Section 251 of the Income Tax Act
The decision most relied on for Section 251 is CIT v. Sardari Lal & Co. (251 ITR 864), cited in 240 of the 439 judgments on BharatTax that turn on this section.
Leading authorities on Section 251
The Commissioner of Income Tax (Appeals) does not have the power under Section 251 to introduce or assess a new source of income that was not considered by the Assessing Officer. Such additions or assessments of new income must be dealt with under specific provisions like Section 147, Section 148 (reassessment), or Section 263 (revision).
The Commissioner (Appeals) cannot enhance the assessment by discovering a new source of income not considered by the Assessing Officer during the original assessment proceedings. The appellate powers are limited to the subject matter of the assessment under appeal.
Ambiguity in tax statutes and explanations must be resolved in favor of the assessee. Tax Residency Certificates (TRCs) are conclusive proof of residency for treaty benefits unless fraud or treaty shopping is established, validating legitimate holding structures and Special Purpose Vehicles (SPVs).
The Commissioner of Income-tax (Appeals) holds wide powers, including the authority to enhance the assessee's income by considering new sources of income during appeal proceedings.
The Supreme Court clarified that an appellate authority's 'finding' must be essential for disposing of the appeal for the relevant assessment year, not an incidental observation about another year's income. Appellate authorities cannot issue directions on matters not directly arising in the appeal for the specific assessment year, especially regarding escaped income, which has separate statutory mechanisms.
The primary burden of proof for concealment of income lies with the revenue, and a DVO valuation report can only be relied upon after the revenue has discharged this initial burden.
When a refund is due to an assessee under Section 244A, the amount must first be adjusted towards the interest payable on such refund, with the balance then adjusted against the tax amount refundable. This follows the principle of Section 140A(1) and means "any amount" in Section 244A includes accrued interest.
The assessee bears the burden of proof to establish the veracity and genuineness of expenses claimed as deductions under the Income-tax Act.
The Assessing Officer, acting as both an investigator and adjudicator, must examine and verify facts alleged by an assessee, especially when doubt or debate arises. Merely providing PAN and address is insufficient to discharge the assessee's onus under Section 68 if the creditworthiness or genuineness of the share subscribers, particularly alleged paper/shell companies, is doubted.
Judgments on Section 251
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