Statutory pre-deposit for an appeal against a penalty order does not apply under the proviso where the original order imposed a composite liability for tax, interest and penalty. Payment of the tax and interest components does not convert that original composite order into an order demanding penalty alone. A later recovery order confined to penalty likewise does not alter the character of the original order. Accordingly, rejection of the appeal for failure to deposit ten per cent of the penalty was set aside and the appeal was restored for adjudication on merits.

Conditional de novo GST adjudication may be granted where an assessee shows inability to participate because of heart illness and undertakes to make a partial pre-deposit. The assessment may be quashed and treated as an addendum to the show-cause notice, allowing a fresh reply with supporting documents. Fresh adjudication is conditional on cash deposit of 10% of disputed tax and timely submission of the reply; failing compliance, recovery may proceed according to law.

Input tax credit is a conditional statutory entitlement requiring cumulative compliance, including actual tax payment by the supplier. Recipient exposure to supplier default is addressed through reversal and subsequent re-availment of credit, with the claimant bearing the burden of proving eligibility. Fraud-based proceedings require prima facie material supporting allegations of fraud, wilful misstatement or suppression; detailed allegations of fake invoices, bogus supplies and no movement of goods require merits examination. Pre-notice intimation is enabling rather than mandatory, and investigation and adjudication by the proper officer do not alone establish bias. Merits disputes should ordinarily proceed through the statutory appellate remedy.

Clause 2(c) of the 2006 interest waiver/reduction scheme requires non-payment of tax to result from a jurisdictional High Court ruling that governed the taxpayer when advance tax was paid or the return was filed. A later ruling does not satisfy that condition, and waiver also requires prior payment of the principal income-tax demand. Challenges to the underlying interest liability cannot be pursued in proceedings confined to a waiver application. Interest under section 220(2) arises only after default in paying a demand served under section 156 within the prescribed period. Waiver rejection was sustained, while taxpayers may seek refund of excess section 220(2) interest if charged from the return-filing date.

For assessment orders passed before 1 April 2025, the Assessing Officer lacked jurisdiction to impose or initiate penalty proceedings for contravention of cash loan or deposit restrictions under section 271D. Non-initiation of such penalty proceedings therefore could not make the assessment order erroneous and prejudicial to the interests of the Revenue for revision under section 263. A revisionary order founded solely on that omission was set aside, and the taxpayer's appeal was allowed.

Obsolete telecom-related inventory may be written down to nil under a consistently applied lower-of-cost-or-net-realisable-value method where physical verification, item-wise particulars, audited-account disclosures and business discontinuance support that valuation. Inventory should not be carried above the amount expected from sale or use. A higher assumed scrap or realisable value requires positive evidence, such as an independent valuation, market quotation, comparable sale or identified purchaser; absence of a technical certificate or separate bank communication does not by itself displace a supported valuation. The Revenue bears the burden of proving a higher net realisable value once the valuation basis is reasonably demonstrated.

Surrendered income arising from cash and stock discrepancies at business premises, and disclosed in the profit and loss account, is treated as business income where no independent undisclosed asset or non-business source is identified. The enhanced tax rate under section 115BBE, effective from 1 April 2017 without express retrospective operation, does not apply to FY 2016-17. Where competing reasonable interpretations of an ambiguous taxing provision are available and no jurisdictional High Court ruling governs, the interpretation favourable to the assessee applies. The surrendered income is consequently taxable at the normal business-income rate.

Rejection of books of account under section 145(3) requires specific defects that prevent correct determination of business income; suspicion about cash receipts is insufficient where disclosed turnover and trading results remain undisturbed and computerised books and supporting records are offered for verification. Section 69A does not apply to money recorded in the books merely because the books are formally rejected. Cash deposits within recorded cash balances, arising from disclosed sales and trade-debtor realisations, cannot be assessed again as unexplained income unless their nexus with the recorded business is disproved. The section 69A addition was deleted, with consequential taxation under section 115BBE and penalty proceedings not surviving.

Section 50's deeming fiction treats gains on transfer of depreciable assets as short-term capital gains only for capital-gains computation. It does not exclude commercial profit credited to the Profit and Loss Account from book profit used to determine the ceiling on working partners' remuneration. Explanation 3 to section 40(b) starts with net profit in the Profit and Loss Account, subject to Chapter IV-D adjustments and add-back of remuneration already deducted, rather than excluding receipts taxable under another income head. Profit from sale of depreciable shop premises therefore remained in book profit, making the claimed partners' remuneration within the statutory ceiling and requiring deletion of the disallowance.

For assessment year 2011-12, subsequently introduced share-premium taxation and the proviso requiring explanation of a resident shareholder's source of funds do not apply retrospectively. Share receipts must instead be tested under section 68 as then in force. Although an assessee has no automatic obligation to prove the source of source, the investor's bank trail, financial capacity, control of funds and surrounding circumstances remain relevant to creditworthiness and genuineness. Where a composite receipt includes share capital, premium, application money and investment-sale consideration, each component requires separate verification. Corporate and banking records are relevant but not conclusive; review should cover investor capacity, antecedent credits, valuation, underlying investments and commercial rationale.

