Cash-deposit additions under Section 69A were considered unsustainable where prior returns, cash-flow statements and statements of affairs established an opening cash balance exceeding the deposits. The disclosed availability of cash supported deletion of the addition. For property acquired below stamp-duty value, an addition under Section 56(2)(x) was considered unsustainable when the purchaser disputed the valuation, substantiated the stated consideration and sought reference to the Departmental Valuation Officer. Proper valuation through that reference was required before determining any valuation-difference addition, resulting in deletion of both additions.

Mandatory electronic filing of Form 35 did not render an appeal time-barred where the assessee attempted e-filing but encountered system-related difficulties and filed a physical appeal within the prescribed period. Circular No. 20/2016 recognised such technical difficulties and extended the period for electronic filing. Since the delay was not attributable to the assessee, dismissal of the appeal on limitation was unjustified and was set aside in favour of the assessee.

Transfer-pricing benchmarking for sourcing support services requires comparables to satisfy the related-party-transaction filter and functional comparability criteria. Entities failing the prescribed related-party-transaction filter should be excluded. A wholly Government-owned entity may be unsuitable where its ownership characteristics affect comparability. Companies earning commission-based revenue from advertising space or time are not comparable with a cost-plus service provider because their profit profiles differ materially. Infrastructure project-management, engineering, architectural and sector-specific consultancy providers are functionally distinct from sourcing support service providers. Benchmarking must be redetermined after removing unsuitable comparables and allowing the taxpayer an opportunity of hearing.

COVID-19-induced underutilisation of a captive service provider's manpower and infrastructure can warrant a capacity-utilisation adjustment under TNMM where abnormal idle costs materially depress operating margins. Rule 10B(3) permits reasonably accurate adjustments for material profit-affecting differences and does not require publicly available identical capacity-utilisation or idle-cost data for comparables. Reasonable economic estimation is sufficient where the idle costs, their business nexus and computation are demonstrated and reliable. Neutralising the abnormal idle costs produced an operating margin of 14.25%, exceeding the comparable median of 11.84%; the international transactions were therefore at arm's length and required no transfer-pricing adjustment.

Section 144C(13A), retrospectively effective from 1 April 2009, governs limitation and leaves the final assessment within time. Cost-to-cost recovery of withholding tax paid on employee stock options for associated enterprises is unrelated to ITeS and must be excluded from operating income when computing the operating profit-to-operating cost margin. Comparable selection must follow actual functions: voice call-centre, routine BPO, IT service and intellectual-property consultancy entities are materially dissimilar, while the identified knowledge-processing comparable is retained. Delayed receivables are an international transaction, but a working-capital adjustment under TNMM addresses their profitability effect where linked to ITeS, precluding a separate notional-interest adjustment.

Transfer-pricing adjustments for US tax-return preparation and secondment services require fresh verification of any COVID-19 adjustment through evidence of exceptional costs and their differing impact from comparables. Export incentives, foreign-exchange items connected with revenue transactions, and depreciation on deployed assets must receive consistent operating treatment for the tested party and comparables; recomputation is required on that basis. For software support services, employee-cost differences alone do not invalidate an internal CUP; functional, contractual and market comparability must be examined before selecting TNMM or another appropriate method. The assessment remains within limitation where the draft order was timely and the final order followed DRP directions within the prescribed period.

Transfer-pricing determination must separately examine the taxpayer's segmental break-up of income and expenses when determining the arm's length price. Disregarding a material segmental analysis, without substantively addressing objections to that treatment, requires reconsideration after providing an opportunity of hearing. The absence of a transfer-pricing adjustment in the subsequent assessment year formed part of the factual context supporting fresh examination. The determination therefore requires a fresh segment-wise analysis in accordance with law.

Transfer-pricing adjustment for intra-group management, sales and support services was deleted where agreements, allocation workings, invoices and supporting material demonstrated that the services were rendered and supported business operations. The services were not established as shareholder or stewardship activities. An arm's length price of nil under the Comparable Uncontrolled Price Method lacked comparable uncontrolled transactions and cogent benchmarking. The entity-level operating margin, after the service costs, remained within the accepted arm's length range.

Compensation received under an award or agreement made pursuant to the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 is exempt from income tax under Section 96. Accordingly, capital gains arising from such acquisition compensation fall outside taxable income under the Income-tax Act, 1961. Disclosure of the gain in the return without claiming the exemption does not prevent recognition of the statutory non-liability, requiring the assessment to be reconsidered on that basis.

Notice under Section 148 issued to a deceased assessee is invalid where the legal representative promptly objects and does not submit to the assessing jurisdiction. Intimating the assessing authority of the death and reiterating the objection does not constitute participation in assessment proceedings. Section 159 of the Income-tax Act does not cure proceedings initiated through a notice addressed to the deceased person. Consequently, the reassessment initiation, consequential assessment and demand are invalid, although proceedings may be commenced against the legal representative under Section 159 if otherwise permissible.

