Landmark Cases on Assessment Procedure

An assessee is not precluded from canvassing a jurisdictional issue at a later stage, even if it was not raised at the first appellate stage.

A notice issued under section 142(1) of the Income Tax Act and the explanations furnished by the assessee in response are significant in tax proceedings.

Approval for issuing a notice under section 148, based on a standard phrase indicating it's a fit case, does not constitute an independent application of mind and is flawed in law.

A return of income filed in response to a notice under section 148 must be treated as a valid return under section 139, and the assessment must then proceed under section 143 or 144 after issuing a mandatory notice under section 143(2) within the prescribed time.

An assessment order passed beyond one month from the end of the month in which the Dispute Resolution Panel's directions were received is barred by limitation and must be set aside.

Where a co-ordinate bench of the Tribunal has decided an issue in favour of the assessee in its own case for other assessment years, the same principle applies to the current assessment year.

When a valid revised return is filed, it completely replaces the original return for all assessment purposes. The Assessing Officer must consider only the revised return.

The non-issuance of a notice under Section 143(2) of the Income Tax Act prior to the completion of reassessment proceedings does not invalidate the reassessment.

Section 124 of the Income Tax Act is confined solely to territorial jurisdiction and does not encompass inherent jurisdiction for passing assessment orders. The reasons provided by tax authorities must be cogent, germane, and have a nexus to the facts.

The ratio of the Supreme Court in Principal CIT v. Vimal Kumar Rathi (2020) is cited for the proposition that there must be incriminating documents for assessment proceedings to be valid.

An income tax authority cannot dictate the method of accounting an assessee must use; the assessee has the right to adopt any recognized method, and income will be computed accordingly.

Proceedings initiated under Section 153C of the Income Tax Act must strictly follow the prescribed procedure, including the proper recording of satisfaction by the Assessing Officer. Failure to adhere to this procedure renders the initiated proceedings unlawful, even if the Assessing Officer for the searched and other persons is the same.

An agency relationship exists when one person is authorized to create legal relationships between a principal and a third party, making the principal answerable to third parties.

No disallowance under Section 14A can be made by the Assessing Officer if the assessee has not earned any exempt income during the relevant assessment year.

The ITAT decision in Anil Kumar Bhatia v. ACIT (2010) is cited in subsequent judgments, suggesting it deals with issues related to assessment, deductions, or disallowances.

High Courts may intervene in decision-making processes that demonstrate a manifest error, arbitrary exercise of power, misinterpretation of governing law, irrationality under Wednesbury unreasonableness, or procedural impropriety.

An assessee's consent to an addition by the Assessing Officer (AO) does not validate the addition if it is not made as per law. The assessee retains the right to appeal even after agreeing to an addition before the AO, and new evidence discovered later must be examined by the AO.

An income tax tribunal, by referring to decisions of the Gujarat High Court and its own co-ordinate benches, allows an appeal for an assessee governed by the same Gujarat State Government Act and rules as SUDA, in the absence of distinguishing facts from the AO.

A High Court judgment, even if not from the jurisdictional High Court, prevails over a Special Bench order of the Tribunal, including a jurisdictional one, due to the hierarchy where the High Court is superior to the Tribunal. This principle generally applies when there is no conflicting High Court judgment.

An assessee can claim an entitlement, even if initially missed, at a later stage. This principle allows for the correction of assessment orders where a statutory benefit was not claimed by the assessee.

Payment by a payer company to a recipient company with a common shareholder holding 10% or more voting power is deemed a dividend only if the benefit from the transaction is ultimately used for the shareholder's benefit.

The Income Tax Appellate Tribunal (ITAT) considered the date of actual completion of a project in relation to the date of application for completion. The ITAT affirmed the theory of relating back to the date of application.

Once a deduction has been allowed in the initial assessment year, it cannot be re-examined in succeeding assessment years, provided assessment proceedings have attained finality and are not subject to reopening due to limitation.

An intimation issued under section 143(1) of the Income-tax Act, 1961, after a notice under section 143(2) has been issued, is a non-speaking order that can be rectified under section 154. Further, an appeal against such an intimation can be filed under section 246A.

The Income Tax Appellate Tribunal (ITAT) can verify whether a product is different from its raw material by visiting the assessee's industrial unit.

Judgments of the High Courts of Karnataka and Kerala in favour of the assessee are reported after the overruling of Lakshmi Nirman Banglore (P) Ltd. vs DOT.

During set-aside proceedings, the Assessing Officer's jurisdiction is limited to the specific issues that were before the Tribunal in the appeal. The Assessing Officer cannot re-examine or introduce new issues that were not part of the original appeal.

