Issues: (i) Whether the assessee's books of account could be rejected under Section 145 on account of its use of the completed contract/project completion method and variation in flat-booking rates; (ii) Whether addition for alleged undisclosed receipts could be sustained by adopting a uniform base price for flats and treating extra-work payments as the assessee's receipts.

Issue (i): Whether the assessee's books of account could be rejected under Section 145 on account of its use of the completed contract/project completion method and variation in flat-booking rates.

Analysis: Section 145 permits rejection of accounts only where there is a reasonable and cogent basis to conclude that the accounts are incorrect, incomplete, or incapable of determining true income. The completed contract/project completion method was a recognized method consistently followed by the assessee, and the Revenue did not establish that the method itself was impermissible. The Assessing Officer did not compute income under the percentage completion method but estimated profit at 8% of receipts recorded in the books, without comparable cases, past history, project-specific profitability, or other cogent basis. Variation in agreement values for flats, without evidence of unrecorded sales, suppression of receipts, or other accounting defects, did not establish that the books were unreliable.

Conclusion: Rejection of the books of account under Section 145 was unsustainable and is decided in favour of the assessee.

Issue (ii): Whether addition for alleged undisclosed receipts could be sustained by adopting a uniform base price for flats and treating extra-work payments as the assessee's receipts.

Analysis: Adoption of a uniform base price was based on assumption rather than proof that the assessee had actually received the alleged differential consideration. Differences in flat prices could arise from commercial factors including booking timing, payment terms, location, specifications, and negotiations. Payments identified in purchaser inquiries related to separate extra-work agreements with a proprietorship concern; no material established that those sums were received by or belonged to the assessee-company. No purchaser admitted payment of on-money to the assessee, and no independent evidence connected the assessee with any alleged excess consideration.

Conclusion: The addition for alleged undisclosed receipts was unsupported by cogent evidence and is deleted in favour of the assessee.

Final Conclusion: The completed contract/project completion method and the recorded sale consideration were accepted in the absence of demonstrated accounting defects, suppression, or evidence of unaccounted receipts.

Ratio Decidendi: Rejection of books and addition for undisclosed consideration require cogent evidence of accounting unreliability or actual unaccounted receipts; mere preference for another revenue-recognition method, price variation, or estimated differential consideration is insufficient.

Issues: Whether disallowance of diminution in the value of investment in a wholly owned subsidiary under section 143(1)(a) could be rectified under section 154 where a binding jurisdictional High Court decision had allowed an analogous claim as business loss.

Analysis: The subsidiary investment was made to expand and strengthen the assessee's existing business operations. The binding jurisdictional precedent treated loss from investment in a wholly owned subsidiary made for business purposes as a business loss. An intimation under section 143(1)(a), after considering the assessee's response, entails a quasi-judicial function and cannot disregard binding jurisdictional precedent merely because the tax audit report described the expenditure as capital. Non-consideration of a jurisdictional High Court decision that was already pronounced when the intimation was issued constitutes a mistake apparent from the record. The claim was therefore not rendered debatable merely because its allowability had earlier required judicial consideration.

Conclusion: The rectification application was maintainable and merited acceptance; the disallowance of diminution in the value of investment in the wholly owned subsidiary was liable to be deleted.

Issues: Whether penalty for under-reporting of income consequent upon misreporting was sustainable where deductions were claimed in respect of interest and dividend income and the tax with interest was paid after scrutiny assessment and initiation of penalty proceedings.

Analysis: Section 270A(6) of the Income-tax Act, 1961 permits relief from penalty for under-reported income where a bona fide explanation is furnished. That relief is expressly unavailable under section 270A(8) where under-reporting results from misreporting under section 270A(9)(a). The claims under section 80P(2)(d) and section 80M were maintained through the assessment and penalty proceedings; payment of tax and interest occurred only during the appeal against the penalty order. Such payment was consequential to scrutiny assessment and penalty action, not a voluntary disclosure establishing a bona fide error.

Conclusion: The levy of penalty at 200% under section 270A for under-reporting consequent upon misreporting was valid and is against the assessee.

