Uncorroborated third-party electronic records and statements cannot by themselves establish an alleged cash payment for an addition under section 69A of the Income-tax Act, 1961. A person against whom third-party documents are used must have an opportunity to rebut their contents or cross-examine the persons concerned. Where the alleged payment is denied, no cash is found in the person's possession and the electronic entry lacks corroboration, generalized third-party information is insufficient to establish the transaction.

Returned loss can determine pecuniary jurisdiction for reassessment under CBDT Instruction No. 1/2011. A notice issued by an officer lacking that jurisdiction renders the notice and consequential reassessment void from inception; restrictions on objections to territorial jurisdiction do not cure the defect. For unexplained cash credits under section 68, documentary material can establish lenders' identity and creditworthiness and the genuineness of loan transactions. An appellate authority's power to conduct further inquiries under section 250(4) is not restricted by the rules on additional evidence. Treating advertisement receipts received through banking channels, adjusted against services and already taxed as business revenue as unexplained credits would result in double taxation.

Employee benefit and labour expenses must be supported by evidence of their genuineness and business purpose to qualify for deduction under section 37 of the Income-tax Act, 1961. Ad hoc percentage disallowances based on deficiencies in supporting evidence and possible inflation, without identifying specific bogus payments, cannot stand. An alternative percentage is also unsupported without material, and allowability remains subject to fresh verification of the expenditure.

Arm's-length remuneration of an associated enterprise constituting a dependent-agent permanent establishment leaves no further profit attributable to the establishment, taking account of the functions performed and risks assumed by the foreign enterprise. The tax authorities treated the Indian entity as a dependent-agent permanent establishment under the India-UK tax treaty and estimated profits relating to a business connection under Rule 10 of the Income-tax Rules, although its cost-plus remuneration remained undisturbed as arm's length.

Transfer pricing adjustments for freight, handling and related charges require arm's length benchmarking under Section 92C of the Income-tax Act, 1961. Inadequate documentation does not justify adjusting the entire payment or restricting the adjustment to an estimated percentage without applying the most appropriate prescribed method. Where the taxpayer's benchmarking is rejected, the arm's length price must be determined afresh using that method. Documentation failures may have other statutory consequences but do not remove the benchmarking requirement.

Treaty-exempt current-year capital gains need not be set off against brought-forward capital losses, which remain eligible for carry forward in accordance with domestic law. Section 90 of the Income-tax Act permits an assessee to elect more beneficial treaty provisions for an assessment year. Article 13 of the India-Mauritius treaty provides the relevant capital gains exemption, while section 74 governs the carry forward and set-off of capital losses. Neither the Act nor the treaty expressly bars the election without setting off brought-forward losses.

Section 270A distinguishes ordinary under-reporting from under-reporting resulting from misreporting, with the latter attracting a higher penalty. Misreporting requires identification of the specific circumstance under section 270A(9) and a showing that its requirements are met. A generic notice fails to communicate the precise charge where the assessment and penalty orders also lack clause-specific findings. Under section 270A(6)(a), income is excluded from under-reported income where a bona fide explanation is satisfactorily substantiated by material facts, including in relation to omitted bank-interest income.

For assessment year 2020-21, Section 139(4C) required a return but did not make filing a condition for exemption under Section 10(23C)(iiiad). The return-filing condition introduced by the twentieth proviso to Section 10(23C) took effect prospectively from 1 April 2023. Registration under Section 12A was not required for the exemption. Where receipts remained within the applicable threshold and substantive conditions were satisfied, non-filing alone did not justify denial of exemption for assessment year 2020-21.

Section 45(2) of the Income-tax Act, 1961 defers taxation of capital gains arising from conversion of land into stock-in-trade until the previous year in which the stock is sold or otherwise transferred. Where the converted stock is sold in stages under a development agreement, the corresponding long-term capital gains are chargeable proportionately in the relevant years. Assessing the entire gain in the year of conversion and execution of the agreement would result in double addition where corresponding gains are offered in the relevant years.