Historical wealth-tax records, valuation reports and family-distribution evidence can substantiate ancestral and self-owned jewellery; non-filing of later wealth-tax returns, without evidence of disposal, does not establish that prior holdings were sold. Accordingly, jewellery disclosed in Schedule AL could not be treated as unexplained merely because original purchase bills were unavailable. Brokerage paid to a Hindu undivided family is not deductible as investment cost for capital-gains exemption where no family fund or asset generated the income and its Karta or coparcener was separately paid for the same personal services. Recipient confirmation or taxability does not establish deductibility; the brokerage disallowance remained sustainable.

Charitable entities whose exemption under sections 11 and 12 is not claimed may deduct expenditure incurred to advance their charitable objects when income is assessed under "Income from Other Sources". Section 57(iii) applies to the computation of such income, including donations made in furtherance of those objects. Applying the coordinate-bench approach where no material factual or legal distinction existed, ITAT deleted the disallowance of the donations and allowed the deduction. The alternative deduction claim under section 80G required no separate adjudication.

Interest-free, repayable housing assistance to financially needy persons may constitute relief of the poor where beneficiaries are selected on genuine financial need, assistance is for reasonable housing, and the trust receives no interest, fee, commission, mark-up or other commercial benefit. Systematic disbursement, repayment security and recycling through a revolving fund do not by themselves make the activity money-lending or commercial. Loans advanced towards charitable objects cannot be treated as impermissible investments without identifying a specific offending investment or deposit. Registration was remanded for limited verification of beneficiary need, loan terms, recoveries, absence of commercial return and redeployment; related donor-tax approval requires consequential fresh consideration.

Assessment-order limitation depends on when the order is made or passed within the statutory period, not on later dispatch, communication or receipt; a dated order remains timely absent material showing it was actually made later. Rental income reflected in Form 26AS cannot be added without verifying whether timing differences from straight-line lease-rental recognition have already been taxed in another year. Interest on refinancing may qualify for deduction under section 24(b) only where a direct nexus connects the original borrowing, property acquisition or construction, and subsequent loan. Tenant-wise reconciliation and refinancing fund-flow evidence require fresh verification; the limitation challenge was rejected, while the rental and interest issues were remanded.

Brought-forward capital cannot be assessed as current-year income merely because an originally reported balance-sheet figure is erroneous; a demonstrable accounting correction supported by accepted prior-year records is permissible absent evidence of fresh unexplained accretion. Alleged on-money for immovable property requires cogent proof of actual payment, and a retracted vendor statement or unconnected cash deposits does not establish ownership of unexplained money. Section 68 requires a credit arising in the relevant year, so aggregate closing creditor balances, internal appropriations, prior-year liabilities and supported chit liabilities cannot be taxed without component-wise examination. Recorded sundry debtors are debit receivables, not cash credits or unrecorded investments. On these principles, the four additions were deleted.

Operational expenditure incurred to run an already deployed, revenue-generating telecom network retains its revenue character even when recorded as capital work-in-progress; book entries do not conclusively determine tax deductibility. Absent identification of an asset created or a nexus with acquisition or construction, deferral until quality-of-service targets are met does not make recurring operating costs capital. Payments to non-resident telecom operators for connectivity, carriage, termination, bandwidth and maintenance are not royalty or technical-service fees where the payer obtains no right to use equipment or process and receives no technical capability. Without Indian taxability or a permanent establishment, no withholding obligation arises.

Business-expenditure and depreciation principles support deduction where expenditure serves ongoing operations without creating a capital asset or ownership right. Public-road contributions, compensatory afforestation, dry docking, mining-lease renewal stamp duty, dumping conversion charges, obsolete inventory write-offs and irrecoverable supplier advances are treated as revenue or business outgoings on the stated conditions. Depreciation is linked to use of any asset within a block and may extend to qualifying commercial vehicles, energy-saving generators and brought-forward goodwill. Interest disallowance is not justified where interest-free funds exceed investments or no borrowing-advance nexus exists. Withholding is not triggered for ex.....

DCF valuation adopted for share premium under Rule 11UA cannot be replaced by the NAV method merely because projected results differ from subsequent actual performance. Consistent acceptance of the same premium in earlier years and for identical shares issued to non-residents supports equivalent treatment for resident shareholders. Occupancy certificates do not determine the deductibility of borrowing interest where commercial buildings have been put to use, rental income is assessed as business income, and borrowings funded construction. Advertisement and marketing costs for commercial space remain allowable business expenditure where incurred for commercial exploitation, notwithstanding a subsequently obtained occupancy certificate.

Declared transaction value cannot be rejected merely because a foreign supplier mistakenly shipped different goods where the Bill of Entry matches the supplier's invoice and import documents, and no evidence establishes deliberate misdeclaration, fraud, suppression, wilful misstatement or duty evasion by the importer. The resulting classification change is not attributable to the importer. Goods received through a bona fide supplier-induced mix-up may be cleared on payment of appropriate duty. Confiscation, redemption fine and importer penalty do not arise without the required culpable conduct. Packaged-commodity declarations must be completed before home-consumption clearance and may be affixed with prescribed permission. BIS-non-compliant non-releasable amplifiers remain subject to re-export.

Declared garments used to conceal substantial quantities of undeclared imported goods remain confiscable and may be released on payment of redemption fine. Concealment involving imports in breach of trade and intellectual-property laws supported confiscation, but redemption fine was reduced to 10 per cent of the declared or assessed value because the original fine was excessive. Liability to penalty for gross misdeclaration and improper importation was sustained where the importer failed to provide satisfactory material establishing lack of knowledge of the undeclared goods supplied by a foreign supplier. The penalty quantum was reduced, and the appeal was partly allowed.