Section 68 is inapplicable where purchases are capitalised as construction work-in-progress, no corresponding credit appears in the books, and purchase records are supported by tax filings, supplier evidence, invoices and audited accounts. Share application money is explained when the applicant's identity, creditworthiness and transaction genuineness are established through corporate, financial and banking records, absent material linking the assessee to alleged entry operators. Declared agricultural income is not unexplained credit where land ownership, production, sales and expenditure evidence substantiate cultivation and higher realisation is supported by the nature of the produce. The three additions were deleted.

Assessment of a company struck off and dissolved requires restoration of its legal existence through the prescribed corporate-law process before proceedings may be initiated or continued. Participation in proceedings does not cure the jurisdictional defect of assessing a non-existent entity. An outward bank remittance made through banking channels for import purchases is an application of funds, not unexplained money. Such an addition requires proof that the assessee owned unrecorded money or another specified valuable article; an unproved source of expenditure cannot replace that ownership requirement.

Reassessment requires the Assessing Officer to dispose of an assessee's objections to reopening by a speaking order before taking any further step. Issuing a notice for scrutiny assessment before deciding those objections constitutes proceeding with reassessment prematurely. Where the notice was issued while objections to the reopening remained pending, the reassessment proceedings and consequential reassessment order were unsustainable and were quashed.

Corporate guarantees issued for associated enterprises constitute international transactions and require arm's-length benchmarking, with the guarantee fee determined at 0.50% rather than 1%. Sales and marketing commission paid to a US associated enterprise is not subject to Indian withholding where it is not Fees for Included Services under the India-USA treaty; the corresponding disallowance does not apply. The Section 10AA deduction requires fresh examination of Form 56F, the bifurcated profit and loss account, and unit-wise eligible-profit computations, rather than turnover-based reallocation of common expenditure.

Penalty for misreporting under section 270A is unsustainable where the statutory notice fails to identify the particular circumstance of misreporting alleged under section 270A(9). Withdrawal of a political-donation deduction in the return filed after reopening, followed by acceptance of revised income in assessment, did not support the penalty. Precedent involving a notice that expressly specified the relevant section 270A(9) clause was distinguishable. The penalty was deleted.

Undisclosed income for search-penalty purposes includes unrecorded money, entries or transactions detected during a search and not disclosed beforehand. Reduction of a quantum addition alone does not remove its undisclosed or concealed character where the surviving amount remains unrecorded or concealed. The applicable minimum penalty rate under section 271AAB(1)(c) at the relevant time was 30%, not 60%. For section 271(1)(c), a penalty notice identifying concealment as the specific charge, supported by recorded assessment-stage satisfaction, can sustain penalty despite a reduced quantum addition.

Tax deduction at source default does not arise where an employer, while making leave fare concession reimbursements involving foreign travel, complies with an operative interim judicial direction requiring the reimbursement not to be treated as income for TDS. Although such reimbursements may be substantively taxable and ineligible for leave fare concession exemption, compliance with the binding interim direction precludes treatment as an assessee in default. A later declaration of the substantive tax position cannot retrospectively convert that compliant conduct into a default. Consequently, interest consequential to the alleged TDS default does not survive.

CBDT Instruction No. 1916 regulates jewellery seizure during searches but does not provide an unconditional exemption from assessment. Ownership, nature and source of jewellery must be established on the facts. Jewellery identified in the assessee's bedroom was assessable separately where the applicable benefit for the assessee and family had already been allowed, and jewellery found with brothers had been considered in their respective assessments. Joint occupation of a residence did not establish common ownership or permit unutilised family-member relief to be adjusted against the assessee's jewellery. The addition for unexplained gold jewellery was therefore sustained.

Revenue appeals before the ITAT are not maintainable where the tax effect falls below the monetary threshold prescribed by CBDT Circular No. 09/2024. As the tax effect was below the applicable threshold for departmental Tribunal appeals, the Revenue appeal was treated as non-maintainable, in favour of the assessee.

Section 50C(2)(a) allows a valuation reference only where the taxpayer timely disputes the stamp-duty value before the Assessing Officer and statutory conditions are met; a limited remand cannot reopen a valuation issue that has become final. Section 54B applies to short-term as well as long-term capital gains, but requires reliable proof that the transferred land was used for agriculture by the taxpayer or parent throughout the prescribed two-year period. For unexplained investment and bank-credit claims, identity evidence, bank receipts, confirmations, and tax records alone do not establish source, nature, or genuineness without contemporaneous evidence showing the payment arrangement and nexus.

