Landmark Cases on Assessment Procedure

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.

The courts and tribunals cannot grant relief contrary to legislative intent. They cannot extend relief where the statute clearly indicates otherwise.

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 recorded under Section 153C of the Income Tax Act must be specific to each assessment year.

The decision in Rayala Corporation (P) Ltd. v. Enforcement (1969) is doubted and disapproved by later Supreme Court judgments, particularly concerning the interpretation of repeal under the General Clauses Act.

The court confirms that an assessment order passed without providing the assessee with an opportunity to be heard is invalid.

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 Any claims or entries in the original return cannot be relied upon after being withdrawn or modified in a revised return.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 Delhi High Court decision in Principal Commissioner of Income Tax-6 v. M/s. N.C. Cables Ltd. (2017 SCC OnLine Del 6533) is cited for the proposition that certain assessments, particularly those involving Section 153D, require specific approvals.

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.

Judicial scrutiny can examine whether there was material on the basis of which a belief could be formed about the escapement of income.

An Assessing Officer can initiate reassessment proceedings under Section 147 even if a scrutiny notice under Section 143(2) was not issued within the prescribed time, provided the conditions for Section 147 are met. An intimation under Section 143(1)(a) does not preclude recourse to Section 147.

Disclosure of primary and material facts necessary for assessment is the assessee's duty, not to draw legal or factual inferences for the Assessing Officer.

A consistent position adopted by the tax authorities in prior assessment orders should generally be maintained in subsequent years, absent new contrary evidence or circumstances. This principle of consistency aims to prevent arbitrary changes in tax treatment.

A satisfaction note under Section 153C of the Income Tax Act is not invalid on hyper-technical grounds for incorrect terminology, provided the Assessing Officer was satisfied with the seized documents' contents.

A finding of fact by the Income-tax Appellate Tribunal can be challenged as erroneous in law under section 66(1) if it is not supported by any evidence or is perverse.

A protective assessment is permissible when there is doubt regarding the ownership of income. However, a protective assessment cannot be made if the Assessing Officer has already arrived at a definite conclusion regarding taxability and ownership.

If the language of a statute is plain and capable of only one meaning, that obvious meaning must be given to the provision. This principle applies to statutory interpretation, including provisions like Section 14A which cannot be extended to Section 115JB.

The powers of the Commissioner (CIT) exercising revisional jurisdiction under section 264 of the Income Tax Act, 1961, cannot override statutory provisions like sub-section (5) of section 80A, which mandate specific conditions for claiming deductions.

An Assessing Officer cannot delegate their powers and functions to a special auditor or chartered accountant under Section 142(2A) of the Income Tax Act. Scrutinizing and verifying entries is within the Assessing Officer's own purview and does not necessitate engaging external professionals for the audit.

Tribunals need not reproduce the detailed and reasoned findings of the Commissioner of Income-Tax (Appeals) if they concur with the CIT(A)'s view. This procedural rule prevents unnecessary repetition of detailed analysis.

The court establishes that once the assessing officer rejects the assessee's accounts, the burden shifts to the assessee to prove the correctness of their accounts.

The taxpayer has a duty to disclose all primary and material facts necessary for assessment fully and truly. The determination of what constitutes material or primary facts depends on the specific facts and circumstances of each case, and no universal formula can be applied.

Where the Assessing Officer has consistently followed a particular view in previous assessment years, they cannot depart from that view in a subsequent year if there has been no change in law or facts.

Confidential information disclosed to the Settlement Commission cannot be used by the Assessing Officer to make additions if the settlement application is not admitted under section 245D(1).

An appeal before the Tribunal is not maintainable if the Assessing Officer has accepted the issue in a remand report furnished before the Commissioner (Appeals).

An assessment order is bad in law if a notice under section 143(2) is not issued. However, if the assessee does not file a return within the time specified in a notice issued under section 148, and the return is treated as invalid, the Assessing Officer may not need to issue a notice under section 143(2).

The Assessing Officer is bound to complete an assessment within the time limit prescribed under Section 144C(13) of the Income Tax Act, 1961, after receiving directions from the Dispute Resolution Panel.

The period of limitation for passing an assessment order under section 144C(13) is computed from the date the Dispute Resolution Panel's (DRP's) directions are deemed to have been received, which is when they are uploaded on the ITBA portal.

Courts interpret the law as it stands and cannot legislate. If a law is misused or subject to abuse, it is for the legislature to amend it, not the judiciary to supply a casus omissus.

Payments from a closely held company to a concern in which a shareholder has substantial interest may be treated as deemed dividend under section 2(22)(e) of the Income Tax Act, 1961, if the conditions are met. However, if such amounts are repaid and the subsidiary's ledger account becomes a debit balance reflecting as sundry debtors, it supports the assessee's case.

An assessment based solely on incomplete or incorrect third-party information without proper independent inquiries by the Assessing Officer is not valid. The Assessing Officer must controvert the direct material presented by the assessee.

This case is cited as precedent in discussions of various tax matters, including assessment procedures and specific sections like 132 and 153C, often in conjunction with other cited cases.

The Assessing Officer's (AO) order is liable to be set aside if the AO merely follows the Transfer Pricing Officer's (TPO) order without properly considering directions from the Dispute Resolution Panel (DRP). This principle applies even when comparables used by the TPO are identical to those in the assessee's case.

When assessment is completed under section 153B(1)(b) based on a search, assessment years prior to the search year are subject to the provisions of section 153C, provided they fall within the six assessment years preceding the year of the search.

Where a cooperative bank faces challenges with updating its software and manually gathering data for reporting under section 285BA due to its large database, these practical difficulties can be considered in determining penalties for non-furnishing of Annual Information Reports.

The ITAT decision in Amarjit Singh Bakshi (HUF) v. ACIT is cited as authority for the proposition that additions to income can be made based on specific legal precedents.

The Tribunal, in assessing the facts and circumstances, can consider the submission of the appellant and the assessment order.

A plaint cannot be rejected based on the defendant's allegations in a written statement or an application under Order VII Rule 11 CPC. The court must consider only the averments made in the plaint itself.

Where the Assessing Officer correctly decides that Section 144C is not applicable because there is no variation in the returned income, a draft assessment order is not required.

Concurrent orders that are not in accordance with law can be set aside, even if they relied on settled tests found in case law.

An Assessing Officer can rely on original assessment records when recording reasons to believe income has escaped assessment, even if the initial assessment was processed under Section 143(1).

Reopening an assessment without providing the assessee with the sanction obtained under section 151 of the Income Tax Act, despite a written request, violates principles of natural justice and can be fatal to the reopening.