Adjudicatory decisions cannot be sustained when they rely on cited precedents that cannot be traced and are disclaimed by the authority. This applies where untraceable citations support treating the fifteen-day period for a speaking order under Section 17(5) of the Customs Act as directory. Fake or hallucinated precedents cannot provide a basis for adjudication, and the classification of the period cannot rest on such disclaimed citations.

Admissibility of statements recorded under section 108 raises questions about compliance with the mandatory procedure in section 138B. Electronic evidence raises questions about the provenance of emails. Customs valuation issues include rejection of transaction value under Rule 12 of the Customs Valuation Rules, 2007, and redetermination under Rule 9, including by reference to comparable invoices. The beneficial owner doctrine is also relevant.

Benami-law amendments introduced in 2016 apply retrospectively insofar as they are declaratory, curative or procedural, including machinery for attachment, adjudication and confiscation. Provisions creating new offences or enhancing punishment apply prospectively. A benami transaction involves property held by one person for the benefit of another who provided the consideration. Deposits under the Income Declaration Scheme, 2016 may qualify as benami property where void declarations and a request to adjust the deposits against another person's tax demand support identification of that person as the provider of consideration and beneficiary.

Tax additions for alleged on-money payments cannot rest solely on assumptions or presumptions unsupported by evidence linking the taxpayer to the payment. Where neither the assessment nor the lower appellate findings discuss incriminating evidence connecting the taxpayer to the alleged payment, an addition based on such assumptions lacks the evidentiary basis needed to sustain it.

An addition for an alleged cash on-money payment must be supported by evidence linking the taxpayer to the payment. Assumptions and presumptions alone cannot sustain the addition. Claimed search material does not establish the required link where neither the assessment nor the appellate findings identify actual evidence connecting the taxpayer to the alleged payment.

Section 68 of the Income-tax Act, 1961 requires an explanation of an unsecured loan credit to be tested against evidence of the creditor's identity and the transaction's genuineness. Lender confirmations, tax return acknowledgements containing PAN particulars, and bank statements showing receipt and repayment through banking channels can support the explanation. General investigation reports and third-party statements about accommodation entries do not directly connect a particular loan with the borrower's unaccounted money. Where supporting documents remain undisplaced by independent, transaction-specific inquiry or evidence tracing the borrower's cash, the loan cannot be treated as unexplained solely on that general material.

Reopening beyond three years under section 149(1)(b), as applicable, requires material revealing income chargeable to tax amounting or likely to amount to at least Rs. 50 lakh. For a capital asset transfer, the threshold is assessed using income computed under section 48, not gross sale consideration. Sale proceeds less purchase cost can fall below the threshold even before indexation or consideration of disputed ownership shares, preventing reopening.

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.