An application for immunity under Section 270AA of the Income Tax Act is rejected if the case does not fall within its scope and ambit. Furthermore, any order passed beyond the limitation period specified in Section 270AA(4) is barred by limitation.

The Supreme Court's dismissal of a Special Leave Petition affirms the Delhi High Court's decision in Addl. CIT vs. J.K. D’Costa, and many High Courts have followed this view.

An addition to income based on a Directorate of Valuations (DVO) report is not justified if the Assessing Officer (AO) has not rejected the assessee's books of account or pointed out defects therein.

Revenue authorities are not estopped from correcting a mistaken view of statutory provisions in income tax assessments, even if they previously took that incorrect view.

A notice under section 148, issued by a Jurisdictional Assessing Officer (JAO) instead of a Faceless Assessing Officer (FAO), is invalid and must be quashed as per the faceless assessment scheme under section 151A.

For the purpose of assessment under section 153C, the six-year period commences from the date the materials are forwarded to the Assessing Officer (AO) of the third person by the AO of the searched person.

The High Court's decision in PCIT v. Meenakshi Overseas stands for the principle that the reopening of an assessment and subsequent additions must be based on merits, following established legal procedures.

A High Court decision is authority for the principle it establishes, which is then applied in subsequent cases. In this instance, PCIT v. Ramelex (P) Ltd. [179 Taxmann.com 374 (HC, 2025)] is cited as a precedent in later judgments.

Courts and tribunals cannot extend relief if the legislative intent is otherwise clear. Once an assessee falls within the letter of the law, they must be taxed regardless of perceived hardship.

Amendments to Section 36(1)(va)/43B of the Income Tax Act by the Finance Act, 2021, are applicable from Assessment Year 2021-2022. Adjustments or additions related to employees' contribution to ESIC and PF that fall outside the scope of Section 143(1)(a)(iv) or Section 143(1) of the Act are not permissible.

Cases cited by this decision often involve assessment years 2018-19 and 2019-20.

The mere absence of a stock or consumption register does not automatically justify the rejection of books of accounts and the framing of an assessment under Section 145. The rule of consistency should be applied when the department has accepted the manner of book-keeping in preceding and succeeding years.

A satisfaction note under Section 153C of the Income Tax Act must be recorded for each assessment year, and a consolidated satisfaction note for entire assessment proceedings is invalid.

The Supreme Court doubted and disapproved its earlier decisions in Rayala Corporation (P) Ltd. v. Enforcement, along with Kolhapur Cane Sugar Works Ltd. v. Union of India and General Finance Company v. CIT, impacting the interpretation of statutory repeal under the General Clauses Act.

A revised return filed under section 139(5) substitutes the original return, rendering the original return obsolete for assessment purposes. Any claims or entries in the original return cannot be relied upon after being withdrawn or modified in a revised return.

The rule of law this case is cited for is that decisions that do not directly refer to Section 153D of the Income Tax Act, 1961, are still relevant to its applicability, especially when inserted after June 1, 2007.

The Delhi High Court's decision in PCIT v. Anuj Bansal affirms a tribunal's view, suggesting its authority lies in establishing or confirming principles related to assessment proceedings, potentially concerning reassessment or search and seizure.

Best judgment assessment cannot be invoked to reject books of account if purchases and sales are vouched, opening stock is derived from previous year's closing stock, closing stock is not disputed, and the previous year's books of account were not found incorrect.

A retired partner remains liable for the tax demands of the firm for the period they were a partner, even before statutory amendments explicitly stating this.

An Assessing Officer (AO) must have original jurisdiction over an assessee to validly issue a notice under Section 148 of the Income Tax Act. Notices issued by a non-jurisdictional AO are considered invalid.

Amendments to tax law should be treated as effective from the date the original law was introduced if they are intended to rectify hardship or incongruity.

The Gujarat High Court's decision in Shri Vijaybhai N. Chandrani v. ACIT is considered inapplicable to proceedings under Section 153C if the revenue relies on material seized from third-party premises without any statement recorded under Section 132(4) of the Income Tax Act, 1961, particularly after amendments made by the Finance Act, 2015, to Section 153C.

When an Assessing Officer has not accepted the decision of the Bombay High Court in Godrej Boyce Mfg. Co. Ltd. vs. DCIT (2001) 234 ITR 1 (Bom.), the disallowance under Section 14A, calculated as per Rule 8D, may be restored to the Assessing Officer with a direction to compute it based on the immediately preceding year.