Topic
Tax assessment in India refers to the process by which income tax authorities examine a taxpayer's returns and determine liability under the Income Tax Act, 1961, or GST laws, often involving scrutiny of unexplained income, valuation, and procedural compliance.
The ITAT deleted a ₹34.85 million addition, holding that customer cash deposited in a business correspondent’s account is not the correspondent’s assessable income under section 69A. Only the correspondent’s commission is taxable, benefiting all BCs and their clients.
The Delhi ITAT set aside assessment orders for AY 2016-17 and 2017-18, ruling that a single omnibus satisfaction note under Sec 153C is invalid without year-wise linkage of seized material to income. It also declared that notices served after the statutory 15-month limitation are void. Taxpayers must ensure separate satisfaction notes for each year and timely notices.
The Jaipur ITAT ruled that the word ‘and’ in Section 147 operates conjunctively, so an Assessing Officer can only reopen assessment for income already identified as escaped, not for any other income. This narrows reassessment powers and shields taxpayers from unexpected additions. The ruling applies to all cases invoking Section 147 nationwide.
ITAT Pune ruled that income tax assessments are vitiated if the Assessing Officer fails to provide the assessee with third-party replies obtained under Section 133(6) of the Income Tax Act, 1961. The Tribunal emphasized that non-disclosure violates principles of natural justice, setting aside the assessment order and reinforcing procedural fairness in tax proceedings.
Allahabad High Court rules that tax authorities cannot enhance disclosed turnover under the UP VAT Act without cogent adverse material. Best judgment assessment requires evidence beyond mere non-production of books, reinforcing safeguards for taxpayers against arbitrary tax demands.
Andhra Pradesh High Court rules that GST best judgment assessments under Section 62(2) are deemed withdrawn the moment a taxpayer files returns with late fees and interest, even beyond the 60-day period. The judgment nullifies demand notices issued under such assessments, reinforcing taxpayer rights against procedural rigidity.
ITAT Jodhpur rules that disallowance of business expenditures under Section 37(1) of the Income Tax Act must be backed by tangible evidence, not mere suspicion or perceived inadequacy of activity. The ruling reinforces compliance standards for tax assessments, impacting businesses and tax practitioners.
The Karnataka High Court quashed an income tax assessment against an agricultural co-operative society for failing to afford it a hearing on its claim for exemption under Section 80P, reinforcing that procedural fairness is non-negotiable even in faceless assessments. The ruling mandates that tax authorities must entertain substantive claims under special exemptions before finalizing assessments, protecting cooperative societies from arbitrary demand notices and bank freezes.
ITAT Ahmedabad quashed an appellate order for failing to address the assessee's submissions, reinforcing that procedural fairness mandates a full hearing before adjudication. The ruling underscores that tax authorities must engage with evidence submitted by taxpayers, not just dismiss appeals mechanically.
ITAT Bangalore ruled that a revisionary order under Section 263 of the Income Tax Act is invalid if the Principal Commissioner fails to verify the existence of an expenditure claim before setting aside an assessment. The tribunal emphasized that such orders violate principles of natural justice and cannot be sustained without establishing a nexus between the assessee and alleged payees. This ruling reinforces the need for thorough inquiry before invoking revisionary jurisdiction.
The ITAT Delhi has ruled that tax authorities cannot impose disallowances under Section 143(1)(a) for contributions to welfare funds if the legal position under Section 36(1)(va) was unsettled at the time of the intimation. This protects assessees from automatic adjustments when judicial clarity is pending, reinforcing procedural fairness in summary assessments and benefiting all taxpayers facing ambiguous statutory interpretations.
The ITAT Mumbai has ruled that seized financial calculations, without independent corroboration or borrower confirmation, cannot substantiate an addition for undisclosed interest income. This reinforces the burden of proof on the revenue and protects taxpayers from speculative assessments based solely on circumstantial material recovered during searches.
Allahabad HC rules that the limitation period for tax appeals begins from the date of actual communication of the order, not its issuance. The Revenue bears the burden of rebutting the dealer's claim with cogent evidence; absent such proof, the dealer's stated communication date stands. This reinforces procedural fairness in tax disputes and curtails arbitrary dismissal of appeals on technical grounds.
CESTAT New Delhi ruled that the revenue cannot impose service tax on alleged residential complex construction based solely on legal notices; it must provide concrete evidence proving the nature of the construction as a taxable service. This shifts the evidentiary burden decisively to the tax authority, protecting developers from speculative assessments and reinforcing due process in indirect tax disputes.
ITAT Delhi deleted a Rs 50 lakh addition under Section 68 after the assessee proved the identity, creditworthiness, and genuineness of share application money using the investor’s filed tax returns and direct verification from the investor company. This reinforces that documentary evidence from tax-compliant third parties, not just bank statements or board resolutions, can satisfy Section 68’s tripartite test - a critical precedent for real estate and startup firms raising equity capital.