“Section 132(2)”
The decision most relied on for Section 132(2) is National Thermal Power Co. Ltd. v. CIT (229 ITR 383), cited in 5,834 judgments on BharatTax.
Leading authorities on Section 132(2)
Appellate authorities can consider new claims and additional grounds if the relevant facts are already on record. The purpose of assessment is to correctly determine tax liability, allowing both parties to raise issues.
In a search assessment under Section 153A, additions can only be made for completed or non-abated assessment years if incriminating material relevant to those years is found during the search, although notice under Section 153A(1) is mandatorily issued for six assessment years preceding the search.
When two equally plausible interpretations of a taxing provision are possible, or when conflicting views exist from non-jurisdictional High Courts, the interpretation that favors the assessee must be adopted.
Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.
The Commissioner of Income Tax (Appeals) possesses co-terminus powers with the Assessing Officer and can direct the Assessing Officer to perform actions he failed to do, but cannot introduce a new source of income in the assessment. The appellate assessment must be confined to the items of income that were the subject matter of the original assessment.
In search assessments under Section 153A, additions to income are permissible only if incriminating material is found during the search; in the absence of such material, completed assessments cannot be disturbed. A statement recorded under Section 132(4) and later retracted may not, on its own, constitute sufficient incriminating evidence for making additions.
Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.
A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.
