The DRP, being an authority created under a statute and conferred with the powers, has the obligation to act as a body living to the expectations which the law mandates. The DRP has to afford adequate opportunity for personal hearing and deal with the issues urged by a speaking order which would reflect cogent reasons. This is apt to say so that no assessee can have any kind of apprehension that the approach to the DRP is perfunctory

The authorities can determine the true legal relation resulting from a transaction and if some device has been used by the assessee to conceal true nature of the transaction, it is the duty of the authority to unravel the device and determine its true character. However, the legal effect of the transaction cannot be displaced by probing into the “substance of the transaction”. The taxing authority must not look at the matter from its own view point but that of a prudent businessman. Each case will depend on its own facts. The exercise of jurisdiction cannot be stretched to hold a roving enquiry or deep probe

As the department had examined the fundamental nature of the transaction in the earlier years and its nature remained unchanged, the department could not have changed its view as regards the nature of the transaction by dubbing it as erroneous. Though the principle of res judicata does not apply to income-tax proceedings, Courts have held that where a fundamental aspect of a transaction is found as having permeated through different assessment years, the revenue is not permitted to change its view unless there is a change in circumstances. The department is not entitled to re-open an assessment based on a fresh inference of transactions accepted by the revenue for several preceding years on the pretext of dubbing them as erroneous. Associated Food Products 280 ITR 377 (MP), Sirpur Paper Mills Ltd 114 ITR 404 (AP) & CIT vs Gopal Purohit 228 CTR 582(Bom) followed

In the context of regular assessment proceedings, it has been held in Lalji Haridas vs. ITO 43 ITR 387 (SC) that even when there is no specific provision in the Act for protective assessment, the AO has power to make such a protective assessment under certain circumstances. This principle of law will apply to block assessment proceedings u/s 158BC & 158BD as well and the AO has the power to make a block assessment order on a protective basis

The Explanation to s.73 creates a fiction that the loss suffered by certain companies from the business of purchase & sale of shares shall be deemed to be speculation loss. The Explanation is not inconsistent with the object of introduction. The CBDT Circular dated 24.7.1976 cannot be treated as guide for interpretation of s. 73 when the provision is very clear and free from any ambiguity

S. 68 provides that if the assessee is not able to give satisfactory explanation as to the “nature and source” of a sum found credited in his books, the sum may be treated as the “undisclosed income” of the assessee. The initial burden is on the assessee to explain the “nature and source” of the credit and to do so, the assessee is required to prove (a) Identity of the shareholder; (b) Genuineness of transaction; and (c) credit worthiness of shareholders