Issues: Whether input tax credit can be denied where the purchasing dealer has established the genuineness of the transactions and movement of goods, solely because the selling dealer did not pay tax or filed nil returns.

Analysis: The assessee produced documents supporting the transactions, including e-sugam records establishing movement of goods. This material sufficiently discharged the burden under Section 70 of the Karnataka Value Added Tax Act, 2003. The failure of the selling dealer to remit tax could not, by itself, justify rejection of the purchaser's input tax credit claim after the genuineness of the purchases had been established.

Conclusion: Input tax credit was allowable to the assessee; it could not be denied solely on account of the selling dealer's failure to pay tax.

Issues: Whether the amount paid to an agreement holder for relinquishing enforceable rights in the property was deductible while computing capital gains.

Analysis: Section 48 of the Income-tax Act, 1961 permits deduction of expenditure incurred wholly and exclusively in connection with transfer. The agreement holder possessed enforceable rights capable of specific performance, and payment to extinguish those rights was necessary to clear and improve the transferor's title before conveyance. The full sale consideration was received, with part thereof paid through banking channels to the agreement holder for surrendering those rights.

Conclusion: The payment made to the agreement holder for extinguishment of its rights was allowable as expenditure under Section 48 of the Income-tax Act, 1961 in computing capital gains.

Issues: (i) Whether omission of Section 6(3) of the Foreign Exchange Management Act, 1999 invalidated the 2018 complaint and show-cause notice; (ii) Whether a charitable trust qualifies as a person under the Foreign Exchange Management Act, 1999 and whether loans in rupees from non-resident trustees outstanding beyond three years contravened Regulation 4 of the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000; (iii) Whether the claimed welfare purpose, technical nature of breach, or absence of mens rea precluded civil penalty; and (iv) Whether the penalty amount warranted reduction.

Issue (i): Whether omission of Section 6(3) of the Foreign Exchange Management Act, 1999 invalidated the 2018 complaint and show-cause notice.

Analysis: The omission took effect only upon notification of the relevant Finance Act, 2015 provision on 15.10.2019. The complaint and show-cause notice were issued before that date; consequently, the later omission did not affect their validity.

Conclusion: The proceedings were maintainable. This issue is against the appellant.

Issue (ii): Whether a charitable trust qualifies as a person under the Foreign Exchange Management Act, 1999 and whether loans in rupees from non-resident trustees outstanding beyond three years contravened Regulation 4 of the Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000.

Analysis: Section 2(u) of the Foreign Exchange Management Act, 1999 inclusively covers every artificial juridical person not otherwise specified. A trust is distinct from its trustees and falls within that expression. The sums received from non-resident trustees were recorded as borrowings in the accounts of the trust and its institutions. Although the borrowings were on a non-repatriation basis, repayment could have been made by credit to the lenders' permitted non-resident accounts. The loans were not repaid within the three-year period prescribed by Regulation 4, and the later certificate did not negate the contravention.

Conclusion: The trust was a person under the Foreign Exchange Management Act, 1999, and the borrowings contravened Section 6(3)(e) read with Regulations 3 and 4. This issue is against the appellant.

Issue (iii): Whether the claimed welfare purpose, technical nature of breach, or absence of mens rea precluded civil penalty.

Analysis: Section 13(1) provides a civil-penalty regime without requiring wilfulness, deliberateness, or intention. An established breach of the statutory and regulatory obligation attracts penalty irrespective of welfare purpose, claimed technicality, or absence of mens rea.

Conclusion: Mens rea was not a prerequisite for penalty, and liability for civil penalty remained established. This issue is against the appellant.

Issue (iv): Whether the penalty amount warranted reduction.

Analysis: While sustaining the contravention and the liability to penalty, the penalty quantum was reduced from Rs. 5,00,00,000 to Rs. 1,00,00,000.

Conclusion: The penalty is reduced to Rs. 1,00,00,000. This issue is in favour of the appellant.

Final Conclusion: The foreign-exchange contravention and civil penalty liability remain established, but the monetary penalty is confined to Rs. 1,00,00,000.

Ratio Decidendi: A contravention of a statutory or regulatory obligation under the Foreign Exchange Management Act, 1999 attracts civil penalty without proof of mens rea where the statute does not prescribe a mental element.

Issues: Whether deletion of the addition for alleged unaccounted foreign-bank deposits, supported as a transfer from existing funds in another foreign-bank account, warranted interference in an appeal under Section 260A.

