Landmark Cases on Assessment Procedure

Procedural or administrative irregularities during an assessment, including those related to Section 153D approval or assessee non-compliance, do not annul the entire assessment. Instead, such defects are curable, requiring proceedings to be restored to the point of irregularity for rectification and due opportunity.

Amendments to procedural law that are procedural or beneficial, intended to remove hardship, are generally retrospective and apply from their enforcement date.

The absence of JCIT's approval under Section 274(2) is a curable procedural irregularity that does not render the Assessing Officer's order void ab initio, but rather requires the matter to be decided afresh after obtaining the necessary approval.

Tax reassessment proceedings initiated after the commencement of the Income Tax Act, 1961, must adhere to the provisions of the new Act.

An assessment order is unsustainable if the Assessing Officer has not discharged the burden of proof by conducting appropriate investigation, and has merely relied on the observations of the Investigation wing.

When books of account are rejected under Section 145(3) of the Income-tax Act, income must be estimated on best judgment, using the assessee's past history as the primary guide for such estimation.

A wrong name given in a notice is considered a clerical error and does not invalidate the notice, especially when the facts of the case clearly indicate the intended recipient.

Subsequent explanations or affidavits cannot supplement the reasons provided in an original satisfaction note.

The disallowance of delayed employee contributions to provident fund and ESI under section 36(1)(va) read with section 2(24)(x) cannot be made as an adjustment during the automated processing of an income tax return under section 143(1)(a).

Income tax proceedings initiated or an assessment order passed in the name of a deceased person are void ab initio, as such proceedings are without jurisdiction. Section 159 of the Income Tax Act does not apply if proceedings were not initiated during the assessee's lifetime.

Where the National Faceless Assessment Centre (NFAC) and the Joint Assessing Officer (JAO) have concurrent jurisdiction, a notice issued by the JAO under Section 148 of the Income Tax Act is valid, provided no prejudice is caused to the assessee.

The Income Tax Appellate Tribunal cannot substitute its own reasons for those that the Assessing Officer failed to record or adequately inquire into; it must instead remand the matter back to the Assessing Officer for proper adjudication.

Non-response to Section 133(6) notices or the assessee's inability to compel third parties to reply cannot be the sole or sufficient ground for rejecting books of account under Section 145(3).

If the issue that led to the reopening of an assessment does not sustain, an addition to income cannot be made on a different issue. This is especially true if an order under section 143(3) has already been passed and the reopening is based on a mere change of opinion.

The phrase "if considers it necessary or expedient" or "considered necessary" in a statutory provision, such as Section 143(2) of the Income-tax Act, requires an active application of mind and consideration of all relevant aspects. The opinion formed, even if subjective, must be based on existing circumstances and not imaginary grounds.

Appellate authorities must independently examine facts and apply legal provisions to determine the correct income, including taxing unexplained credits under deeming provisions.

When books of account are rejected and income is estimated, tax authorities cannot simultaneously rely on those rejected books to make specific additions, such as unexplained cash credits forming part of the balancing scheme of accounts, or to disallow specific expenses.

If the Revenue accepts the Tribunal's decision for earlier years without challenge, it cannot assail the same decision in subsequent years, provided the facts are similar.

Section 41(1) of the Income Tax Act applies only where there is remission or cessation of a trading liability during the previous year relevant to the assessment year, and not merely because the assessee cannot provide confirmations for sundry creditors.

The rule of consistency should be followed in tax assessments, especially when similar issues have been decided in prior years or for other parties, and assessments were completed under section 143(1).

The Supreme Court declined to stay assessment proceedings, even when there was divergence of opinion among High Courts and reservations about the correctness of prior judgments concerning the validity of orders under Section 142(2A) and extended limitation under Section 153(3).

When a rule is substituted for an old rule, the old rule ceases to exist as the first step of the substitution process. Even if the new substituted rule is later declared invalid, the old rule does not revive.

An order is not rendered invalid, but merely irregular, if the initiation of the proceeding was valid but its completion contained a curable defect or irregularity. Procedural technicalities should not be allowed to defeat justice where the defect is not fundamental.

An assessment becomes invalid if the notice under Section 143(2) of the Income-tax Act is not issued within the time limit prescribed by the proviso to Section 143(2).

An assessee is allowed to make a claim during assessment proceedings even if it was not made in the original return of income, provided it is pointed out by the Assessing Officer. This is supported by the Tribunal's decision in JCIT vs. Hero Honda Finlease Ltd.

