Unexplained loan credits cannot be added where the taxpayer establishes lender identity, transaction genuineness and creditworthiness through confirmations, financial records, banking evidence and repayment details, and the Revenue neither identifies defects nor conducts independent enquiry. The burden then shifts to the Revenue to produce contrary material, resulting in deletion of the loan addition. Donation expenditure requires verification where the supporting receipt is unavailable. Fees for increasing authorised share capital are not allowable as outright revenue expenditure and may be claimed only through statutory amortisation.

For a kachha arhtia, only commission income, rather than sale proceeds belonging to principals, constitutes turnover or gross receipts for audit purposes under the applicable beneficial circular. Where accepted commission was below the audit threshold, and the Revenue alleged that books were not maintained, penalty for failure to have accounts audited was unsustainable because audit presupposes existing books. The penalty under section 271B was therefore vacated. Penalty for non-maintenance of books requires verification of the statutory conditions under section 44AA(2) by reference to the preceding three years and an opportunity of hearing; the section 271A matter was restored for fresh determination.

Foreign Tax Credit remains available where foreign dividend income is taxed in India and the substantive conditions under section 90 and the applicable DTAA are met. Rule 128 regulates the procedural mechanism for claiming the credit and cannot override substantive treaty-based relief. Delayed furnishing of Form 67 does not, by itself, justify denial when the form is available during assessment or appellate proceedings. The credit remains subject to verification of foreign tax payment and correct computation.

Accounted sales receipts reflected in impounded material and books cannot be characterised as unexplained expenditure where verification shows that the entries represent debtor realisations against sales; the unexplained-expenditure provision is therefore inapplicable. Cash payments for salary, audit fees and sales promotion are not disallowable under the cash-payment restriction where recipients did not accept cheques and the recorded facts establish commercial expediency. On these principles, the additions for unexplained expenditure and the cash-payment disallowances are stated to be unsustainable across the relevant assessment years.

Cash deposits collected by a documented Bank Mitra in the course of authorised intermediary banking services are described as customer funds rather than unexplained money where bank transactions support that arrangement; the corresponding addition was deleted. Rental-income addition was also deleted because no evidence disproved the claim that the income had already been included in the returned taxable income. For penalty provisions covering each failure, repeated notices seeking compliance with the same requirement constitute one default rather than separate defaults, so only one penalty was sustainable and the additional penalty was deleted.

Under the India-Netherlands Treaty, executive search fees under a distinct agreement were not fees for technical services or royalty because they were neither ancillary to licensed rights nor made available technical knowledge, experience, skill, know-how or processes; the related addition was deleted. Actual-cost reimbursement charges supported by third-party invoices, with no markup or profit element, were likewise not fees for technical services, and the addition was deleted. Management fees require fresh examination of the Shared Services Agreement and each service's nature because managerial services fall outside Article 12(5). Interest on income-tax refunds must be taxed at the Treaty rate under Article 11(2).

Deduction under Section 80-IB need not be reduced from business profits before computing the deduction under Section 80-HHC. Section 80-IA(9) limits deductions under other Chapter VI-A, Heading C provisions only to the extent of profits already allowed as a deduction under Section 80-IA; it does not mandate reducing the Section 80-IA or Section 80-IB deduction from gross total income for computing another deduction. Tax liability must therefore be recomputed in conformity with the governing Supreme Court interpretation.

For reassessment notices issued more than three years after the relevant assessment year, Section 151 requires prior sanction from the Principal Chief Commissioner, Principal Director General, Chief Commissioner, or Director General, as applicable. Approval by a Principal Commissioner of Income Tax does not meet that statutory requirement. Consequently, reassessment proceedings initiated on such approval are invalid, and the resulting assessment order is liable to be quashed.

Notional interest cannot be assessed on outstanding balances under the mercantile system unless interest income has actually accrued. Despite the general accrual principle, the concerns had not paid interest for two years, one had ceased operations and the other had been wound up, and no recoveries were made. Their relationship with the assessee's partners did not by itself establish deliberate waiver of interest or accrual of income. The notional-interest addition was therefore unsustainable and deleted.

For computing the Section 80HHC deduction, Explanation (baa) requires exclusion of 90% only of interest, job-work charges and similar receipts included in business profits. Where expenditure incurred to earn such receipts is allowable in computing business income, it cannot be included in the amount excluded. The netting principle therefore applies: only net eligible interest and job-work receipts are reduced when determining eligible export profits, requiring recomputation of the deduction on that basis.

Commissioning of a windmill by the prescribed date determined eligibility for enhanced depreciation. The contemporaneous commissioning certificate, electricity-export records for September 2004, and grid-injection permission established that the windmill was commissioned on 30 September 2004. Transport and insurance documents did not displace this direct evidence. The Tribunal's contrary finding was described as perverse, and the appellate decision allowing depreciation at 80% was restored.

Territorial jurisdiction for an appeal against an assessment order lies with the High Court having jurisdiction over the place where the assessment order was made. As both the assessment and appellate orders originated in Hyderabad, the subsequent relocation of the respondent's registered office to Bangalore did not create jurisdiction for the Karnataka High Court. The appeal was therefore not maintainable before that High Court.

Prosecution for wilful failure to furnish an income-tax return under Section 276CC is excluded where tax payable on regular assessment, after reducing advance tax and tax deducted at source, does not exceed the prescribed threshold. Tax deducted at source exceeded the assessed tax liability and a refund was payable, bringing the taxpayer within this statutory exception. The exception applied despite filing of the return after notice under Section 148 and after the criminal complaint was instituted. Continuing prosecution in those circumstances was unwarranted and amounted to abuse of process; the complaint was liable to be quashed.

Pre-commencement trial-run income and scrap-sale proceeds intrinsically connected with construction of a broadband project retain capital character, reduce the project's construction cost, form part of capital work-in-progress, and are not taxable as revenue receipts. For the deduction available to an eligible unit, the taxpayer may select the initial assessment year within the prescribed period; the consecutive deduction period runs from that chosen year rather than from commencement of operations. Earlier years' unabsorbed depreciation need not be set off against eligible income when computing the deduction from the selected initial year.

Concurrent factual findings on the attribution of a seized document cannot be disturbed in an appeal under Section 260A unless shown to be perverse. Where the original seized document was unavailable and the appellate authorities found that the scanned entry referred to another entity rather than the assessee, the challenge raised only a factual dispute. The High Court found no perversity in that concurrent finding and therefore declined interference, deciding the issue in favour of the assessee.

Prior notice is mandatory before the Commissioner (Appeals) enhances an assessment. Section 251(2) requires a reasonable opportunity to show cause against the specific proposed enhancement; general scrutiny of ledger accounts or participation in appellate proceedings does not replace explicit notice. Without such notice, the assessee is denied the statutory opportunity to contest the enhanced disallowance. The stated conclusion is that enhancement without prior notice is impermissible.

Writ jurisdiction may be exercised despite an available statutory appeal where a penalty order is passed after the appellate Tribunal has set aside the underlying assessment and fee-for-technical-services adjustment, making the exercise of power arbitrary. A penalty for misreporting of income cannot survive once the binding appellate order extinguishes the assessment addition on which it rests. The Assessing Officer must give effect to the appellate determination and should not finalise penalty proceedings while the relevant appellate proceedings remain pending; the consequential penalty and demand must be dropped.

Premium payable on redemption of foreign currency convertible bonds is treated as revenue expenditure because borrowing-related costs incurred for business purposes do not create an enduring asset or advantage. The redemption-premium liability arises when the bonds are issued and is allowable under the applicable business-expenditure provision. Although the liability arises in the year of issue, settled treatment permits its proportionate amortisation over the bonds' maturity period, irrespective of possible early redemption. No fresh question of law arose on the timing of deduction because that issue had not been raised before the appellate authorities.

Section 127 of the Income-tax Act requires a reasonable opportunity of hearing before transferring a case between income-tax jurisdictions where such opportunity is possible. The assessee requested time beyond 16 January 2023 to file a detailed representation through a Chartered Accountant, but the transfer order was issued on 12 January 2023 without considering that request. The transfer order was therefore invalid for breach of the hearing requirement and was set aside for fresh determination after affording the assessee an opportunity to be heard.

An assessment order issued without a Document Identification Number is described as suffering from a patent and inherent irregularity that invalidates it. Although portal uploading is recognised as a valid mode of service under the GST law, practical hardship in the online regime, combined with the patent defect, may justify entertaining a delayed writ challenge on equitable terms. The challenge may proceed upon a protective pre-deposit of 20% of the disputed tax, and the assessment must be reconsidered after a hearing, with substantive issues left open.