Analysis: The concurrent factual findings established that the amount credited to the HSBC account was transferred from funds already available in the ABN AMRO account and was not a fresh deposit during the relevant financial year. No cogent material was produced to disprove the explained source; the addition was therefore based only on presumption.

Conclusion: The deletion of the addition was justified and no substantial question of law arose; the issue was decided in favour of the assessee.

Issues: (i) Whether acceptance of Form No. 10B after filing the return but before the extended return-filing due date fulfilled the audit-report condition for exemption under Section 12A(1)(b) of the Income-tax Act, 1961; (ii) Whether rejection of the Section 119(2)(b) condonation application solely because it exceeded the period in Circular No. 16/2024 dated 18.11.2024 could stand.

Issue (i): Whether acceptance of Form No. 10B after filing the return but before the extended return-filing due date fulfilled the audit-report condition for exemption under Section 12A(1)(b) of the Income-tax Act, 1961.

Analysis: Section 12A(1)(b) requires a trust to obtain an audit report and furnish it with its return to avail exemption. The audit report was obtained and uploaded on the return-filing date, and its portal acceptance occurred the next day, before the extended due date for filing the return. The audit-report requirement was substantive, whereas the time and mode of its electronic acceptance were procedural. The facts therefore constituted substantial compliance, and a rigid insistence on acceptance on the same date as the filed return was unwarranted.

Conclusion: The audit-report condition stood fulfilled, and denial of exemption for the one-day delay was unwarranted. This issue is decided in favour of the assessee.

Issue (ii): Whether rejection of the Section 119(2)(b) condonation application solely because it exceeded the period in Circular No. 16/2024 dated 18.11.2024 could stand.

Analysis: The remedy under Section 119(2)(b) is an additional remedy and is not a mandatory precondition to entitlement to exemption. The circular-based limitation could not displace the established entitlement arising from substantial compliance with Section 12A(1)(b). The availability of an appellate remedy also did not preclude relief where the audit report was not validated despite the extended return-filing date.

Conclusion: The rejection of the condonation application cannot stand and is quashed. This issue is decided in favour of the assessee.

Final Conclusion: Form No. 10B is required to be accepted for the relevant assessment year and the exemption under Section 11 is required to be granted.

Ratio Decidendi: Where an audit report is available before assessment and within the extended return-filing period, the substantive condition for exemption is fulfilled; the timing or mode of its filing is procedural and cannot defeat the exemption.

Issues: (i) Whether the assessment was vitiated by breach of natural justice and non-application of mind; (ii) Whether cash deposits of Rs. 80,43,000 constituted unexplained money; (iii) Whether receipts of Rs. 7,20,41,250 from the land-related arrangement were taxable as business income rather than capital gains or a refundable advance; and (iv) Whether Rs. 12,00,000 disclosed in GST returns was taxable as undisclosed business receipts.

Issue (i): Whether the assessment was vitiated by breach of natural justice and non-application of mind.

Analysis: The requirements of natural justice were met where repeated statutory notices and show-cause notices were issued, replies and the supporting affidavit were considered, and a final opportunity was afforded. The assessment separately addressed the cash deposits, land-transaction receipts and GST discrepancy, while the appellate authority considered the written submissions. No specific material denied consideration was identified.

Conclusion: The assessment was not vitiated by breach of natural justice or non-application of mind; decided in favour of Revenue.

Issue (ii): Whether cash deposits of Rs. 80,43,000 constituted unexplained money.

Analysis: Section 69A of the Income-tax Act, 1961 applies where the source and nature of money owned by an assessee are not satisfactorily explained. The alleged cash refund was unsupported by evidence of the original advance, dates and mode of repayment, or a correlation with the bank deposits. The affidavit was inconsistent in amount and remained uncorroborated after non-response to the notice under section 133(6). The assertion of redeposit of withdrawn business cash lacked a cash book, withdrawal trail and deposit-wise reconciliation; the deposits in the separate car-sales account were also unexplained.

Conclusion: The cash deposits of Rs. 80,43,000 were rightly treated as unexplained money under section 69A, with consequential application of section 115BBE of the Income-tax Act, 1961; decided in favour of Revenue.

Issue (iii): Whether receipts of Rs. 7,20,41,250 from the land-related arrangement were taxable as business income rather than capital gains or a refundable advance.

