Penalty for under-reporting of income does not apply where a Health and Education Cess deduction claim was bona fide when made, supported by favourable judicial decisions including an earlier decision involving the assessee, and later became inadmissible due to retrospective clarification that tax includes surcharge and cess. The claim was voluntarily withdrawn during assessment following the retrospective insertion of Explanation 3 to section 40(a)(ii). Applying coordinate-bench decisions, the penalty under section 270A was directed to be deleted.

Uncorroborated digital data and documents seized from an independent third-party broker cannot, by themselves, establish an assessee's undisclosed on-money receipts in an assessment under section 143(3). The presumption concerning seized material under section 132(4) is confined to the person from whom the material is recovered. Where no incriminating material is found from the assessee and the broker is neither an employee nor a partner or director, independent corroborative evidence is required before attributing alleged sale receipts to the assessee.

Agricultural receipts supported by evidence of actual cultivation, plantations, crops, irrigation facilities, labour engagement, horticultural finance and related expenditure are agricultural income rather than unexplained taxable income. Net income declared after agricultural expenditure may be accepted where it is reasonable for the scale of cultivation and crops grown. In the absence of unexplained deposits, investments or another identified non-agricultural source, assessing the entire gross agricultural receipts without allowing cultivation expenditure is unjustified. The substantiated agricultural income is therefore not liable to be taxed as unexplained income.

Documentary evidence establishing the identity, creditworthiness and genuineness of creditor transactions precludes additions based on alleged unverifiability. Recorded cash sales, sales and stock registers, branch-wise particulars and VAT disclosures may establish the source of cash deposits, preventing treatment as unexplained where the assessment record supports those deposits. Allegations of accommodation-entry transactions require a demonstrated factual basis, such as seized material, statements or other supporting evidence. Additions cannot rest on conjecture, surmise or unsupported allegations of non-compliance when relevant documentary material substantiates the transactions.

Penalty proceedings for concealment of income or furnishing inaccurate particulars are vitiated where the statutory notice uses both limbs of the penalty provision without identifying the precise charge. A composite allegation fails to provide clarity on the basis for initiating penalty and cannot sustain the resulting penalty order. Failure to specify the applicable limb in the notice rendered the penalty invalid in favour of the assessee.

Reassessment jurisdiction under Section 147 read with Section 148 requires a reason to believe founded on existing and correct material. Where recorded reasons rely on Form 26AS receipt figures materially higher than the actual reported receipts, the foundational factual premise is incorrect and non-existent. The notice initiating reassessment and the consequential reassessment order are therefore void ab initio for lack of valid jurisdiction.

Section 68 requires satisfactory proof of creditor identity and capacity and transaction genuineness. Documentary evidence of loan receipts, repayment trail and interest payments, particularly repayment before assessment completion, must be considered in determining whether unsecured loans are unexplained cash credits. Where those facts are established, the loans are not liable to addition as unexplained credits. An interest disallowance founded solely on addition of the principal loans has no independent basis once the loan additions fail; the corresponding interest expenditure consequently remains allowable.

For searches initiated on or after 1 April 2021, assessment of a year preceding the search year falls within reassessment jurisdiction and requires a notice under section 148. A search is deemed information suggesting income escapement, while the exclusion from the preliminary procedure under section 148A does not remove the requirement of valid initiation under section 148. Statutory limitations, approvals and order requirements operate independently; approval for a subsequent order cannot cure the absence of a section 148 notice. Administrative scrutiny guidelines and participation in proceedings under sections 143(2) and 143(3) cannot confer jurisdiction. An assessment initiated only under those provisions is legally unsustainable.

Charitable exemption under Section 11 cannot be denied solely because the prescribed audit report in Form 10B was furnished 22 days after the stipulated date, where it was available before processing of the return under Section 143(1). Section 12A(b) requires timely furnishing of the audit report, but the delay did not defeat the exemption claim when the processing authority had the report before return processing.

Reassessment notices issued more than three years after the relevant assessment year require prior approval under section 151(ii) from the specified senior authority; approval by a Principal Commissioner lacks jurisdictional competence. Competence is determined on the date the notice is issued, rather than the date approval is granted. The proviso effective from 1 April 2023 does not retrospectively exclude the reply period available under section 148A(b). Notices approved by an incompetent authority, and consequential reassessment orders, are invalid.

