S. 2(22)(e) : Deemed dividend- Loans from companies–Not beneficial shareholder in lender companies–Cannot be added as deemed dividend – Provision is not applicable.

S. 260A : Appeal – High Court -Defunct companies-The fact that the assessee company stands dissolved as a defunct company u/s 560(5) of the Companies Act, 1956 does not mean that income-tax proceedings & appeals become infructuous. The liability against such companies has to be dealt with in accordance with s. 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act which deal with “liability in special cases” and “discontinuance of business or dissolution”[ S.176, Companies Act , 1956 S, 560(5) ]

S. 254(2) : Appellate Tribunal-Rectification of mistake apparent from the record–Strictures-The insinuation of the Dept that ITAT passes order in a state of oblivion displays a totally irresponsible and cavalier approach on the cusp of contempt and deserving exemplary cost to purge the same. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naiveté of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for- I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT without verifying their record. [S. 147]

S. 147 : Reassessment-Bogus share capital-Though the reopening is based on information supplied by the investigation wing, the reasons do not specify that the investment was non-genuine-The AO cannot reopen to investigate into the source of genuineness and creditworthiness of the investors as it falls within the realm of fishing enquiries which is wholly impermissible in law. [S.68, 148]

S. 92C : Transfer pricing-It is mandatory for the AO to determine the arm’s length price (ALP) of the international transactions by following one of the prescribed methods-He is not entitled to follow any other method or to resort to estimation-The failure to follow one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law-The legal infirmity cannot be cured by restoring the issue to the TPO-The TPO cannot be allowed another innings to rectify the mistake. [S. 254(1)]

S. 68 : Cash credits-Bogus Share Capital-Merely presenting of documents & making payment through bank or appearance by director before the AO & admitting fact of share application made is in itself not sufficient to justify the genuineness of the transaction-It is against human probability that anyone will invest and pay share premium in a company without net worth or future prospectus-All applicants with common address are being controlled remotely by one person. These applicants are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries-Credit worthiness is not established-Addition is held to be justified.

S. 50C : Capital gains-Full value of consideration- stamp valuation-The adoption of stamp valuation as the sale consideration is not justified in absence of any evidence that the sale consideration was more than the value shown in the agreement-The AO has not brought on record that the property under sale was not was under various encumbrances and the assessee was having the absolute marketable title of the said property- Addition is held to be not valid.[S. 45]

S. 271D : Penalty-Accepts any loan or deposit–loan received from father – same could be treated as gift and not loan – levy of penalty unjustified.

S. 271(1)(c) : Penalty–Concealment–Depreciation on land-Bona fide mistake -Voluntarily agreed to surrender tax on value of depreciation wrongly taken on land–Levy of penalty is not justified. [S. 32]

S. 263 : Commissioner – Revision of orders prejudicial to revenue – Rental income –Business income –Income from house property-Every loss of Revenue as a consequence of an order of AO could not be treated as prejudicial to interests of Revenue – Revision is held to be not valid. [S.22, 28(i)]