Analysis: The land was owned by other persons and no registered instrument or other evidence established that it became a capital asset of the assessee. The unregistered arrangements and the actual work of land aggregation, conversion, coordination and legal formalities established a continuing commercial facilitation activity. No primary evidence showed that the receipts were refundable, including terms of refund, a corresponding liability in accounts, or a subsisting obligation at year-end. The related payments to farmers and others were allowed as expenditure, and the capital gain already returned was excluded to prevent duplication.

Conclusion: The balance receipt of Rs. 7,20,41,250 was correctly assessed as business income and not as capital gains or a refundable advance; decided in favour of Revenue.

Issue (iv): Whether Rs. 12,00,000 disclosed in GST returns was taxable as undisclosed business receipts.

Analysis: GST disclosures constituted relevant contemporaneous material. The assertion that the underlying bill was rejected and revised was unsupported by the contract, invoices, customer details, rejection correspondence, ledger account, credit note, or GST reconciliation. In the absence of cogent contrary evidence, the statutory GST disclosure was not rebutted.

Conclusion: The addition of Rs. 12,00,000 as undisclosed business receipts was sustained; decided in favour of Revenue.

Final Conclusion: The procedural challenge and all disputed additions, including the characterisation of the land-arrangement receipts, remain legally sustainable.

Ratio Decidendi: The tax character and source of a receipt must be established through credible contemporaneous evidence; unsupported labels, affidavits, or assertions cannot displace the real commercial substance of the transaction or statutory disclosures.

Issues: (i) Whether interest at 15% paid on compulsorily convertible debentures to the associated enterprise was at arm's length and whether a nil arm's length price based on debt-equity recharacterisation could be sustained; (ii) Whether the disallowance under section 94B(1) of the Income-tax Act, 1961 required recomputation on the revised interest and EBITDA figures; and (iii) Whether the claimed set-off of brought-forward business loss required verification.

Issue (i): Whether interest at 15% paid on compulsorily convertible debentures to the associated enterprise was at arm's length and whether a nil arm's length price based on debt-equity recharacterisation could be sustained.

Analysis: The associated enterprise and an unrelated subscriber invested under the same debenture subscription agreement on substantially identical contractual terms, including the 15% interest rate. The prior-year ruling accepted this unrelated-party subscription as a reliable internal comparable and found the external comparables functionally dissimilar. No material change in the debenture terms was established for the relevant year.

Conclusion: The 15% interest on the compulsorily convertible debentures is at arm's length, and the nil transfer-pricing adjustment based on debt-equity recharacterisation is deleted. This is in favour of the assessee.

Issue (ii): Whether the disallowance under section 94B(1) of the Income-tax Act, 1961 required recomputation on the revised interest and EBITDA figures.

Analysis: The revised computation claimed that the original disallowance was based on incorrect interest and EBITDA figures. Determination of the statutory interest-limitation disallowance required verification of the revised computation and the underlying financial particulars.

Conclusion: The assessing officer must verify the revised figures and determine the disallowance under section 94B(1) in accordance with law using the correct associated-enterprise interest. This is in favour of the assessee to the extent of the directed verification.

Issue (iii): Whether the claimed set-off of brought-forward business loss required verification.

Analysis: The related claim had been allowed in prior appellate proceedings subject to verification. The quantum and availability of the brought-forward loss required factual verification and appropriate effect to the relevant appellate order.

Conclusion: The assessing officer must verify the eligible brought-forward business loss and grant the allowable set-off in accordance with law. This is in favour of the assessee to the extent of the directed verification.

Final Conclusion: Interest on the debentures is accepted at arm's length, while the statutory interest-limitation disallowance and the loss set-off claim are to be determined after verification.

Ratio Decidendi: Where an unrelated party subscribes to equivalent debentures under the same contractual terms, that internal comparable establishes arm's-length interest absent material distinguishing facts.

Issues: (i) Whether the statutory opportunity requirement was breached before the adjustment under section 143(1); and (ii) Whether late e-filing of Form 10B beyond the one-month deadline under section 12A(1)(b) bars exemption under section 11.

Issue (i): Whether the statutory opportunity requirement was breached before the adjustment under section 143(1).

Analysis: The variance schedule accompanying the intimation expressly identified delayed filing of Form 10B as the basis of the adjustment. The same matter was addressed in the rectification proceedings and in the detailed submissions before the appellate authority. The record therefore established adequate notice of, and opportunity to answer, the basis of the adjustment.

