Cash deposits during demonetisation are satisfactorily explained where an accepted opening cash balance and cash brokerage earned before demonetisation, already included in returned income, provide sufficient cash availability. A comparison limited to the deposit and opening balance is inadequate if it ignores current-year cash receipts. Where the revenue authorities neither disprove the brokerage receipts as undisclosed income nor reject the books of account or identify inconsistencies in the cash-flow explanation, an addition based on mathematical difference, conjecture or surmise cannot stand. The addition under Section 115BBE was consequently deleted.

Penalty for furnishing inaccurate particulars is not attracted merely because a replacement-expenditure deduction claim is disallowed, provided the assessee has disclosed accurate and non-false particulars. Where classification of replacement expenditure as capital or revenue is genuinely debatable because of divergent judicial views and pending consideration of the identical issue by the jurisdictional High Court, the claim remains bona fide. Disallowance in those circumstances does not establish conscious furnishing of inaccurate particulars, and penalty is unsustainable.

For assessment years before the first proviso to Section 68 became operative, a closely held company need establish the identity, creditworthiness and genuineness of share subscribers, rather than the source of their funds. PAN and corporate records, audited financial statements, banking trails, confirmations, allotment documents and verification may substantiate share application money and share premium. Suspicion arising from low income, share premium valuation or alleged accommodation entries cannot support an unexplained-credit addition without independent corroboration linking the funds to undisclosed income. Share application money refunded through banking channels within the same financial year, with no shares allotted or year-end balance, is not unexplained credit absent evidence of a device to introduce undisclosed funds.

Section 69A requires proof that the assessee owns money proposed to be treated as unexplained. Credits in a jointly operated bank account, used by both spouses, do not by themselves establish sole ownership by one holder. Where credited sale proceeds relate to property accepted as exclusively owned by the spouse and transaction-wise explanations support other clearing entries, the ownership condition remains unproved. The unexplained-money addition was therefore deleted.

Section 151(ii) requires prior approval from the specified higher authority where reassessment action is initiated more than three years after the end of the relevant assessment year. Approval from a Principal Commissioner does not meet that requirement; the statute instead requires approval from the Principal Chief Commissioner or Principal Director General, or, in their absence, the Chief Commissioner or Director General. Non-compliant approval deprives the reassessment action of jurisdiction, rendering the order under section 148A(d), the notice under section 148, and consequential proceedings invalid.

Section 144C(13) imposes a specific mandatory period for completing a final assessment after DRP directions, overriding general assessment-limitation provisions. Uploading the DRP directions to the ITBA portal on 29 August 2024 constituted communication and receipt in that month. The assessment therefore had to be completed by 30 September 2024; an order dated 29 October 2024 was barred by limitation and unsustainable in law.

Share capital and share premium supported by investor confirmations, tax records, audited financial statements, bank records, ledger accounts and share-application documents satisfy the initial evidentiary burden for Section 68 purposes. Investor identity, creditworthiness and transaction genuineness are not undermined merely by common shareholding, low reported income, or unsubstantiated suspicion of fund layering. Once these elements are documented, the evidentiary burden shifts to the Revenue to disprove the material or establish routing of the taxpayer's undisclosed income. In their absence, the receipts cannot be treated as unexplained cash credits.

Penalty for non-compliance with statutory notices is subject to the reasonable-cause protection under Section 273B. Although the initial notices were not complied with, subsequent participation in reassessment proceedings, furnishing of replies, and completion of assessment under Sections 147 and 143(3), rather than best judgment assessment under Section 144, supported the explanation for default. On these facts, the penalty under Section 272A(1)(d) was treated as unsustainable and deleted for both assessment years.

Penalty proceedings under section 271(1)(c) cannot survive where their sole basis, a transfer-pricing adjustment, has been set aside for de novo adjudication. The adjustment was restored because submissions and supporting evidence had not been considered, breaching principles of natural justice, and no merits finding had been reached. Once set aside, the original adjustment ceased to be a concluded determination. Fresh assessment and penalty proceedings therefore required independent consideration, and the penalty founded on the earlier adjustment was quashed.

Notice issued under section 148 for assessment year 2019-20 on 24 April 2023 fell outside the limitation in section 149(1). The ordinary three-year period ended on 31 March 2023, and the alleged escaped income did not meet the threshold for extended limitation. Excluding the period allowed for reply to the section 148A(b) notice extended the deadline only to 21 April 2023 under the statutory seven-day rule. Time available to pass an order under section 148A(d) could not separately extend the deadline, and the preliminary notice could not be treated as a section 148 notice. The reassessment notice was therefore invalid.

