Notional interest cannot be disallowed on interest-free advances where surplus interest-free funds exceeding those advances are available. Existing advances substantially carried over from the preceding year, no disallowance had been made in that year, and the fresh advance in the relevant year was made from available surplus funds. Applying the presumption that interest-free advances are funded from sufficient interest-free funds, the deletion of the notional-interest disallowance was upheld.

Final assessment orders must incorporate binding Dispute Resolution Panel directions. Where an assessment was finalised without giving effect to those directions because the Transfer Pricing Officer's giving-effect order was not received before limitation, the appropriate course is restoration for fresh assessment. The Assessing Officer must issue a fresh order conforming to the Dispute Resolution Panel's directions and provide the assessee an adequate opportunity of hearing.

Reassessment based on an assessee being a non-filer and non-PAN entity is invalid where the return of income had already been filed and disclosed the property transaction relied on for reopening. The return, computation and tax-deduction details showed that the foundational assumptions for reassessment were factually incorrect. Consequently, the reassessment proceedings and resulting assessment were treated as void from inception, with the issue decided in the assessee's favour.

Income-tax appellate authorities must adjudicate appeals on merits and cannot dismiss them solely because the assessee does not participate. The text states that providing only two brief hearing opportunities before dismissal for non-compliance fails to afford a reasonable opportunity of hearing and conflicts with substantial justice. Where the assessee is absent, the appellate authority should nevertheless decide the disputed additions on the available record. The required effect is a fresh merits-based decision after granting a reasonable opportunity of hearing.

Best-judgment assessment and sustained disallowances were upheld because the assessee did not furnish requested particulars, supporting evidence, or submissions on the merits of its claims. Its participation remained confined to seeking transfer of the assessment proceedings, while no material was produced before the Assessing Officer, appellate authority, or Tribunal to displace the assessment or substantiate the depreciation and expense claims. The transfer request relating to the Tribunal appeal had also been rejected. The assessment and disallowances sustained by the appellate authority therefore remained in force.

Adjustment of brought-forward losses required fresh computation where the underlying transfer-pricing additions on intra-group services for preceding years had been deleted by the Tribunal and upheld by the jurisdictional High Court. The Assessing Officer must recompute the assessee's income in accordance with law after providing an adequate opportunity of hearing, taking account of those intervening developments.

Reassessment based on alleged client-code modification transactions requires assessee-specific tangible material and independent application of mind by the Assessing Officer. General information from the Investigation Wing, without identifying relevant brokers, trades, client-code details, or fictitious profits or losses attributable to the assessee, does not establish a live link with escaped income. Mechanical reproduction of such information constitutes borrowed satisfaction rather than a valid reason to believe. Reassessment initiation on this basis was invalid, and the assessment was quashed.

Penalty for concealment under Section 271(1)(c) cannot be sustained where assessed income and corresponding additions rest solely on estimation. Concealment requires a wilful act, and an Assessing Officer's estimate or guess of income does not by itself establish such concealment. Accordingly, the penalty imposed on estimated additions was directed to be deleted for all relevant assessment years.

Documentary bank evidence established the source of part of the residential-property investment and disproved an alleged term deposit, requiring deletion of those additions while retaining the unexplained difference between declared consideration and stamp-duty value. A cash-funded cost of improvement was not allowable because its source was not credibly established, so consequential indexation was also denied. Investment in a new residential house within the prescribed period qualified for capital-gains deduction under Section 54. The jurisdictional objection to reassessment was rejected. Taxable income was to be recomputed by retaining only the unexplained property-value differential and allowing the residential-house reinvestment deduction.

Revision of a limited-scrutiny assessment was valid because the purchase of immovable property was the selected scrutiny issue, and the stamp-valuation difference was directly connected to that examination. The assessment had not considered the difference between stamp valuation and purchase consideration attributable to the assessee's share in the property. The revisionary direction therefore fell within jurisdiction and validly required addition of the assessee's share of that difference.

Search-statement admissions under Section 132(4) have evidentiary value but are not conclusive. A surrender used to impose tax liability must be clear, unambiguous, unconditional and unequivocal, and should identify the relevant assessment year, business activity and source of undisclosed income. Where no incriminating material is recovered and no independent evidence links the alleged surrender to the year under assessment, an addition cannot rest solely on a vague statement. Separate assessment of the same surrendered income in an individual's hands may also create a risk of double taxation where additions have already been sustained in related business concerns.