Conclusion: No breach of the principles of natural justice was established; this issue is against the assessee.

Issue (ii): Whether late e-filing of Form 10B beyond the one-month deadline under section 12A(1)(b) bars exemption under section 11.

Analysis: The furnishing of Form 10B under section 12A(1)(b) serves as procedural and evidentiary compliance to verify eligibility for exemption, unlike a substantive statutory election that must be exercised within a prescribed period. The audit report had been obtained in time, was e-filed before the due date for filing the return, and the assessee had registration under section 12AA and had applied its receipts towards its charitable objects. In these circumstances, the delayed electronic furnishing of the report was a curable procedural defect and did not defeat substantive compliance with the conditions for exemption.

Conclusion: Delay in e-filing Form 10B beyond the one-month deadline does not by itself disentitle an otherwise eligible assessee to exemption under section 11; this issue is in favour of the assessee.

Final Conclusion: The denial of exemption on the sole basis of delayed e-filing of Form 10B is unsustainable. Eligibility for exemption remains to be given effect to after verification and reconciliation of the return particulars with Form 10AC.

Ratio Decidendi: A delayed furnishing of an audit report required for charitable exemption is a curable procedural lapse and cannot, by itself, defeat exemption where substantive eligibility conditions are satisfied.

Issues: (i) Whether redevelopment compensation received for hardship and displacement is taxable by reference to actual rent expenditure; (ii) Whether a difference between Form No. 26AS and declared taxable salary can be added despite employer-issued Form No. 16 and the applicable gratuity ceiling; (iii) Whether deductions under sections 80G and 80TTA can be denied where donation and savings-interest claims are supported by documentary evidence.

Issue (i): Whether redevelopment compensation received for hardship and displacement is taxable by reference to actual rent expenditure.

Analysis: The payment arose under a redevelopment agreement because the assessee was required to vacate the residential premises during redevelopment. Its intrinsic nexus was with hardship and displacement relating to a capital asset, and not with any service or revenue activity. Applying substance over form, taxability follows the true character of the receipt and cannot depend upon its subsequent application towards alternate accommodation. The assessee's erroneous offer of part of the receipt as income also did not alter that character.

Conclusion: The redevelopment compensation is a capital receipt not chargeable to tax; the related addition is deleted in favour of the assessee.

Issue (ii): Whether a difference between Form No. 26AS and declared taxable salary can be added despite employer-issued Form No. 16 and the applicable gratuity ceiling.

Analysis: The gratuity ceiling under section 4(3) of the Payment of Gratuity Act, 1972 had been enhanced to Rs. 10,00,000, making the gratuity exemption reflected in Form No. 16 permissible. Form No. 26AS is a tax-credit statement and gross receipts reported therein do not by themselves determine taxable salary. Form No. 16 and the full-and-final settlement statement separately identified exempt components, and no component-wise finding or contrary material established that any such component was taxable or ineligible.

Conclusion: The salary addition based on the unreconciled gross receipts is unsustainable and is deleted in favour of the assessee.

Issue (iii): Whether deductions under sections 80G and 80TTA can be denied where donation and savings-interest claims are supported by documentary evidence.

Analysis: The donation receipt and corresponding bank debit established the donation, with no material showing that the recipient institution was ineligible. Savings-bank interest had been offered under the head Income from Other Sources, and no finding showed that the account was ineligible or that the claim exceeded the statutory limit.

Conclusion: The deductions under sections 80G and 80TTA are allowable and the related disallowance is deleted in favour of the assessee.

Final Conclusion: Redevelopment hardship compensation is excluded as a non-taxable capital receipt, the salary computation in the employer-issued documents prevails absent contrary material, and the substantiated deduction claims must be granted.

Issues: Whether penalty under Section 271AAA was leviable on the discrepancy between physical and book stock of polished diamonds where physical stock was lower and no evidence established unrecorded sale proceeds.

Analysis: The statutory definition of undisclosed income requires income represented by search material which was not recorded in the books. The recorded book stock exceeded physical stock by 60.11 carats, with no corresponding sale or credit recorded. Although a statutory presumption attached to the books found during search, no search-based evidence established that the diamonds had been sold and that the sale consideration remained unrecorded. Confirmation of the quantum addition did not, by itself, satisfy the independent conditions for penalty, which require strict construction.

Conclusion: Penalty under Section 271AAA was not leviable and was deleted.

