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An addition for unaccounted sales based on an estimated production yield, without any supporting evidence, is not legally sustainable. Issue Can the books of account of a manufacturing business be rejected and a significant addition for unaccounted sales be made based solely on a hypothetical or estimated production yield adopted by the Assessing Officer, especially… Read More »

An auditor’s error is a reasonable cause to condone a delay in filing Form 10B. Issue Should a delay in uploading the mandatory audit report in Form 10B be condoned if the delay was caused by an inadvertent error on the part of the auditor’s staff, particularly when the audit itself was completed and the… Read More »

No separate claim can be made for seized gold once it has been taxed. Issue Can a person file a writ petition to claim the release of seized assets, such as gold ornaments, if those very same assets have already been considered and substantively assessed to tax in the hands of another person (in this… Read More »

An assessment order is invalid if passed under a different section than intended. Issue Is an assessment order legally valid if the Assessing Officer, after recording a formal satisfaction to proceed under a specific section of the Income-tax Act, 1961 (in this case, Section 153C), ultimately ignores that and passes the final order under a… Read More »

A foreign travel expense addition is unjustified if the source of the payment is proven. Issue Can an addition for unexplained foreign travel expenditure under Section 69C of the Income-tax Act, 1961, be sustained if the assessee provides a plausible explanation and credible documentary evidence to prove the source of the funds for the travel?… Read More »

Reopening an assessment based on vague, unverified information from a portal is invalid. Issue Is a notice for reassessment legally valid if it is based on general information from a third-party investigation, without the Assessing Officer specifying the exact transaction and independently verifying the information’s relevance to the assessee? Facts The Assessing Officer (AO) issued… Read More »

A search assessment requires incriminating material, not just regular business documents. Issue Can a search assessment be sustained under Section 153A of the Income-tax Act, 1961, based on the discovery of normal business documents related to a corporate restructuring, and separately, can the conversion of a firm into a company be taxed as a transfer… Read More »

A revision of an assessment isn’t valid without specific adverse material against the assessee. Issue Can a completed assessment, where a deduction was allowed after verification, be revised under Section 263 of the Income-tax Act, 1961, based on general adverse findings against a third party, without any specific incriminating material that links the assessee’s own… Read More »

A voluntary ex-gratia payment is not taxable as profits in lieu of salary. Issue Is a voluntary, one-time ex-gratia payment received by an employee from an employer upon the closure of a business unit taxable as “profits in lieu of salary” under Section 17(3) of the Income-tax Act, 1961? Facts An assessee, who was a… Read More »

Section 13 is not applicable at the trust registration stage. Issue Can a charitable trust’s application for registration under Section 12AB of the Income-tax Act, 1961, be rejected by invoking the provisions of Section 13, which deals with the denial of tax exemption for benefiting a particular community? Facts An assessee-trust filed an application for… Read More »