Landmark Cases on Assessment Procedure
1,189 decisions, ranked by how many judgments on BharatTax rely on them.
The doctrine of 'lifting the corporate veil' is not applied as a matter of course, but only exceptionally when warranted by relevant facts, circumstances, and conditions, requiring detailed investigation by the Assessing Officer.
An Assessing Officer must record their dissatisfaction with the assessee's claim regarding expenditure or non-expenditure before applying Rule 8D(1)(b) for disallowance under Section 144.
The Supreme Court's inherent jurisdiction to punish for contempt of subordinate courts is protected, but its power to suspend an advocate's licence under contempt jurisdiction is limited.
The expression "any previous year" refers to the previous year relevant to the assessment year concerned, not all previous years. This interpretation applies even in specific contexts like the Merged States (Taxation Concessions) Order.
Section 2(22)(e) is not attracted when an assessee has a running account with a company and has been advancing money to it, as this provision was intended to prevent the misuse of funds through loan advances.
Sanction for reassessment proceedings under Section 151 is invalid if granted mechanically, vitiating the subsequent proceedings under Sections 147/148. The Supreme Court affirmed this by dismissing a Special Leave Petition.
Reassessment proceedings are vitiated if the approval of the specified authority, along with the reasons to believe, is not furnished to the assessee. Reassessment cannot be initiated until the Assessing Officer records reasons to believe income has escaped assessment and obtains approval from a specified authority.
A claim for exemption or deduction can be entertained even if it was not made in the Income Tax Return (ITR). Income must be assessed and tax collected in accordance with Article 265 of the Constitution.
Failure of the Assessing Officer to provide the assessee with materials proposed to be relied upon is a statutory requirement, and its non-compliance is fatal to the assessment.
An Assessing Officer cannot refer a matter to the Director of Valuation without first rejecting the assessee's books of accounts. This principle applies even when considering potential unexplained investments, particularly if allowances for self-supervision and differential rates are considered.
The crucial date for the completion of assessment proceedings is the date the Assessing Officer makes the order, not the date it is served on the assessee, for the purpose of limitation under Section 153B.
Current account transactions between group companies do not constitute deemed dividend under section 2(22)(e) as they are not loans or advances.
The principle of res judicata does not apply to income tax proceedings, meaning previous year's assessments are not binding on subsequent years, though they can serve as evidence.
The rejection of books of accounts is not a precondition for an enquiry under Section 142A.
A 'best judgment assessment' is invalid if the Assessing Officer fails to issue a show-cause notice to the assessee or specify the grounds for default under Section 144(1)(a) to (c). Such an assessment order is liable to be quashed or annulled for non-compliance with statutory requirements.
A statement recorded during a survey under Section 133A of the Income Tax Act, 1961 cannot, by itself, be the basis for an addition to income, as Section 133A does not empower authorities to examine persons on oath. Corroborative evidence is required for such additions.
An assessee cannot be held to its original voluntary disallowance if it was made under a wrong belief, especially after a tribunal has ruled in its favor, as the Income Tax Act aims to tax real income.
The accrual of interest is a concluded issue based on the Supreme Court's decision in CIT v. T.N.K. Govindarajulu Chetty, which upheld the High Court's judgment.
The Income-tax Officer must form a belief that income has escaped assessment, record reasons for this belief, and obtain necessary sanctions before reopening a concluded assessment. Reopening based on an incorrect section of the Act or without proper justification is invalid.
A taxpayer's denial of liability to be assessed under the Income Tax Act can be in respect of the whole or part of their income, and may be based on any ground, whether of fact or law.
Issuing a valid notice under Section 143(2) is a mandatory prerequisite for framing a reassessment order under Section 143(3)/148. Failure to issue such a notice renders the reassessment order illegal and the omission is not curable.
Assessments under section 143(3) and 144 have distinct and different consequences. An assessment under section 143(3) involves reviewing the income tax return and requesting evidence of income and expenditures.
A statutory notice issued in the name of a non-existing entity renders the entire assessment void ab initio. This principle is not curable under section 292B.
An order is not invalidated by the mention of a wrong provision or the omission of a provision if the court or statutory authority possessed the requisite jurisdiction.
A later decision of a court of co-equal strength, which ignores an earlier binding precedent, can be considered per incuriam and therefore not binding.
Where an Assessing Officer is not satisfied with the correctness of an assessee's claim for expenditures incurred to earn exempt income, the AO is bound to apply the provisions of Rule 8D.
An order of the ITAT Ahmedabad Bench in DCIT v. Kalpataru Power Transmission Ltd. ([2016] 68 Taxmann.com 237) has been overruled by a later judgment of the same bench in the same case.
Non-maintenance of a day-to-day stock register is not, by itself, a sufficient ground for rejecting an assessee's books of account.
Penalty proceedings do not fall within the ambit of Section 245E of the Income-tax Act, and the Settlement Commission exceeds its jurisdiction if it drops penalty proceedings while deciding a settlement application.
An appellate authority can lift the bar of time limitation to give effect to directions regarding escaped income or claims allowable in different assessment years. This power is derived from Section 153(3) of the Income Tax Act.
Reassessment proceedings under Section 147 are invalid if the Assessing Officer's belief is not based on new tangible material not available during the original assessment. The Assessing Officer cannot reopen a case on the same issues that were already considered and discussed in the original assessment.
A fair hearing requires that a person be served with a proper, clear, and precise notice to enable them to make an effective defence. Ambiguity in notice denies the right to fair and judicious proceedings, and the adequacy of notice is determined on a case-by-case basis.
Failure of the Assessing Officer (AO) to fulfill a statutory requirement before assessing an appellant is fatal to the assessment.
An Assessing Officer's rejection of an assessee's books of account is baseless if the books, even if audited, contain income and expenditure details, and the Assessing Officer was not unable to compute income from them.
A reassessment made without serving a notice under section 143(2) is invalid. The amended proviso to section 148 of the Income Tax Act, 1961, does not apply in such cases.
Section 292B of the Income Tax Act, 1961, which deals with the rectification of certain mistakes, does not extend to correcting errors in the recording of reasons for reassessment proceedings. Invalid proceedings for assuming jurisdiction cannot be rectified under this section.
A Mutual Agreement Procedure (MAP) order is an adjustment to an assessment order, not an annulment of it. This means that penalty proceedings under section 271(1)(c) can still be initiated even after a MAP order, provided there was concealment of income.
An assessee can challenge tax liability arising from special charging provisions, such as Section 115QA, by filing a separate appeal under Section 246A. Dividend Distribution Tax (DDT), as an additional tax not linked to the computation of total income, must be appealed independently.
A notice under Section 148 for reassessment is invalid if the return filed by the assessee is not e-verified. The Assessing Officer cannot proceed with reassessment under Section 144 based on an invalid return.