Issues: (i) Whether the additional claim for refund of excess dividend distribution tax based on the India-Singapore treaty rate should be admitted and adjudicated; (ii) Whether market research and media measurement expenditure was deductible as revenue expenditure under Section 37(1) of the Income-tax Act, 1961.

Issue (i): Whether the additional claim for refund of excess dividend distribution tax based on the India-Singapore treaty rate should be admitted and adjudicated.

Analysis: The additional claim and supporting facts were already available on the record. The underlying question concerning the applicable dividend distribution tax rate for a foreign shareholder was pending before a larger Bench of the Supreme Court.

Conclusion: The additional dividend-distribution-tax refund claim was admitted and remanded to the Assessing Officer for adjudication in accordance with the eventual larger-Bench decision, in favour of the assessee.

Issue (ii): Whether market research and media measurement expenditure was deductible as revenue expenditure under Section 37(1) of the Income-tax Act, 1961.

Analysis: Section 37(1) permits deduction of expenditure incurred wholly and exclusively for business. Client agreements, invoices and the business model established that the expenditure on market research and media measurement was connected with advertising and media-planning services and supported revenue generation. The genuineness and quantum of the expenditure were undisputed, and no adverse material displaced its business nexus, reasonableness or commercial expediency.

Conclusion: The expenditure was allowable as revenue expenditure under Section 37(1) of the Income-tax Act, 1961, in favour of the assessee.

Final Conclusion: The treaty-based dividend-distribution-tax claim remains open for determination under the governing larger-Bench ruling, while the deduction for market research and media measurement expenditure remains allowable.

Issues: (i) Whether the transferred land was agricultural land excluded from capital-gains taxation; (ii) Whether section 50C permitted adoption of the stamp-value rate of Rs. 180 per sq. ft.; (iii) Whether absence of a reference to the Departmental Valuation Officer invalidated the valuation under section 50C(2); (iv) Whether the guideline value was required to be applied only to the actual extent of land transferred; (v) Whether the assessment violated principles of natural justice; and (vi) Whether the Assessing Officer exceeded the permissible scope of limited scrutiny.

Issue (i): Whether the transferred land was agricultural land excluded from capital-gains taxation.

Analysis: The burden to establish exclusion from the definition of capital asset on account of agricultural character lay on the assessee. Description in revenue records or measurement in acres was not conclusive; actual use, surrounding circumstances, and the character of the property were material. The absence of cogent evidence of agricultural operations or agricultural income, the existence and transfer of a factory building as part of an industrial property, and the assessee's original return treating the transaction as taxable capital gains did not establish the claimed exclusion.

Conclusion: The land was not established to be agricultural land excluded from capital-gains taxation. The issue is decided against the assessee.

Issue (ii): Whether section 50C permitted adoption of the stamp-value rate of Rs. 180 per sq. ft.

Analysis: Section 50C applies a statutory deeming fiction where the declared consideration is lower than the value adopted, assessed, or assessable by the stamp valuation authority. The competent registration authority determined, in relation to the same property and transaction, that the applicable value was Rs. 180 per sq. ft.; that determination was neither reversed nor shown to be inapplicable. The rate was therefore not an unrelated subsequent value retrospectively imposed on the transfer.

Conclusion: Adoption of Rs. 180 per sq. ft. for section 50C computation was valid. The issue is decided against the assessee.

Issue (iii): Whether absence of a reference to the Departmental Valuation Officer invalidated the valuation under section 50C(2).

Analysis: The mechanism under section 50C(2) is attracted when the assessee claims before the Assessing Officer that the stamp valuation exceeds the fair market value as on the date of transfer. No such claim or request for reference was made during assessment, despite notice seeking justification of the sale consideration.

Conclusion: Non-reference to the Departmental Valuation Officer did not vitiate the assessment. The issue is decided against the assessee.

Issue (iv): Whether the guideline value was required to be applied only to the actual extent of land transferred.

Analysis: The first appellate authority had directed verification of the land extent comprised in the relevant survey numbers and application of the adopted rate only to the correct extent, upon production of supporting records. That factual-verification direction adequately addressed the claimed discrepancy between 1.72 acres and 1.92 acres.

Conclusion: In favour of the assessee to the limited extent that the section 50C computation must be restricted to the verified actual area transferred.

Issue (v): Whether the assessment violated principles of natural justice.

Analysis: Statutory notices were issued, the assessee participated and furnished explanations and documents, and independent enquiries were made with the registration authorities. Opportunity was also available in the first appeal, where verification relief concerning the land extent was granted. No resulting prejudice was established.

