Landmark Cases on Assessment Procedure

Service of notice at a place other than the assessee's registered address violates assessment procedure and renders the notice invalid.

Assessees have the right to raise legal objections and additional grounds at any stage of the proceedings, including before the Tribunal.

Section 53A of the Transfer of Property Act requires specific conditions to be met for a transferee to defend or protect possession under the doctrine of part performance. These include a written contract for transfer for consideration, signed by the transferor, with ascertainable terms, and part performance of the contract by the transferee, such as taking possession.

A reassessment is void if the Assessing Officer fails to issue a mandatory notice under Section 143(2) after a return is filed in pursuance of a Section 148 notice. Such failure renders scrutiny proceedings invalid.

The omission to mention Section 143(2) in a notice does not invalidate assessment proceedings if the assessee was provided with an opportunity to be heard and responded to the issues raised.

The satisfaction note must reveal incriminating material for the Assessing Officer to assume jurisdiction under Section 153C of the Income Tax Act, 1961. This material must be incriminating and relate to the assessment years being reopened.

Reopening an assessment beyond four years from the relevant assessment year is invalid if the reasons provided do not contain a finding that the assessee failed to make a full and true disclosure of all necessary facts. The condition precedent for exercising the power to reopen an assessment after four years is absent in such cases.

Where substantial questions of law are answered against the revenue and in favour of the assessee, appeals are dismissed. The Karnataka High Court's decision in Karnataka Bank Ltd. v. Assistant Commissioner of Income-Tax, Circle 2(1) is cited as authority for answering substantial questions of law against the revenue.

The assessment officer rejecting a claim based solely on payments made before the sale deed execution date, without further details, is not valid.

A Tribunal cannot allow a party to change its stance by referring to new facts not pleaded or asserted before the Assessing Officer or Commissioner (Appeals).

An assessee can raise additional grounds of appeal that are purely legal and go to the root of the matter, even if they did not file a cross-objection, provided no new evidence is required.

An assessment order is invalid if a notice under section 143(2) was not issued, unless the assessee failed to file a return within the time specified in a notice under section 148, in which case the AO may treat the return as invalid and need not issue a notice under section 143(2).

Approval under Section 153D of the Income Tax Act is administrative in nature and does not require elaborate reasoning. The absence of detailed reasoning in the approval does not invalidate the assessment unless there is a complete lack of application of mind by the approving authority.

The word 'includes' in an interpretation clause can sometimes be restrictive, depending on the context, and may not always signify an enlargement of meaning.

Tax liability under a new provision of the Income Tax Act cannot be applied retrospectively to assessment years prior to the date the provision came into force. The date of accrual of income is relevant for determining which provision applies.

Issuing a notice at the address listed in the PAN database is sufficient compliance for notice issuance. If no specific intimation of a change of address is given to the Assessing Officer, they are justified in sending the notice to the address available in the PAN database.

Reopening assessment is a mere change of opinion by the Assessing Officer in the absence of new tangible material. If the assessee has placed all materials before the Assessing Officer, his reassessment after 4 years is unjustifiable.

Reassessment proceedings are invalid if initiated without any failure on the part of the assessee to disclose material facts and without a specific finding of such failure in the reasons recorded. Reassessment based solely on a change of opinion without new material is also invalid.

A notice issued under section 148A(b) of the Income Tax Act is vitiated if it is not accompanied by proper material, or if the information provided is incorrect. Furthermore, the submissions filed by the assessee in response to a section 148A(b) notice must be considered when passing an order under section 148A(d).

Where there is an apparent conflict between two independent provisions of law, the special provision must prevail.

Section 27 of the Indian Evidence Act, 1872 raises a presumption that service of notice is effected when it is sent to the correct address by registered post. When a notice is sent by registered post to the drawer's address, it is unnecessary to further aver that the addressee is deemed to have knowledge of the notice.

A reference to the Valuation Officer under section 142A for valuation of assets cannot be made without rejection of books of account. However, if the valuation is made with regard to property, asset, or investment as stated in sections 69 and 69B, a reference under section 142A can be made without rejecting the books of account.