The Transactional Net Margin Method (TNMM) remained the most appropriate method for benchmarking exports of chemical additives to associated enterprises because it had been consistently applied on an aggregated entity-level basis and produced operating margins within the arm's-length range. As no change in facts, circumstances, or law, and no cogent basis for rejecting TNMM, was identified, the rule of consistency prevented replacement with the Comparable Uncontrolled Price Method. The transfer-pricing adjustments for both assessment years were therefore deleted.

Merger-related goodwill amortisation is treated as a non-operating expense for transfer-pricing operating-margin purposes because it is abnormal, non-recurring and unrelated to the provision of IT services; it must therefore be excluded from operating costs. Companies engaged in diversified high-end, consulting, analytics, product-engineering or digital services, with significant intangibles, absent segmental data, supernormal profits or excessive turnover, are unsuitable comparables for a captive IT-service provider and must be removed from the comparable set. Rule 46A does not apply where segmental information was furnished during assessment and later material merely clarifies that approach; no remand report is required.

Rebate under section 87A omitted from an original return may be claimed through a revised return where the omission is an error capable of correction. The restriction on revising a return to convert positive returned income into a loss return does not apply to a revised claim for an omitted rebate. Denial of the section 87A rebate while processing a valid revised return is unsustainable, and the taxpayer is entitled to the rebate.

Interest on deposits that a primary agricultural co-operative society must maintain under Karnataka co-operative law forms operational business income from providing credit facilities to members and qualifies for deduction under section 80P(2)(a)(i). Such mandatory deposits are distinct from voluntary investment of surplus funds. Interest on deposits exceeding the verified statutory requirement may be assessed as income from other sources; however, only net income is taxable after deduction of directly attributable proportionate expenditure. The mandatory deposit quantum must therefore be determined before applying the deduction and tax treatment.

Section 115BAC permits an individual or HUF to elect the new tax regime if the income-computation conditions under subsection (2) are met. The statutory invalidation of an option for subsequent years arises only from failure to meet those conditions, not merely from delayed filing of Form 10-IE or the return for an earlier year. Filing Form 10-IE was treated as directory, and no fresh form was required for later years after a valid option had been exercised unless that option became invalid on the specified statutory ground. Denial of the new-regime option solely because of prior-year filing delay was therefore unsustainable.

Recorded coaching-fee receipts entered in accepted and audited books, already included in returned income, cannot be treated again as unexplained cash credits without cogent material showing that particular receipts are fictitious, bogus, or manipulated; otherwise, the addition results in double taxation and rests on suspicion. Disallowance of expenditure relating to exempt income under Section 14A read with Rule 8D does not arise where no exempt income was earned and no new exempt-income-yielding investment was made. The Finance Act, 2022 explanation to Section 14A applies prospectively from 1 April 2022 and does not govern earlier assessment years.

Rebate under section 87A under the new tax regime is available to a resident individual with total income within the statutory limit even where income includes short-term capital gains taxable at the special rate under section 111A. The text states that neither provision expressly excludes such gains from rebate eligibility, and no distinction is made between normal-rate and special-rate income. It further states that long-term capital gains taxable under section 112A, where below the statutory threshold, do not prevent the rebate. On that basis, the rebate and any consequential refund are to be granted in accordance with law.

Interest earned by a credit co-operative society from surplus funds temporarily invested with co-operative societies qualifies for deduction under Section 80P(2)(a)(i) when the funds are attributable to its business of providing credit facilities to members and are not liabilities payable to members. The expression "attributable to" has wider scope than "derived from", allowing deduction for interest on funds not immediately required for lending. Interest arising from member liabilities is distinguishable. Delay in filing appeals may be condoned where appellate orders were sent to a superseded email address, the taxpayer did not receive them, and appeals were filed promptly after discovery.

Interest earned by a co-operative housing society on corpus-fund deposits with a co-operative bank falls within the deduction available for income from investments with another co-operative society under Section 80P(2)(d). Section 80P(1) applies to co-operative societies, and a housing society is not excluded merely because of its nature. A co-operative bank registered under the Karnataka Co-operative Societies Act is treated as a co-operative society for this purpose. Accordingly, such deposit interest is eligible for deduction under Section 80P(2)(d).