What the courts have decided on section 142(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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PCIT v I-Ven Interactive Ltd
Supreme CourtHelps department
I moved my registered office and put the new address on my return and in Form 18 with the Registrar of Companies. The scrutiny notice went to the old address. Is the assessment bad?
No. The Supreme Court held that a notice under section 143(2) sent within the prescribed time to the address in the PAN database is sufficient compliance, and actual service afterwards is immaterial. Filing Form 18 with the Registrar of Companies is not intimation to the assessing officer, and merely showing the new address in the return is not enough. The assessee must apply to have the PAN database changed, because scrutiny notices are generated by an automated system that picks the address from PAN. The appeal was allowed and the matter remanded to the CIT (Appeals) to decide the other grounds on merits.
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CIT v Chhabil Dass Agarwal
Supreme CourtHelps department
Can I go straight to the High Court against an income-tax order instead of filing the statutory appeal?
Ordinarily no. The Supreme Court held that the Income-tax Act supplies a complete machinery for assessment and reassessment, and an assessee cannot abandon that machinery and invoke Article 226. The exceptions are narrow and have to be pleaded and made out — an order passed otherwise than in accordance with the enactment, in defiance of fundamental principles of judicial procedure, under repealed provisions, or in total violation of natural justice.
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Marshall Sons & Co (India) Ltd v ITO
Supreme CourtHelps taxpayer
Our amalgamation says it takes effect from an earlier appointed date, but the court sanctioned it two years later. Which date does the Department have to work from?
The date in the scheme. The Supreme Court held that every scheme must specify a date from which the amalgamation or transfer takes effect, that the court sanctioning it may fix a different date and if it does that date governs, but that where the court merely sanctions the scheme as presented, the transfer date in the scheme is the date of amalgamation. It cannot be otherwise. Proceedings before the court necessarily take time, the transferor may go on trading meanwhile, and that trading is deemed to be for and on behalf of the transferee. Notices calling on the transferor to file returns for later years were therefore unwarranted.
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BVR Projects v Assessment Unit
High CourtHelps taxpayerValidity unconfirmed
The faceless show-cause notice gave me four days to reply. Is that enough time?
No. The CBDT's Standard Operating Procedure of 3 August 2022 for faceless assessment requires seven days to answer a show-cause notice. A notice issued on a Saturday with a deadline at 1.02 p.m. the following Friday gave four working days to respond to a proposed addition of over Rs. 5.22 crores, and the assessment order was set aside on that ground alone.
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Benteler Automotive India Pvt Ltd v Union of India
High CourtHelps taxpayerValidity unconfirmed
The DRP issued its directions years ago and the Assessing Officer has still not passed a final assessment order. Is the assessment now dead, or can he pass one whenever he likes?
It is dead. Section 144C(13) requires the Assessing Officer, on receipt of the DRP's directions under s.144C(5), to complete the assessment in conformity with them within one month from the end of the month in which the directions are received, and he need not give any further hearing. Where that month passed — here even after the extension of the outer date under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 — and no order was passed, the Bombay High Court held the assessment barred by limitation and quashed the pending proceedings on the assessee's writ petition.
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AMNS Gandhidham Ltd v ACIT
High CourtHelps taxpayerValidity unconfirmed
My client took over a company through an IBC resolution plan. The assessing officer has begun assessments for years before the takeover and says he will examine whether the brought forward losses survive the change in shareholding. Can he?
On these facts, no. Where the resolution professional gave the jurisdictional Principal Commissioner the opportunity of being heard that s.79(2)(c) requires and the Principal Commissioner made no submissions before or at the approval of the resolution plan, the Bombay High Court held that the Revenue could not afterwards reopen the allowability of the carried forward losses, and quashed assessment proceedings relating to a period before the plan's implementation date.
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AMNS Khopoli Ltd v ACIT
High CourtHelps taxpayerValidity unconfirmed
Our company came out of the NCLT under an approved resolution plan. The department now says it will not recover anything but wants to complete the assessment for an earlier year to build a case against the old promoters. Can it?
No. Once the resolution plan is approved, claims that are not part of it stand extinguished and no proceedings in respect of them may be initiated or continued for any period before the effective date - and that covers the assessment itself, not merely recovery. The Bombay High Court quashed notices under s.143(2) and s.142(1) even though the Revenue had accepted on the record that it would not enforce any resulting demand.
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Chambal Fertilizers and Chemicals Ltd v PCIT, Udaipur
High CourtHelps taxpayerValidity unconfirmed
Can the officer reject a s.270AA immunity application without a hearing and without saying which clause of s.270A(9) applies?