Issues: (i) Whether the delay in filing the appeal before the Commissioner (Appeals) was liable to be condoned; (ii) Whether the assessment and additions required fresh adjudication after affording the assessee an opportunity to substantiate the bank deposits.

Issue (i): Whether the delay in filing the appeal before the Commissioner (Appeals) was liable to be condoned.

Analysis: The assessee had filed a condonation application along with the appeal, supported by the tax professional's affidavit explaining that health issues had prevented attendance to assessment and appellate notices. The record also showed that the condonation petition had been filed despite the contrary observation in the appellate order. The explanation constituted sufficient cause, and substantial justice prevailed over technical delay.

Conclusion: The delay before the Commissioner (Appeals) ought to have been condoned, in favour of the assessee.

Issue (ii): Whether the assessment and additions required fresh adjudication after affording the assessee an opportunity to substantiate the bank deposits.

Analysis: The assessee asserted that the deposits represented receipts from the utensil-trading business and undertook to furnish supporting material. Since the assessment had been completed ex parte and the assessee had not received an effective opportunity to substantiate this claim, a fresh examination by the Assessing Officer was necessary in the interest of justice.

Conclusion: The impugned order was set aside and the matter was restored to the Assessing Officer for de novo adjudication, in favour of the assessee.

Final Conclusion: The assessee's claims concerning the bank deposits must be reconsidered afresh after an effective opportunity to furnish supporting evidence.

Ratio Decidendi: Where a delay is supported by sufficient cause and the taxpayer has not received an effective opportunity to substantiate material claims in an ex parte assessment, procedural delay should yield to substantial justice and fresh adjudication should be directed.

Issues: Whether the first appellate authority was justified in dismissing the appeal in limine for a 126-day delay without adjudicating the grounds on merits.

Analysis: The explanation attributing non-compliance and delayed filing to the authorised representative was unsupported by evidence, warranting costs. However, the appeal had been rejected solely on limitation without a merits determination. The assessment also proceeded on a presumptive application of the tax-deduction requirement to the entire purchases, without a finding that purchases from each relevant party exceeded the prescribed threshold. In the interests of justice, substantive adjudication after opportunity to produce evidence and consideration of the Assessing Officer's remand report was required.

Conclusion: The limitation-based dismissal is set aside and the first appellate authority must adjudicate the grounds on merits after granting opportunity, obtaining a remand report on additional evidence, and upon payment of the imposed costs.

Issues: Whether reassessment for Assessment Year 2017-18 was valid where the sanction for issuance of notice was granted by the Principal Commissioner under Section 151(i), although more than three years had elapsed and approval under Section 151(ii) was required.

Analysis: The substituted reassessment regime introduced by the Finance Act, 2021 applied because the notice was issued after 31.03.2021. After expiry of three years from the end of the relevant assessment year, Section 151(ii) required approval from the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General. The undisputed sanction from the Principal Commissioner was not from a statutorily specified authority under Section 151(ii), rendering the initiation jurisdictionally defective.

Conclusion: The sanction was invalid, and the notice under Section 148 and consequential reassessment proceedings were without jurisdiction.

Issues: Whether penalty for unexplained money can be sustained where the underlying quantum addition was ultimately restricted to an estimated profit element.

Analysis: The quantum addition was reduced to 10% of the cash deposits on an estimated basis, recognising that the deposits arose in the course of the assessee's trading activity and that only an embedded profit element warranted taxation. An ad hoc estimated addition did not establish conscious concealment or undisclosed income warranting penalty.

Conclusion: Penalty under Section 271AAC(1) of the Income-tax Act, 1961 was not leviable on the estimated addition and was deleted, in favour of the assessee.

Issues: Whether reassessment for the assessment year 2019-20 could be initiated under Sections 147, 148 and 148A of the Income-tax Act, 1961 on the basis of a verification report under Section 131(1A) of the Act.

