Today's Digest Summary
TaxCorp Daily Digest
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⚡ Quick Summary
- GST Procedural Rights Reinforced: Multiple High Courts — Bombay, Kerala, Patna, and Calcutta — have issued significant rulings affirming that procedural safeguards under the CGST Act are mandatory, not discretionary, covering personal hearings, composite notices, ITC denial, and registration cancellations.
- Reassessment Jurisdiction Under Scrutiny: ITAT benches across Hyderabad, Panaji, Raipur, and Ahmedabad have quashed reassessment proceedings on grounds of time-barred notices, insufficient response windows, and AOs exceeding the scope of recorded reasons.
- FADS 2026 Alert: A comprehensive disclosure window for foreign assets and income has opened under the Finance Act, 2026 — with critical two-category structures carrying vastly different tax consequences. Eligible assessees must act promptly.
- NFRA Expands Oversight Framework: A new Advisory Committee on Audit Quality, Assurance and Technology has been constituted, signalling intensified regulatory focus on AI, blockchain, cloud risks, and ERP-based audit environments.
📂 Category-wise Updates
🟦 Income Tax
The ITAT Nagpur held in Rajiv Madhaorao Khobragade Vs ITO that a delay in e-verification of a return does not invalidate the assessee's timely exercise of the Section 115BAC option, as long as the return itself was filed within the Section 139(1) deadline. Technical portal glitches cannot be used to deny substantive statutory rights. The Tribunal also condoned a 125-day appeal delay citing the Supreme Court's substantial justice doctrine.
✅ Action Item: Verify e-verification completion immediately after filing. If portal delays occur, document the technical glitch contemporaneously and preserve all ITR acknowledgement records.
ITAT Mumbai in Manjeet Digambar More Vs ITO deleted a ₹14,26,743 addition, affirming that interest under Section 28 of the Land Acquisition Act, 1894 is an accretion to compensation — not a separate income stream taxable under Section 56(2)(viii). The ruling follows CIT v. Ghanshyam (HUF) and is applicable where the underlying land qualifies as rural agricultural land outside Section 2(14)(iii).
✅ Action Item: Clients receiving enhanced land acquisition compensation should revisit past assessments where Section 28 interest was separately taxed under "Other Sources."
3. ITAT Nagpur: Entire Contract Turnover Cannot Be Taxed As Income – Profit To Be Estimated u/s 44AD
In Chandrashekhar Konduji Pawar Vs CPC, the ITAT Nagpur reduced a tax addition from ₹7,15,599 to ₹71,560 by applying a 10% profit estimation under Section 44AD, firmly holding that gross contract receipts appearing in Form 26AS are turnover — not income. Simultaneously, the Tribunal cautioned that omitting business income while claiming TDS credits is impermissible.
✅ Action Item: Contractors and small businesses must reconcile Form 26AS TDS credits with ITR income disclosures to avoid CPC-generated mismatch demands.
The ITAT Jaipur struck down a ₹1,01,84,719 penalty under Section 271(1)(c) on two independent grounds: the underlying quantum additions had already been deleted, and the penalty order was issued in the name of a deceased assessee without invoking the legal representative machinery under Section 159. Both defects independently rendered the order void.
✅ Action Item: In cases involving deceased assessees, immediately verify whether Section 159 has been properly invoked before engaging in penalty proceedings or appeals.
In Apex Detonators Pvt. Ltd. Vs ACIT, the ITAT Nagpur ruled that income reflected in Form 26AS does not discharge a company's mandatory obligation to file its return. However, the Tribunal remanded the Section 270A penalty for fresh adjudication, noting that TDS credit treatment in the penalty computation and the assessee's opportunity of hearing had not been properly addressed.
✅ Action Item: Companies must not rely on Form 26AS as a substitute for timely return filing. Monitor penalty computations to ensure TDS credits are correctly netted against "tax payable on under-reported income."
In Chandra Pal Singh Vs ITO, the ITAT Agra remanded a ₹16,19,133 Section 54 disallowance, rejecting the AO's approach of treating a bank balance as unutilised capital gain without examining the actual payment trail. The Tribunal directed fresh examination of the valuation report and date-wise payment records.
✅ Action Item: Assessees claiming Section 54 exemption should maintain a contemporaneous paper trail of construction payments, valuation reports, and bank withdrawal linkages.
