Landmark Cases on Assessment Procedure

The Revenue cannot be permitted to reopen previously decided issues in income-tax proceedings, absent any change in the assessee's circumstances, to maintain consistency in assessment.

A notice for reassessment under Section 148 cannot be issued unless the return of income already filed has been disposed of. Reassessment proceedings cannot be initiated while assessment proceedings based on a filed return are still pending.

Service of a notice or requisition under the Income-tax Act must be made in accordance with Section 282(1), which allows for service by post or as if it were a summons under the Code of Civil Procedure, 1908. Rules 12 to 15 of Order V of the CPC are relevant, emphasizing personal service where practicable.

Service of notice by affixture is invalid if it is not done in accordance with the procedure laid down in the Code of Civil Procedure, specifically requiring the association of an independent local person.

Where no incriminating material or evidence is found during a search and seizure action, and the assessment for the relevant year has already been completed and is unabated, no addition can be made.

An assessment cannot be automatically vested with a jurisdictional officer without a formal order under Section 127 of the Income Tax Act. Even intra-city transfers require an order under Section 127.

Section 153D of the Income Tax Act requires the approving authority to indicate the thought process involved in granting approval, reflecting some indication of the reason for the conclusion, even if elaborate reasons are not necessary.

The case is cited for the proposition that the Assessing Officer has the power to make additions to income, which is relied upon by the Department Representative (Ld. DR) in support of their claims.

A notice issued by an Assessing Officer lacking valid jurisdiction over the assessee is invalid. Subsequent proceedings based on such a notice are void ab initio, and cannot be validated by transferring the records or proceedings.

Reassessment proceedings initiated based on documents already on record are invalid. Sanction for reassessment proceedings under section 151 is invalid if accorded in a mechanical manner.

When interpreting a provision in a taxing statute, courts must adopt a construction that preserves its purpose, workability, and efficacy, eschewing interpretations that would defeat or obliterate the provision.

Service of notice under Section 148(1) is a mandatory condition precedent for making an assessment order. Once a notice is issued within the limitation period, the Income-Tax Officer gains jurisdiction to proceed with reassessment.

The Delhi High Court decision in PCIT v. KBCL (2017) 395 ITR 572 (Delhi) is upheld by the Supreme Court, establishing a precedent for assessee-favorable rulings in similar cases. This precedent has been relied upon by coordinate benches for subsequent assessment years.

A notice under section 143(2) for assessment under section 143(3) must be issued within the prescribed time limit of 12 months from the end of the month in which the return is furnished, even if the return was initially processed under section 143(1).

An issue that has been admitted and concluded by previous judgments from the Company Law Board and High Courts cannot be reopened. This is especially true when it contradicts undertakings made in an amended application.

An assessee is entitled to follow the cash basis of accounting if consistently adopted, especially in the initial year of commercial operations.

Decisions of the Tribunal, including Special Benches, that have followed earlier decisions in the assessee's own case or the case of Hero Exports v. CIT, are binding on coordinate benches, especially when the revenue cannot controvert the findings. This principle of consistency is applied to allow additional grounds of appeal.

When the language of a statute is clear and unambiguous, courts must apply it as written, regardless of any perceived harsh consequences. Judges do not have the power to mitigate statutory harshness.

Sanction for reopening an assessment under Section 151 requires approval from the specified authority, and approval from a superior but different authority is invalid. Even if the reopening is within four years, the correct authority must grant approval.

A notice issued under Section 143(2) is a jurisdictional notice, and the absence of such a notice renders the assessment order invalid. Failure to issue a valid notice under Section 143(2) cannot be cured by subsequent actions or findings.

An assessment cannot be reopened merely because the Income Tax Officer forms a different opinion on the facts already examined, especially after the assessee has fully disclosed all material facts.

Proceedings before the Dispute Resolution Panel (DRP) are a continuation of the assessment proceedings, not an appeal, and the DRP acts as a corrective mechanism offering a second look at the draft assessment order before a final, appealable order is passed by the Assessing Officer.

A legal representative of a deceased person has all the rights and powers of a general administrator, and the estate vests with them as such, in accordance with Section 211 of the Indian Succession Act.

Failure to issue a valid notice under section 143(2) after the filing of a return of income in response to a notice under section 148 renders the assessment order invalid. Section 292BB does not cure this defect, as it is not a procedural irregularity.