Approval under Section 151 is a mandatory jurisdictional safeguard before issuing a reassessment notice under Section 148. As an "other document" under Section 282A(1), the approval must bear the approving authority's manual or digital signature. A DIN, electronic transmission, or printed name and designation does not cure an unsigned approval or establish compliance with that requirement. Section 292BC did not apply where the approval pre-dated its effective date. An unsigned sanction therefore invalidates the reassessment notice and consequential reassessment proceedings for want of jurisdiction.

Demand under Section 156 requires a final assessment under Section 143(3) determining the sum payable; a draft order that merely proposes variations, preserves objections, and is not followed by a final order cannot support demand or consequential penalty proceedings. Section 292B cannot retrospectively convert such a draft order into a final assessment. Further, the Section 144C draft-assessment procedure is unavailable where the Transfer Pricing Officer makes no variation to returned income, since the assessee is not an eligible assessee under Section 144C(15)(b). The draft assessment and resulting fiscal and penalty actions were therefore invalid.

Reassessment jurisdiction requires material with a direct and live nexus to the alleged escapement of income. Allegations concerning persons connected with a foreign investor, without reference to the taxpayer or its investment transaction, are remote and cannot support a reason to believe that share capital or premium represented escaped income. An inference that the taxpayer routed its own funds through an unrelated foreign investor is also unsustainable on human probabilities. Employees' PF and ESIC contributions deposited by the return-filing due date remained deductible under the law prevailing when the notice was issued; a later contrary ruling cannot retrospectively establish escapement. Neither ground validly supported reopening, requiring annulment of the reassessment notice.

Reassessment under Sections 147 and 148 lacks jurisdiction where its recorded reasons rely solely on additions or disallowances in subsequent assessment years that binding appellate orders have overturned. Deletion of the Revenue's position on broken-period interest, premium amortisation on held-to-maturity securities, non-performing asset interest, perpetual debt instrument interest, bad debts and wage-revision provision removes the factual foundation for a reason to believe that income escaped assessment. The reopening notice and rejection of objections are therefore liable to be quashed because the basis for reassessment no longer exists.

Revision of an assessment under section 264 cannot be rejected as non-maintainable for lack of legal-heir proof when material supplied to establish legal-representative status has not been considered. Recognition of the legal representative and a personal hearing are required before fresh determination on merits. Where reassessment was made ex parte because notices went to a deceased taxpayer's email address before the heir knew of the proceedings, the assessment and consequential penalty actions were stayed pending disposal of the revision application and for four weeks thereafter.

Service of a show cause notice and an opportunity of hearing are mandatory before the Transfer Pricing Officer determines arm's length price under Section 92CA(3) read with Section 92C(3). Information notices issued during transfer-pricing proceedings do not substitute for the statutory notice requiring the assessee to respond to a proposed adjustment. Non-service of that notice deprives the assessee of the required hearing and invalidates the arm's length price determination. The determination must therefore be set aside and reconsidered only after proper notice and hearing.

Section 11(1A) permits a charitable trust to claim capital-gains exemption where sale consideration from a trust-held capital asset is used to acquire another capital asset. Investment of the entire proceeds in a bank fixed deposit for at least six months qualifies as such utilisation; a two-year deposit therefore satisfies the condition. Revision under Section 264 can correct a bona fide omission in a return that causes overassessment, rather than being limited to mistakes by tax authorities. Compliance issues under the Gujarat Public Trust Act or doubts about charitable activity do not displace this standalone exemption where the trust has valid registration and disclosed all material facts. Excess tax is refundable with applicable interest.

Pending rectification of denial of tax exemption for non-filing of Form 10-B requires merits-based consideration before a writ challenge to the resulting tax demand is adjudicated. Where the application was acknowledged but absent from the electronic system and no merits order existed, the competent authority must place it on record, decide it according to law, and communicate the decision. The tax demand must conform to that determination.

Full GST liability paid before demand under the IGST head, instead of the applicable CGST and SGST heads, does not by itself attract interest or penalty where the error was an inadvertent clerical mistake. Section 77(2) of the CGST Act does not apply unless tax was paid under a genuine misconception that an intra-State supply was inter-State. Incorrect remittance between tax heads, without any unpaid tax liability, therefore does not warrant interest or penalty solely on account of the mistaken tax-head classification.

Assessment of tax liability under Section 73(9) cannot be made before expiry of the due date for filing the relevant financial year's annual return. For financial year 2022-23, an order made before 31 December 2023, when that was the annual-return due date, lacked authority. The assessment was set aside, with fresh assessment permitted only after notice and an opportunity of hearing.