Under reassessment procedure, a scrutiny notice must be issued only after the taxpayer files a return in response to a reopening notice. Issuing the scrutiny notice before that return is filed makes the notice invalid and cannot cure the statutory defect. Without a valid scrutiny notice, the reassessment order is invalid. Reassessment orders founded on prematurely issued scrutiny notices are therefore liable to be set aside, and appeals challenging their invalidation fail where no further question of law arises.

Rule 68B's amended recovery period applies only where the original limitation period remained alive when the amendment took effect; recovery for 2007-08 and 2008-09 was therefore barred, while proceedings for 2009-10 to 2011-12 remained timely. Service on the defaulting firm sufficed for sale of its assets, particularly where partners received copies and participated; individual notice is required where recovery targets a partner's personal assets. Auction valuation was not defective because sale prices exceeded guideline and partner-declared market values, and revised reserve prices alone showed no undervaluation. Third-party funding of demand drafts did not invalidate compliant auction payments. The recovery auction was confirmed and the sale certificate was to issue to the purchaser.

Penalty under section 271(1)(c) cannot rest on a disallowance of business interest on secured promissory notes once the underlying quantum disallowance has been reversed. Interest on those notes was treated as incurred for business purposes and therefore not deductible only on an unsustainable basis. The Tribunal's deletion of penalty was upheld because the issue was initially debatable and the quantum position later attained finality. With no surviving basis for the disallowance, the penalty could not continue, and the Revenue's appeals were dismissed.

Customs-duty refund limitation for provisionally assessed duty runs from communication of the final assessment order to the person entitled to claim refund, rather than from the order's date. A limitation period cannot begin before the claimant has actual or constructive knowledge of the order creating the remedy. Revenue must establish service through the prescribed statutory mode; mere despatch without proof of delivery is insufficient. In the absence of Revenue evidence of despatch or delivery, and with unrebutted postal evidence of receipt, the refund claim was treated as filed within the one-year period and remained eligible for consideration.

Penalty for cash receipt of immovable-property sale consideration requires foundational satisfaction during assessment proceedings that section 269SS was contravened and that penalty proceedings should be initiated. The Joint Commissioner's separate authority to impose penalty cannot cure the absence of this recorded satisfaction through a later show-cause notice. Where the assessment order contains no finding of contravention or indication of proposed penalty proceedings, subsequent initiation lacks jurisdiction; participation by the assessee does not validate it. The penalty under section 271D was consequently quashed, while the alternative reasonable-cause plea remained open.

Inadvertent filing of the concessional-regime option form by a credit co-operative society does not, by itself, require assessment under that regime where the return was filed under the old regime, claimed the statutory deduction available to credit co-operative societies, and expressly stated that no concessional-regime option was exercised. The filing was not treated as an attempted withdrawal of an option after filing a return under the new regime. Processing the return under the concessional regime and disallowing the deduction were unjustified; the appellate order was set aside and the deduction claim was accepted.

Penny-stock long-term capital-gain claims may fail despite demat, exchange, banking and securities-transaction-tax records where abnormal price movement, operator material and layered purchaser funding establish accommodation entries under the test of human probabilities; related commission additions may consequently stand. Exempt-income expenditure disallowance requires examination of all exempt income, including claimed long-term gains, and may require recomputation. A loose-paper entry cannot be added to a person not named or supported by material, though it may be considered in the attributable family member's assessment. For unsecured loans, established identity alone does not prove creditworthiness or genuineness. Confirmed foreign-account sources can defeat additions absent contrary material. Concealment penalties are invalid where notice does not specify the applicable charge.

Compulsorily convertible debentures, despite their hybrid features, retain their character as debt until conversion into shares. Transfer-pricing authorities cannot treat such instruments as equity solely from their features and fix the arm's length price of related interest at nil. Debt-to-equity recharacterisation is contemplated under Chapter X-A only after an impermissible avoidance arrangement is declared through the prescribed procedure. As no such procedure was invoked, the recharacterisation and resulting transfer-pricing adjustment were deleted, and the appeal was allowed.

Arm's-length pricing of interest on 30-year non-convertible debentures cannot rest on an unsupported minimum-tenure filter under the comparable uncontrolled price method, particularly where tenure does not uniformly determine coupon rates; the transfer-pricing adjustment was deleted. Interest limitation for debt payable to non-resident associated enterprises must exclude interest paid to non-associated enterprises and prevent duplicate disallowance of interest already affected by transfer pricing; recomputation and consequential relief were directed. Classification of assessment adjustments under the appropriate head of income requires verification of the computation and records. A challenge to penalty initiation is premature where no final penalty order is under appeal.

Section 167B, which applies the maximum marginal rate where beneficiaries' shares are indeterminate, does not apply to public charitable trusts or organisations. Their income is chargeable at normal rates notwithstanding uncertainty regarding beneficiaries' shares. Application of this principle requires verification of the trust deed, rectification application, return of income and original assessment order. Following verification, the tax liability should be computed at normal rates and consequential relief granted where due.