In Rajasthan Urban Development Fund Vs ITO, the ITAT Jaipur upheld the anti-double-recovery doctrine — a deductor cannot face a principal TDS demand if the payee has already included the amount in income and paid taxes. Relief was conditional upon submission of revised Form 26A for AO verification.
✅ Action Item: Where TDS was not deducted on bona fide grounds and the payee has since paid tax on the income, obtain Form 26A from the payee immediately and file it with the jurisdictional AO.
The ITAT Chandigarh deleted a ₹26,69,319 addition, holding that an inadvertent error in ITR form selection cannot legally justify taxing the same income twice. The Tribunal distinguished Goetze (India) Ltd. v. CIT, clarifying that the restriction on fresh claims before appellate authorities does not apply to pleas against double taxation of already-disclosed income.
✅ Action Item: Exercise diligence in ITR form selection. Where form selection errors occur, raise the double-taxation plea explicitly before CIT(A), supported by the original disclosure evidence.
In Roop Narayan Choudhary Vs DCIT, the ITAT Jaipur deleted a ₹28,83,274 LTCG addition, firmly ruling that a Power of Attorney holder is not the "deemed owner" of property and cannot be taxed on capital gains arising from its sale. The Tribunal also condoned a massive 765-day delay, acknowledging the assessee's reliance on a negligent consultant whose email was registered on the portal.
✅ Action Item: Ensure the correct email address and mobile number are registered on the Income Tax Portal under the assessee's credentials — not the consultant's — to avoid missed notices.
The ITAT Rajkot in Ravindra Purshottamdas Patel Vs PCIT-1 held that a Section 263 revisionary direction does not have indefinite legal life. If the AO fails to pass a consequential order within the Section 153(3) timeline, the revision becomes infructuous and the original assessment revives automatically.
✅ Action Item: Assessees facing Section 263 revisions should track the Section 153(3) limitation window carefully — Revenue's procedural failure can itself extinguish the revision.
11. ITAT Nagpur: No Higher TDS u/s 206AA Where Correct PAN Was Quoted but Marked Inoperative
In ABL Engineering Company Vs ITO, the ITAT Nagpur ruled that Section 206AA's higher TDS rate applies only where PAN is not furnished, is invalid, or does not belong to the deductee. An inoperative PAN (due to non-Aadhaar linkage) that is validly quoted does not trigger Section 206AA. The ₹3,77,230 CPC-TDS demand was deleted.
✅ Action Item: Deductors who faced higher TDS demands solely on account of inoperative PANs (not invalid ones) should consider filing rectification applications before the CPC-TDS.
In ITO Vs Gaurav Karnawat HUF, the ITAT Jaipur held that interest on borrowings taken exclusively to subscribe to an IPO constitutes a legitimate part of the "cost of acquisition" under Section 48, capitalizable for capital gains computation. The Revenue's appeal was also dismissed for falling below the CBDT Circular No. 09/2024 monetary threshold.
✅ Action Item: Taxpayers who borrowed for IPO subscriptions should revisit capital gains computations for prior years and ensure financing costs are properly capitalized and documented.
In Dell International Services India Pvt. Ltd. Vs JCIT, the ITAT Bangalore held that a Section 154 rectification order disallowing ₹87,67,420 on delayed PF/ESI contributions could not be sustained, as the issue was genuinely contested on the date of the rectification order. The Tribunal rejected the CIT(A)'s approach of validating the rectification by reference to the Checkmate Services Supreme Court ruling delivered three years later.
✅ Action Item: Rectification orders under Section 154 must be confined to issues that were indisputably settled law on the date of rectification — not issues clarified by subsequent judicial decisions.
The ITAT Hyderabad condoned a 2,336-day delay in a Section 80G appeal where the original rejection order was never properly served. All consequential orders — including cancellation of 12AB registration and rejection of renewal — were set aside as they lost their foundational basis once the 2019 order was remanded.
✅ Action Item: Charitable trusts and NGOs must maintain systematic records of all NFAC/CIT(E) communications and proactively follow up on pending applications to avoid silent rejections.
In Marri Usha Vs ACIT, the ITAT Hyderabad quashed a ₹50 lakh addition after finding that the Section 148 notice was not demonstrably dispatched before the Section 149 limitation expired. A digital signature date alone does not constitute the date of issuance. Section 292BB was held inapplicable where the assessee had contemporaneously objected to non-service.
