Section 119 of the Income Tax Act
Income-tax Act, 2025: s.239
Section 119 of the Income-tax Act, 1961 corresponds to section 239 (Instructions to subordinate authorities) of the Income-tax Act, 2025.
Read section 239 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 119 is PCIT v. Shiv Kumar Nayyar (163 Taxmann.com 9), cited in 597 of the 707 judgments on BharatTax that turn on this section.
Leading authorities on Section 119
Approval under Section 153D for search assessments is invalid if granted mechanically, hastily, or without due application of mind, such as on the same day as the proposal or in a bunched manner. Such an invalid approval renders the consequential assessment order under Section 153A void ab initio.
Approval under Section 153D for search assessments is not a mere formality; it requires the approving authority to apply its mind judiciously to the subject matter and ensure satisfaction of legal and procedural requirements for each assessment year.
Approval under Section 153D of the Income Tax Act is mandatory for assessment orders in search cases. While elaborate reasons for approval are not required, the approving authority must provide some indication that it has examined the draft orders and found them to meet the requirements of law.
CBDT and CBEC circulars, along with administrative instructions, are binding on departmental authorities, who must not act in contravention of them. However, these circulars and instructions are not binding on courts or assessees.
Strict adherence to approval protocols under Section 153D, including those in the Departmental Manual of Office Procedure, is essential for search assessments. An assessment is invalid if the approving authority fails to apply its mind or consider all relevant seized material before granting approval.
Late fees under section 234E can only be levied prospectively from June 1, 2015. Levying late fees for periods prior to this date is not permissible.
Assessment orders are bad in law if they are passed without valid approval from the Additional Commissioner under Section 153D, or if such approval is granted mechanically without application of mind.
An approval under Section 153D of the Income Tax Act, 1961, is considered mechanical and invalid if granted without application of mind and without perusing relevant assessment records, including seized material. This principle has been affirmed by multiple High Courts and the Supreme Court.
For a limited company, expenses cannot be disallowed merely on the grounds of presumed personal use of assets by directors or by treating the expenditure as a non-business purpose. Percentage disallowances of expenses in such cases are not sustainable.
Disallowance under section 40(a)(ia) cannot be made when the assessee has deducted tax at a lesser rate, as opposed to no deduction. The second proviso to section 40(a)(ia) is applicable retrospectively, mitigating disallowance where tax is deposited by the recipient.
