Landmark Cases on Assessment Procedure

Section 282A(1) of the Income-tax Act, 1961, mandates that any notice or document issued by the tax authority must be signed. This requirement for a manual or digital signature is mandatory and cannot be treated as a mere formality.

An Assessing Officer errs by ignoring detailed explanations and documentary evidence provided by the assessee and proceeding to a conclusion without considering such submissions.

An Income Tax Officer is bound by a High Court decision within their jurisdiction, even if an appeal or SLP is pending before the Supreme Court.

Amendments made to Section 14A by the Finance Act, 2022, inserting a non-obstante clause and an explanation, are prospective from April 1, 2022, and cannot be applied retrospectively. Further, where no exempt income is earned, Section 14A read with Rule 8D cannot be applied.

An assessment order is vitiated if the approval granted by the approving authority was mechanical and demonstrated a non-application of mind.

Failure to obtain prior approval under section 153D of the Income Tax Act, 1961, for the assessment order renders the assessment proceedings void, as the assessment is an integrated process requiring such approval for income and tax computation.

Decisions of the Supreme Court declaring the law are retrospective in nature unless specified otherwise. Judges discover and find the correct law, and later decisions clarifying legal positions are treated as having retrospective effect.

The Commissioner of Income Tax (Appeals) must provide a speaking order, stating the points for determination, the decision, and the reasons for the decision, even when dismissing an appeal for non-prosecution.

Reassessment is permissible even after scrutiny under section 143(3) if the original assessment order is silent on the issue being reassessed and new facts emerge subsequently.

The High Court held that once the Assessing Officer has applied his mind and issued a notice under Section 148, the Assessee must satisfy him regarding the correctness of the return filed by him or the correctness of the assessment made. The Court also held that an appeal under Section 250 of the Income-tax Act, 1961, is a continuation of the assessment proceedings and the Appellate Authority can admit additional evidence under Rule 46A.

Reassessment proceedings are invalid if the assessment order is passed within four weeks of the disposal of objections, as this does not provide the assessee with adequate time. The assessment order is bad in law and void in such circumstances.

The Assessing Officer rightly treats differences in stock found during a survey as unaccounted stock. Additions to income should not be made solely based on additional income offered.

Jurisdiction under Section 153C of the Income Tax Act is invalid if no documents belonging to the assessee are found. The satisfaction note must be based on objective facts, and the non-obstante provisions of Sections 153A and 153C do not override the mandatory provisions of Sections 142(2) or 143(2).

The Assessing Officer must record dissatisfaction with the correctness of an assessee's expenditure claim with cogent reasons. A failure to articulate dissatisfaction and the basis for it renders the assessment invalid.

Circulars issued by the Board under Section 37-B of the Central Excise Act, 1944, are binding on the tax authorities, and the revenue cannot repudiate such circulars even if they are perceived to be inconsistent with statutory provisions.

A disallowance is not called for on the principle of consistency when liability for interest stands differently in different years.

The Commissioner of Income Tax (Appeals) can make enhancements to an assessment during appellate proceedings, provided such enhancements do not amount to introducing an entirely new head of income.

If a second notice for reassessment is issued and the assessee appears without objecting to the service of the first notice for 30 days, it is a valid presumption that the first notice was duly served. Repeated appearances of an authorized representative further corroborate valid service.

This case is authority for the proposition that an appeal can be adjudicated in favor of the appellant, leading to the deletion of additions made to income.

The Assessing Officer (AO) cannot discard the Discounted Cash Flow (DCF) method for share valuation if the assessee opts for it as per Rule 11UA(2). The AO must record reasons for not accepting the assessee's valuation report and obtain a fresh report before proceeding with their own valuation, but cannot change the method chosen by the assessee.

The Bombay High Court holds that following the Supreme Court's decision in Checkmate Services, it is irrelevant whether a disallowance for delayed remittance of employee's contribution to welfare funds is made under Section 143(1) or Section 143(3) of the Income Tax Act.

A third judge's opinion in a reference is decisive, effectively forming a majority opinion equivalent to a full bench, even if not sitting together with the original two judges.

A wrong decision, even if followed in earlier years, cannot be perpetuated on the basis of the principle of consistency if it contravenes the correct law and facts.

Where there is a conflict between provisions, interpretations that favour the assessee should be preferred. This principle aids in avoiding absurdity and reflecting legislative intent.

The Supreme Court recognizes that complex issues may necessitate reliance on prior Apex Court decisions. This case is cited alongside others for considering such complex matters.

