Landmark Cases on Assessment Procedure

When a statute prescribes a specific method for exercising a power, that power must be exercised only in the manner prescribed.

An assessee is entitled to the adjustment of seized cash towards advance tax liability from the date of making the application for such adjustment.

Section 153C proceedings can only be initiated for assessment years in which incriminating material is found and such material relates to the determination of total income for those years.

When an order under section 143(3) is passed, a prior order under section 143(1) ceases to be operative and merges with the final order, unless the legislature expressly provides otherwise.

A notice issued to a deceased assessee or their legal representatives beyond the period of limitation is without jurisdiction and cannot be saved by Section 292B.

An Assessing Officer cannot accept or entertain a revised claim in the absence of a revised return of income.

Dismissal of a Special Leave Petition (SLP) in limine by the Supreme Court does not affirm the reasoning of the lower court's judgment or cause the impugned judgment to merge with the dismissal order. It signifies that the court found the case not worth examining.

An assessment or reassessment proceeding initiated or continued against a deceased person after their demise is illegal and void ab initio, as no valid notice can be issued to a dead individual.

No addition can be made on the basis of technical electricity consumption formulas to estimate suppressed production, and unexplained investment in unaccounted purchases cannot be sustained if deleted by the CIT(A) and there is no change in facts.

The Supreme Court rejects revenue's appeal in a case concerning the assessment of income, indicating a procedural aspect or a specific issue of law was affirmed. The case involves scrutiny assessments under Section 143(2) and potentially reassessment under Sections 147/148.

Proceedings under section 148, including the notice issued, are invalid and void ab initio if reassessment is not initiated under the correct section, such as section 153C, when the basis for reopening arises from information found during a search on a third party.

An assessment order passed without a valid order of transfer under Section 120(4)(b) of the Income Tax Act, 1961, is void and without jurisdiction.

Assessments are invalid if framed without proper orders under section 120(4)(b) and section 127 of the Income-tax Act.

Orders under section 148A(d) are subject to appeal and the Supreme Court has upheld High Court decisions that considered them appealable. The dismissal of SLPs by the Supreme Court in related cases indicates a settled position on this matter.

If assessment proceedings are wrongly initiated, the court can still entertain the action, and principles of estoppel, waiver, or res judicata do not prevent this.

Judicial discipline requires consistency in legal interpretation. Once a view is taken in a particular year, and absent contrary material, the same view should be followed to ensure finality in litigation.

An assessment made based on an assessee's admission that a particular income is liable to be included in its total income is valid.

Additions made purely on a notional basis, without supporting evidence, are liable to be deleted.

The High Court's direction to the CIT(Appeals) to consider specific Supreme Court judgments implies that cases may be decided on merits by appellate authorities based on relevant precedents without necessarily remanding them to the Assessing Officer.

An assessee waives the right to object to the Assessing Officer's jurisdiction if they participate in proceedings without challenging the notices issued.

An addition to income cannot be justified solely based on a valuation report. The Assessing Officer must apply their mind to the information collected and form a belief before reopening an assessment.

Failure by the Assessing Officer (AO) to dispose of objections filed by the assessee against the reopening of assessment under Section 147 of the Income-tax Act, 1961, renders the reassessment order invalid and affects the AO's jurisdiction.

The assessment proceedings under section 153A are valid even if no incriminating material is found during search and seizure.

A consortium formed for bidding on an infrastructure contract is not an 'association of persons' for tax purposes if it acts as a pass-through entity.

Service of notice within the prescribed limitation period is fundamental to the jurisdiction of the Income-tax Officer to reopen an assessment. The 1961 Act distinguishes between the 'issue' and 'service' of notice for reassessment.

An Assistant Commissioner of Income Tax (ACIT) can perform the functions and exercise the powers of an Assessing Officer only if specifically directed under section 120(4)(b) of the Income Tax Act.