Analysis: Section 148A requires that the show-cause notice be founded on information suggesting escapement of income and that the order determining whether to issue a reassessment notice be made after actual consideration of the material on record and the assessee's reply. Information suggesting escapement cannot be a mere suspicion or a desire for verification; it must have a live link and rational nexus with the conclusion that income has escaped assessment. Although Section 131(1A) permits investigation, the verification report extended adverse inferences from a confined inquiry into specified funds to the entirety of expenditure without independent verification. The order neither addressed the audited accounts, bank records, utilisation details and vouchers furnished nor found any identified amount to be unaccounted for. Its sole basis that transactions required further in-depth scrutiny disclosed a roving or fishing inquiry, rather than the requisite application of mind and a speaking determination under Section 148A(3).

Conclusion: The jurisdictional threshold for reassessment was not met; the order under Section 148A(3) and the consequential notice under Section 148 were unsustainable, in favour of the assessee.

Issues: (i) Whether information reflected against the assessee's PAN despite disclosure and taxation in the demerged entity's hands constituted information suggesting escapement under Explanation 1 to Section 148; and (ii) Whether the extended limitation period under Section 149(1)(b) was available.

Issue (i): Whether information reflected against the assessee's PAN despite disclosure and taxation in the demerged entity's hands constituted information suggesting escapement under Explanation 1 to Section 148.

Analysis: Section 148 permits reassessment only on information suggesting Income Escaping Assessment, while Section 148A requires objective satisfaction and application of mind before issuance of a notice. Income disclosed and taxed by the entity to which the business stood transferred does not become escaped income merely because departmental data reflected the transactions against another PAN for transitional reasons. An order acknowledging such disclosure but seeking reassessment solely for further verification, without dealing with the supporting material or verifying the connected assessee's records, amounts to a roving or fishing inquiry.

Conclusion: The material did not constitute valid information suggesting income escaping assessment under Explanation 1 to Section 148. This issue is decided in favour of the assessee.

Issue (ii): Whether the extended limitation period under Section 149(1)(b) was available.

Analysis: Section 149(1)(a) prescribes a three-year period, and the extended limitation under Section 149(1)(b) requires books, documents, or evidence revealing previously undisclosed income of at least the stipulated threshold. Material showing transactions already recorded and offered to tax does not reveal undisclosed income; it only calls for correlation of disclosed information. The notice was issued after expiry of the ordinary limitation period.

Conclusion: The extended limitation under Section 149(1)(b) was unavailable, and the reassessment notice was time-barred. This issue is decided in favour of the assessee.

Final Conclusion: The reassessment action for the relevant assessment year lacked the statutory basis of information suggesting escapement and was also barred by limitation.

Ratio Decidendi: Information for reassessment must indicate actual escapement of undisclosed income; material showing only a technical attribution mismatch concerning income already disclosed and taxed cannot satisfy that threshold or invoke extended limitation.

Issues: Whether tax was required to be deducted at source on transferable development rights issued to a developer under a slum rehabilitation scheme and on transferable development rights issued as compensation for land acquired for public purposes.

Outcome: Rule was issued; the impugned orders, demand notice and consequential proceedings were stayed pending final hearing, and the petition was directed to be tagged with the connected petition.

Issues: Whether the assessee remained eligible for deduction under Section 80-IB(10) after excluding part of the land initially earmarked for the housing project and constructing a personal residential house thereon.

Analysis: Section 80-IB(10) grants deduction for qualifying housing projects subject to conditions, including the minimum plot-area requirement and the prescribed maximum built-up area for residential units. Although the project was initially proposed over 117.5 cents in two phases, the assessee later withdrew 46.93 cents from the project and used it for a 4000 sq. ft. personal residence. That construction could not form part of an affordable housing project because it exceeded the stipulated residential-unit area. The effective project area was consequently reduced to 70.57 cents, below the statutory minimum.

Conclusion: The assessee was not entitled to deduction under Section 80-IB(10) for either assessment year; the issue is decided against the assessee.

Issues: Whether reassessment proceedings initiated under Sections 148A(1), 148A(3) and 148 of the Income-tax Act, 1961 were valid where the underlying dissemination reports and material connecting the assessee with the alleged escapement of income were not supplied at the notice stage.

