Section 132(1) of the Income Tax Act

When computing disallowance under Section 14A of the Income-tax Act using Rule 8D of the Income-tax Rules, only investments that have actually yielded exempt income during the relevant previous year are to be considered for the calculation.

If the Assessing Officer has not conducted any investigation and thus has not discharged their burden of proof, any addition made by the AO is unsustainable and must be deleted.

Proceedings become fatal if principles of natural justice are violated, such as when seized material is not provided to the assessee or cross-examination of a person whose statement the Assessing Officer relies upon is denied.

Section 153C of the Income-tax Act is invoked only when it is established that seized documents do not belong to the searched person, or if the searched person disclaims them; the satisfaction note must specifically indicate this fact.

An assessee cannot be asked to explain the source of the source for cash credits, particularly share capital or share application money, once they have discharged the initial onus regarding the identity, genuineness of the transaction, and creditworthiness of the immediate investor.

If an assessee possesses sufficient interest-free own funds to cover investments yielding exempt income, it is presumed that such investments are made from these own funds, precluding any disallowance of interest expenditure under Section 14A, even when borrowed funds are also available.

An assessment under section 153A of the Income-tax Act is not solely restricted to the evidence found during the search; the Assessing Officer can also consider other post-search material or information available that relates to the search evidence.

The scope of assessment under Section 153A is not limited solely to seized material but includes any other information provided by the assessee in the return of income filed in response to a Section 153A notice. It also applies principles for estimating undisclosed income, such as from on-money receipts, even if there is material for only some transactions.

A penalty levied under Section 271(1)(c) is not sustainable if the notice issued under Section 274 fails to specifically mention whether the charge relates to concealment of income or furnishing inaccurate particulars of income. The Assessing Officer must specify the exact charge for the penalty to be valid.