Landmark Cases on Assessment Procedure

An assessee's objection to an Income Tax Officer's jurisdiction, if it concerns the assumption of power in contravention of CBDT instructions rather than a dispute over territorial limits, means Section 124(3) does not aid the revenue.

A taxation statute must be strictly construed, and there is no room for equity in tax provisions.

The Tribunal has the primary jurisdiction to prevent a miscarriage of justice and is duty-bound to grant consequential relief where required.

An assessee cannot claim deductions or expenses in a Section 153A assessment if they were not claimed in the original return, especially when the original assessment was already completed.

An Assessing Officer can estimate higher profits than returned if the assessee fails to justify their figures, but must disclose the basis of computation and provide a speaking order.

A question of law is substantial if it is debatable, not previously settled by law or binding precedent, and possesses substance, importance, or considerable worth. This is a prerequisite for an appeal under Section 260A.

A document, once incorporated, must be read as it is and cannot be supported by supplementary material.

An Assessing Officer can make additions on issues that come to notice during reassessment proceedings, even if no addition is made on the original issue that formed the basis for reopening.

An Assessing Officer cannot reopen an assessment merely because they failed to apply their mind to the facts and issues, as the assessee should not suffer due to the officer's lapse. If the officer did not apply their mind, it does not automatically imply that income has escaped assessment.

When considering the application of a particular legal principle, decisions from various High Courts, including those that may appear contrary, should be distinguished on facts and law if they are not directly on point to the present case.

Section 2(22)(e) does not apply to transactions between a shareholder and a company that are in the nature of a current account with reciprocal money transfers, rather than loans or deposits.

An amending act can be purely clarificatory, intended to clarify a meaning already implicit in the principal Act. The word 'and' can be interpreted as 'or' in statutory interpretation if it leads to unintended results.

Section 292BB of the Income-tax Act, 1961, concerning service of notice, does not apply to the issuance of a mandatory notice under section 143(2) within the statutory period, and does not cure defects or enlarge the time limit for such issuance.

Reassessment proceedings initiated after four years from the end of the relevant assessment year require sanction from the Joint Commissioner, not merely a Commissioner, to be valid.

A decree passed by a court that lacks inherent jurisdiction is considered void ab initio and cannot be validated even by the consent of the parties.

An assessment order that relies solely on affidavits and statements obtained under section 131(1A) without independent examination by the Assessing Officer is invalid. The Assessing Officer must provide positive material and evidence to prove their case.

The Commissioner of Income Tax (Appeals) must provide valid notice to the assessee before enhancing gross profit.

An assessment order passed without giving effect to the binding directions of the Dispute Resolution Panel (DRP) under section 144C(10) within the stipulated time under section 144C(13) is null and void and must be set aside.

The Assessing Officer (AO) must conduct independent verification and inquiries before making an assessment, and failure to do so can render the assessment order erroneous and prejudicial to the revenue. When assessing long-term capital gains, the AO must examine the financials of the company whose shares were allegedly inflated and consider the pattern of share price increases and subsequent falls.

If parties to an agreement understand its terms in a particular way and act accordingly, the Assessing Officer cannot impose a different interpretation for taxation purposes.

The term 'allotment of shares' signifies the appropriation of previously unappropriated capital, and shares only come into existence upon such allotment. This principle is relevant for understanding the issuance of bonus shares.

Where the cost of construction shown in the books of account is not proper, the Assessing Officer's reference to the Director of Valuation (DVO) is justified.

Decisions of other Coordinate Benches allowing provisions for standard assets are relevant when considering similar issues, even if a specific bench affirmed the AO's view.

Reassessment proceedings are unsustainable if the reasons recorded for reopening are based on a mistaken factual premise, such as the incorrect assertion that no return of income was filed when one was actually filed.

A purely legal ground can be raised at any stage of the proceedings, including before the Income Tax Appellate Tribunal, as long as it does not require fresh evidence or investigation.