Rural agricultural land located beyond prescribed municipal limits falls outside the definition of a capital asset under Section 2(14)(iii). A village population of 1,650 and an engineering certificate placing the land 8.2 kilometres beyond Surat Municipal Corporation limits support that classification. Revenue acceptance of the same position for co-owners reinforces the exclusion. The transfer therefore does not attract capital-gains taxation, and an addition based on deemed-value provisions is unsustainable.

GST turnover reconciliation precludes a gross-profit addition where the difference between monthly GSTR-1 turnover and book turnover results from duplicate reporting rather than unaccounted sales. Although non-compliance may permit a best-judgment assessment under the Income-tax Act, the assessment must determine correct taxable income. A monthly GST mismatch, without independent evidence of unaccounted sales, purchases, receipts, or bank transactions, does not establish suppressed turnover. Where sales ledgers, monthly GST returns and annual GSTR-9 reconcile the variance, and annual turnover matches the books and profit and loss account, gross profit cannot be estimated on the alleged differential turnover.

Transactions recorded in an impounded diary, comprising cash sales, bank deposits and business-cash movements in an ice-cream and milk-products business, were treated as business receipts rather than wholly as unexplained income. Despite the absence of complete transaction-wise correlation, the recorded sums were subjected to income estimation under the presumptive taxation framework in section 44AD of the Income-tax Act, 1961. Income was estimated at 8% of the recorded sums, restricting additions to the estimated profit component and deleting the balance.

Bank credits arising from transfers between an assessee's own accounts, sourced from salary subject to tax deduction at source, are explained and cannot be assessed as unexplained money under section 69A; the corresponding addition was deleted. Admitted rental income remains eligible for the statutory 30% standard deduction under section 24 even where no return of income was filed, because the Act imposes no such bar. The rental-income addition was therefore sustained only after allowing that deduction.

Alleged suppressed sales inferred from a stock shortage cannot be treated wholly as undisclosed income where the stock originated from explained opening stock disclosed in audited accounts. Rejection of books for non-production may support estimation, but absent a finding of undisclosed investment or excess unexplained stock, the sale value represents turnover rather than income. Taxability is limited to the profit embedded in the unrecorded sales. Applying the gross-profit rate already used in assessment, only 2.32% of the alleged suppressed sales was treated as taxable, while the balance was deleted.

Penalty for concealment cannot be sustained where the sole unexplained cash-credit addition forming its basis has been deleted in quantum proceedings. With no surviving addition under the cash-credit provision, the factual foundation for alleging concealment or inaccurate particulars ceases to exist. The penalty is therefore required to be deleted because it rested entirely on the deleted addition.

Receipts from sale of flats built on long-held land may constitute business income where the overall facts show commercial development rather than capital realisation. Relevant indicators include the nature and volume of the asset, improvements made to increase saleability, financing and sale arrangements, and intention shown by surrounding circumstances. Construction of multiple flats, buyer advances funding substantial construction costs, and sales to unrelated persons supported treatment as an adventure in the nature of trade despite long holding and absence of regular property dealings. Section 54 relief was therefore unavailable, while proportionate land and construction costs attributable to flats sold were deductible in computing business income.

Section 87A rebate remains available for the relevant assessment year to an eligible resident individual whose total income is within the prescribed threshold, including against tax on short-term capital gains taxable at special rates under Section 111A. Section 87A does not distinguish between normal-rate and special-rate income, while Section 111A contains no express exclusion. The express restriction in Section 112A(6) for long-term capital gains confirms that an exclusion requires statutory language. Section 115BAC(1A) governs concessional-regime computation without limiting the separate Section 87A rebate. A Finance Act, 2025 restriction operates prospectively and does not affect the relevant assessment year.

The first proviso to Section 149(1) bars reassessment notices under the new regime for assessment years beginning on or before 1 April 2021 if proceedings could not have been initiated under the earlier reassessment or search-assessment regime. For a person other than the searched person, the relevant date under Section 153C is when seized material reaches that person's jurisdictional Assessing Officer. As the material was treated as received in the previous year 2022-23, the six-year period extended only to assessment year 2017-18. The notice for assessment year 2012-13 was consequently time-barred, rendering the consequential assessment void ab initio and the remand infructuous.

Section 145(3) permits rejection of accounts that are substantially incorrect or incomplete, including where stock or inventory records and essential purchase, sales and expense ledgers are not maintained or produced. Once books are rejected, net profit must be estimated on a rational, verifiable basis supported by industry standards, business conditions, comparable material or other stated rationale; an ad hoc percentage is insufficient. A preceding five-year average declared net-profit rate may provide the basis for recomputation. Changes in sundry-creditor opening balances require evidence of their nature and source, including confirmations, before treatment as unexplained cash credits.