Reassessment initiated and completed against a dissolved partnership firm after its business succession to a proprietorship concern is legally unsustainable where the Department had accepted the succession and assessed the relevant transactions in the successor's hands. Assessing the same income again in the dissolved firm's hands would cause impermissible double taxation. Reopening jurisdiction also fails where the recorded reasons merely refer to financial transactions and cash deposits without identifying the relevant bank account, specific transaction, or material indicating income escapement by the erstwhile firm. The reassessment and consequential addition were therefore invalid.

Interest earned by a primary agricultural credit society on deposits of surplus profits qualifies for deduction as profits attributable to providing credit facilities to members where the deposits are connected with, permitted by, or required for its lending business. Interest from members' funds or deposits lacking a business nexus is distinguishable, and entitlement requires factual verification. Disallowances for failure to deduct tax at source and the taxability of miscellaneous income require fresh examination where relevant expenditure, tax-deduction and income particulars were not furnished and an effective opportunity to provide them was allegedly unavailable. The relevant records must be examined in accordance with natural justice.

Alleged bogus purchases supported by books, banking channels, GST records, invoices, delivery challans, stock registers and accepted corresponding sales should not ordinarily result in disallowance of the entire purchase value where the books are not rejected. Supplier-related adverse material and discrepancies in transport documents may justify taxing the embedded profit attributable to unverifiable purchases. The profit element was estimated at 12.5%, with the remaining purchase disallowance deleted. The governing principle is that accepted sales and corroborative accounting and tax records support a profit-based addition rather than full purchase disallowance.

Section 54F treats the cost of a new residential asset as extending beyond the purchase consideration where genuine post-purchase reconstruction, renovation, alterations and improvements are incurred to make the house suitable for residential use. The cost of land and construction may be aggregated, and the prior habitability of the purchased house or the scale of improvement expenditure does not by itself disqualify the expenditure. However, expenses for personal comfort rather than construction do not qualify. Genuine reconstruction and renovation expenditure, together with the purchase cost, is eligible for the full Section 54F deduction.

Penalty under Section 271DA for alleged cash receipt contrary to Section 269ST cannot survive where the sole quantum addition was deleted because the assessee was not involved in the underlying transaction. Establishing an actual cash receipt by the assessee is essential. Presumptions relating to seized material do not apply where the material was recovered from another entity's premises, did not refer to the assessee, and lacked supporting admission. A pending further appeal against the quantum deletion does not alter the operative effect of existing appellate findings without a stay. The penalty was therefore unsustainable and deleted.

Business expenditure remains deductible where profit and loss accounts, purchase records, VAT returns and sales records establish that the underlying receipts and costs arose from business transactions. Incorrectly reporting those receipts and expenses under income from other sources in the return constitutes a return-preparation error and does not alter their true business character. The claimed expenditure was therefore allowable as business expenditure, and the disallowance was deleted.

Interest paid on bank and non-banking financial company borrowings used to advance loans was deductible from income from other sources where the assessment record established a direct nexus between the borrowings, the loans advanced to private parties, and the interest income earned. Interest expenditure incurred to generate declared interest income was allowable under the applicable deduction provision. The corresponding disallowances for both assessment years were deleted.

Assessment against a person other than the searched person under the search-assessment framework depends on the date seized material is handed to that person's Assessing Officer. Where handover and satisfaction occur on or after 1 April 2021, that framework is excluded and reassessment is the prescribed route; the notice and consequential assessment were quashed for lack of jurisdiction. Penalty limitation for a matter not linked to assessment proceedings begins when the Assessing Officer refers the matter for penalty action. As the penalty order was passed after the applicable six-month period, the penalty for accepting prohibited loans or deposits was time-barred and quashed.

Recurring digital marketing and platform-facilitation expenditure incurred to promote an existing business is revenue expenditure where it creates no asset or advantage in the capital field. Digital advertising, media management, search-engine optimisation, SMS broadcasting, content generation, video production and social-media strategy required repeated promotional spending and merely improved customer traffic, sales and commission income; the expenditure was allowable under Section 37. Payments for digital-platform search and product-display services similarly enabled product visibility, corrected search terms and improved customer access without procuring a capital asset or enduring capital advantage; they were also allowable under Section 37. The enduring-benefit test applies commercially, not mechanically.

Section 194N places the obligation to deduct tax at source on the banking company making cash payments beyond the prescribed threshold, while Section 271C penalises the person that fails to make that deduction. A customer receiving cash is not liable for the bank's deduction failure or related penalty. A bank therefore lacks statutory authority to impose a lien on a customer's current account to recover alleged tax deducted at source on cash withdrawals, particularly where no tax-authority direction exists. The lien must be released and account operations permitted upon furnishing relevant income-tax returns.