An assessment order framed within the statutory limitation period cannot be doubted solely because the consequential demand and notice were served after the limitation period had expired.

The Assessing Officer (AO) must record proper satisfaction under section 14A read with rule 8D before making a disallowance, and a failure to do so may lead to the issue being restored to the AO.

An Assessing Officer cannot review a position already accepted in a prior assessment order if no material evidence is found during a search, especially when completing an assessment under Chapter XIV-B.

Accounts regularly maintained in the course of business must be taken as correct unless there are strong and sufficient reasons to indicate they are unreliable. The revenue must prove accounts are unreliable before rejecting them, and rejection should not be done lightly.

An assessment order is liable to be struck down if the Assessing Officer fails to communicate the 'reasons to believe' upon which the case was reopened. Such a failure constitutes a brazen violation of governing legal principles and the assumption of jurisdiction is unsustainable.

If an assessee fails to raise an objection regarding the jurisdiction of the Assessing Officer within the stipulated time, they will be barred from raising the issue later. If the Commissioner decides the issue, their decision is final and cannot be questioned in appeal.

This case is cited for the proposition that when an AO issues a notice under section 153A(1)(b), it is mandatory to produce the relevant books of accounts and documents for assessment, even if the assessment is being done under section 143(3).

Assessing authorities can estimate expenditure under Section 14A read with Rule 8D when the assessee claims no expenditure was incurred for earning dividend income.

An assessee's duty is to provide all primary facts to the Assessing Officer; the drawing of inferences from these facts rests with the officer. A reassessment based solely on a change of opinion without new material is invalid.

The Court considered the applicability of certain judgments in its decision. The cited judgments relate to taxability of income, capital gains, and assessment procedures.

Adjustments under section 143(1)(a)(ii) cannot be made if the assessee's case is allowable on facts. The Assessing Officer or CPC cannot exercise powers under section 143(1) to make adjustments contrary to the facts allowable to the assessee, even when considering amended sections like 80AC.

An assessee must disclose primary facts, not inferential facts, for assessment. Merely producing documents is insufficient if they are embedded in voluminous records and not clearly highlighted to the Assessing Officer.

An assessee has the liberty to adopt any recognized method of accounting, and income should be computed according to that system. Income Tax authorities cannot dictate the method of accounting or the valuation of work-in-progress.

Questions of law in appeals under Section 260-A of the Income Tax Act must be framed at the time of admission and not after arguments conclude. Similar principles apply to Section 256 jurisdiction.

A claim for exemption from taxability must be made in the original return under section 139(1) or a revised return under section 139(5). Any claim made outside these mandatory time limits, including during a section 153A assessment, is not allowable.

Trade advances that are in the nature of commercial transactions do not fall within the ambit of Section 2(22)(e) of the Income Tax Act.

When an Assessing Officer raises a query during assessment proceedings and the assessee provides a reply, it is presumed that the AO considered the query and was satisfied with the reply. The assessment order does not need to explicitly discuss every query and response.

The jurisdiction of the Income-Tax Officer to reopen assessment proceedings under Section 147 is contingent upon the issuance of a valid notice under Section 148. If the Section 148 notice is invalid for any reason, all subsequent proceedings become void due to lack of jurisdiction.

The Assessing Officer (AO) has the power to disturb the valuation of shares provided by the assessee's chartered accountant, even if Rule 11UA(2) is followed. If the AO doubts the valuation report, they are not necessarily bound to refer the matter to the Valuation Officer and can adopt a different method to determine the fair market value.

A court decision serves as a precedent based on its specific facts, requiring tax authorities and tribunals to apply its reasoning to new cases with careful consideration of the individual circumstances.

The Assessing Officer cannot discard the assessee's method of accounting without recording reasons to do so under Section 145 of the Income Tax Act.

While the strict rule of res judicata does not apply to income tax proceedings, the revenue cannot adopt a contradictory stance in subsequent years if the facts and circumstances remain identical. Decisions made in earlier years should be respected, and the position of the tax authorities should not be arbitrarily changed.

Reassessment proceedings under section 148 of the Income-tax Act, 1961 cannot be initiated so long as the original assessment proceedings, based on a return already filed, are pending and have not been disposed of or terminated.

A Joint Commissioner of Income-tax's definition under Section 2(28C) of the Income Tax Act includes an Additional Commissioner of Income-tax, impacting jurisdictional challenges.

A requisition under section 132A is considered complete only when the seized books of accounts and other documents are actually received by the requisitioning authority. The provisions of Chapter XIV-B of the Income-tax Act, 1961, become applicable only upon such actual receipt.