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“scrutiny assessment”

Assessment ProceduresSection 143(3)Section 143(3)7,671 judgments

The decision most relied on for scrutiny assessment is CIT v. Sunbeam Auto Ltd. (332 ITR 167), cited in 897 judgments on BharatTax.

Leading authorities on scrutiny assessment

CIT v. Sunbeam Auto Ltd.
332 ITR 167 · 2011 · High Court
897
citing judgments

The Commissioner cannot revise an assessment under Section 263 merely because the assessment order does not explicitly reflect an inquiry, or because the Commissioner holds a different opinion. An inquiry, even if considered inadequate, or an assessment based on a plausible view by the Assessing Officer after due examination, does not automatically make the order erroneous or prejudicial to the interests of the revenue.

Phool Chand Bajrang Lal v. ITO
203 ITR 456 · 1993 · Supreme Court
396
citing judgments

Reassessment proceedings under Section 147 are valid even after a scrutiny assessment under Section 143(3), provided the Assessing Officer forms a reason to believe, based on definite, specific, and reliable information, that income escaped assessment due to the assessee's failure to fully and truly disclose material facts.

Sanjay Bimalchand Jain v. PCIT-1, Nagpur
89 Taxmann.com 196 · 2018 · High Court
251
citing judgments

The exemption for long-term capital gains on share transactions is unavailable if the assessee fails to discharge the onus of proving the genuineness of gains arising from dubious share transactions designed to convert unaccounted income into tax-exempt capital gains. Courts will uphold an assessment based on the Revenue's evidence of price rigging or penny stock manipulation if the assessee cannot provide cogent evidence for the abnormal rise in share value.

CIT v. British Paints India Ltd.
188 ITR 44 · 1991 · Supreme Court
204
citing judgments

The Assessing Officer has a duty to examine whether an assessee's books of account truly disclose the correct income and is not bound to accept the accounting system regularly employed by the assessee or methods followed in earlier years. Each assessment year is a distinct and self-contained unit for tax purposes.

Principal Commissioner of Income-tax v. Subodh Agarwal
149 Taxmann.com 373 · 2023 · High Court
194
citing judgments

Approval of draft assessment orders under Section 153D must be granted with due application of mind, not mechanically. Approving multiple cases, such as 38 in a single day, without proper scrutiny amounts to mechanical approval, rendering the assessment invalid.

ITO v. TechSpan India (P) Ltd.
92 Taxmann.com 361 · 2018 · Supreme Court
194
citing judgments

Reassessment under Section 147/148 is invalid if it constitutes a mere change of opinion by the Assessing Officer without any fresh tangible material, especially after the assessee made a full and truthful disclosure during the original scrutiny assessment under Section 143(3).

Narayanappa v. CIT
63 ITR 219 · 1967 · Supreme Court
187
citing judgments

The approval required from a higher authority under section 153D of the Income Tax Act is an administrative act, not a quasi-judicial one. Consequently, an opportunity of hearing is not required to be given to the assessee at the stage of obtaining such approval, provided the approving authority is competent.

CIT v. Ralson Industries Ltd. 5
288 ITR 322 · 2007 · Supreme Court
153
citing judgments

The Supreme Court affirmed that lower authorities are bound by decisions of higher authorities due to judicial discipline. It also clarified that the Commissioner, in exercising revisional power under Section 263, can conduct necessary inquiries to determine if an assessment is prejudicial to the Revenue.

Judgments citing scrutiny assessment

Mittal Cotspin Limited, Ludhiana vs. Income Tax Officer, Ward-2(5), Ludhiana

In the result, appeal is allowed

ITA 950/CHANDI/2025[2014-15]Status: DisposedITAT Chandigarh04 Feb 2026AY 2014-15

Bench: Shri Rajpal Yadav & Shri Manoj Kumar Aggarwalआयकर अपील सं./ Ita No. 950/Chd/2025 "नधा"रण वष" / Assessment Year: 2014-15 M/S Mittal Cotspin Ltd., The Ito, St. No. 1, Opp. Govt. Primary Vs Ward 2(5), High School, Madhopouri, Ludhiana. Ludhiana. "थायी लेखा सं./Pan No: Aagcm7124G अपीलाथ"/Appellant ""यथ"/Respondent Assessee By : Shri Ashwani Kumar, Ca, Shri Aditya Sood, Ca & Ms. Deepali Aggarwal, Ca Revenue By : Dr. Ranjit Kaur, Addl. Cit Sr. Dr Date Of Hearing : 28.01.2026 Date Of Pronouncement : 04.02.2026

For Appellant: Shri Ashwani Kumar, CA, Shri Aditya Sood, CAFor Respondent: Dr. Ranjit Kaur, Addl. CIT Sr. DR
Section 143(2)Section 143(3)Section 147Section 68

case are that assessee has filed its return of income electronically on 30.11.2014 declaring ‘nil’ income. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) dated 18.09.2015 was issued and served upon the assessee. The ld. AO has passed the assessment order ... section 147/151 to the facts of the case: In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. According, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe