Constitutional validity of supplier-tax-payment condition for input tax credit - Section 74 demand for input tax credit based on retrospective cancellation of supplier registrations-factual and statutory foundation Constitutional validity of supplier-tax-payment condition for input tax credit - Constitutional challenge to the condition governing availment of input tax credit upon payment of tax by the supplier - HELD THAT: - The binding Supreme Court ruling BHANDARI SCRAP TRADERS [2026 (7) TM... ... ...

Input tax credit remains conditional on the supplier's payment of tax; the constitutional challenge to that condition and the request to read it down were rejected. A demand based on retrospective cancellation of supplier registrations must, however, establish the statutory elements of fraud, wilful misstatement or suppression to evade tax. General audit objections without supplier-wise invoices, cancellation dates, attributable credit, supporting material, or findings on the taxpayer's defence of genuine transactions and contemporaneous registrations do not provide the required factual and statutory foundation. The demand and consequential proceedings were set aside and remanded for fresh adjudication after notice and an effective hearing, without deciding the merits.

GST registration cancelled solely for non-filing of returns may be restored conditionally, since continued cancellation prevents invoicing and business operations and may hinder tax recovery. Restoration requires filing all pending returns and paying applicable tax, interest, fine and penalty within the stipulated period. Compliance enables restoration and permits final determination of tax liability through filed returns; non-compliance results in cancellation continuing.

Interest on delayed GSTR-3B liabilities continues until the Electronic Cash Ledger is debited and the amount is credited to the electronic liability register; a cash-ledger credit alone is a deposit, not payment of an identified tax liability. The further proviso to Rule 88B(1), which excludes continuously available cash-ledger balances from interest computation, operates prospectively because it provides substantive relief without retrospective language. Failure to provide a requested personal hearing breaches Section 75(4), but does not require remand where no surviving prejudice, factual dispute, or unconsidered defence exists. A show-cause notice remains adequate where its basis was understood and fully answered without prejudice.

Board monetary-limit litigation policy permits a departmental GST appeal below the prescribed threshold only where a stated exclusion applies. The recurring-issue or interpretation exclusion requires genuine recurring or wider revenue implications; it does not cover every interpretative dispute, mere disagreement with an appellate order, or a general need to construe a provision. As no recurring or cascading implication was pleaded or established, the Revenue appeal against penalty deletion following Section 128A relief was dismissed as not maintainable. Whether that relief could be granted without the prescribed application remained open.

Judicial discipline requires a High Court to follow a Coordinate Bench decision in the same assessee's preceding assessment year where the material facts are identical. In reassessment proceedings concerning an alleged bogus insurance-brokerage transaction, the facts differed only by assessment year from those previously considered. That identity of facts precluded a different view on the challenge to the preliminary reassessment order and consequential reassessment notice. The writ petition was therefore dismissed.

Limitation for notices under Sections 153A and 153C is reckoned backward from the assessment year in which the satisfaction note is recorded. Where the note was recorded in AY 2024-25, the stated extended limitation reached only AY 2015-16. A notice for AY 2010-11 therefore fell outside the permissible period and was quashed as time-barred.

Section 153C limitation requires the six-year look-back period to be calculated from the assessment year immediately preceding the year in which the satisfaction note is recorded. Where the satisfaction note was recorded in AY 2023-24, the period extended only to AY 2017-18; AY 2016-17 lay outside it. The notice for AY 2016-17 was therefore time-barred and quashed, and the writ petition succeeded.

Revised Form-3 certificates correcting computational errors cannot impose a payment deadline that expired before the revised certificate was issued, because this would require impossible performance. Payment of the revised quantified amount and intimation on the day after issuance complied with the requirement to pay within 15 days of receiving the certificate. The demand notice and interest order were set aside, and the declarant became entitled to statutory acknowledgment of payment and issuance of Form-5 for closure under the Direct Tax Vivad se Vishwas Scheme.

Extended-period reassessment requires recorded reasons to link escaped income to a prescribed asset, transaction-related expenditure, event or occasion, or book entry; unidentified unaccounted receipts or expenses alone do not satisfy that jurisdictional condition, invalidating the challenged reassessments. For the assessment year preceding the search year, a section 143(3) assessment cannot be completed without notice under sections 147/148. Digital material alleging unaccounted sales must demonstrate relevance, authenticity, integrity and probative value, with identifiable completed sales or receipts and independent corroboration. Uncontextualised WhatsApp chats, unrebutted retracted statements, unreconciled seized records, or backward projection of later-year material cannot establish year-specific taxable income or sustain profit estimation.