The Supreme Court decision in Pr. CIT vs. Jay Ambey Aromatics is cited as authority for the principles laid down in related Supreme Court judgments concerning assessment proceedings.

Assessment orders passed by an Assessing Officer are liable to be set aside if they disregard binding instructions or circulars issued by the Central Board of Direct Taxes (CBDT), especially concerning the selection of returns for scrutiny. The CBDT circulars are binding on all officers of the Income-tax department.

A question of law is considered substantial if it is debatable, not previously settled, and has a material bearing on the outcome of the case. It must also arise from established facts and be necessary for a just decision.

Where the initiation of assessment proceedings is valid, but the completion is irregular, the assessment order may be considered irregular but not invalid, as the intervening irregularity can be curable. Technicalities should not obstruct justice.

An assessment order is invalid if it is based on a notice issued under section 143(2) by an Assessing Officer who lacked jurisdiction at the time the notice was issued, even if the case was subsequently transferred to an officer with jurisdiction.

The Assessing Officer must record their dissatisfaction with the correctness of an assessee's claim regarding expenditure in relation to exempt income, providing cogent reasons, before invoking Section 14A and Rule 8D for disallowance.

Approval for assessment under section 153D must be granted separately for each assessee and each assessment year, and requires the approving authority to apply an independent mind to the materials, not to give mechanical approval.

The absence of prior approval from the Joint CIT under section 274(2) does not render an Assessing Officer's order void ab initio; the matter can be decided afresh after obtaining the necessary approval.

A best judgment assessment is valid if the estimate made by the Assessing Officer is not arbitrary, has a nexus with discovered facts, and the Assessing Officer is considered the best judge of the situation. Rejection of books of accounts is justified in such cases.

When a provision of an Act is omitted and simultaneously re-enacted with substantial overlap, section 24 of the General Clauses Act applies, meaning the re-enacted provision is treated as a continuation of the old one unless otherwise specified.

A 'jurisdictional fact' is a fact that must exist before a court or tribunal can assume jurisdiction over a matter. The existence or non-existence of such a fact determines the jurisdiction.

Reassessment proceedings under Section 147/148 are invalid if the time for issuing a notice under Section 143(2) for regular assessment has not yet expired.

The Appellate Assistant Commissioner's (AAC) power to enhance an assessment is broad and not limited to the specific items of appeal, but it is restricted to income that was originally before the Income Tax Officer and cannot introduce entirely new sources of income.

Proceedings before the Dispute Resolution Panel (DRP) are a continuation of the assessment proceedings, not an appeal. The DRP's role is to act as a correcting mechanism, providing a second review of the proposed assessment order.

Dismissal of a Special Leave Petition (SLP) in limine does not amount to a declaration of law under Article 141 of the Constitution, nor does it confirm the view of the lower court.

Assessment proceedings initiated against a deceased person are void. Once an assessee dies, assessment proceedings can only continue in the name of their legal representative, to the extent of the deceased's estate.

Minor irregularities in books of account cannot be the sole basis for rejection of the books or for making an estimated trading addition, especially when the assessee has provided explanations for discrepancies. The case distinguishes itself by focusing on receipts not brought into account rather than expenses claimed.

The faceless assessment regime under section 151A is a jurisdictional imperative. If jurisdiction is statutorily vested in the Faceless Assessing Officer, any notice issued by the Jurisdictional Assessing Officer is void ab initio.

The validity of notice service is a question of fact, and procedural irregularities in service by affixture do not automatically render the service non est if the assessee had knowledge of the proceedings and suffered no prejudice.

An assessment order that is not served on the assessee before the assessment's time-barring date is considered non-est, meaning it is void and without legal effect.

An assessment order is void if it is based on mere surmise and suspicion rather than proof.

A notice issued under section 153C of the Income Tax Act, 1961, is invalid if the Assessing Officer fails to record reasons showing the bearing of seized material on the determination of the assessee's total income. The dismissal of the department's SLP upholds this principle.

The selection of cases for scrutiny must be completed within the time prescribed by CBDT instructions. The department is bound by its own standards and cannot act with discrimination or selectively apply them.

Courts cannot substitute their own views for those of the Directorate of Enforcement when assessing whether actions were taken arbitrarily or without jurisdiction. The court must consider the substance of the matter, not just the form.