The word 'shall' in a statutory provision may not always convey a mandatory intent, and its interpretation depends on the context of the provision as a whole.

Where an ambiguous interpretation of a statute admits two views, the construction favoring the assessee must be adopted.

For an assessee to be considered in default, a notice must be served in one of the modes provided by the Income Tax Act. Acquiring knowledge of a notice's issuance is not a substitute for proper service.

A purchasing dealer can rely on a selling dealer's certificate of registration, and a retrospective cancellation of the seller's registration cannot affect a buyer who acted on the certificate when it was valid.

The Tribunal can admit a new ground of appeal if the legal position on an issue changes during appellate proceedings due to a subsequent judgment of higher authorities.

The case is cited as precedent alongside other decisions, implying its relevance in income tax matters.

An assessment is invalid if it is made without a valid notice issued by the Assessing Officer with the correct jurisdiction. Jurisdiction assumed solely based on PAN data may not be valid.

The case Oil India Co. Ltd. v. CIT (1982) 137 ITR 156 (HC) is cited for its ratio in relation to other decisions by the Supreme Court.

Tribunals can admit additional grounds of appeal if they are purely legal, and the facts are already on record and do not require fresh investigation.

An assessment order passed against a deceased person, even if initiated after death, is null and void and must be set aside, especially when the return was filed by the legal representative.

An Assessing Officer's failure to make inquiries during assessment proceedings is a ground for distinguishing a case from Bharat Overseas Bank v. CIT.

A return filed in response to a notice under Section 148 should be treated as a valid return, and an assessment made without issuing a notice under Section 143(2) is void.

The High Court, in CIT v. Shri Digvijay Cement Co. Ltd., addressed issues related to income tax law, as indicated by its citation in subsequent judgments concerning various sections and topics.

Sanction for reassessment proceedings initiated after three years from the end of the relevant assessment year must be obtained from the Principal Commissioner of Income Tax (PCCIT) under Section 151(ii). The proviso to Section 151, inserted w.e.f. 01.04.2023, does not apply retrospectively to proceedings initiated before that date.

Share income of a partner that does not form part of the total income is to be added to the total income to determine the tax rate payable by the partner.

The Income Tax Appellate Tribunal (ITAT) is the final fact-finding authority. Disagreements between different benches of the ITAT on factual findings necessitate reference to a larger bench.

Additions made towards notional interest are not sustainable when the Assessing Officer does not state under what provisions of the Act such additions are being made.

The first appellate authority (CIT(A)) has the power to consider issues suo motu, dealing with all points arising not just from the subject matter of the appeal but from the larger area of the assessment. The CIT(A) is a superior authority to the Assessing Officer and can correct mistakes and give directions in conformity with the Act.

A revised return can only be filed under Section 139(5) if there is an omission or a wrong statement in the original return due to bona fide inadvertence or mistake.

An assessee can urge a legal ground that was not decided by the lower appellate authority, even without filing a separate appeal against that specific decision.

Assessments made pursuant to proceedings that lack a proper foundation or assumption of jurisdiction must be annulled.

Orders of the Income Tax Appellate Tribunal (ITAT) that rely on specific precedents, such as Genisys Integrating Systems India (P) Ltd. vs. DCIT, are binding on the Commissioner of Income Tax (Appeals) (CIT(A)).

The operative principle or ratio decidendi of a decision holds precedent value. A tribunal's decision that ignores the legal import of a 'set aside' order, failing to acknowledge that a demand subsisting despite the source order being set aside is not obliterated, is not valid.

Income is computed in accordance with the method of accounting regularly employed by the assessee, but this does not mean an adopted accounting system can never be changed.

Deemed dividend under section 2(22)(e) can be assessed only in the hands of a shareholder of the lender company, not in the hands of a non-shareholder. The expression 'shareholder' includes both registered and beneficial shareholders.