Under-reporting of income: no penalty under section 270A if unaccounted cash is declared and taxed in the current year.
Penalty under the statutory penalty provision applies only where assessed income exceeds income determined in the processed return; a taxpayer who deposits previously unaccounted cash, declares it in the current-year return and pays tax will, if no addition is made on assessment, not have under-reported income and thus will not trigger the penalty. Enhanced penalty rates require a finding of misreporting. Administrative guidance requires explanation of source for such disclosures and may lead to classification as unexplained deposits, but that classification does not create under-reporting if the amount was offered to tax. (AI Summary)

Foreign Tax Credit eligibility clarified: credit tied to year income is taxed and limited by per source computation.
Draft rules allow resident assessees to claim foreign tax credit only in the year the corresponding income is offered to tax in India, restrict eligible foreign taxes to those under applicable DTAAs or taxes in the nature of income tax where no DTAA exists, disallow credit for disputed foreign tax, require per stream and per country calculation with conversion at telegraphic transfer buying rates, permit FTC against MAT/AMT with safeguards against double recovery, and mandate foreign tax authority certificates, payment proof and a non dispute declaration. (AI Summary)

Conversion of company into LLP: capital gains exemption hinges on satisfying statutory conversion conditions, non compliance triggers tax chargeback.
Conversion of a private or unlisted public company into an LLP is treated as not constituting a transfer for capital gains under Section 47(xiiib) if six statutory conditions are met: vesting of all assets and liabilities in the LLP; shareholders becoming partners with proportionate capital and profit shares; no other consideration to shareholders; maintenance of an aggregate minimum profit sharing for a specified period; prescribed turnover limits in preceding years; and prohibition on distribution from accumulated profits for a specified period. Failure to comply, including subsequent breaches of time linked conditions, triggers chargeability of previously exempted gains under Section 47A. (AI Summary)

Preliminary objections: reassessment cannot proceed until objections are decided by a speaking order, safeguarding assessee procedural rights.
Reassessment cannot proceed while the assessee's preliminary objections to a reassessment notice remain undecided; the assessing officer must furnish reasons for the notice, give the assessee an opportunity to object, and dispose of those objections by a separate speaking order within a reasonable time before undertaking reassessment proceedings. (AI Summary)

HRA exemption and interest deduction can coexist; qualifying interest may be added to cost for capital gains computation.
HRA exemption is available only when the accommodation occupied is not owned and rent is actually paid, while interest deduction for borrowed capital used to acquire or construct a house property operates under income from house property and is subject to qualifying conditions and ceilings. The two benefits operate independently and do not exclude each other, so an assessee satisfying both sets of conditions may claim HRA and interest deduction concurrently. Interest allowed earlier may nevertheless be added to cost of acquisition for capital gains computation on sale, because capital gains and house property are distinct heads of income. (AI Summary)

Section 148 notices: furnishing reasons enables filing, objection and prevents arbitrary reassessment actions.
Section 148 authorises reassessment notices where income is alleged to have escaped assessment; judicial guidance requires that assessing officers furnish reasons within a reasonable time when requested so the assessee can file a return, object to the notice and receive a speaking order. Supplying reasons with the notice prevents arbitrariness, enables targeted disclosure of escaped income and ensures compliance with natural justice; conversely, notices that compel revised returns without stating grounds deny a meaningful opportunity to explain and invite unnecessary litigation. (AI Summary)