✅ Action Item: Upon receipt of Section 148 notices, immediately verify and formally record objections about notice dispatch dates, especially near limitation boundaries.
The ITAT Panaji in Salama Mahmadsalim Dafedar Vs ITO granted partial relief of ₹2,84,000 on demonetisation-era cash deposits, accepting the gold sale by an identified family member but rejecting relief on anonymous cash memos lacking purchaser identification.
✅ Action Item: For demonetisation-era additions still in litigation, ensure third-party sources of cash are identified by name and supported by independent confirmation letters.
In Baraiya Galaji Kalaji Vs ITO, the ITAT Ahmedabad remanded an assessment where the AO had taxed the entire sale consideration of ₹2,10,18,000 as Short Term Capital Gain without computing cost of acquisition, holding period, or indexation. The consequential penalty of ₹69,45,743 was also set aside pending fresh quantum determination.
✅ Action Item: Any assessment where the AO has adopted gross sale proceeds as taxable income without performing the Section 48 computation should be immediately challenged at the appellate stage.
In Rampal Singh Vs ITO, the ITAT Agra remanded an unusual Section 69A addition premised on treating cash withdrawals as unexplained income, holding that the Rule 46A application for additional evidence could not be ignored by the CIT(A). The ₹8,47,664 penalty under Section 271AAC was deleted since the quantum addition was set aside.
✅ Action Item: When filing Rule 46A applications before CIT(A), obtain a written acknowledgment and follow up to ensure the additional evidence is formally considered before the order is passed.
The ITAT Chandigarh deleted a ₹2.12 crore Section 69 addition in Hari & Co. Owners Vs ITO, holding that a DVO valuation report constitutes only an evidentiary input, not conclusive proof of unrecorded investment. A ~20% variance between DVO estimates and declared cost — when explainable by CPWD/state PWD rate differentials and supervision costs — does not independently establish unexplained investment.
✅ Action Item: In construction cost disputes, obtain a detailed cost analysis distinguishing CPWD versus state PWD schedule of rates, and document personal supervision costs with professional estimates.
The Chandigarh ITAT in Thakur Ram Singh Smriti Nyas Vs ITO remanded a Section 12AB registration rejection, holding that where the complete Trust Deed is now available, the CIT(E) must re-evaluate the application on a full and accurate record rather than decide finally on incomplete documentation.
✅ Action Item: Charitable entities approaching CIT(E) for 12AB registration must ensure the complete, executed Trust Deed and full supporting documents are submitted at the application stage itself.
In Divyank Goyal Vs ITO, the ITAT Agra held that "winnings" under Section 115BB require deduction of the principal stake (buy-in) from gross payout — where a net loss results, there can be no taxable winnings. The ruling applies the Supreme Court's Gameskraft distinction between indirect and direct tax treatment of gaming transactions, covering periods prior to Section 115BBJ.
✅ Action Item: Online gaming participants for pre-115BBJ periods should download and archive comprehensive financial ledgers from gaming platforms, clearly distinguishing principal stakes from winnings.
22. ITAT Panaji Upholds 5% Profit Estimation on Unaccounted Sales to Sister Concern
In ACIT Vs Vega Aviation Products Pvt. Ltd., the ITAT Panaji upheld differential profit estimation: 5% on intra-group contract manufacturing supplies (to avoid double-profit estimation at the group level) and 15% on direct retail unaccounted sales. The Revenue's appeal was dismissed both on merits and the monetary threshold.
✅ Action Item: In group company structures, assess intra-group transactions holistically to avoid aggregate profit estimations that exceed commercially plausible margins.
The ITAT Chandigarh in Sham Sunder Gupta Vs ITO delivered a three-pronged ruling: overseas inspection charge reimbursements to non-residents without Indian PE do not attract TDS under Section 195; business travel expenses require pragmatic evidence evaluation; and the Section 68 "source of source" amendment is strictly prospective from 01.04.2023 — it cannot be applied retroactively to earlier assessment years.
✅ Action Item: Review all Section 68 additions for AYs prior to 2023-24 where "source of source" was invoked — a strong ground for challenge is now clearly established.
24. ITAT Panaji Voids Section 148 Notice Issued 38 Days After Limitation Expired
In Venkagouda Krishnagouda Patil Vs Assessment Unit, the ITAT Panaji quashed a Section 148 notice issued 38 days beyond the permissible limitation window, applying the Supreme Court's Union of India vs. Rajeev Bansal surviving-time formula. The consequential ₹22,71,792 Section 69 addition was also annulled.