While the principle of res judicata does not strictly apply to income tax assessments, decisions in earlier years are not binding in subsequent years, there should be finality and certainty in tax litigation, and earlier decisions should be followed subject to limitations.

Each year's income tax assessment is generally final and binding only for that specific year, and a previous year's assessment does not govern subsequent years. While the strict rule of res judicata does not apply in income tax proceedings, the revenue cannot contradict its earlier stance in identical circumstances without demonstrated changed facts.

A reassessment order is bad in law if the Assessing Officer fails to dispose of the assessee's objections by way of a speaking order.

Profits earned on behalf of an association of persons (AOP) are taxable in the hands of the AOP, especially when the owners themselves would have faced chaos in their business if they claimed these profits directly.

Separate additions to income cannot be made by an Assessing Officer for the same investment if its source has already been subjected to tax, even if the addition is based on a statement recorded under Section 132(4).

Reassessment proceedings are vitiated if the Assessing Officer fails to provide the assessee with a copy of the reasons for reopening the assessment, despite a specific request.

CBDT circulars are binding on income-tax authorities. If an assessee's case is selected for scrutiny in violation of CBDT instructions, the assessee's contention may be acceptable.

Mesne profits decreed by a court are taxable income in the hands of the decree holder in the relevant assessment year they are charged to income-tax.

The assessment order merges into a subsequent order passed under Section 154 of the Act, rendering it unappealable before the CIT(A).

A subsequent reassessment order under section 147 effaces the original assessment order, requiring a fresh assessment of the entire income of the assessee. The original assessment order is deemed to be superseded by the reassessment order.

A disallowance under section 143(1)(a) for delayed deposit of employee's contribution to PF/ESI is invalid as it constitutes a debatable issue, which falls outside the scope of summary processing under section 143(1)(a).

A High Court's decision can be considered even if another High Court has taken a different view, especially if a Full Bench of the court has analyzed both conflicting decisions.

The Commissioner (Appeals) is not required to record elaborate reasons when upholding an Assessing Officer's order, provided the reasons are clear and explicit, demonstrating consideration of the issue.

Disallowance under Section 14A cannot exceed the amount of income claimed as exempt.

The High Court has held that an assessee can rely on cited case law to support their legal and factual submissions.

The exercise of power under Section 131(1A) of the Income Tax Act is contemplated in a situation that arises before the exercise of power under Section 132.

An assessing officer is duty-bound to compute the income of an assessee in accordance with the law, irrespective of any admission made by the assessee. The purpose of assessment is to correctly determine taxable income as per the Act.

When an Assessing Officer is not satisfied with an assessee's claim for disallowance of expenditure related to exempt income, subsections (2) and (3) of Section 14A of the Income-tax Act, read with Rule 8D, prescribe a formula for determining such expenditure. The proximate cause between the expenditure and the earning of exempt income is a prerequisite for invoking Section 14A.

An order passed under section 153C of the Income Tax Act is invalid in the absence of a valid show cause notice.

An Assessing Officer cannot make additions to income based on alleged bogus purchases solely on suspicion from sales tax authority information without conducting an independent inquiry and providing the assessee an opportunity to controvert the seller's statements.

Income tax authorities must follow the principle of consistency, meaning that identical issues decided in favour of the assessee in earlier years should be followed in subsequent years, absent any change in facts. This principle is upheld even if the earlier decision was based on specific facts applicable to those years.

An appellant cannot challenge the jurisdiction of the Assessing Officer after the expiry of one month from the date of service of notice, especially when statutory notices were issued and not responded to.

An assessment order is not bad in law solely for failing to specify the section under which an addition is made, provided the addition is justified on merits.

Delay in filing Form 10-IC, which is a procedural requirement for claiming the benefit of section 115BAA, should not invalidate the assessee's substantive right to such benefit.

A department cannot be allowed to revisit a matter on the same facts when the Tribunal has already passed an order which has been followed by multiple coordinate benches.

A reassessment order is bad in law if the Assessing Officer fails to obtain approval from the specified authority under Section 151(ii) before issuing a notice under Section 148.

High Courts allow writ petitions in favour of the assessee concerning the issue of jurisdiction in cases where orders under Section 148A(d) are challenged.