Section 118 of the Income Tax Act
Income-tax Act, 2025: s.238
Section 118 of the Income-tax Act, 1961 corresponds to section 238 (Control of income-tax authorities) of the Income-tax Act, 2025.
Read section 238 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 118 is (4) ClT v. Manoj Jain (287 ITR 285), cited in 48 of the 34 judgments on BharatTax that turn on this section.
Leading authorities on Section 118
A District Valuation Officer (DVO) report, by itself, is not sufficient incriminating evidence to make additions for unexplained investments in a block assessment under Section 158BC. The revenue bears the primary burden of proof to establish undisclosed income, and a DVO opinion alone is also insufficient information for reopening an assessment under Section 147.
A Departmental Valuation Officer's (DVO) report, by itself, is not sufficient information to conclude understatement of consideration or make additions to income. The Revenue must discharge the burden of proving actual receipt of higher consideration, beyond merely relying on a DVO's opinion, especially in the absence of incriminating evidence.
Cancellation of registration granted under section 12A of the Income Tax Act, 1961, requires examination of the assessee's activities in light of the objects of the trust and the definition of 'charitable purpose' under Section 2(15), especially concerning the proviso.
The Commissioner has the power to cancel registration under Section 12AA(3) for violations occurring prior to the amendment by the Finance Act of 2010. This power existed even before it was explicitly conferred by the amendment.
For additions under Section 69B, the Assessing Officer bears the initial burden to prove an understatement of consideration in the assessee's books. Once undervaluation is established, the AO may use a reliable yardstick to measure the undisclosed investment if the assessee offers no satisfactory explanation.
Statements made during assessment proceedings, particularly those concerning cash credits or accommodation entries, are not conclusive proof and can be retracted or disbelieved if other evidence contradicts them. Such statements lack credence when challenged and uncorroborated.
Receipts arising to an assessee in its capacity as a Special Planning Authority (SPA) are not chargeable to tax, especially when established under specific acts and in line with precedents like CIDCO.
Institutions set up for specific purposes do not qualify as 'local authorities' for the purpose of section 10(20) of the Income-tax Act. This applies even if the institution's activities are considered for the advancement of general public utility.
A State Road Transport Corporation is not a 'local authority' for the purpose of claiming exemption under Section 10(20) of the Income Tax Act. Consequently, its income is taxable.
