Section 144A of the Income Tax Act
Income-tax Act, 2025: s.272
Section 144A of the Income-tax Act, 1961 corresponds to section 272 (Power of Joint Commissioner to issue directions in certain cases) of the Income-tax Act, 2025.
Read section 272 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 144A is CIT v. Shivam Motors (P.) Ltd. (230 Taxmann 63), cited in 179 of the 176 judgments on BharatTax that turn on this section.
Leading authorities on Section 144A
Disallowance under Section 14A of the Income-tax Act applies even if no exempt income is actually earned during the relevant previous year, provided investments capable of yielding exempt income exist.
Disallowance under Section 14A of the Income Tax Act, 1961, cannot exceed the actual tax-exempt income earned by the assessee during the relevant year. If no tax-exempt income is earned, no disallowance under Section 14A is warranted.
The Income Tax Appellate Tribunal (ITAT) cannot permit a new ground requiring fresh investigation of facts unless it remands the matter or requests a report from the lower appellate authority. The ITAT possesses the power to remand or remit cases back to the authorities below in appropriate circumstances.
Disallowance under Section 14A applies only when exempt income is actually received or receivable during the relevant previous year. The provision does not trigger merely upon incurring expenditure if no exempt income materialized in that year.
Expenditure incurred by an assessee carrying on a composite business giving rise to both taxable and non-taxable income is allowable in its entirety without apportionment. This principle led to the subsequent introduction of Section 14A of the Income-tax Act.
This case outlines the fundamental tests for invoking Section 263, holding that an assessment order is 'erroneous' if based on incorrect facts or incorrect application of law, or passed without due inquiry. For revision, both the conditions of being erroneous and prejudicial to the interest of the Revenue must be fulfilled.
Each assessment year is an independent unit for income-tax purposes, requiring the issuance of a separate notice under Section 148 of the Income-tax Act for a valid reassessment. Failure to issue such separate notices renders the assessment invalid.
When a statutory authority issues an order based on specific grounds, its validity must be assessed solely by those stated grounds and cannot be supported or improved by additional reasons provided later in affidavits or other means. An order that is invalid at its inception cannot be validated by subsequent justifications.