✅ Action Item: For any reassessment notice received after the deemed notice regime of 2021, recompute the surviving limitation period using the Rajeev Bansal formula and raise a formal limitation objection before the AO.
25. ITAT Jodhpur Upholds ₹165 Crore Section 80P Deduction: No Denial Without Identifying Non-Members
The ITAT Jodhpur in DCIT Vs Adarsh Credit Co-Operative Society Ltd. affirmed a massive ₹165 crore Section 80P deduction for AY 2014-15, ruling that denial requires concrete identification of non-member transactions — not general allegations of broken mutuality. The Section 80P(4) exclusion was held inapplicable as the assessee is not a co-operative bank.
✅ Action Item: Co-operative societies facing Section 80P denials based on generalised assertions of non-member dealings should insist on specific, transaction-level adverse material being placed on record.
The ITAT Jodhpur held that denial of Section 80GGC deductions and Section 69A additions based solely on a third-party search report — without specific, corroborative evidence connecting the individual assessee to an alleged cash-back scheme — cannot be sustained. Mathematical assumptions do not meet the statutory evidentiary threshold.
✅ Action Item: All political contributions under Section 80GGC must be made exclusively through verifiable banking channels and supported by official party receipts.
In Mohammed Aijaz Shaikh Vs ITO, the ITAT Jodhpur remanded the matter for fresh adjudication, emphasising that jurisdictional objections under Sections 148A/148 must be specifically addressed by the CIT(A), and that third-party statements used against an assessee must be made available for cross-examination.
✅ Action Item: Where assessment orders rely on third-party investigation wing statements, formally demand cross-examination rights before the AO and replicate this demand before CIT(A).
In D.B. Engineering Pvt. Ltd. Vs ACIT, the ITAT Delhi ruled that excess TDS constitutes an indefeasible refund right under Section 237, irrespective of whether the return was filed under Section 139 or in response to a Section 148 notice. Where the reassessment determines Nil taxable income, the refund cannot be withheld.
✅ Action Item: Assessees who filed returns under Section 148 and received Nil assessments should immediately pursue pending TDS refund claims — these are legally due and cannot be administratively withheld.
29. ITAT Jodhpur: Section 69A Addition on Penny Stock LTCG Scrapped; Section 10(38) Exemption Sustained
In ITO Vs Kaushal Chand Daga (HUF), the ITAT Jodhpur deleted a ₹16,21,960 Section 69A addition on penny stock LTCG, holding that exchange-based transactions routed through banking channels and supported by demat records and broker notes cannot be rejected on suspicion alone — specific evidence of price manipulation or cash circulation is required.
✅ Action Item: Investors in LTCG matters involving alleged penny stocks should preserve complete demat account statements, broker contract notes, SEBI trade confirmations, and banking records for all purchase and sale transactions.
In Ankit Agarwal Vs ITO, the ITAT Jodhpur deleted a ₹40 lakh Section 68 addition for AY 2015-16, ruling that where a loan is received and fully repaid through banking channels within the same FY with complete KYC documentation, the Section 68 burden is discharged. An Investigation Wing report on general accommodation-entry networks — without a specific transaction-level cash trail — is insufficient.
✅ Action Item: For unsecured loan additions, compile a consolidated evidence dossier: lender PAN, ITR acknowledgement, account confirmation, bank statements showing receipt and repayment, and address proof.
In St. Joseph Educational Society Vs ITO, the ITAT Chandigarh upheld a ₹2,06,200 penalty for a 5.5-year delay in ITR-V submission, rejecting defences based on NIL income, accountant negligence, and dual PAN confusion. The fact that the ITR-V was submitted just one day before a Section 148 notice was issued negated any claim of bona fide error.
✅ Action Item: Verify ITR-V submission within 30 days of e-filing. Educational societies and trusts with NIL taxable income are equally bound by verification obligations and are fully exposed to Section 272A(2)(e) penalties.
In Usha Gupta Vs ITO, the ITAT Chandigarh held that demonetisation-era cash deposits by cash-intensive retail businesses (Kirana shops) cannot be treated as unexplained income where audited books, purchase records, and sales linkages are produced. The ruling also flags the systemic problem of the same deposits being subjected to double assessment under different provisions.
✅ Action Item: Small retailers with pending demonetisation additions should consolidate audited accounts, stock registers, and purchase invoices to demonstrate deposits are relatable to disclosed business turnover.
