Issues: Whether tax claims and related income-tax appeals for earlier assessment years could continue after the taxpayer's successor entity entered corporate insolvency and was directed into liquidation, where no departmental claim was shown to have been admitted.

Analysis: Corporate insolvency had commenced in respect of the successor entity, and the entity was subsequently placed in liquidation following failure to implement the approved resolution plan. No material established admission of the Department's claims for the relevant assessment years in either the resolution or liquidation process. The insolvency framework applied accords finality to claims under an approved resolution plan and treats excluded statutory dues as extinguished, preserving a clean slate for the corporate debtor or resolution applicant.

Conclusion: The departmental tax claims could not be pursued through the connected proceedings, operating in favour of the assessee.

Issues: Whether consideration received for automated subscription, training and support services constituted fees for technical services under Article 12(5)(b) of the India-Netherlands Double Taxation Avoidance Agreement and Section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: Article 12(5)(b) requires technical or consultancy services to make available technical knowledge, experience, skill, know-how or processes to the recipient. The subscription services were rendered through software hosted on servers outside India, without unrebutted evidence of human intervention, and amounted to a standard facility. The recipient had to continuously obtain the services, acquired only a right to use the systems, and received no technology enabling independent future application. Training and support were confined to use of the systems and did not transfer the underlying technology.

Conclusion: The consideration did not constitute fees for technical services under Article 12(5)(b) of the India-Netherlands Double Taxation Avoidance Agreement or Section 9(1)(vii) of the Income-tax Act, 1961.

Issues: Whether the estimation of net profit at 8% in the best-judgment assessment was sustainable.

Analysis: The absence of books of account and non-compliance with the notice seeking information justified estimation of business profit. However, an estimate in a best-judgment assessment must be bona fide, rational and non-capricious, and must rest on the assessee's past history or comparable cases. Neither the 12% rate initially adopted nor the reduced 8% rate was supported by such a basis.

Conclusion: The estimation at 8% was unsustainable; the net profit is to be redetermined on the basis of past history or comparable businesses after affording an opportunity of hearing.

Issues: Whether receipts from contractual recruitment and training services for an insurance company were professional receipts taxable under the presumptive scheme for specified professions, or business receipts eligible for the presumptive scheme applicable to businesses.

Analysis: The statutory scheme confines the presumptive regime for specified professions to services falling within the professions enumerated or notified under Section 44AA(1) of the Income-tax Act, 1961. Recruitment and training of insurance agents constituted contractual business-support activity and did not amount to a notified profession or technical consultancy merely because it involved knowledge, skill or training. The assessee neither carried on insurance agency business nor earned commission or brokerage; its receipts arose from business-support services.

Conclusion: The receipts were business receipts and not professional receipts within the presumptive regime for specified professions. The assessee was entitled to compute its profits under the presumptive scheme for businesses, subject to fulfilment of its statutory conditions, and the addition was deleted.

Issues: Whether penalty for misreporting of income under section 270A was sustainable merely because a deduction claimed under section 80GGC was disallowed.

Analysis: The enhanced penalty for misreporting under section 270A required proof of the specific statutory ingredients under section 270A(9). The disclosed deduction claim and banking-channel payment evidenced disclosure of material facts. General investigation material concerning the recipient's alleged modus operandi did not establish that the assessee had misrepresented or suppressed facts or furnished false particulars. An inadmissible claim and misreporting of income are distinct; independent penalty proceedings require a separate examination and cannot treat the assessment disallowance as conclusive.

Conclusion: The statutory conditions for misreporting were not established, and the penalty imposed in consequence of the disallowed deduction could not be sustained.

Issues: (i) Whether stamp-duty and registration payment of Rs. 9,45,000 was unexplained; (ii) Whether the difference of Rs. 1,21,83,358 between stamp-duty value and declared sale consideration was taxable; and (iii) Whether cash payment of Rs. 19,68,750 for purchase of the property was unexplained money.

Issue (i): Whether stamp-duty and registration payment of Rs. 9,45,000 was unexplained.

Analysis: The burden to establish the source of the stamp-duty payment remained undischarged. The asserted loan arrangement was unsupported by loan confirmation, proof of transfer to the assessee, or other corroborative material establishing that the funds were made available for that payment.

Conclusion: The addition of Rs. 9,45,000 as unexplained investment was sustained against the assessee.

Issue (ii): Whether the difference of Rs. 1,21,83,358 between stamp-duty value and declared sale consideration was taxable.

Analysis: The stamp-duty valuation exceeded the declared consideration by Rs. 1,21,83,358. The assertion that longstanding tenancy justified a lower price was not supported by independent valuation evidence or material establishing a lower fair market value, and no valuation reference was sought under the statutory mechanism.

Conclusion: The valuation differential of Rs. 1,21,83,358 was sustained as deemed income against the assessee.