Penalty for undisclosed income under section 271AAB requires independent proof that the amount falls within the provision's exhaustive statutory definition. Strict construction applies because the provision is penal, and a surrender or admission in a search statement alone does not establish undisclosed income. Vague diary notings of advances, without details of parties, dates, purpose, terms, corroborative transactions, undisclosed assets, or an identified unaccounted source, represent an application or outflow of funds rather than unrecorded income. Deeming rules for unexplained income cannot be imported into section 271AAB's self-contained definition.

Conversion of compulsorily convertible debentures into compulsorily convertible preference shares through a book entry, without funds being received in the relevant previous year, does not create an unexplained sum credited for that year. Share premium recorded solely on that conversion therefore falls outside Section 68, because the provision applies to sums credited in the assessee's books during the relevant previous year.

Condonation of delay was sought by the Revenue, which attributed the delay to a peculiar procedural trajectory. The related issue concerned the legal status of a Transfer Pricing Officer report in an abated proceeding. The Supreme Court found no good ground to interfere with the High Court's order and dismissed the Special Leave Petition.

Deduction under section 80P(2)(d) was available to a co-operative society that was not a co-operative bank, despite cancellation of its licence. The High Court upheld that entitlement and quashed reassessment notices and related departmental orders. The Supreme Court found no ground to interfere, leaving the High Court's decision and the quashing of reassessment action undisturbed.

Section 263 revision requires an assessment order to be both erroneous and prejudicial to the Revenue; revenue loss or the Commissioner's disagreement with a legally sustainable view does not suffice. Export quota-sale premium accepted for deduction under Section 80HHC was treated as outside the specified export-incentive receipts under Sections 28(iiia) to 28(iiic) and therefore subject to the exclusion under Explanation (baa) to Section 80HHC. Although a CBDT Office Memorandum binds departmental officers, it cannot override statutory interpretation applied in judicial proceedings. As the Assessing Officer had not applied the relevant statutory criteria, the assessment satisfied both conditions for revision and the Commissioner's Section 263 action was justified.

Premium earned on a domestic transfer of export quota does not fall within the export-incentive receipts specified in Sections 28(iiia) to 28(iiic and therefore does not qualify for the Section 80HHC deduction. Departmental circulars and administrative instructions bind Revenue authorities but cannot bind constitutional courts or override statutory provisions and judicial interpretation. The CBDT Office Memorandum's treatment of export-quota premium as a specified incentive creates a legal fiction inconsistent with the statutory scheme, since such premium lacks the foreign-exchange character and other essential attributes of the enumerated receipts.

Refund of unutilised input tax credit under the inverted duty structure provision is available where inputs and outward supplies are commercially distinct and input GST rates exceed the output rate. Perfumes, fragrances, chemicals and packaging materials, compared with agarbati as the output supply, create a qualifying input-output rate differential. A circular addressing the same goods taxed at different rates over time does not bar such a claim. Departmental circulars bind tax officers but remain persuasive before the Tribunal and cannot expand statutory refund restrictions.

Section 129(3) requires the proper officer to issue a penalty order within seven days of serving notice. The statutory term "shall" makes that period mandatory, particularly because fiscal provisions require strict construction. Issuing the penalty order 28 days after service of notice breaches the prescribed time limit; the order is consequently void ab initio and a nullity in law.

Show-cause notices, detention orders and appellate orders founded on factual errors or grounds outside the notice violate principles of natural justice by denying an effective opportunity to respond and are unsustainable. For goods returned by a job worker to the principal, e-way-bill consignment value is limited to the transaction value of the taxable job-work service and excludes the value of the principal's original goods. Where job-work charges and applicable tax remain below the prescribed threshold, an e-way bill is not mandatory and penalty under Section 129 does not arise.

Excess IGST paid on zero-rated export supplies due to incorrect GSTR-3B reporting remains refundable where export details and tax liability were correctly reported in GSTR-1, but the automated Customs refund process failed because of a return mismatch. A subsequent duplicate IGST payment made to obtain the automated export refund does not extinguish the earlier payment, which remains excess tax. Clerical reconciliation errors and procedural discrepancies in GSTR-3B cannot justify retention of tax beyond the amount lawfully due, as such retention is impermissible under Article 265 of the Constitution.