33. Reassessment Under Section 148A(b) Invalid If Seven Clear Days Not Granted: ITAT Raipur Clarifies
The ITAT Raipur in Atal Agrawal Vs ITO confirmed that "not less than seven days" in Section 148A(b) means seven clear intervening days — both the issue date and the response deadline are excluded. A notice issued on 24.03.2022 requiring response by 30.03.2022 granted only five clear days and was held to be jurisdictionally defective, rendering all downstream proceedings void.
✅ Action Item: Upon receipt of any Section 148A(b) notice, immediately count the clear intervening days. If fewer than seven, file a formal written objection on jurisdictional grounds before responding on merits.
The ITAT Ahmedabad dismissed the Revenue's 15-ground appeal in ACIT Vs Zydus Lifesciences Limited for AY 2011-12, invoking the rule of consistency across TP adjustments, corporate guarantee characterisation, R&D deductions, and Section 14A disallowances. Key clarification: investments yielding taxable foreign dividends are not subject to Rule 8D disallowance.
✅ Action Item: Pharmaceutical and multinational companies should maintain year-wise documentation of settled TP positions and systematically cite prior ITAT orders to invoke the consistency rule in ongoing assessments.
FADS 2026, enacted under Section 133 of the Finance Act, 2026, provides a structured but time-bound window for disclosing undisclosed foreign assets and sourced-but-undisclosed foreign assets. Category 1 (genuinely undisclosed foreign wealth) carries a combined 60% tax and additional amount, while Category 2 (sourced assets omitted from return Schedules) requires only a flat ₹1 lakh fee. Correct categorisation is critical, as misclassification carries severe consequences.
✅ Action Item: Eligible assessees must act without delay. Engage a qualified tax adviser to correctly classify foreign assets, prepare supporting documentation for Category 2 claims, and file declarations before the scheme window closes.
In Reena Ayan Shah Vs ITO, the ITAT Ahmedabad deleted a ₹62,400 penalty under Section 270A, holding that withdrawal of a Section 80GGC deduction after a Section 148 notice — absent evidence of fabrication or misrepresentation — does not satisfy the statutory ingredients of "misreporting" under Section 270A(9).
✅ Action Item: Revenue's burden to prove misreporting under Section 270A(9) is high and specific. Assessees who voluntarily revised claims after reopening notices should systematically challenge 270A penalties on this basis.
In Dinaben Navinchandra Patel Vs ITO, the ITAT Ahmedabad quashed a reassessment where the AO had abandoned the cash loan ground and instead added a bogus LTCG amount. Explanation 3 to Section 147 cannot rescue a reassessment where the original recorded reason itself was not investigated — it applies only during an otherwise valid reassessment.
✅ Action Item: In all reassessment cases, formally verify whether the AO has actually made an addition on the grounds mentioned in the recorded reasons. If the original ground is abandoned and a new ground substituted, this constitutes a strong jurisdictional challenge.
🟩 GST
In Taiyo Nippon Sanso India Pvt. Ltd. v. Union of India, the Bombay High Court reaffirmed that Section 75(4) of the CGST Act mandates a personal hearing whenever an adverse decision is contemplated or formally requested — detailed written submissions do not satisfy this obligation. Failure to address specific material objections (such as overlapping Central and State proceedings) can render the order unsustainable.
✅ Action Item: When an adverse GST order is anticipated, always formally request a personal hearing in writing and document the request date. Retain records of all notices, acknowledgements, and attended hearings.
2. GST-Style Adjudication in Income Tax: A Professional's Thought Experiment
This analytical article constructs seven hypothetical scenarios contrasting GST-style document-heavy adjudication with Income Tax proceedings, highlighting a critical conceptual distinction: adjudication is issue-specific dispute resolution, while audit is a systematic broad examination. When GST adjudications routinely expand beyond original scope, they effectively become audits — creating compliance asymmetry and due process concerns.
✅ Action Item: Tax professionals advising on GST adjudication should formally object whenever the scope of proceedings expands beyond the original SCN to cover the entire business — this constitutes an unlawful conflation of adjudication and audit powers.
3. Kerala High Court Invalidates Composite GST Notices Covering Multiple Assessment Years
In K.P Salih Vs Assistant Commissioner of Central Tax, the Kerala High Court quashed composite GST notices bundling multiple assessment years, affirming that each assessment year constitutes a separate proceeding under the CGST framework. The Revenue's reliance on a pre-GST Supreme Court ruling on the J&K Motor Spirit Act was specifically rejected as inapplicable.