Issue (iii): Whether cash payment of Rs. 19,68,750 for purchase of the property was unexplained money.

Analysis: Search material indicating the cash payment remained unrebutted. No confirmation from the seller or other reliable material was produced to disprove receipt of the impugned cash amount.

Conclusion: The addition of Rs. 19,68,750 as unexplained money was sustained against the assessee.

Final Conclusion: All three disputed additions relating to unexplained payments and the stamp-duty valuation differential remained sustained.

Issues: Whether deductions under Sections 80C and 80CCD(1B), omitted from the original return and not claimed through a revised return, could be entertained in appellate proceedings, with supporting additional evidence admitted.

Analysis: Appellate authorities have the power to admit a legitimate fresh claim even where it was not made in the original return. An eligible statutory deduction should not be denied merely because the taxpayer was unaware of the claim. The investments in PPF and the National Pension Scheme related to notified schemes, and the supporting documents were material to determination of the claim. The additional evidence was therefore admitted for verification under Rule 29.

Conclusion: The claims for deduction of Rs. 1,50,000 under Section 80C and Rs. 50,000 under Section 80CCD(1B) are to be allowed after verification of the admitted evidence.

Issues: Whether the cash deposit of Rs. 2,00,000 in the proprietary concern's bank account was liable to be added as unexplained cash credit under Section 68 of the Income-tax Act, 1961.

Analysis: The deposit was supported by the reconstructed cash book, monthly sales summary and daily sales registers. The concern had substantial declared turnover and regular cash deposits during the year, while the disputed amount was consistent with its normal retail sales. Requiring customer-specific particulars for cash retail collections was unwarranted in the circumstances, particularly where the turnover was taxed under the presumptive-taxation scheme.

Conclusion: The addition of Rs. 2,00,000 as unexplained cash credit was unsustainable and was directed to be deleted.

Issues: Whether penalty for under-reporting of income in consequence of misreporting could be sustained where the cost of improvement claimed in computing short-term capital gains was disallowed for inadequate documentary evidence.

Analysis: The claimed improvement expenditure was disclosed in the return and supporting details, and the disallowance concerned only the adequacy of evidence for that expenditure. The existence of the improvement work, including the compound wall, was not disputed. In the circumstances, insistence on contractor-level documentation for incidental capital expenditure incurred through small local purchases and labour payments was unwarranted. The disallowance resulting from incomplete documentation did not establish misrepresentation or suppression of facts.

Conclusion: The penalty under Section 270A for under-reporting of income consequent upon misreporting was unsustainable and was quashed, in favour of the assessee.

Issues: (i) Whether penalty for misreporting could be sustained where the penalty notice alleged only under-reporting of income; and (ii) Whether a fully disclosed, bona fide and debatable claim for deduction under section 80P(2)(d) amounted to misreporting or attracted penalty under section 270A.

Issue (i): Whether penalty for misreporting could be sustained where the penalty notice alleged only under-reporting of income.

Analysis: The notice issued under section 274 read with section 270A alleged under-reporting only, whereas the penalty order imposed penalty for under-reporting arising from misreporting. The charge was neither proper nor precise.

Conclusion: Penalty for misreporting could not be sustained on the charge specified in the notice. This issue is decided in favour of the Assessee.

Issue (ii): Whether a fully disclosed, bona fide and debatable claim for deduction under section 80P(2)(d) amounted to misreporting or attracted penalty under section 270A.

Analysis: Section 270A(9) confines misreporting to specified categories, while section 270A(6)(a) excludes an under-reported income where the explanation is bona fide and all material facts are disclosed. The deduction claim involved conflicting jurisdictional decisions and wider judicial divergence; the later adverse decision had not considered the earlier favourable decision. The relevant facts were fully disclosed, and no category of misreporting was identified or established.

Conclusion: The claim did not constitute misreporting and did not attract penalty under section 270A. This issue is decided in favour of the Assessee.

Final Conclusion: The penalty founded on the disallowed deduction lacks statutory basis and is to be deleted.

Ratio Decidendi: A penalty for misreporting under section 270A cannot be imposed where the notice does not state that charge and a fully disclosed, bona fide claim on a debatable issue is not shown to fall within a statutory category of misreporting.

Issues: (i) Whether three high-turnover, branded companies were comparable with a captive software development service provider for determining the arm's length price; (ii) Whether interest on USD-denominated delayed receivables from associated enterprises had to be benchmarked using LIBOR plus an appropriate mark-up rather than the SBI rate.

Issue (i): Whether three high-turnover, branded companies were comparable with a captive software development service provider for determining the arm's length price.

Analysis: Transfer-pricing comparability requires a proper comparison of functions, assets and risks, including material differences in scale, brand value and operational capacity. The disputed companies had turnovers vastly exceeding that of the assessee and possessed substantial brand value and scalability. Their functional, asset and risk profile was therefore not comparable to that of the assessee, a captive service provider.