Conclusion: No violation of principles of natural justice was established. The issue is decided against the assessee.

Issue (vi): Whether the Assessing Officer exceeded the permissible scope of limited scrutiny.

Analysis: A jurisdictional objection based on limited scrutiny requires material showing the specific scrutiny issues and that the assessment addressed a wholly unconnected matter. No such material was produced to demonstrate that examination of capital gains and application of section 50C fell outside the identified scrutiny parameters.

Conclusion: The alleged excess of limited-scrutiny jurisdiction was not established. The issue is decided against the assessee.

Final Conclusion: The capital-gains treatment and the stamp-value computation remain sustainable, with the calculation confined to the land extent verified from the registered instruments and relevant records.

Issues: (i) Whether enforcement proceedings for alleged non-fulfilment of EPCG export obligation could be initiated before expiry of the prescribed obligation period; (ii) Whether the CESTAT's observations on IGST input tax credit and revenue neutrality precluded Revenue from undertaking fresh verification.

Issue (i): Whether enforcement proceedings for alleged non-fulfilment of EPCG export obligation could be initiated before expiry of the prescribed obligation period.

Analysis: The EPCG authorisation prescribed a six-year period for discharge of the export obligation. Proceedings alleging non-fulfilment were initiated before expiry of that period. The exemption framework under Notification No. 79/2017-Customs was therefore incapable of being enforced on the alleged default before the obligation period ended.

Conclusion: Proceedings initiated before expiry of the export-obligation period were premature, in favour of the assessee.

Issue (ii): Whether the CESTAT's observations on IGST input tax credit and revenue neutrality precluded Revenue from undertaking fresh verification.

Analysis: The revenue-neutrality observations rested on data concerning payment of IGST and availability of corresponding input tax credit, which was expressly kept subject to verification. Those observations did not finally determine the factual entitlement or prevent examination of the issue in proceedings lawfully initiated after expiry of the obligation period.

Conclusion: Revenue may verify the relevant data and determine the issue in any fresh proceedings in accordance with law, in favour of Revenue.

Final Conclusion: The CESTAT's order remains undisturbed on account of the prematurity of the original proceedings, while the revenue-neutrality question remains open for statutory verification if fresh action is taken.

Ratio Decidendi: Where an EPCG authorisation fixes a period for fulfilling export obligation, proceedings for alleged non-fulfilment cannot be initiated before that period expires.

Issues: Whether a prior mortgage and enforcement action by a secured creditor under the SARFAESI framework required release of property attached as proceeds of crime under the PMLA.

Analysis: The PMLA and the SARFAESI framework operate in distinct fields, and the PMLA has overriding effect in matters concerning money-laundering and proceeds of crime. A prior secured interest does not by itself invalidate a PMLA attachment; protection is contingent upon proof of bona fide acquisition of the interest, adequate consideration and due diligence. The subject land was connected with transactions found to have been vitiated by fraud on power and was identified as having been acquired through tainted funds. No adequate evidence established that the due diligence undertaken at creation of the mortgage warranted release of the property. The absence of criminal culpability of the secured creditor did not remove the property's liability to attachment.

Conclusion: The prior mortgage and enforcement measures did not entitle the secured creditor to release or auction of the attached property; the attachment remained operative, with recourse available before the Special Court under Section 8(8) of the PMLA.

Issues: Whether rejection of a refund claim after a rectification notice was returned undelivered, without an effective opportunity to respond or be heard, violated the principles of natural justice.

Analysis: The rectification notice issued under Section 161 of the Central Goods and Services Tax Act, 2017 was not effectively served, as it was returned undelivered. The earlier written reply and the statutory deadline for passing the order could not substitute an effective opportunity to address the rectification notice and participate in the hearing.

Conclusion: Adjudication without effective service of the rectification notice violated the principles of natural justice.

Issues: (i) Whether the addition for demonetisation-period cash deposits was entitled to relief under Paragraph 1.1 of the Annexure to CBDT Instruction No. 3/2017 dated 21.02.2017; (ii) Whether the enhanced 60% tax rate under amended Section 115BBE of the Income-tax Act, 1961 applied to the surviving addition for Assessment Year 2017-18.

Issue (i): Whether the addition for demonetisation-period cash deposits was entitled to relief under Paragraph 1.1 of the Annexure to CBDT Instruction No. 3/2017 dated 21.02.2017.