An assessment order cannot be held erroneous and prejudicial to revenue if the Assessing Officer (AO) could not have travelled beyond the issues forming the subject matter of 'limited scrutiny'. The Principal Commissioner of Income Tax (PCIT) cannot invoke Section 263 to set aside an assessment on grounds not forming part of the limited scrutiny.

Before making an adjustment, the TPO must issue a show cause notice and provide the assessee an opportunity to be heard. This ensures principles of natural justice are followed.

A protective assessment is permissible only at the initial assessment stage, as higher appellate or revisional authorities can definitively determine the liable assessee.

Proceedings initiated under Section 147/148 of the Income Tax Act, 1961, and notices issued under Section 148A(b) and Section 148 are liable to be quashed if the Assessing Officer fails to supply the requisite information/material along with the notice under Section 148A(b).

Decisions taken by a majority of joint authorities, acting in different capacities, can be set aside if they do not act by unanimity and instead report disagreements to the court for directions.

Courts cannot legislate or usurp legislative functions under the guise of interpretation when a law is misused or subjected to abuse. Legislatures must amend, modify, or repeal laws that are deemed necessary.

The tax law applicable is the law in force during the assessment year, unless expressly provided or implied otherwise. This principle dictates which version of the law governs tax matters for a particular assessment period.

Orders passed by the Assessing Officer (AO) while giving effect to the orders of an appellate authority are appealable under section 246A of the Act, as they are considered to be orders passed under sections 143 or 144.

The Assessing Officer has the suo motu power to direct an assessee to obtain an audit report and to extend the time for its submission, by interpreting the conjunction 'and' as 'or' in the relevant statutory provision.

Instructions or circulars issued by the CBDT, even if they deviate from existing law, are binding on income-tax authorities if they confer a benefit on the assessee. An assessment order passed in contravention of such binding instructions is void and unsustainable in law.

An Assessing Officer cannot estimate income by adopting a net profit rate when the assessee's accounts are duly audited and there is no reason to doubt their correctness, unless Section 145(3) is invoked.

A reassessment order is invalid if there was a want of notice under section 143(2). This applies even if the notice was issued without examining the return or if the Assessing Officer did not represent before the Commissioner (Appeals) that the notice had been issued.

Section 149 of the Income Tax Act, 1961, only mandates the issuance of a notice within the prescribed period and does not require the notice to be served on the assessee within that same period.

The Income Tax Appellate Tribunal has the power to consider claims for losses under any provision of the Act, even if not initially raised in the return of income, when deciding an appeal. This is due to the Tribunal's plenary powers under Section 254 of the Income Tax Act.

Reassessment cannot be initiated without specific observations that the assessee failed to furnish fully and truly all material relevant for assessment. The reopening must demonstrate a failure of the taxpayer's obligation to disclose material facts.

Decisions of a larger bench of the Supreme Court are binding on benches of lesser or equal strength, and decisions of a smaller bench can be considered obiter dicta if they are in conflict with larger bench decisions.

A Probate Court lacks jurisdiction to issue directions against third parties, even if the appellant approached the court as a propounder of a will.

Courts can only interpret legislation, not rewrite, recast, or redesign it, as they lack the power to legislate. The court's role is to make the legislature's intention explicit.

An order recording the transfer of a case must be on record, even for intra-city transfers, for the transfer to be valid under Section 127 of the Income Tax Act.

The court considers findings from the Assessing Officer, CIT(A), and submissions from both the Department and Assessee, along with case laws, to arrive at a decision.

A concession made by a counsel will not bind the assessee if the assessee never authorised such a concession. The Assessing Officer must consider material furnished by the assessee instead of relying solely on the counsel's statement.

Sanction implies prior permission or authorization before an act is performed, whereas approval signifies confirmation of an act already done. These terms are not synonymous and their scope depends on the statutory language and context.

When a revised return is filed, the original return is considered withdrawn and replaced by the revised return for assessment purposes. A claim for carry forward or set-off of losses must be made in a return filed within the time permitted by Section 139(3) to be valid.

Where an adjustment under section 143(1) is disputed, it cannot be made. If an issue is debatable, section 143(1) cannot be invoked.

If an Assessing Officer reopens an assessment based on specific issues and makes no addition regarding those issues, they cannot introduce new issues for addition during reassessment proceedings.