Conclusion: The three disputed companies must be excluded from the software development comparables, in favour of the assessee.

Issue (ii): Whether interest on USD-denominated delayed receivables from associated enterprises had to be benchmarked using LIBOR plus an appropriate mark-up rather than the SBI rate.

Analysis: Benchmarking interest on delayed receivables must correspond to the currency in which the invoices were raised. The invoices were denominated in USD, and the transfer-pricing record itself recognised that USD invoices warranted application of LIBOR plus an appropriate mark-up; application of the SBI rate was consequently inconsistent with that basis.

Conclusion: Interest on the delayed USD receivables must be benchmarked using LIBOR plus an appropriate mark-up or another suitable rate, in favour of the assessee.

Final Conclusion: The transfer-pricing computation requires revision by removing the non-comparable software-development entities and by applying a currency-appropriate benchmark to delayed receivables.

Issues: Whether rectification under Section 154 could be invoked to add the difference between sales reported in the return and the financial statements after the sales figure had already been verified and accepted in the original assessment.

Analysis: Rectification is available only for a mistake apparent from the record. The original assessment had accepted sales of Rs. 8,95,654 after enquiry and verification against VAT returns, treating the higher figure in the return as a typographical error. An audit objection noting the discrepancy, without material demonstrating an error in that prior verification, could not displace the view formed in the assessment or establish an apparent mistake. The rectification was consequently founded on borrowed satisfaction rather than an identifiable mistake apparent from the record.

Conclusion: The rectification order under Section 154 was invalid; the addition of Rs. 80,60,870 was deleted.

Issues: Whether, upon dispute of the stamp-duty valuation adopted for transfer of immovable property, the Assessing Officer could apply Section 50C of the Income-tax Act, 1961 without obtaining a valuation from the Departmental Valuation Officer.

Analysis: The actual sale consideration was offered in place of the guideline value adopted by the Sub-Registrar for stamp-duty purposes. In a dispute between the declared consideration and stamp-duty valuation, Section 50C(2) of the Income-tax Act, 1961 requires the Assessing Officer to obtain valuation by the Departmental Valuation Officer for determination of fair market value before adopting the stamp-duty value for capital-gains computation. No such reference had been made.

Conclusion: Stamp-duty valuation could not be adopted under Section 50C without first obtaining the Departmental Valuation Officer's valuation in the stated circumstances.

Issues: (i) Whether section 14A disallowance could be sustained where the assessee claimed only sponsorship-related expenses and offered other income on gross basis; and (ii) Whether absence of section 14A disallowance in earlier assessments required consistent treatment.

Issue (i): Whether section 14A disallowance could be sustained where the assessee claimed only sponsorship-related expenses and offered other income on gross basis.

Analysis: Section 14A of the Income-tax Act, 1961 read with Rule 8D of the Income-tax Rules, 1962 concerns expenditure connected with exempt income. The precedent involving income offered wholly on gross basis was distinguishable because sponsorship-related expenditure had been claimed in the present year. Verification was required to determine whether that claimed expenditure related exclusively to sponsorship income and not to investments yielding exempt income.

Conclusion: The section 14A issue was remitted for verification, with any disallowance to be restricted in accordance with Rule 8D(ii). No final determination on the quantum of disallowance was made.

Issue (ii): Whether absence of section 14A disallowance in earlier assessments required consistent treatment.

Analysis: The principle of res judicata does not apply to income-tax assessments, each assessment year being a separate unit. The earlier assessment orders did not establish that the applicability of section 14A had been examined and accepted on identical facts.

Conclusion: Earlier assessments did not preclude examination of section 14A in the relevant year; the consistency claim was rejected against the assessee.

Final Conclusion: The claimed sponsorship-only expenditure requires factual verification before determining any adjustment relating to exempt income, while prior-year assessments do not bar such current-year examination.

Issues: Whether the addition for non-genuine purchases, where the corresponding sales were accepted, should be confined to the profit element embedded in those purchases and, if so, at what rate.

Analysis: Acceptance of the corresponding sales precluded assessment of the entire disputed purchase value as income. The recorded finding that goods were procured through the grey market using accommodation bills nevertheless warranted estimation of the embedded profit. The 25% rate lacked a material basis, particularly when the assessment record itself indicated that the relevant grey-market margin would not exceed 8%. A 5% estimation was considered fair in the circumstances.

Conclusion: The addition in respect of the disputed purchases shall be restricted to 5% of their value.

Issues: (i) Whether section 50C of the Income-tax Act, 1961 applies to the transfer of tenancy rights in a building; (ii) Whether the claim that stamp valuation exceeded fair market value required examination under section 50C(2) of the Income-tax Act, 1961.