✅ Action Item: Any pending GST proceedings initiated through a single notice spanning multiple years should be immediately reviewed for this procedural infirmity and challenged at the appropriate forum.
4. Madras High Court Allows GST Appeal Revival on Fulfilling 10% Pre-Deposit Condition
In Altec Fabricators Vs Assistant Commissioner, the Madras HC Division Bench corrected a Single Judge's 25% pre-deposit direction, affirming the correct statutory requirement of 10% under Section 107 of the CGST Act on a ₹5.23 crore demand. A seven-day appeal filing delay was condoned given substantial prior compliance.
✅ Action Item: Pre-deposit conditions in GST appeals must be verified against the Section 107 statutory framework — any direction exceeding 10% of disputed tax (excluding interest and penalty) should be challenged immediately.
In Cart Infralog Ltd. & Anr. Vs Additional Commissioner, the Calcutta HC quashed a ₹6.3 crore ITC denial, holding that Section 79 recovery must first be attempted from the defaulting supplier before denying ITC to a bona fide recipient. Vague fraud/suppression allegations invoking Section 74 extended limitation were also struck down.
✅ Action Item: Assessees facing ITC denial based solely on GSTR-2A mismatches should document their bona fide purchase evidence (invoices, payments, delivery receipts) and formally request Section 79 action against the defaulting supplier before any demand is confirmed.
The Karnataka HC upheld entry tax on Hydraulic Oil under the Karnataka Tax on Entry of Goods Act, 1979, reinforcing the expansive interpretation of residual clauses in tax schedules and confirming that materials consumed in machinery operation (without forming part of the finished product) qualify as "consumables" subject to entry tax.
✅ Action Item: Manufacturers and industrial operations using hydraulic systems in Karnataka should review their procurement classifications and assess pending entry tax exposure on consumables.
7. Prospective Impact of New GST Penalty Pre-Deposit Rules on Appeals Before GSTAT
The Hyderabad GSTAT in M/s. Reddy Veeranna Constructions Pvt. Ltd. held that the Finance Act, 2025 amendment introducing a 10% penalty pre-deposit under the proviso to Section 112(8), effective 01.10.2025, cannot apply to penalty-only proceedings where the SCN predated that date. The right of appeal is a vested right accruing at the date of SCN.
✅ Action Item: Parties with penalty-only GSTAT appeals arising from pre-01.10.2025 SCNs should file an application asserting the prospective nature of the amendment if a 10% pre-deposit demand is raised.
This comprehensive guide analyses Section 70 summons under the CGST Act, covering CPC applicability, CBIC administrative guidelines, Section 70(1A) authorised representation rights, and judicial rulings confirming that a summons is an instrument of inquiry — not an adjudicatory order or accusation of guilt.
✅ Action Item: Upon receipt of a Section 70 summons, verify the issuing officer's jurisdiction and designation, assess whether personal attendance is required or authorised representative suffices under Section 70(1A), and prepare responses strictly within the summons scope.
In Super Enterprises Vs. Union of India, the Patna HC reversed a GST registration cancellation, ruling that a personal hearing notice cannot be scheduled before the SCN response deadline expires. Invoking the "civil death" doctrine, the Court directed restoration of registration upon demonstration of subsequent compliance — clearing all dues and filings.
✅ Action Item: Businesses facing GST registration cancellation proceedings should verify the chronological sequence of SCN issuance, reply deadline, and hearing notice — any procedural inversion is a ground for immediate challenge.
🟪 Company Law / Corporate Governance
1. NFRA Sets Up Expert Panel to Strengthen Audit Quality and Technology Oversight
NFRA has constituted its third formal advisory body — the Advisory Committee on Audit Quality, Assurance and Technology — under Rules 15 and 16 of the NFRA Rules, 2018. The Committee will provide non-binding expert advice on auditing standards application, high-risk sector identification, AI and data analytics governance, cybersecurity, cloud-based audit documentation risks, and technology environments including ERP, blockchain, and APIs.
✅ Action Item: Audit firms and listed company audit committees should begin self-assessing their technology governance frameworks, AI tool usage policies, and cybersecurity protocols in anticipation of heightened NFRA scrutiny aligned with the new Committee's mandate.