Analysis: Section 148A(1) requires disclosure of sufficient material particulars and incriminating material that prima facie connect the assessee with the alleged fictitious or accommodation transactions, so as to afford an effective opportunity to respond. Screenshots containing transaction values and entity details, without the underlying dissemination reports relied upon, did not satisfy that requirement. The Assessing Officer also did not meaningfully address the assessee's documentary response or independently identify material establishing the assessee's role in the alleged transactions. Supply of the reports during the writ proceedings could not cure the foundational defect in the statutory notice.

Conclusion: The proceedings under Sections 148A(1), 148A(3) and 148 were invalid for want of disclosure of the relied-upon material and a meaningful statutory opportunity to respond.

Ratio Decidendi: A reassessment notice founded on alleged accommodation or fictitious transactions must disclose the material particulars and relied-upon incriminating material linking the assessee to those transactions; subsequent disclosure cannot cure the denial of an effective opportunity under Section 148A(1).

Issues: (i) Whether reassessment proceedings initiated by notice issued in the name of a deceased assessee were valid; (ii) Whether alleged escaped capital gains from sale of land, with sale proceeds deposited in a bank account, fell within the expression "asset" for the extended reassessment period; (iii) Whether reassessment could be initiated solely on the basis of a valuation report obtained in the case of a co-owner without an independent valuation inquiry for the assessee's land.

Issue (i): Whether reassessment proceedings initiated by notice issued in the name of a deceased assessee were valid.

Analysis: The notice and the order were issued after the assessee's death, although the petitioner was her legal representative. Proceedings against a deceased person did not conform to the statutory framework governing assessment of a deceased person through the legal representative.

Conclusion: The notice and consequential order issued in the name of the deceased assessee were invalid and were quashed. The finding is in favour of the assessee.

Issue (ii): Whether alleged escaped capital gains from sale of land, with sale proceeds deposited in a bank account, fell within the expression "asset" for the extended reassessment period.

Analysis: The inclusive definition of asset covers immovable property and bank deposits. Land sold by the assessee was a capital asset, and its sale proceeds, on deposit in the bank account, retained the statutory character of an asset. Understatement of capital gains directly concerned income represented in that form and allegedly escaping assessment above the prescribed threshold.

Conclusion: The alleged escaped capital gains were capable of falling within the expression "asset" for the extended reassessment period. The finding is against the assessee.

Issue (iii): Whether reassessment could be initiated solely on the basis of a valuation report obtained in the case of a co-owner without an independent valuation inquiry for the assessee's land.

Analysis: Reassessment was founded exclusively on the co-owner's valuation report, which relied on sale instances from another village. The assessee's registered valuer's report was disregarded without an independent valuation reference, inquiry into the fair market value of the assessee's land, or application of mind to tangible material demonstrating escapement of income.

Conclusion: Reassessment solely on the co-owner's valuation report, without an independent valuation inquiry and formation of belief by the Assessing Officer, was impermissible. The impugned notice and order were quashed. The finding is in favour of the assessee.

Final Conclusion: Reassessment proceedings could not be sustained where initiated against a deceased assessee or where founded only on an unverified valuation report concerning a co-owner.

Ratio Decidendi: A valuation report concerning another person cannot by itself constitute a valid basis for reassessment unless the Assessing Officer independently investigates the assessee's property, applies mind to the material, and forms a belief of escapement of income.

Issues: Whether revisionary jurisdiction under Section 263 could be invoked where the Assessing Officer had made enquiries into seized material and accepted the assessee's explanation.

Analysis: The assessment record showed that detailed notices under Section 142(1) were issued, the assessee was confronted with seized documents and statements, explanations were obtained, and the Assessing Officer consciously accepted those explanations. The revision was founded on the same material and reflected a different view regarding the adequacy of the enquiries. Revision under Section 263 is attracted where there is a lack of enquiry rendering the assessment erroneous and prejudicial to Revenue; it cannot be invoked merely because the revisional authority prefers another view after an enquiry has been conducted and a plausible view has been adopted.

Conclusion: The assumption of revisionary jurisdiction under Section 263 was unsustainable; the finding was in favour of the assessee.

Issues: Whether a final assessment order passed against a foreign company without first issuing a draft assessment order under the statutory dispute-resolution procedure is valid.

