Landmark Cases on Assessment Procedure

A direction contemplated by Section 153(3)(ii) must be an express direction that is necessary for the disposal of the case before the authority or court.

The date of handing over documents to the AO of a non-searched person is considered the date of search for the purpose of Section 153C, determining the six-year block period for reassessment.

An Assessing Officer cannot interfere with accounts of an assessee engaged in life insurance business if they are drawn up in accordance with the First Schedule to the Income Tax Act and satisfy the Insurance Act's requirements. The figures in such accounts are binding on the Assessing Officer.

An Assessing Officer can validly reopen an assessment by issuing a fresh notice even if prior reassessment proceedings were dropped, provided the earlier proceedings were not concluded.

An order for the transfer of a case, even within the same city, must be on record. The explanation to Section 127 of the Income Tax Act clarifies that all proceedings, pending or future, stand transferred upon such an order.

An incorrect allowance in an earlier assessment year does not bind the revenue in subsequent years, as each assessment year is independent. The assessing officer has a duty to ensure correct computation of taxable income.

A definition under Section 3 of the Income Tax Act is not permissible if it is inconsistent with other provisions. The interpretation of 'any previous year' refers to the previous year relevant to the assessment year concerned.

An Assessing Officer has 'reason to believe' that income has escaped assessment if there is a direct nexus between the tangible material available on record and the belief formed.

Distance is measured by road, not straight line, from the outer limits of a municipal jurisdiction. A 25-kilometer distance for tax purposes is calculated from the outer limit of the Brihanmumbai Municipal Corporation (BMC).

The Supreme Court has established that compensation for loss of love and affection should be a uniform amount, often cited as ₹25,000, to ensure consistency across judgments.

Administrative instructions issued by the Central Board of Direct Taxes (CBDT) under section 119 of the Income-tax Act are binding on income-tax officers. These instructions, when issued under section 119(2)(a), can extend timelines for actions like issuing notices under section 143(2), and non-compliance with these binding instructions can render subsequent actions invalid.

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.

The judgment in Foods P.Ltd. vs. ACIT is relied upon in subsequent cases as authority for legal propositions not explicitly stated in the provided passages.

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.

When a notice under section 153A is issued, the assessing officer must proceed with reassessment and can assess total income by making additions for undisclosed income or income escaping assessment, beyond what was originally assessed.

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.

The Assessing Officer must validly dispose of reasons recorded for reopening when cash deposits require explanation from the assessee.

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.

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.

The principle that identical facts decided in earlier years, including those concerning assessment years 2010-11, 2011-12, 2012-13, 2013-14, and 2015-16, should be applied to subsequent assessment years with identical facts is reaffirmed.

A presumption that a notice was served upon an assessee can be rebutted by the assessee providing evidence, such as an affidavit, denying receipt of the notice.

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.

The Calcutta High Court's decision in Giriraj Commercial (P.) Ltd. v. Union of India is cited in arguments regarding the retrospective applicability of amendments, specifically concerning the validation of sanctions for reassessment proceedings. However, the subsequent judgments indicate this argument was not countenanced, as the amendment in question had a prospective effective date.

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 assessment made in the name of a company that has 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.

An additional ground of appeal can be considered if it is a question of law and arises from the facts already on record, allowing for a more complete adjudication of the appeal.

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.

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.

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 made in the name of a dissolved, amalgamated company is void, not merely a curable procedural defect, especially when the assessing officer was informed of the amalgamation but failed to substitute the correct company name.

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.

The case is authority for the proposition that certain decisions are binding only on the bench that made them.

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.

A circular issued by the Board contrary to a declaration of law by the Supreme Court loses its validity.