Landmark Cases on Assessment Procedure

The filing of a revised computation before the assessing officer, relying on established precedents, is a valid procedural step in tax assessments.

Even in a limited scrutiny assessment, the Assessing Officer has a duty to conduct a prima facie inquiry into other potential areas of income escapement. If such an inquiry is not conducted and issues outside the limited scrutiny are later revised under section 263, the revision may be considered valid.

Circulars and instructions issued by the Board are binding on income tax officers, but not on assessees or appellate authorities. Some courts have held that circulars are binding on the Revenue.

Assessments under Section 153A are mandatory in all cases, even without incriminating material found during a search or requisition. The provisions of Section 153A are clear and unambiguous, requiring ordinary interpretation.

An Income-tax Officer cannot conduct a fresh enquiry beyond the specific directions of the Appellate Assistant Commissioner (AAC) when a matter is remanded. The ITO is bound by the specific directions of the AAC's order during remand proceedings.

Deemed dividends under Section 2(22)(e) can only be taxed in the hands of shareholders who are both registered and beneficial owners of shares in the paying company.

A writ petition under Article 226 of the Constitution of India is maintainable after the disposal of objections, even if the case is from the Gujarat High Court.

Once an Assessing Officer issues a notice under section 153A for reassessment, they are obligated to proceed with the reassessment proceedings and can assess the total income, including additions for undisclosed income or income escaping assessment, beyond what was originally assessed.

A decision of a High Court is binding precedent even if an appeal or special leave petition is pending, unless the operation of the judgment has been stayed or reversed. This principle applies to decisions of non-jurisdictional High Courts and is followed by tribunals.

When assessing income from undisclosed sources found during a search, the Assessing Officer can proceed under section 153C based on incriminating material found in the possession of a third party, even if the assessment is limited to specific block periods.

Where an assessee's books of account have been audited and the auditor has not provided adverse comments, the books are considered genuine, and the Assessing Officer is generally incorrect in rejecting them.

A notice under section 143(2) is mandatory for a scrutiny assessment. Assessments made without issuing and serving this mandatory notice are invalid, untenable, and void ab initio.

Taxing authorities cannot rewrite the terms of an agreement to impose a tax levy if the transaction between parties was at arm's length and there was no collusion. The commercial expediency of a contract is to be determined by the contracting parties themselves.

The Income Tax Appellate Tribunal (ITAT) may allow an assessee to raise a jurisdictional ground of appeal, even if not raised before the Commissioner (Appeals), by invoking Rule 27 of the ITAT Rules, if the ground goes to the root of the matter.

An assessment framed without the Assessing Officer having valid jurisdiction is void ab initio. This applies when an Additional Commissioner lacks proper delegation or conferment of concurrent jurisdiction by the Commissioner.

An assessment order is unsustainable if passed by an Assessing Officer exceeding their limited powers, especially by not following due procedure when converting a limited scrutiny case to full scrutiny.

For assessment or reassessment of income of another person under Section 153A, the Assessing Officer with jurisdiction over that other person must issue a notice to them.

Reassessment proceedings are invalid if proper approval under section 151 of the Income Tax Act is not obtained.

A presumption of valid service of a notice exists if it is not returned 'unserved' within 30 days, but this presumption is rebuttable by the assessee.

A final assessment order passed without first issuing a draft assessment order under section 144C is not tenable, as the issuance of a draft order is mandatory during remand proceedings.

A decision by the Calcutta High Court in Giriraj Commercial (P.) Ltd. v. Union of India (169 Taxmann.com 168) was cited to argue for the retrospective applicability of an amendment to validate a sanction. However, the court found that an amendment introduced specifically from 01.04.2023 could not be interpreted as retrospective.

A penalty under Section 271(1)(c) for concealment of income, arising from a scrutiny assessment under Section 143(3), is distinct from a demand of additional tax based on the processing of a return under Section 143(1)(a).