Transfer-pricing benchmarking under TNMM required royalty for engine technology to remain aggregated with the manufacturing segment once TNMM had been accepted as the most appropriate method; separate royalty benchmarking was deleted for both assessment years. Engineering and design comparability required exclusion of a company with diversified services, no reliable segmental data, a different functional profile and an extraordinary acquisition; margins require recomputation. The expenditure disallowance relating to exempt dividend income was sustained under section 14A read with Rule 8D. Tax liability, credits and interest computations were remitted for verification and correction.

Penalty under Section 271(1)(c) does not follow merely from a Section 43B disallowance where statutory tax liabilities were not claimed as expenditure, were disclosed in the tax audit report, and rested on a plausible interpretation; a quantum addition alone does not establish inaccurate particulars. Foreign dividend income disclosed in Schedule SI and taxed at the applicable special rate is not concealed merely because it was omitted from the computation summary, where the mismatch was inadvertent and rectification was voluntarily sought before revisionary proceedings. Penalties relating to both items were deleted, and the Revenue's challenge failed.

Net profit estimation for a vegetable commission business must reflect the nature of commission activity and available material after cash deposits are accepted as business turnover. Relevant considerations include loading and unloading, salary and administrative expenses, and income results accepted for the succeeding assessment year and another comparable business assessment, without mechanically applying those comparables. Incomplete records and transaction volume do not justify reduction merely on a general claim. Business income was recomputed by applying a 2% net profit rate to accepted business receipts.

Recording satisfaction during assessment proceedings is required before penalty for an alleged cash-receipt contravention of section 269SS can be validly initiated. Applying the Supreme Court principle in Jai Laxmi Rice Mills, the Tribunal treated the absence of any satisfaction or penalty initiation in the assessment order as an invalid assumption of jurisdiction. It deleted the penalty under section 271D without deciding whether section 269SS applied to cash sale consideration for immovable property.

Following a search under section 132, assessment of search-related escaped income must proceed through the special reassessment mechanism under section 148 rather than the general scrutiny-assessment route under section 143(3). Consequently, a regular assessment made under section 143(3) for the relevant post-search assessment was treated as unsustainable in law and quashed, rendering the remaining grounds academic. The principle limits recourse to ordinary scrutiny assessment where the prescribed search-linked reassessment framework applies.

Section 50C does not extend to relinquishment of an unregistered contractual right to seek specific performance of an agreement to sell land. Where no sale deed is registered in the transferee's favour and the vendor remains owner, the relinquished right is a capital asset comprising a contractual remedy, not land or building. The deeming fiction is confined to transfers of land or building and cannot be enlarged to cover such rights. A registered leasehold interest was distinguished because it confers possessory and enjoyment rights in rem. The recomputation of long-term capital gain under section 50C and the resulting addition were deleted.

Jewellery found in an assessee's locker was treated as explained where government-approved valuation reports established its age and ownership by the assessee and family members. CBDT Instruction No. 1916 serves as a guiding consideration for jewellery attributable to family members, assessed with reference to family status, customary gifts and inheritance, and the surrounding circumstances. On these facts, the explanation of source was accepted and the addition for unexplained jewellery was deleted.

Investigation material linking three loan creditors to accommodation-entry providers, supported by admissions concerning management of bank accounts and income-tax files, established a sufficient nexus for reassessment; the challenge to reopening failed. Confirmations and bank records showing full repayment in the following financial year, together with no corresponding addition for loans from the same creditors in the succeeding year, meant the loans could not be treated as accommodation entries. The Tribunal deleted the bogus-loan addition, and the consequential unexplained-expenditure addition did not survive; the appeal was partly allowed.

Foreign salary earned by a non-resident and received in USD in an NRE account requires assessment of evidence establishing foreign employment, non-residential status, and receipt of salary. Passport entries, employment records, and NRE account details are material evidence and should be considered. The absence of foreign tax returns, a tax residency certificate, or proof of foreign tax payment does not alone warrant rejection of the claim where available records support it. Assessment should address these documents without treating foreign tax records as a mandatory condition.

BSE futures and options trade profits disclosed for tax were supported by contract notes, tax records, bank statements, annual reports, transaction statements and account confirmations. Treating those profits as unexplained cash credit requires material showing that the broker or counterparty was tainted; no such material was identified. The preponderance-of-probabilities assessment distinguished alleged pre-arranged reversal trades involving loss-making entities from profitable trades with no identified loss-making counterparty. The trades were accepted as genuine, resulting in deletion of the unexplained cash credit addition and the consequential alleged commission expenditure addition under Section 69C.