Landmark Cases on Assessment Procedure

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.

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.

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 assessment or reassessment order is invalid if the assessee has not been served with a notice under section 143(2) of the Income-tax Act, 1961.

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.

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 court taking cognizance of an offence must apply its mind to the allegations and not mechanically reproduce legal provisions. A bald order without considering the facts constituting the alleged offences is bad in law.

A legal provision should be interpreted in a manner that gives full effect to its purpose, rather than narrowly construing it to defeat that purpose. If there are two possible interpretations of a provision, the one that is consistent with the legislative intent should be preferred.

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.

An assessee's objection to a specific assessment proceeding does not constitute a denial of their overall liability to be assessed under the Income Tax Act.

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.

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.

A debatable issue cannot be decided under section 143(1)(a) of the Income-tax Act, as its scope is restricted to adjustments for prima facie mistakes and omissions apparent from the record.

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.

A judgment should not be applied if it was decided sub silentio, meaning a relevant legal principle was not considered or discussed.

An assessment order is invalid if the assessee is not granted a reasonable opportunity of being heard before the transfer of their case, even if Section 127 uses the word 'may'. The word 'may' in Section 127 should be interpreted as 'shall'.

The Assessing Officer accepting the assessee's submission by not rejecting it during assessment proceedings amounts to forming an opinion, and reopening on the same issue would be without jurisdiction.

The Tribunal's decision in ACIT v. Haware Construction (P.) Ltd. is authority for the principle that the profit rate, when restricted by the CIT(A), should be reasonable and cover the profits of the appellant, avoiding excessive additions.

The Assessing Officer must assign reasons for rejecting an assessee's explanation to disallow expenses under Section 14A, otherwise, the addition will be deleted.

An assessment order passed based on a draft assessment order issued to a non-existent entity is void ab initio. This applies where a draft assessment order under section 144C was passed in the name of an amalgamating company that was no longer in existence on the date of the order.

An Assessing Officer's decision allowing a claim based on the assessee's detailed written explanation and inquiries made during assessment cannot be deemed erroneous simply because the order lacks elaborate discussion on the matter.

A challenge to the fundamental jurisdiction to make an assessment can be raised for the first time before any authority. An assessee cannot confer jurisdiction on an authority who inherently lacks it.

An order under Section 163, deeming a person as an agent of a non-resident, must be passed after providing that person an opportunity to be heard. Such an opportunity must be given before initiating reassessment proceedings.

An opportunity to be heard must be given to the assessee before making any adjustment or disallowance under section 143(1)(a) of the Income Tax Act, 1961.

Where a return is filed in response to a notice under section 148, even if delayed, a notice under section 143(2) must be issued for the assessment proceedings to be valid, following the decision in Hotel Blue Moon.

The validity of a reassessment can be challenged in collateral proceedings, even if the original assessment was completed under section 143(3).

The absence of a pre-generated DIN, or the failure to record reasons and obtain prior approval for manual issuance of a DIN, is fatal to the validity of an assessment order. Compliance with the DIN protocol is a jurisdictional prerequisite, not a curable irregularity.

An assessee should not be compelled to pay more tax than due for a procedural lapse, especially when the claim is otherwise admissible as per filed forms during assessment proceedings.

The CIT(A) relied on the Allahabad High Court's decision in CIT vs. Jagdish Prasad Tiwari to sustain additions to income, holding that a profit element on disputed components should be added to the assessee's income.

Concurrent jurisdiction means two authorities have equal powers to deal with a situation in its entirety, not that the same work can be divided between them.

A Commissioner is not justified in not admitting and adjudicating claims made by an appellant under sections 54B and 54F, especially when the Bangalore Tribunal's decision in Rakesh Singh v. ACIT (2012) is relevant.

An intimation issued under Section 143(1) of the Income-tax Act, 1961, does not survive once a notice under Section 143(2) has been issued, and the AO is divested of jurisdiction to issue an intimation under Section 143(1) after issuing a notice for regular assessment under Section 143(2).

A revised return can be filed in respect of an original return that claimed carry forward of loss under Section 139(3). Once a revised return is filed, the original return is considered withdrawn and substituted.

The Andhra Pradesh High Court in P.L. Ganapathi Rao & ANR vs. CIT (2006) 285 ITR 501 (AP) noted that a cash basis accounting system was followed in the case.

Service of notice under section 143(2) within the stipulated period is mandatory for continuing assessment proceedings. Failure to serve the notice within this period renders the assessment proceedings final.

Additions made by the Assessing Officer are liable to be deleted if similar additions have already been deleted for assessment years. Additions made purely on a notional basis without independent corroboration are also liable for deletion.

A reference to the Director of Valuation under Section 132(9D) is invalid if it is made without rejecting the assessee's books of account, and a subsequent DVO report is also unsustainable if it's based on such an invalid reference.

Procedural rules are intended to aid the administration of justice and should not be used to obstruct or defeat the cause of justice. Substantial compliance with procedural requirements is sufficient when the underlying purpose of the rule has been met.