Issue (i): Whether section 50C of the Income-tax Act, 1961 applies to the transfer of tenancy rights in a building.

Analysis: Section 50C(1), a deeming provision, substitutes the stamp valuation for consideration received on transfer of a capital asset being land or building. Section 2(14) defines capital asset as property of any kind held by an assessee. The binding precedent of the jurisdictional High Court establishes that the mode of holding land or building, including holding as a tenant, does not take the property outside section 50C. Differences between leasehold and tenancy rights may affect the nature or value of the right, but not the applicability of the provision. Earlier contrary coordinate decisions could not prevail over the binding interpretation.

Conclusion: Section 50C applies to the transfer of tenancy rights in the building. This issue is decided against the assessee.

Issue (ii): Whether the claim that stamp valuation exceeded fair market value required examination under section 50C(2) of the Income-tax Act, 1961.

Analysis: Section 50C(2) provides the statutory valuation mechanism where the assessee claims that the stamp valuation exceeds fair market value. As the valuation objection and request for reference to the Departmental Valuation Officer were raised, the statutory conditions for such reference required examination.

Conclusion: The Assessing Officer must examine the claim under section 50C(2) and, if the prescribed conditions are met, obtain valuation by the Departmental Valuation Officer before determining the full value of consideration. This issue is decided in favour of the assessee.

Final Conclusion: Stamp-duty valuation provisions govern the transfer of tenancy rights, while the value to be adopted must be determined through the statutory valuation mechanism.

Ratio Decidendi: A transfer of land or building held through tenancy remains within section 50C because the mode by which the property is held does not alter its character as land or building for that provision.

Issues: Whether the notice under Section 148 dated 27.07.2022 was issued within the limitation period prescribed by Section 149.

Analysis: Where an earlier reassessment notice was deemed to be a show-cause notice under Section 148A(b), only the period surviving between issuance of that notice and 30.06.2021 remained available for completing the reassessment-notice procedure, after excluding the period for supply of material and reply. Where the surviving period was less than seven days, the statutory minimum period of seven days applied. The original notice left only three days, and the fresh notice was issued beyond even the period computed on assumptions most favourable to the Revenue. A subsequent communication described as a further supply of material already furnished could not restart the limitation period.

Conclusion: The notice under Section 148 was barred by limitation, and the reassessment founded on it was without jurisdiction.

Issues: Whether an addition under Section 68 of the Income-tax Act, 1961 could be sustained by treating recorded cash sales as inflated where cash deposits made during demonetisation were covered by the recorded cash balance.

Analysis: Section 68 permits examination of the nature and source of a credit, and the test of human probabilities permits scrutiny beyond book entries. However, that test does not displace an appraisal of the particular cash book, sales, stock and bank records. The cash in hand recorded immediately before demonetisation exceeded the subsequent bank deposits. No discrepancy in the cash-book balance, bank entries or stock records, no fictitious sale, and no particular unexplained deposit was identified. The estimate based on an average cash-sales ratio was not an independent historical benchmark because it included the year under examination, and it did not explain why the recorded opening cash balance was to be disregarded. Although non-rejection of books under Section 145(3) does not bar examination of an individual credit, it is material where the addition rests solely on an estimated ratio without a specific defect in the books or cash-flow records.

Conclusion: The recorded cash balance adequately explained the deposits, and the addition for alleged inflated cash sales under Section 68 was deleted in favour of the assessee.

Issues: (i) Whether the disallowances of excavation expenses and professional charges forming part of work-in-progress were sustainable; (ii) Whether the assessments were barred by limitation.

Issue (i): Whether the disallowances of excavation expenses and professional charges forming part of work-in-progress were sustainable.

Analysis: For the unabated assessment years, the disallowances were not founded on any seized incriminating material. Under the search-assessment framework, expenditure already recorded in the regular books could not be disturbed in an unabated assessment without such material. Independently, the primary records furnished, including agreements, invoices, banking records and confirmations, established the genuineness of the expenditure and discharged the burden of proof; no infirmity was shown in the merits finding.

Conclusion: The additions were unsustainable, and their deletion for all the assessment years was upheld, in favour of the assessee.

Issue (ii): Whether the assessments were barred by limitation.

Analysis: Section 153B(1) prescribed the original deadline for completion of the assessments. The asserted extension under its Explanation required substantiation of the reference to Foreign Tax and Tax Research. No copy or other evidence of that reference was produced despite the assessee's request, so the asserted extension of limitation was not established.

Conclusion: The assessments were barred by limitation and void ab initio, in favour of the assessee.

Final Conclusion: The assessment orders could not stand, while the relief from the disputed expense additions remained intact.

Ratio Decidendi: An extension of the statutory assessment limitation based on a foreign-tax reference must be supported by evidence of the reference; a bare assertion cannot extend the limitation.