Analysis: Paragraph 1.1 permits an individual without business income to receive the benefit of no verification for cash deposits up to Rs. 2.50 lakh. The benefit was found applicable. As the balance addition was accepted, no further examination of its merits was required.

Conclusion: Relief of Rs. 2.50 lakh was granted and the remaining addition of Rs. 9.46 lakh was sustained; this issue was decided partly in favour of the assessee.

Issue (ii): Whether the enhanced 60% tax rate under amended Section 115BBE of the Income-tax Act, 1961 applied to the surviving addition for Assessment Year 2017-18.

Analysis: The amendment enhancing the rate from 30% to 60% took effect on 15.12.2016, but conflicting judicial views existed on its applicability to transactions in the relevant previous year. In the absence of a jurisdictional decision, the favourable interpretation of the taxing provision was adopted, under which the enhanced rate applies only to transactions from 01.04.2017.

Conclusion: The 60% rate was held inapplicable to the surviving addition, which is taxable at the pre-amendment rate of 30%; this issue was decided in favour of the assessee.

Final Conclusion: The cash-deposit addition stands reduced by Rs. 2.50 lakh, and tax on the surviving addition is to be computed at 30%.

Issues: Whether the assessment was valid where the jurisdictional Assessing Officer issued notice beyond the statutory period and no valid order transferring jurisdiction was produced.

Analysis: The proviso to Section 143(2) required notice for the relevant assessment year to be issued by 30.09.2016. The notice issued by the jurisdictional Assessing Officer on 12.07.2017 was beyond that period. The earlier timely notice had been issued by a non-jurisdictional officer and could not validate the assessment in the absence of a valid transfer order under Section 127. A valid notice by the competent Assessing Officer is mandatory for an assessment under Section 143(3).

Conclusion: The assessment was void ab initio for want of a valid and timely notice under Section 143(2) and a valid jurisdictional transfer; the relief granted to the assessee was sustained.

Issues: Whether the Mumbai Bench had territorial jurisdiction to adjudicate the Revenue's appeal and the assessee's cross-objection arising from an assessment order passed by an Assessing Officer situated at Chennai.

Analysis: Ordinary territorial jurisdiction is determined by the location of the Assessing Officer who passed the assessment order, and not by the location of the assessee or the appellate authority. Since the originating assessment order was passed by the Assessing Officer at Chennai, the Mumbai Bench lacked ordinary territorial jurisdiction over both proceedings.

Conclusion: The Mumbai Bench lacked territorial jurisdiction; the parties may pursue their respective proceedings before the appropriate jurisdictional Bench, with all merits issues remaining open.

Issues: Whether an addition based solely on the difference between opening and closing cash balances was sustainable where the opening cash was a brought-forward audited balance and the books remained unrejected.

Analysis: The opening cash balance was carried forward from the preceding financial year and reflected in audited accounts; it was not a fresh credit or receipt in the relevant previous year. No material established that the brought-forward cash did not exist or represented income of the relevant year. A mere increase in closing cash, without examination of individual cash receipts and payments or identification of a specific unexplained receipt, could not support the addition. The books of account were not rejected under Section 145(1) of the Income-tax Act, 1961, and no cash-book entry was found false or unverifiable.

Conclusion: The cash-balance addition of Rs. 37,01,999 was unsustainable and was deleted, in favour of the assessee.

Issues: Whether the addition of Rs. 3 crore as unexplained investment under Section 69 of the Income-tax Act, 1961 could be sustained in the assessee's hands.

Analysis: Section 69 applies where an investment made by the assessee is not recorded in its books and its nature and source remain unexplained. The Rs. 2.75 crore payments were made before the assessee firm came into existence and were confirmed as payments made by the predecessor firm. The assessee subsequently recorded the corresponding liability on transfer of the project; taking over that liability did not establish an investment made by the assessee. Any inadequacy in the predecessor firm's explanation of its cash source required examination in that firm's assessment. The documentary material, including cash-flow details, buyer particulars and bank entries, was not displaced through enquiry; suspicion could not substitute evidence. The remaining Rs. 25 lakh was supported as a bank payment later returned, with no corroborative material proving a separate cash payment. The partner's general admission could not override the dates, books and bank records.

Conclusion: The Revenue failed to establish any unexplained investment by the assessee. The Rs. 3 crore addition under Section 69, together with the consequential levy under Section 115BBE and interest, was deleted.