Section 271F of the Income Tax Act
The decision most relied on for Section 271F is State of Kerala v. C. Velukutty (60 ITR 239), cited in 78 of the 927 judgments on BharatTax that turn on this section.
Leading authorities on Section 271F
A best judgment assessment must be based on wisdom, truth, and legal principles, not arbitrary caprice. While it involves estimation and guesswork, this must have a reasonable nexus to available material and the case's circumstances.
The omission by an Income Tax Officer to initiate penalty proceedings during the assessment, when there is an observation of under-reporting or mis-reporting of income, renders the assessment order erroneous and prejudicial to the interests of the Revenue, granting the Commissioner jurisdiction to revise such an order under Section 263.
Reassessment proceedings initiated for AY 2015-16 after April 1, 2021, are barred by limitation and invalid, as per the amended provisions of the Finance Act, 2020.
A conscious act by the assessee to hide information from the department is a key factor in upholding revenue assessments and penalties.
A notice under section 148 of the Income Tax Act issued after March 31, 2021, is invalid if it relies on the extended time limit provided by the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020, for assessment years prior to 2021-22.