🟧 Insolvency (IBC)
1. NCLT Chandigarh Admits Section 9 IBC Plea: No Credible Pre-Existing Dispute Shown
The NCLT Chandigarh admitted a Section 9 application by M/s. Knitscraft Textile LLP against M/s. Ervika Global Private Limited, finding an acknowledged operational debt of over ₹1 crore and no credible pre-existing dispute supported by contemporaneous documentary evidence. The Corporate Debtor's vague MOU-based settlement defence and a subsequent criminal complaint were insufficient to constitute a Mobilox-standard credible dispute.
✅ Action Item: Corporate debtors must document any genuine pre-existing disputes contemporaneously — vague post-default settlement claims and unsubstantiated criminal complaints are consistently held insufficient to block Section 9 admission.
📅 Key Deadlines & Action Items
| Deadline / Trigger | Requirement | Authority |
|---|---|---|
| FADS 2026 — Act Immediately | File foreign asset declarations under Finance Act, 2026 before the scheme window closes; secure Category 1 vs. Category 2 classification advice | Finance Act, 2026, Ss. 133 & 139 |
| GST GSTAT Pre-Deposit (w.e.f. 01.10.2025) | 10% penalty pre-deposit required for penalty-only appeals filed after 01.10.2025; not applicable to pre-01.10.2025 SCNs | CGST Act, S. 112(8) proviso (Finance Act, 2025) |
| Section 148A(b) Response Window | Upon receipt, count seven clear intervening days immediately; raise formal limitation objection if window is short | CGST Act / IT Act, S. 148A(b) |
| Section 153(3) — Post-Section 263 Orders | Track AO's deadline to pass consequential order; limitation failure revives original assessment | IT Act, Ss. 263 & 153(3) |
| ITR-V Verification | Submit ITR-V immediately after e-filing; 5.5-year delay attracted ₹2.06 lakh Section 272A(2)(e) penalty despite NIL income | IT Act, S. 272A(2)(e) |
| GST Pre-Deposit for Section 107 Appeals | Statutory cap is 10% of disputed tax only; challenge any direction exceeding this threshold | CGST Act, S. 107 |
| Form 26A for TDS Deductors | Where payee has paid tax on receipt, file revised Form 26A immediately to avoid "assessee in default" status | IT Act, S. 201(1) |
| Section 80GGC Political Contributions | All donations must be made exclusively through banking channels (NEFT/RTGS/Cheque) to support deduction claims | IT Act, S. 80GGC |
💡 Professional Takeaways
1. Procedural Safeguards Have Become Jurisdictional — Not Merely Curative
Across Income Tax and GST, courts and tribunals are consistently treating procedural violations — insufficient response windows under Section 148A(b), improper hearing sequences under Section 75(4), composite notices under GST, and time-barred Section 148 notices — as jurisdictional defects that void proceedings entirely. Tax professionals must build a procedural audit into every contested assessment, treating each step as a potential ground for complete quashing — not merely as a secondary argument to bolster merits.
2. The Evidence Threshold for Additions Under Sections 68, 69, and 69A is Rising
A clear and consistent trend emerges from this edition: ITAT benches across Jodhpur, Chandigarh, Ahmedabad, and Panaji are demanding specific, transaction-level, corroborative evidence before sustaining additions under Sections 68, 69, and 69A. Investigation Wing reports, generalised modus operandi findings, GSTR-2A mismatches, DVO valuations, and penny stock price movement analyses — standing alone — are being held categorically insufficient. Professionals advising assessees in scrutiny and search-related proceedings should document this evidentiary benchmark as a primary defence strategy.
3. FADS 2026 and NFRA's Technology Committee Signal a Convergence of Disclosure and Compliance Intensity
The simultaneous introduction of FADS 2026 for foreign asset disclosure and NFRA's new Technology Advisory Committee reflects a coordinated regulatory shift: the government is simultaneously offering structured settlement paths for historical non-compliance while dramatically raising the bar for prospective compliance quality in audit, technology governance, and cross-border financial transparency. Tax and audit professionals advising HNIs, multinationals, and listed entities should treat these as linked signals — the window for voluntary disclosure is open, while the scrutiny infrastructure for future non-compliance is being actively upgraded.
© TaxCorp India | thetaxcorp.in | This digest is prepared for informational purposes only and does not constitute legal or tax advice. Readers are advised to seek professional guidance for specific matters.