“black money act”

An increase in a company's subscribed share capital cannot be treated as the company's undisclosed income under section 68, even if the subscribers to the capital are found not to be genuine. The amount of share capital cannot be regarded as undisclosed income of the company itself.

The requirement to pass a draft assessment order under Section 144C of the Act is mandatory. A final assessment order issued without such a draft order is a nullity, constituting an incurable jurisdictional error that cannot be saved by Section 292B, even in set-aside proceedings following an ITAT remand.

Issuance of a draft assessment order under section 144C(1) of the Income Tax Act is mandatory, and its non-issuance is not a curable procedural lapse.

Failure by the Assessing Officer to pass a draft assessment order under section 144C(1) before passing the final assessment order vitiates the entire proceeding, making the final order without jurisdiction, null, void, and unenforceable. This procedural lapse is not a mere irregularity but an illegality.

Payments made for purchasing stock-in-trade or raw materials are considered expenditure for the purposes of Section 40A(3) of the Income Tax Act. The Supreme Court has upheld the constitutional validity of Section 40A(3), stating its purpose is to curb black money, not restrict business freedom.

An assessment order framed in violation of the mandatory prescriptions of Section 144C is a nullity. This principle is supported by numerous judicial decisions, including JCB India Ltd. v. Dy. CIT.

Failure by the Assessing Officer to follow the procedure under Section 144C(1) is a breach of a mandatory provision and renders the assessment order without jurisdiction and bad in law, not a mere procedural error.