“regular assessment”
The decision most relied on for regular assessment is CIT v. Continental Warehousing Corporation (Nhava Sheva) Ltd. (374 ITR 645), cited in 1,823 judgments on BharatTax.
Leading authorities on regular assessment
In Section 153A proceedings, the scope of assessment extends to abated proceedings, enabling an assessee to raise fresh legal claims that could have been made in regular assessment proceedings.
Where an assessee maintains regular books of account, and these books are not rejected or found defective by the Assessing Officer, any cash deposits or available cash shown in the cash book, if sufficient to cover the transaction, cannot be treated as unexplained income or an addition under sections 68 or 69A.
Proceedings under Section 153A of the Income Tax Act are not confined solely to incriminating material found during a search, and the Assessing Officer can assess total income for the relevant years.
Loose sheets of paper containing jottings, not shown to be part of regularly maintained books of accounts, do not constitute incriminating material for initiating assessment under section 153C. The satisfaction note required for 153C proceedings must specify the assessment year to which the alleged incriminating material belongs.
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.
In a search assessment under Section 153A or 153C, additions cannot be sustained if the material or transactions relied upon do not relate or pertain to the assessee. Regular books of accounts not unearthed during search do not constitute incriminating material to justify additions.
Additions cannot be made under Section 153A for assessment years where original assessments have become final, unless incriminating material relevant to those years is unearthed during the search operation under Section 132.
When unaccounted receipts or suppressed sales are detected and books of account are rejected under Section 145(3), additions to income must be restricted to the profit element embedded in such transactions, not the entire transaction value. This profit element is to be estimated by considering the assessee's regular profit ratio as per books of account.
