Reopening for Foreign Share Capital Quashed; Investor Accepted in Later Years Issue Whether the Assessing Officer (AO) can reopen an assessment under Section 147 alleging that share capital received from a foreign entity (‘GS’, Singapore) is unexplained cash credit (Section 68), when the same investor’s identity and creditworthiness were accepted by the Department in subsequent… Read More »
Addition based on “Dumb Documents” & Retracted Statements Deleted Issue Whether additions for unexplained money (cash investment in land) can be sustained solely on seized Excel sheets found on a third party’s laptop and statements that were subsequently retracted, without independent corroboration. Facts The Evidence: During a search on a group of companies, Excel-based management… Read More »
DPIIT Startup Immunity covers Angel Tax (Sec 56(2)(viib)), but not Section 68; Addition Deleted on Merits Issue Immunity Scope: Whether a DPIIT-registered start-up is immune from scrutiny under Section 68 (Unexplained Cash Credit) merely because it is exempt from Section 56(2)(viib) (Angel Tax). Merits: Whether the Assessing Officer (AO) was justified in adding the share… Read More »
Only Profit Element (8%) Taxable on Trading Deposits; Section 115BBE Not Applicable Issue Whether cash deposits in a trader’s bank account, which represent business turnover, can be fully added as “unexplained money” under Section 69A and taxed at the punitive flat rate under Section 115BBE (60% + Surcharge), or if only the profit element should… Read More »
Reopening based on “Borrowed Satisfaction” regarding Option Trades Quashed Issue Whether a reassessment notice under Section 148 is valid if the reasons recorded are merely reproduced from a general investigation report (DIT I&CI) without any independent application of mind by the Assessing Officer (AO), specifically regarding alleged “accommodation entries” in option trades. Facts Assessment Year:… Read More »
Additions based on “Dumb Documents” (Excel Sheets) & Retracted Statements Deleted Issue Whether additions for unexplained money and capital gains can be sustained based solely on seized Excel sheets (projections/estimates) and statements recorded under Section 132(4) that were subsequently retracted, without any independent corroboration or third-party verification. Facts The Evidence: During a search, Excel-based management… Read More »
Foreign Exchange Fluctuation Loss Allowed; AS-11 Compliance is Key Issue Whether a loss arising from foreign exchange fluctuations on the reporting date (Mark-to-Market loss) is an allowable business expenditure under Section 37(1), or if it should be disallowed as a “notional” or “unrealized” loss. Facts Assessee: An engineering consultancy company following the mercantile system of… Read More »
Additions based on “Dumb Documents” (Excel Sheets) & Retracted Statements Deleted Issue Whether additions for unexplained money and capital gains can be sustained based solely on seized Excel sheets (projections/estimates) and statements recorded under Section 132(4) that were subsequently retracted, without any independent corroboration or third-party verification. Facts The Evidence: During a search, Excel-based management… Read More »
Re-deposit of Cash Withdrawn for Salaries during Demonetization Accepted; Addition Deleted Issue Whether cash deposited in Specified Bank Notes (SBNs) during the demonetization period can be treated as unexplained cash credit under Section 68 when the assessee claims it was the re-deposit of cash previously withdrawn for salaries but not utilized due to a switch… Read More »
Reopening Assessment for CSR (Sec 35AC) Disallowed without “New Material”; SLP Dismissed Issue Whether an assessment can be reopened under Section 147 to disallow CSR expenditure claimed under Section 35AC (or 80G) based solely on a “change of opinion” regarding the law, without any “fresh tangible material” coming to the Assessing Officer’s knowledge. Facts Assessment… Read More »