An assessee cannot amend a return to claim a deduction if a revised return was not filed within the prescribed time limits.

An assessment made in the name of a company that has already been amalgamated and dissolved is null and void.

An Assessing Officer cannot assume jurisdiction to reassess income based solely on a reconsideration of the same material that was available during the original assessment, as this would amount to a mere change of opinion and not the discovery of fresh tangible material. Reopening an assessment requires fresh tangible material coming into possession after the original assessment was concluded.

When a definition in a statute uses the word 'means', it is an exhaustive and exclusive definition, meaning only what is explicitly stated is included.

Goods are considered marketable if they are generally available in the market, even if from a single source, for purchase. Marketability is a prerequisite for goods to be subject to excise duty, in addition to manufacture.

The Tribunal erred in holding that notice under section 143(3)(2) ought to have been served upon the assessee before taking further proceedings, even when the assessee had not filed fresh returns in response to a notice under section 148.

Sanction for reassessment notices issued after April 1, 2021, is valid if approved by a Joint Commissioner under the unamended Section 151, even if the notice date is disputed.

A circular that is beneficial to the assessee must be applied prospectively if it is oppressive or against the assessee's interests. Assessees have the right to claim prospective enforcement of such circulars.

The decision in CIT v. Vidyut Steel Ltd. (219 ITR 30) is no longer considered good law.

A similar proposition has been laid down by the Hon'ble High Court of Jammu & Kashmir.

Courts and tribunals cannot grant relief contrary to legislative intent, even if it appears to cause hardship. Taxation applies when an assessee falls within the letter of the law.

An assessment framed in the name of a company that has been amalgamated and dissolved is not automatically null and void. Instead, it may be considered a procedural defect that can be cured, particularly if the assessing officer was made aware of the amalgamation.

Circulars issued by the Income Tax Department that are not in force during the relevant assessment year cannot be applied to an assessee. Only circulars in force during the period under consideration are applicable, and subsequent modifications or withdrawals do not affect past assessments.

An assessment order made without first passing a speaking order on objections raised by the assessee is arbitrary and bad in law. This principle is established by the Supreme Court and followed by the High Courts.

Non-issuance of a mandatory notice under Section 143(2) in a block assessment proceeding is a jurisdictional error that cannot be cured, rendering the assessment void.

Notices issued by JAOs under Section 151A read with the Scheme dated 29th March 2022 are invalid and bad in law.

A competent legislature can validate an invalid law by removing the infirmities pointed out by a court, and such a validation can be retrospective. If the validation grants legislative competence, it can render a previous court judgment irrelevant without impermissibly overruling it.

Failure to serve a notice under section 143(2) renders an assessment irregular but not null and void.

In an assessment made under section 143(3), it is presumed that the assessment was made after proper application of mind by the Assessing Officer, and issues accepted by the AO generally do not appear in the assessment order.

A defective return of income, once the defects are rectified within the permitted time, becomes a valid return and relates back to the original date of filing.

An appeal does not lie against an addition made to income when the assessee has agreed to such addition. The assessee cannot challenge an assessment order based on their prior agreement.

The principle of consistency in tax matters should be followed, meaning the revenue should not take a contrary view if there is no material change in circumstances justifying it.

Where the Assessing Officer (AO) of the 'person searched' under section 153A is the same as the AO for the 'other person' covered under section 153C, there is no requirement for the AO to record satisfaction under section 153C.

A reference cannot be made by Revenue Authorities for assessment years where no information could have been provided due to a protocol start date.

The principle of consistency in tax treatment, where an assessee's position adopted in one year is followed in subsequent years, is a guiding principle. This case supports the application of such consistency in assessments.

The case is cited for the ratio laid down in the decision.

The word 'served' in the proviso to Section 143(2) should be interpreted as 'issued' within the prescribed time limit. The date of service of a Section 143(2) notice is not relevant if it was issued within the statutory period, even if served later.