Landmark Cases on Assessment Procedure

An Additional Commissioner of Income-tax cannot pass an assessment order if no specific allocation of powers has been made in their favour for conducting such an assessment.

An assessment made by the Assessing Officer is invalid if no notice under Section 143(2) has been served upon the assessee within the prescribed period.

Courts follow the principle of consistency by accepting the books of accounts shown by an assessee unless there are valid reasons to reject them. The Assessing Officer should accept book results and cannot make additions on an estimation basis if the books are not rejected.

An assessment under Section 153A cannot be finalized without issuing a notice under Section 143(2). A statement made during a Section 133A survey does not, on its own, form the sole basis for an assessment.

A reassessment framed by the Assessing Officer without objectively considering all objections raised by the assessee is liable to be quashed. The Assessing Officer must pass a separate order dealing with the objections, and merely disposing of them in the assessment order is not sufficient compliance.

The formation and constitution of a partnership are not affected by the fact that one of the partners is a benamidar.

An Assessing Officer does not need to reject the books of accounts before making a reference to the Departmental Valuation Officer under Section 142A for valuation. Rejection of books is implied when such a reference is made and additions are subsequently made under Section 69.

This case is authority for the proposition that the Income Tax Officer has the power to reopen assessments under certain circumstances, provided specific conditions are met.

The appellate authorities, including the Commissioner (Appeals) and the Tribunal, are not barred from entertaining a fresh claim or an issue not originally raised in the assessment proceedings, even if the Assessing Officer would have been barred without a revised return.

When an assessee consistently follows a recognized method of accounting, like the project completion method, and there's no statutory prohibition, revenue cannot arbitrarily switch to another method like the percentage completion method during assessment.

When a definition is not provided in a particular section of the Income Tax Act, definitions from other sections of the Act or from other statutes can be used to ascertain the contextual meaning of an expression.

An assessment order passed without disposing of the assessee's objections to the reopening of assessment and without passing a speaking order is unjustified. The assessment framed by the AO cannot be sustained if objections are not dealt with.

The case discusses the assessment proceedings, specifically whether the Assessing Officer had a bona fide belief that income had escaped assessment, justifying the reopening of assessments.

For assessments under Section 153A, notice under Section 143(2) is not mandatory. Compliance with natural justice principles, satisfied by issuance of a notice under Section 143(2) or a questionnaire under Section 142(1), is sufficient.

Failure by the Assessing Officer to follow the procedure under Section 144C(1) is a breach of a mandatory provision and renders the assessment order without jurisdiction and bad in law, not a mere procedural error.

If an assessee fails to produce acceptable accounts, the revenue can estimate income based on available materials and past assessment records. This can be done even in the absence of vouchers and quantitative stock details.

Mechanical approval granted under Section 151 of the Income Tax Act, 1961, without independent application of mind by the competent authority, vitiates the assumption of jurisdiction and can lead to the quashing of reassessment proceedings. This principle is affirmed by the Bombay High Court in Vodafone India Ltd. vs. DCIT.

The Income Tax Appellate Tribunal must follow decisions of the jurisdictional High Court and cannot disregard them, even if the Tribunal believes a specific provision of law was not considered.

The tribunal considers whether an amount represents a double addition for tax purposes.

The Commissioner of Income Tax (Appeals) must pass a speaking order that addresses the points raised in the appeal and provides reasons for the decision, as mandated by Section 250(6) of the Income Tax Act.

The powers of the first appellate authority are coterminous with those of the Assessing Officer. The appellate authority can perform actions the Assessing Officer should have taken or direct the Assessing Officer to perform them.

Orders of the ITAT directing the DCIT to process returns under Section 200A are binding, even for periods prior to June 1, 2015.

An assessee is not entitled to the benefit of input tax credit if it is not accounted for within the prescribed period, as per the provisions of the Act, even if a revised return is filed.

It has similarly been held in the following decisions, indicating that this case stands for a widely accepted legal principle, often cited in conjunction with other similar judgments.

The Delhi High Court held that Income Computation and Disclosure Standards (ICDS) notified under Section 145(2) were ultra vires the provisions of the Income Tax Act, as they exceeded delegated legislative power. Subsequently, Section 43CB was introduced to provide statutory backing for certain ICDS provisions, such as those related to construction contracts using the percentage of completion method.

Notice issued under Section 153C of the Income-tax Act, 1961, is invalid if the Assessing Officer of the searched person and the Assessing Officer of the assessee do not record their satisfaction that the seized documents belong to the assessee.

Information becomes relevant only when its existence is realized and its implications are recognized. The Assessing Officer must examine the implications of information available to them.

The Supreme Court's dismissal of a Special Leave Petition affirms that the reopening of assessment is permissible even if the Assessing Officer relies on the same record as the completed assessment, and a mere change of opinion does not form the basis for such reopening.

Assessment orders not served before the time-barring date are considered non-est. If assessment orders are not served before the assessment's expiry, they are deemed invalid.

A final assessment order passed under section 144C(13) read with section 143(3) without first issuing a draft assessment order under section 144C(1) is violative of section 144C(1) and must be set aside. Such an order is void ab initio and not a curable defect.

Section 6 of the General Clauses Act applies when a temporary statute is repealed before its expiry. Where a provision is omitted and simultaneously re-enacted, the omission does not obliterate the provision.

An Assessing Officer exceeds their jurisdiction by making additions on issues beyond the scope of 'limited scrutiny' assessment. This renders the assessment order unsustainable.

This case supports the proposition of law that instructions and directions issued by the Income Tax Board under Section 119 of the Act are to be observed and followed by income-tax authorities for the proper administration of the Act.

When interpreting a statutory provision, courts must consider both the literal text and the surrounding context.

Deductions are admissible even if claimed for the first time before the first appellate authority, provided the issue is a legal one and facts are on record. The Assessing Officer has a duty to consider such claims.

The Tribunal cannot adjudicate on the jurisdiction of an Assessing Officer if the objection was not raised before the Assessing Authority. Sub-section 3 of Section 124 bars an assessee from raising questions of jurisdiction before the First Appellate Authority or Tribunal if such an objection was not raised before the Assessing Authority at the very first stage.

The Income Tax Act does not provide an appeal remedy for additional tax demanded under section 115QA, but an alternative remedy of appeal before the CIT(A) may exist.

An Assessing Officer must record their dissatisfaction with an assessee's disallowance before making a further disallowance under Section 14A.

An assessee is entitled to a deduction based on the provisions of law, irrespective of the existence or absence of entries in its books of account. Preparing accounts in accordance with statutory provisions does not prevent an assessee from claiming tax on real taxable income.

A challenge to jurisdiction under section 124(3) of the Income Tax Act must be made within one month of the notice, as prescribed by the Act.