemplating an adverse decision is invalid where the noticee was not informed of the date, time and venue of personal hearing.

Analysis: Section 75(4) requires an opportunity of hearing where an adverse decision is contemplated, irrespective of whether the person chargeable with tax or penalty specifically requests such hearing. The petitioner was not provided the date, time or venue of personal hearing, resulting in an infraction of that requirement. In view of the delay in approaching the Court, fresh adjudication was directed upon deposit of 10 per cent of the disputed tax.

Conclusion: The impugned adjudication order was set aside, conditional upon the required deposit, and the show-cause notice was directed to be adjudicated afresh after affording a personal hearing.

Issues: Whether reassessment notices under Section 148 of the Income-tax Act, 1961 for assessment year 2015-16, issued on or after 1 April 2021, were sustainable.

Analysis: The notices dated 09.04.2021 and 27.07.2022 fell within the adopted Supreme Court determination that all notices for assessment year 2015-16 issued on or after 1 April 2021 were required to be dropped, as they could not be completed within the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The Revenue accepted the applicability of that determination.

Conclusion: The reassessment notices were unsustainable and were quashed.

Issues: Whether a determination under Section 73 could demand an amount exceeding that specified in the show cause cum demand notice and on grounds beyond those stated in that notice.

Analysis: Section 75(7) of the West Bengal Goods and Services Tax Act, 2017 and Section 75(7) of the Central Goods and Services Tax Act, 2017 confine a determination to the amount and grounds contained in the show cause notice. The notice was restricted to Rs. 1,13,55,828, whereas the determination aggregated to Rs. 2,25,47,046. A demand cannot exceed the notice amount or be confirmed on grounds not specified in the notice.

Conclusion: The determination was invalid to the extent that it exceeded the show cause cum demand notice. It was set aside and treated as a show cause notice, with the proper officer required to adjudicate after affording the assessee an opportunity of hearing.

Issues: Whether rubber contraceptives manufactured by the assessee qualify for deduction under Section 80IB despite Serial Nos. 27 and 28 of the Eleventh Schedule.

Analysis: Section 80IB provides a deduction for eligible industrial undertakings, subject to exclusions under the Eleventh Schedule. Serial Nos. 27 and 28 apply to the specifically identified products concerning crown corks and pilfer-proof caps, respectively, and cannot be expanded to cover every product made using rubber. Rubber contraceptives are not among the goods specifically covered by those entries. The principle of consistency and uniformity in application of law also applied, since the deduction had been accepted on identical facts for the remaining eligible years.

Conclusion: Rubber contraceptives do not fall within Serial Nos. 27 and 28 of the Eleventh Schedule, and the assessee is entitled to deduction under Section 80IB.

Issues: Whether the entire amount of alleged bogus purchases was liable to disallowance under Section 69C of the Income-tax Act, 1961.

Analysis: The assessee carried on wholesale trading in industrial chemicals, and procurement from unregistered dealers could not be ruled out. The corresponding sales were not disputed in the assessment or appellate proceedings. In these circumstances, disallowance of the full purchase amount was not justified; only the profit element embedded in the unverified purchases required estimation.

Conclusion: A lump-sum gross-profit disallowance of 5% of the alleged bogus purchases was sustained, with the balance addition deleted, in favour of the assessee.

Issues: (i) Whether the 3% tolerance under transfer-pricing law applies where the arm's-length benchmark is based on a single internal comparable. (ii) Whether the corporate guarantee adjustment should be benchmarked at 0.5%. (iii) Whether a separate notional-interest adjustment on outstanding receivables can be sustained without verifying the treatment of comparable third-party export receivables.

Issue (i): Whether the 3% tolerance under transfer-pricing law applies where the arm's-length benchmark is based on a single internal comparable.

Analysis: The third proviso to Section 92C(2) of the Income-tax Act, 1961, read with Rule 10CA(7) of the Income-tax Rules, 1962 and the notified 3% transfer-pricing tolerance band, governed the determination. The margin earned in the non-AE and domestic segment was used as an internal comparable to benchmark the AE segment. A dataset containing a single value has that value as its arithmetical mean; Rule 10CA(7) does not require more than one comparable for the tolerance to operate. The variation between the declared AE margin and the arm's-length margin adopted was within 3%.

Conclusion: The assessee was entitled to the 3% tolerance benefit, and the transfer-pricing adjustment for the two- and three-wheeler segment was deleted, in favour of the assessee.

Issue (ii): Whether the corporate guarantee adjustment should be benchmarked at 0.5%.

Analysis: The corporate guarantee commission was required to be benchmarked having regard to the distinct nature of a corporate guarantee as compared with a bank guarantee. On identical facts, the applicable arm's-length corporate guarantee rate had been determined at 0.5%.

Conclusion: The corporate guarantee adjustment must be recomputed by applying a 0.5% guarantee commission, in favour of the assessee.

Issue (iii): Whether a separate notional-interest adjustment on outstanding receivables can be sustained without verifying the treatment of comparable third-party export receivables.

Analysis: The asserted uniform policy of not charging interest on delayed receivables from both AE and third-party export customers was material to the proposed notional interest on receivables. The assertion required verification through documentary evidence before determining whether any separate transfer-pricing adjustment was warranted.

Conclusion: The receivables issue was remitted for verification; no interest adjustment shall be made if the absence of interest charged to third-party export customers is substantiated.

Final Conclusion: The vehicle-segment pricing was accepted within the notified tolerance, the corporate guarantee benchmark was limited to 0.5%, and the receivables adjustment requires factual verification.

Ratio Decidendi: A notified transfer-pricing tolerance under Rule 10CA(7) applies even where the dataset comprises a single internal comparable, since its arithmetical mean is that value.