Topic
Assessment proceedings under the Income Tax Act, 1961 refer to the formal process by which the Income Tax Department examines a taxpayer’s returns and determines their taxable liability, including scrutiny, notice issuance, and valuation methods.
ITAT Delhi sets aside ex-parte dismissal by CIT(A) for non-prosecution, holding Section 250(6) mandates reasoned orders on merits. Remand directs fresh adjudication, reinforcing statutory compliance and natural justice in tax appeals.
For assessments under Section 153C, the Income Tax Appellate Tribunal Delhi ruled that the assessing officer’s date of satisfaction - not the search date or handover of seized material - determines jurisdictional validity. This clarifies a critical procedural gap for post-2021 searches where handover records are missing, protecting assessees from invalid proceedings based on administrative delays.
ITAT Delhi rules that proceedings under Section 153C of the Income Tax Act are invalid if incriminating material is handed over after 01.04.2021, even if the search occurred earlier. This holding establishes that the jurisdictional trigger is the date of handover, not the search date, impacting all pending assessments under the repealed provision.
When a taxpayer in the informal sector declares business income but maintains no books, the ITAT Agra rules that unexplained cash deposits cannot be fully added under Section 69A without applying the peak credit theory. This ensures fair assessment by focusing on the highest balance reached during the year, not total inflows - a critical safeguard for small traders and cash-based businesses.
The ITAT Mumbai has struck down the practice of imposing automatic 10% disallowance on short-term borrowings under Section 68, ruling that tax authorities must conduct a substantive verification of the lender’s identity, genuineness, and creditworthiness. This sets a critical precedent for businesses relying on third-party loans, ensuring assessments are grounded in evidence, not arbitrary percentages.
ITAT Delhi rules that assessments under Section 153C of the Income Tax Act are invalid if the deemed search date falls on or after 01.04.2021, due to the Finance Act 2021 amendment. The tribunal quashed assessments for AY 2014-15 to 2016-17, setting a precedent that bars proceedings initiated beyond the cut-off date, impacting tax authorities and assessees alike.
ITAT Delhi rules that reassessment under Section 153C of the Income Tax Act is invalid if the satisfaction note is recorded after 01.04.2021, as only Section 148 proceedings are permissible thereafter. The ruling underscores strict compliance with jurisdictional timelines, impacting tax authorities' assessment powers.
ITAT Delhi rules that a consolidated satisfaction note under Section 153C IT Act for multiple assessment years is invalid, violating the Supreme Court's precedent in Sunil Kumar Sharma. The Tribunal quashed the assessment for AY 2017-18, reinforcing that jurisdictional validity hinges on year-specific satisfaction notes, impacting tax litigation and assessment proceedings.
ITAT Mumbai rules that cash deposits derived from disclosed sales, already offered for taxation, cannot be reclassified as unexplained income under Section 68 of the IT Act. The ruling prevents double taxation and reinforces the principle that only unverified or undisclosed sources can be taxed as unexplained credits.
The ITAT Nagpur holds that an assessment under Section 251(1)(a) can be set aside for inadequate inquiry by the Assessing Officer, regardless of whether the assessee submitted a response. This affirms that natural justice requires more than mere procedural compliance - the inquiry itself must be meaningful, fair, and substantive, impacting how tax officers conduct scrutiny assessments nationwide.
ITAT Agra rules that once an assessee establishes the identity of creditors, their creditworthiness, and the genuineness of cash credits under Section 68, the onus shifts to the revenue to disprove these facts. The tribunal deleted the addition of Rs. 2.43 crore, reinforcing the legal standard for unexplained cash credits in tax assessments.
The ITAT Kolkata ruled that the Assessing Officer cannot disallow purchases and make a blanket addition merely because the assessee failed to respond to Section 133(6) notices. The burden lies on the department to identify concrete discrepancies in the books, not to penalize silence. This protects taxpayers from arbitrary assessments and reinforces procedural fairness in income tax scrutiny.
ITAT Bangalore clarifies that reassessment under Section 263 of the Income Tax Act does not necessitate a fresh notice under Section 143(2), as the proceedings are a continuation of the original assessment. This ruling streamlines procedural compliance for tax authorities and assessees, avoiding redundant notices in set-aside cases.
ITAT Delhi rules that an assessment order is void ab initio if the notice under Section 143(2) is issued by an Assessing Officer lacking pecuniary jurisdiction, as mandated by CBDT Instruction No. 1/2011. The ruling reinforces jurisdictional compliance as a non-negotiable prerequisite for valid tax assessments, impacting all pending and future scrutiny cases.
The ITAT Delhi has ruled that a reopening under Section 147 is legally unsustainable if the Assessing Officer records a specific reason to believe income has escaped assessment but makes no corresponding addition based on that reason. This establishes that mere suspicion, without quantified tax liability, cannot justify reopening - a critical safeguard for taxpayers against arbitrary assessments.