It was ruled that deciding appeals based on facts of another year is a serious legal error. The matter was sent back for reconsideration on correct facts.
It was held that documented capital contributions supported by affidavits, bank records, and land evidence are explained credits. Assessing authorities cannot disregard undisputed financial capacity.
While reopening of assessment was sustained due to bank deposit information, the cash addition was deleted on merits. Proper explanation of source defeats Section 69A.
It was ruled that interest for late filing of the original return can be computed based on tax determined in search-related assessment. Timely filing after notice does not negate earlier delay.
The issue was whether penalty could be imposed for disallowance arising from a disclosed change in lease rent accounting. The Tribunal held that a bona fide, disclosed and debatable claim cannot attract penalty under section 271(1)(c).
Restoring the Assessing Officer’s findings, the Tribunal ruled that excessive salary to related directors can be disallowed when it substitutes dividend distribution. Reasonableness must be judged against comparable market remuneration.
The Tribunal examined the validity of reopening and multiple expense disallowances. While relief was granted on cash payments and reimbursed interest, statutory interest on taxes was held to be non-deductible.
The Tribunal sustained reassessment based on search information but faulted the disallowance of political donations. The key takeaway is that additions cannot rest solely on untested third-party statements without cross-examination.
The Tribunal held that a continuously maintained ledger found during search constituted reliable evidence. Additions for unexplained expenditure under section 69C were sustained based on corroborated diary entries.
The Tribunal held that once a Section 263 revision is set aside, the consequential assessment has no legal existence. All proceedings based on such assessment automatically collapse.
