https://www.taxtmi.com/caselaws?id=470766 Reassessment based on intelligence regarding alleged bank-fund diversion through letters of credit may be valid where fresh tangible material supports a prima facie belief of escaped income, statutory notices communicate the reasons, objections are considered, and approval is obtained within the prescribed period. However, expenditure funded by banks directly paying vendors upon encashment of letters of credit cannot be treated as unexplained merely because purchases are alleged to be bogus or funds diverted. The addition under the unexplained-expenditure provision and consequential special-rate taxation therefore fail where the source is admitted or established. A consequential natural-justice challenge requires no separate determination once reassessment initiation is upheld. en-us Thu, 27 Jul 2023 00:00:00 +0530 Fri, 07 Aug 2026 16:09:32 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=470766 Reassessment based on intelligence regarding alleged bank-fund diversion through letters of credit may be valid where fresh tangible material supports a prima facie belief of escaped income, statutory notices communicate the reasons, objections are considered, and approval is obtained within the prescribed period. However, expenditure funded by banks directly paying vendors upon encashment of letters of credit cannot be treated as unexplained merely because purchases are alleged to be bogus or funds diverted. The addition under the unexplained-expenditure provision and consequential special-rate taxation therefore fail where the source is admitted or established. A consequential natural-justice challenge requires no separate determination once reassessment initiation is upheld. Case-Laws Income Tax Thu, 27 Jul 2023 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=470766