Landmark Cases on Assessment Procedure

A notice is presumed to have been properly served if it is not returned as unserved, and objections regarding non-service are not acceptable in such cases.

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.

An assessee can raise an objection regarding the validity of the Assessing Officer's jurisdiction for reopening a concluded assessment even if the issue was not raised before the CIT(Appeals), by invoking Rule 27 of the Income Tax Appellate Tribunal Rules, 1963. This is permissible if the issue is ancillary to the main issue and does not require additional evidence.

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.

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.

An appellate tribunal ought to remand a matter rather than set aside assessments entirely when jurisdiction is in question.

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.

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.

The date from which maintenance is payable should be determined based on the filing of the application or the completion of pleadings and submission of income affidavits, differentiating between ad-interim and interim maintenance. An earning wife is not barred from maintenance if her income is insufficient to maintain herself.

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.

The appellate authority can entertain a claim for special deduction made by the assessee during assessment proceedings, even if not originally included in the return of income, if the omission was not willful or unreasonable.

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 cannot be initiated unless the assessment proceedings based on a previously filed return have been terminated. Notice for reassessment cannot be issued while original assessment proceedings are pending.

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.

Assessments made under section 153A of the Income Tax Act are not vitiated for the mere reason that they were preceded by assessment proceedings under section 143(3).

Issuance of a draft assessment order under section 144C(1) of the Income Tax Act is mandatory, and its non-issuance is not a curable procedural lapse.

The validity of sanction for issuing orders under section 148A(d) and notices under section 148 must be tested with reference to the amended section 151. If sanction is not granted by an authority specified under section 151(ii), such orders and notices are invalid and liable to be quashed.

Improper service of notice invalidates the entire reassessment proceedings. If no notice is served within the prescribed period, the Income-tax Officer is incompetent to commence reassessment proceedings.

The Assessing Officer must record a specific finding that the method of accounting adopted by the assessee is unacceptable or that the accounts are irregular before rejecting them. Mere high percentage of dead loss in a spinning mill does not automatically lead to an inference of suppressed production or justify an addition by way of estimate if record-keeping of wastage is not feasible.

A tribunal can exercise its discretion to admit an additional ground of appeal, even if raised for the first time, provided it considers the facts and circumstances of the case.

When an Assessing Officer records satisfaction in relation to assessment proceedings, such satisfaction must be recorded for each assessment year individually. This ensures compliance with legal requirements and facilitates proper assessment.

An Assessing Officer cannot allow a claim for deduction that is raised afresh unless a revised return is filed. However, an assessee is not disabled from raising such a claim before appellate authorities if it was disallowed by the Assessing Officer for the technical reason of not filing a revised return.

A court's decision must be interpreted within the context of the specific questions of law raised before it. It is impermissible to isolate a word or sentence from its context to define the complete law declared by the court.

The furnishing of an audit report during assessment proceedings, rather than by the due date of filing the return, is considered a directory and not mandatory compliance for claiming deductions under Section 80-IA.

A protective assessment is permissible when the assessing officer has doubt regarding who is in receipt of income, but a recovery based on a protective assessment is not allowed. If an assessment is intended to be protective, it must be clearly stated as such.

Courts must give a fair and reasonable construction to revenue statutes, adhering strictly to the statutory language without resorting to equitable interpretation. No tax can be levied without clear statutory intent.

The Supreme Court refers the issue of whether a shareholder must be both registered and beneficial for reconsideration by a larger bench.

If an assessee explains a factual position and the Assessing Officer (AO) does not reject it in the assessment order, the issue is deemed accepted by the department, preventing its relitigation.

Assessing officers cannot introduce issues for inquiry that were not part of the original limited scrutiny, without adhering to mandatory procedural requirements.

The levy of interest under the Income Tax Act is part of the assessment process and can be challenged in an appeal if the assessee disputes the chargeability of interest itself. However, claims for waiver or reduction of interest cannot be challenged in appeal and must be pursued through revisional jurisdiction.

An order passed under Section 148A(d) and subsequent proceedings are void if the Assessing Officer provides insufficient opportunity for the assessee to file a reply before issuing the notice under Section 148A(b).

When a return is filed as an artificial juridical person, the assessee cannot be treated as an association of persons, making any order to that effect without jurisdiction.

The Income-Tax Act, 1961, as amended on April 1, of any financial year, applies to the assessment of that year, and amendments coming into force after April 1 would not apply.

An additional plea that fundamentally alters the case's original presentation before the Assessing Officer, CIT(Appeals), or Tribunal is not permitted at the appellate stage.