Analysis: A foreign company falls within the definition of an eligible assessee under Section 144C(15)(b)(ii) of the Income-tax Act, 1961. Where a prejudicial variation is proposed, Section 144C(1) mandatorily requires the Assessing Officer to first forward a draft assessment order, enabling the assessee to accept the variation or raise objections before the Dispute Resolution Panel. The final assessment is thereafter required to be completed in conformity with the prescribed procedure under Section 144C(13). Issuance of a final order without a preceding draft order is a breach of a mandatory statutory requirement and vitiates the assessment.

Conclusion: The final assessment order passed without issuing a draft assessment order was invalid; the issue was decided in favour of the assessee.

Issues: Whether the petitioner could be treated as an assessee in default under Section 201 for non-deduction of tax on payments to its US parent, despite binding findings that the parent had no permanent establishment in India and the payments were not chargeable to tax in India.

Analysis: The facts for the relevant assessment year were identical to those for prior years in which Section 201 orders against the petitioner had been set aside. The Tribunal's finding, subsequently upheld by the High Court, was that the petitioner was an independent entity and did not constitute a fixed place, service, or agency permanent establishment of the US parent under Article 5 of the India-US DTAA. The Assessing Officer could not disregard those binding decisions merely because the Department intended to challenge them. Section 195 applies only where the payment to a non-resident is chargeable to tax in India; an application under Section 195(2) is required only where the payer accepts that part of the remittance is taxable but requires determination of the taxable portion or tax deductible.

Conclusion: The payments were not subject to tax deduction at source, and the petitioner could not be treated as an assessee in default under Section 201.

Issues: Whether companies having turnover exceeding ten times that of the assessee may be retained as comparables for determining the arm's length price of software development services.

Analysis: The assessee's turnover was Rs. 33 crores, whereas the turnovers of the four disputed companies ranged from Rs. 2,471 crores to Rs. 1,60,341 crores. Applying the turnover filter, entities with extremely high turnover and brand value were regarded as unsuitable for a fair comparability analysis; companies within a range of up to ten times the assessee's turnover could ordinarily be considered comparable.

Conclusion: Tata Consultancy Services, LTIMindtree Ltd., Mindtree Ltd. and Tata Elxsi Ltd. shall be excluded from the comparable set, and the arm's length price shall be recomputed in accordance with law after affording the assessee an opportunity of hearing.

Issues: Whether profit embedded in unaccounted on-money receipts recorded in seized material should be estimated at 15% or at a lower rate.

Analysis: The unaccounted receipts and corresponding cash expenditure constituted an integrated stream of business transactions; therefore, while only the profit element in the receipts was assessable, the expenditure reflected in the same seized material could not be ignored. The 15% rate rested only on a general industry premise, without historical margins, comparable projects, or other tangible support. The fluctuating yearly position, aggregate excess of recorded expenditure over net receipts, the nature and location of the projects, and absence of comparable material rendered a uniform 15% margin excessive. The aggregate deficit was nevertheless not conclusive of absence of taxable income because receipts and expenditure across years and projects were not precisely correlated and the cash expenditure was not independently established.

Conclusion: Profit shall be estimated at 5% of the respective net on-money receipts after adjustment of booking cancellations, in favour of the assessee.

Issues: Whether discretionary relief under Section 119(2)(b) of the Income Tax Act, 1961 could be refused where the assessee had offered and paid tax on the same interest income in two assessment years because of revision of Form 26AS by the deductor.

Analysis: Special circumstances for exercising discretion cannot be confined to a predetermined formula and must be assessed from the contextual facts. The same interest income was taxed in both assessment years after the deductor shifted its reporting through a revised Form 26AS. The assessee acted promptly by pursuing rectification and revision remedies from 2019; the eventual delay resulted substantially from the pending and rejected proceedings. Payment of tax twice on the same income constituted genuine hardship, and refusal of relief would result in unjust enrichment of the Revenue.

Conclusion: The rejection of condonation relief under Section 119(2)(b) was unsustainable; the assessee was entitled to submit a revised return for the relevant assessment year, subject to verification in accordance with law.