An Income Tax Officer does not need to explicitly state that an assessee's method of accounting is improper; it is sufficient if the assessment order implies this finding, allowing for rejection of books and best judgment assessment.

In a best judgment assessment, an Assessing Officer can make a bona fide estimate of income based on a rational basis, even if there is no concrete proof, when the assessee fails to provide proper accounts or respond to notices.

An assessing authority is entitled to determine the quantum of refund during a regular assessment made under section 143(3), and the assessed income can fall below the returned income.

Communications not conforming to a specified circular are invalid and deemed never issued. The mandatory requirement of mentioning a Document Identification Number (DIN) in penalty orders is upheld.

When an assessee follows the mercantile system of accounting, a statutory liability is incurred and becomes deductible at the time it is raised or accrued, irrespective of whether a dispute is raised later. An appellate authority admitting additional evidence must record reasons and provide an opportunity for the Assessing Officer to respond.

If an Assessing Officer reopens an assessment based on specific reasons but makes no additions related to those reasons, the AO cannot then make additions based on entirely different grounds not initially recorded. Such a reassessment order is unsustainable and liable to be quashed.

The Assessing Officer's power to make adjustments is restricted, particularly concerning actuarial valuations, and this power is bound by principles laid down by the Supreme Court.

An assessee engaged in construction of flats, consistently following the project completion method of accounting, can continue to use this method if it has been accepted by revenue authorities in the past, and the Assessing Officer cannot unilaterally change it to an estimation basis.

The consistent treatment of a matter across different assessment years should not be changed without new facts justifying the change.

Machinery provisions in tax law are interpreted to give effect to legislative intent and make the charge effective. The view that appeals to judicial conscience prevails.

An Assessing Officer lacks the power under Section 143(1)(a) to make prima facie adjustments of a controversial nature, as doing so can amount to overstepping jurisdiction and incorrectly determining income.

Disallowance of employees' contribution to ESI and PF made under section 143(1)(a) is valid if paid beyond the due date prescribed by the respective Acts, even if paid before the due date for filing the return of income under section 139(1).

A claim for deduction made via a note appended to the original return of income, along with a duly filed audit report in Form No. 10CCB certifying such claims, forms an integral part of the return and is admissible.

Central Board of Revenue (now CBDT) circulars that confer a benefit on the assessee are binding on income-tax officers and must be followed, even if they deviate from the strict interpretation of the law.

The Assessing Officer (AO) is not required to refer the valuation to the District Valuation Officer (DVO) if the AO has conducted a detailed inquiry and is satisfied with the cost of construction. Strict adherence to procedural requirements is essential; failure to comply with mandatory conditions renders the assessment based on such non-compliance invalid.

An assessment order and demand notices are set aside if the Assessing Officer fails to provide a satisfactory explanation for not including the endorsement format from Circular No. 19/2019, and the matter is remanded for fresh consideration.

Issuance of a notice under section 143(2) of the Income-tax Act is mandatory for assessments framed under sections 143(3) and 144, and also in reassessment proceedings under section 147. The absence of such a notice is a jurisdictional defect and not a procedural irregularity.

Grounds raised by the assessee against the validity of approval granted under section 153D of the Income Tax Act are dismissed.

The Commissioner (Appeals) cannot enhance an assessment by including income that was not considered by the Assessing Officer, either expressly or by necessary implication.

A notice issued under section 153C of the Income-tax Act, 1961, for assessment years beyond the ten-year period stipulated in the section is barred by limitation.

The approval required under Section 153D of the Income Tax Act is akin to the approval under Section 274(2), and the latter is considered a procedural requirement that does not affect the Assessing Officer's jurisdiction to levy penalty.

The case of CIT v. Anjum M.H. Ghaswala (SC) is authority for the proposition that the Settlement Commission's power regarding waiver of interest under sections 234A, 234B, and 234C of the Income Tax Act can be exercised in relation to the Central Board of Direct Taxes (CBDT).