Diwali celebration expenses incurred at business premises with staff can qualify as business expenditure under Section 37(1) of the Income-tax Act, 1961, where they serve business purposes, including goodwill among employees and customers. General, office and sales-promotion expenses may be disallowed to the extent admitted or shown to be personal. Unverifiable bills alone do not justify a blanket disallowance of the remaining expenditure without a specific finding that it is personal or non-business expenditure.

Penalty under section 271B requires failure to obtain an audit or furnish the audit report as required under section 44AB; objections to the report's particulars alone do not establish that failure. Ledger entries, sale bills and bank statements can support an explanation that a business advance was settled through supply of goods and repayment of the balance, relevant to its treatment as unexplained money. Where business profit is estimated after rejection of books, evidence of electronic filing and subsequent furnishing of the audit report may require verification with an opportunity of hearing.

Environmental preservation expenditure is allowable in computing business income at the normal rate despite denial of charitable trust registration, where the assessee is treated as carrying on business. Section 37 of the Income-tax Act, 1961 governs qualifying expenditure incurred wholly and exclusively for business, while section 57 concerns expenditure for earning income from other sources. The claimed expenditure was supported by evidence, the books were not rejected, and the ad hoc disallowance lacked cogent reasons.

Late-filing fees under Section 234E cannot be computed during processing of TDS statements for assessment years 2012-13 to 2014-15 merely because processing occurred after 1 June 2015. Section 200A(1)(c) supplied the mechanism for computing those fees from that date. For a statement relating to assessment year 2013-14, processing after the amendment does not authorise the fee or consequential interest; the levy is unlawful.

Section 44AE of the Income-tax Act, 1961 defines a heavy goods vehicle by reference to a gross vehicle weight exceeding 12,000 kilograms and prescribes a weight-based presumptive income rate. Under the applicable framework, including the Motor Vehicles Act, 1988 and the CBDT circular, unladen weight is relevant to tractors or road-rollers. The heavy-goods-vehicle rate applies to goods carriages with a gross vehicle weight of 49,000 kilograms each that were not shown to be tractors or road-rollers, despite their lower unladen weight.

Tax deducted at source is available as a credit to the extent it relates to the corresponding income. The return was processed under Section 143(1) without granting the disputed credit, although Form 26AS reflected both the income and tax deducted. Credit had also been granted to a co-owner. The assessee is entitled to the credit relating to the corresponding income.

Revision of an assessment under section 263 requires an error prejudicial to revenue, including a failure to make necessary enquiries. Cash deposits supported by records, and explanations of liquidity, investments, property payments and profit ratios, do not justify revision where alleged discrepancies or adverse findings are unsubstantiated. Section 145A requires specified taxes, duties, cess and fees to be included in the valuation of purchases, sales and inventory. Separately recording GST and cess rather than including them in those valuations breaches that requirement and justifies revision. Fresh assessment remains confined to the valuation issue.

Penalties for concealment or furnishing inaccurate particulars on estimated additions for alleged bogus purchases are unsustainable where coordinate-bench decisions on identical additions support deletion and no distinguishing features or subsequent contrary rulings exist. Judicial discipline and consistency require those decisions to be followed. Penalties imposed under section 271(1)(c) of the Income-tax Act, 1961 on such estimated additions must therefore be deleted.

Writ jurisdiction may be exercised despite an alternative appeal to the Tribunal where an appellate order under section 250 of the Income-tax Act, 1961 involves an apparent procedural error and denial of an opportunity to be heard. Deciding an appeal ex parte before the deadline for written submissions violates natural justice and may justify setting aside the order and providing a fresh hearing and decision. The assessment merits remain open for that decision.

Transfer-pricing comparables for software and IT-enabled services must be functionally comparable, taking account of business models, outsourcing and differences between higher-end and routine services. Companies with abnormal profits attributable to extraordinary circumstances, including a merger and consolidated results, must be excluded where their inclusion would distort the mean profit level indicator. These exclusions prevent functionally dissimilar companies or distorted results from forming the basis of the arm's length price benchmark.

Reassessment beyond three years and aggregation of bogus-purchase expenditure across previous years are the tax issues.