Reassessment proceedings require the Assessing Officer to furnish recorded reasons on the taxpayer's request and dispose of objections before continuing the reassessment; non-compliance renders the reassessment unsustainable. For alleged bogus long-term capital gains, contemporaneous banking and demat records, contract notes, securities transaction tax evidence, and proof of share acquisition and sale can establish transaction genuineness. General investigation material or suspicion, without cogent evidence linking the taxpayer to accommodation entries or cash payments to an entry provider, cannot displace that evidence. Additions for unexplained share-sale proceeds and consequential alleged commission were deleted.

Tax deduction at source on leave travel concession reimbursements involving a foreign travel leg was not required where operative interim High Court directions restrained such deduction. Although the foreign travel component was not exempt, the assessee-bank was bound to comply with the interim directions and could not deduct tax contrary to them. Non-deduction during the period those directions remained operative therefore did not render the bank an assessee in default. Consequent demands for tax and interest were deleted.

Section 56(2)(x)(b), introduced by the Finance Act 2018 and applicable from Assessment Year 2019-20, operates prospectively. It cannot tax the difference between purchase consideration and stamp value where an immovable-property purchase agreement was executed in 2013 and substantial consideration was paid through banking channels before the provision was inserted. On those facts, the stamp-value-difference addition was deleted and the appellate order sustaining it was set aside.

Assessment issued in the name of an amalgamating company that had ceased to exist, after the Revenue had been informed of the amalgamation, constitutes a jurisdictional defect rather than a procedural irregularity. Section 292B does not cure this defect, and participation in assessment proceedings does not create an estoppel against law. The assessment was quashed as void ab initio on the additional jurisdictional ground, while the remaining merits grounds were left open as academic.

Diversion of income by overriding title arose where a collaboration agreement, banking records, ledger accounts and supporting material established the collaborator's entitlement to a share of flat-sale proceeds. That share did not accrue as the assessee's income because the agreement imposed an overriding obligation; procedural non-compliance, stamp-paper objections, lack of witnesses or doubts about expertise did not establish a fictitious income-diversion device. The resulting addition was deleted. Land acquisition cost could not be disallowed on the basis that it was absent from the books, since the books recorded the land and the purchase deed substantiated acquisition. The unexplained-source inference and related disallowance were deleted.

Outstanding trade-creditor additions may require verification rather than immediate treatment as unexplained cash credits where purchases, corresponding sales and stock are accepted, repayments are undisputed, and additional evidence supports genuine dealings. Additional evidence may be admitted where a supplier's records were unavailable because of fire, subject to assessment verification; no addition should follow if verification reveals no discrepancy. For purchase transactions subject to both tax deduction and collection rules, a buyer need not deduct tax where the seller has already collected tax at source before deduction. Accordingly, the related purchase-payment disallowance was deleted, while the creditor balance was restored for verification.

Under the transactional net margin method, turnover disparity alone does not justify excluding a functionally comparable entity; material impact or reasonably accurate comparability adjustments must be examined, and arm's-length-price adjustments must be confined to associated-enterprise transactions. Goodwill amortisation that is abnormal and non-recurring, and costs unrelated to associated-enterprise transactions, are excluded from operating costs. Import-duty adjustments and warranty, replacement and bad-debt deductions were accepted on consistent treatment, while verification-dependent provision reversals, write-backs and working-capital adjustments require factual examination. Long-term benefit alone does not make business-rights expen.....

Interest on capital borrowed for business purposes is deductible, subject to the restriction applicable until an acquired asset is first put to use. Use of land as a storage yard may be established through delivery and transport records, electricity bills and photographs; such evidence requires verification and cannot be rejected without contrary material. Construction reflected as capital work-in-progress on part of the land does not by itself show that the remaining land was not used for business. Where interest-free funds and borrowings form a common pool, investment is presumed to come from interest-free funds unless a direct nexus with interest-bearing borrowings is established.

Timely revised returns may correct the classification of an already disclosed F&O loss from speculative to non-speculative business loss, with consequential recomputation of its set-off and carry-forward. Such correction does not introduce a fresh or undisclosed loss merely because it changes the loss's character and tax treatment. A revised return filed within the prescribed period must be considered, while the legal sustainability of the reclassification and the treatment of F&O transactions remain subject to independent examination. The stated approach distinguishes revisions of disclosed losses from later claims that contradict an express option exercised in the original return.

Rule 37BA(1) allocates TDS credit to the deductee based on information furnished by the deductor. Where fixed-deposit interest is assessable in a spouse's hands through clubbing of income, Rule 37BA(2) permits transfer of the related TDS credit only if the deductee gives the prescribed declaration to the deductor and the deductor reports the deduction in the other person's name. Without that declaration, TDS continuing in the deductee's Form 26AS remains governed by Rule 37BA(1). Any discrepancy between TDS claimed and the credit reflected requires examination under section 199 and Rule 37BA.