Share capital received from four investors could not be treated as unexplained cash credit where scrutiny assessments of those investors had accepted the sources of their investments and made no additions in their hands. The Tribunal treated the investments as genuine in the recipient company's hands on the basis of the assessment records. That factual finding disclosed no infirmity or substantial question of law, rendering the share-capital addition under Section 68 unsustainable.

Revision under Section 263 requires the assessment order to be both erroneous and prejudicial to Revenue interests. Explanation 2(a) covers assessments made without necessary inquiry or verification, but does not remove the requirement to establish both conditions. Where the Assessing Officer sought and received details on unsecured loans and trade payables, examined the explanations, and adopted a plausible view, revision cannot rest solely on audit objections or a preference for further verification. Absent material showing Revenue prejudice, revision is invalid.

Carry-forward and set-off of business losses require a valid loss return under Section 139(3) and determination of the loss through the relevant assessment process. Failure to file returns for intervening assessment years prevents determination and notification of the unabsorbed loss available for continued carry-forward under Sections 72, 80, 139(3) and 157. Consequently, an earlier-year business loss could not be set off against income of the later assessment years under consideration.

Reassessment initiated beyond four years requires established failure by the assessee to make a full and true disclosure regarding the income alleged to have escaped assessment on the recorded reasons. Where no addition survives on either recorded ground-recomputation of Section 14A disallowance or alleged NSEL income-an addition on a separate issue lacks jurisdictional support. Explanation 3 to Section 147 permits assessment of another escaped-income issue discovered during valid reassessment proceedings, but does not cure an invalid reopening or enlarge the substantive jurisdiction under Section 147. The reassessment and the unrelated addition could not survive.

Contribution towards augmentation of an electricity transmission line owned and maintained by the electricity board was treated as revenue expenditure where it secured adequate power supply for an existing business without conferring ownership, possession, or an enduring capital advantage. The board retained ownership, maintenance responsibility, and the ability to supply other consumers. The expenditure was incurred wholly and exclusively to improve business efficiency and profitability. Revision was not sustainable because the Assessing Officer had made enquiries and correctly allowed the deduction; the assessment was therefore neither erroneous nor prejudicial to Revenue interests.

Business expenditure incurred wholly and exclusively for road and bridge projects in the ordinary course is deductible under section 37(1), even where no corresponding income is booked for a particular project. Absence of project-specific income does not itself invalidate the expenditure; the relevant enquiry is whether taxable receipts or income escaped recognition. Income from one project had been recorded, and identical findings for the preceding assessment year had attained finality. The disallowance was therefore deleted, sustaining deduction of the infrastructure-project expenditure.

Losses of an undertaking eligible for deduction under Section 10B remain available for set-off against taxable profits of other undertakings and for carry-forward under the general loss provisions. Section 10B requires separate computation of export profits solely to quantify the deduction for each eligible undertaking; it does not alter the treatment of that undertaking's profit or loss in computing combined income. Rules governing aggregation, inter-source and inter-head set-off, and carry-forward therefore continue to apply.

TDS on payments to non-residents was considered where the ITAT found that payments to three non-resident companies were not royalty under the applicable DTAA. The High Court dismissed the Revenue's appeal but allowed the Revenue to seek review or restoration if its review petition concerning Engineering Analysis Centre of Excellence succeeds before the Supreme Court. The Supreme Court disposed of the petition and related pending applications.

PTFE braided gland packing with a cross-sectional dimension exceeding 1 mm is excluded from Section XI by Note 1(g), despite its braided form and industrial sealing use. As it does not qualify as textile material, it cannot be classified as a textile article for technical use under heading 5911. The residual PTFE classification under HSN 39209949 applies to PTFE products other than rigid or flexible plain sheets. Clear tariff headings, Section and Chapter Notes, and HSN Explanatory Notes prevail over industry practice or trade parlance. The packing falls under Schedule II and attracts GST at 18%.

GST-rate reductions must be passed to recipients through commensurate price reductions under the anti-profiteering framework. Retaining the same tax-inclusive cinema ticket price by increasing the base price after a GST reduction allows the supplier to retain the tax benefit and breaches that obligation. Regulatory directions or permissions concerning permissible cinema fares do not create an exception to the separate duty to pass on the tax benefit. Profiteering is quantified by retaining the pre-reduction base price, applying the reduced GST rate, comparing that commensurate price with actual prices, and calculating the excess collected on relevant sales. Where recipients are unidentifiable, the amount with applicable interest is credited equally to the Central and State Consumer Welfare Funds; no penalty applies for the investigation period.