Block assessment based solely on retracted statement without seized material is invalid Issue Whether a block assessment addition can be sustained solely based on a Managing Director’s statement recorded under Section 132(4) which was later retracted, in the complete absence of any incriminating material seized during the search. Facts Search Operation: A search and seizure… Read More »

Penalty u/s 271E upheld for cash repayment of loans despite Section 68 addition Issue Whether the penalty under Section 271E for repayment of loans in cash (violating Section 269T) is sustainable when the corresponding receipt of such loans was treated as unexplained income under Section 68 by the Assessing Officer. Facts Assessee Profile: A trust… Read More »

Partial disallowance of Section 54F claim does not attract concealment penalty without proof of fraud Issue Whether a penalty for concealment of income under Section 271(1)(c) can be levied solely because a portion of the deduction claimed under Section 54F was disallowed due to the assessee’s inability to fully substantiate the expenditure with bills. Facts… Read More »

Unsigned Section 148 notice issued after April 1, 2021, without complying with new procedure is void; assessment quashed Issue Validity of Unsigned Notice: Whether a notice under Section 148 is valid if it lacks the digital or manual signature of the Assessing Officer (AO). Date of Issuance vs. Generation: Whether a notice generated on March… Read More »

JAO issued notices under Section 148 after March 2022 are invalid under Faceless Scheme Issue Whether the Jurisdictional Assessing Officer (JAO) retains the jurisdiction to initiate reassessment proceedings and issue notices under Sections 148A and 148 after the implementation of the Faceless Assessment Scheme on March 29, 2022. Facts Period Involved: The dispute pertains to… Read More »

Section 69A addition on alleged unaccounted sales remanded for verification of invoices and ledgers Issue Whether the Assessing Officer (AO) was justified in taxing transactions with four parties as “unaccounted sales” under Section 69A read with Section 115BBE, and whether the appellate authority should have verified the additional evidence (invoices, ledgers) before sustaining the addition.… Read More »

100% Section 54F exemption granted for joint purchase with son where assessee paid entire consideration Issue Whether an assessee is entitled to the full exemption under Section 54F of the Income-tax Act when the new residential property is purchased jointly with his son, who made no financial contribution, specifically when the son’s name was added… Read More »

Unsecured loans used for capital purposes not taxable u/s 41(1); ad-hoc disallowances deleted Case I: Section 41(1) – Unsecured Loans Issue Whether outstanding unsecured loans, which remained unpaid for over three years, can be treated as ceased trading liabilities and taxed under Section 41(1) when the funds were utilized for capital expenditure. Facts Outstanding Loans:… Read More »

Section 263 revision quashed as AO took plausible view on tonnage tax expense allocation Issue Whether the Principal Commissioner (Pr. CIT) can invoke revisionary jurisdiction under Section 263 to set aside an assessment order regarding the allocation of expenses between Tonnage and Non-Tonnage tax divisions, when the Assessing Officer (AO) had already adopted a plausible… Read More »

Automobile manufacturer wins on Transfer Pricing, 14A, R&D deduction and Capital vs Revenue characterization I. Corporate Tax: Disallowances & Deductions 1. Section 14A read with Rule 8D (Exempt Income) Issue: Whether the AO can mechanically apply Rule 8D for interest and administrative expenses when the assessee has already made a suo motu disallowance. Decision: Satisfaction:… Read More »