Reassessment notices issued beyond three years from the end of the relevant assessment year may rely on the extended limitation only where escaped income, represented by an asset, is at least Rs. 50 lakh. Where the alleged escaped income fell below that threshold after excluding a non-taxable agricultural-land transaction, the extended period under section 149(1)(b) was unavailable. The notice under section 148 and consequential assessment were therefore barred by limitation.

Rebate under section 87A is available to an assessee chargeable under section 115BAC(1A) where total income, including short-term capital gains taxable at special rates, does not exceed Rs. 7,00,000. The proviso focuses on total income and does not exclude income taxable at special rates from determining eligibility. Restricting the rebate despite total income remaining within the statutory threshold was unsustainable, and the full prescribed rebate applied.

Section 87A rebate applies to short-term capital gains taxable under Section 111A where total income, including those gains, remains below the prescribed threshold and the rebate is within the applicable limit. The restriction expressly applicable to long-term capital gains under Section 112A(6) does not extend to short-term capital gains under Section 111A. Consequently, rebate may be claimed against such short-term capital gains, and a disallowance on that basis is not sustainable.

Pure legal challenges to a reassessment notice may be admitted where they require no further factual inquiry and affect the root of reassessment. However, grounds not adjudicated by the first appellate authority do not arise from its order and cannot be determined at the Tribunal stage. The first-appellate order was set aside, and the reassessment challenge and remaining grounds were remitted to the Commissioner (Appeals) for adjudication. No determination was made on reassessment validity or the addition.

Reasonable cause under section 273B precludes penalty for failure to deduct tax at source under section 271C when the taxpayer proves that the default was not deliberate. Relevant factors include consistent tax deduction on other payments, a bona fide understanding of the tax treatment of commission payments, and disruption of compliance functions following changes in key accounts personnel. These circumstances support the conclusion that non-deduction was inadvertent and lacked an intention to evade tax, so penalty under section 271C is not sustainable.

Under the mercantile system, royalty liability for rejection or waste dumps sold in earlier periods crystallises when it is first asserted and quantified, provided no earlier demand existed and the taxpayer held a bona fide belief that royalty was not payable. Its deduction is therefore not denied merely as a prior-period item; the matching concept does not displace crystallisation of liability. Interest on delayed payment of such royalty is deductible as business expenditure under section 37(1) where it is compensatory rather than penal, arises from business expediency, and involves no breach or infraction of law. Royalty and consequential compensatory interest are deductible in the year the liability crystallises.

Statutory authorities with separate corporate personality, assets, funds and liabilities cannot treat their income as State income under Article 289(1) merely because they perform public functions or remain subject to State control. Urban improvement trusts are outside the local-authority exemption, while exemptions for specified bodies depend on Central Government notification; notification under the newer provision applies only from assessment year 2026-27. Retrospective trust-registration relief requires assessment proceedings pending on the registration date; preliminary information inquiries do not qualify. Reassessment may proceed where unfiled returns and taxable surplus constitute deemed income escapement, subject to procedural requirements. Taxable surplus need not fail solely because no income head is specified, but receipt-level questions of overriding title, liabilities, remittances and refunds require factual verification in computing taxable income.

Penalty for misreporting requires delayed employees' PF/ESI contributions to fall within a specified statutory category of misreporting. Mere disallowance of a claim, without evidence that the conduct meets one of those categories, does not establish misreporting. Accordingly, disallowance of employees' PF/ESI contributions solely for delayed payment cannot by itself support a misreporting penalty, which is unsustainable absent the prescribed statutory basis.

Compensation received by BSNL employees under the 2019 Voluntary Retirement Scheme is exempt under Section 10(10B) of the Income-tax Act. Earlier coordinate-bench decisions accepting identical exemption claims support the same treatment where Revenue identifies no factual or legal distinction. Tax authorities should not deny an otherwise lawful tax relief merely because the taxpayer was unaware of the entitlement. Taxable income and any consequential refund require recomputation after giving effect to the exemption.

Penalty imposed under Section 270A of the Income-tax Act and the consequential demand notice under Section 156 were challenged through writ jurisdiction under Article 226. An equivalent penalty order and consequential demand notice had already been quashed in a coordinate-bench decision. As the applicability of that decision was undisputed, the penalty order and consequential demand notice for the relevant assessment year were quashed in favour of the assessee.