No. The Rajasthan High Court held that the Deputy Commissioner had violated the proviso to s.270AA(4) by giving no opportunity of hearing, that his order was wholly laconic and did not indicate under which part of s.270A(9) the case was said to fall, and that the revisional authority had, without cogent reasons, cursorily placed the case within clauses (a) and (c). On the facts the amount had not been detected by the department at all - it was disclosed voluntarily during scrutiny after ten other issues had been raised without any addition - so clauses (a) and (c) were not attracted. The Court quashed both orders and directed that immunity under s.270AA be granted.
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Limbabhai Ishwarbhai Jodhani v ACIT (Gujarat High Court) — section 50C fixes the stamp valuation authority's value; the Assessing Officer cannot assume a higher one
High CourtHelps taxpayerValidity unconfirmed
The stamp authority accepted my sale deed at the agricultural land rate and passed a final order on it. The Assessing Officer has reopened on the basis that the open land rate should have applied. Can he assume a valuation above the one the stamp authority itself adopted?
No. The Gujarat High Court quashed the reopening. Section 50C substitutes the value adopted or assessed or assessable by the stamp valuation authority, and the Explanation defines 'assessable' as the price that authority would have adopted or assessed if the transfer had been referred to it. On the record the sale deed described the property as agricultural land, the stamp paid had been accepted by the Deputy Collector, Stamp Valuation Department in an order dated 16 October 2017, and the government resolution prescribed a lower rate for agricultural land than for open plots; the officer was therefore trying to assume a valuation beyond the value prescribed by the stamp valuation authority.
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PCIT v Jai Maa Jagdamba Flour Private Limited
High CourtHelps taxpayerValidity unconfirmed
After a search on or after 1 July 2012, can the officer levy penalty under s.271(1)(c) instead of s.271AAB?
No, not for the specified previous year. The Jharkhand High Court held that s.271AAB opens with a non obstante clause and excludes s.271(1)(c) where the undisclosed income relates to the specified previous year. Where the search was on 3 September 2014 the penalty, if any, had to be levied under s.271AAB, and because the assessee had admitted nothing in a s.132(4) statement and paid no tax on admitted income, the case fell under clause (c) of s.271AAB(1). The penalty actually levied under s.271(1)(c) could not stand. The Court also held it immaterial that no incriminating document had been found, because the statute keys the choice of section to the date of the search.
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Xiaomi Technology India Private Limited v DCIT
High CourtHelps taxpayerValidity unconfirmed
The Assessing Officer has provisionally attached our deposits under s.281B saying a large demand is likely. Is an expected demand enough?
No. A mere apprehension that huge tax demands are likely to be raised on completion of assessment is not enough. The officer must record his own formation of opinion, on tangible material, that the assessee is likely to defeat the demand and that attachment is necessary - not merely expedient - to protect the revenue, and the attachment must be proportionate. An order resting on the Investigation Wing's and the Transfer Pricing Officer's findings is borrowed satisfaction, and the Principal Commissioner's approval is not an empty formality.
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Virdichand Bawandas HUF v National e-Assessment Centre
High CourtHelps taxpayer
You asked for time to reply to the draft order and were refused. Is the final order safe?
No. The scheme requires an opportunity to respond to the modifications proposed in the draft order. Refusing time and then finalising was held wrong, and the assessment and the penalty notice were set aside.
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Symphony Limited v ACIT
High CourtHelps taxpayerValidity unconfirmed
The faceless unit finalised your assessment without issuing a draft order. Is that order good?
No. Under s.144B, a show cause notice issued along with the draft assessment order is a sine qua non. Without it the final order was passed without jurisdiction and was quashed.
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Bharat Aluminium Company Ltd v Union of India
High CourtHelps taxpayer
I asked for a personal hearing in the faceless assessment and was refused. Does the order survive?
No. The Court read 'may' in s.144B(7)(viii) as 'must': once the assessee asks for a personal hearing it has to be given, because a power carrying civil consequences attracts the rules of natural justice unless the statute excludes them, and s.144B embeds rather than excludes them. The assessment order and demand notice were set aside for a fresh reasoned order after hearing.
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Gandhi Realty (India) P Ltd v Asst/Jt/Dy CIT
High CourtHelps taxpayerSuperseded by amendment
The Department says it issued a draft assessment order, but nothing appeared on the portal. Who has to prove service?
The Department does. Where the Revenue claimed a draft assessment order had been placed and served but nothing was traceable on the portal, the Gujarat High Court quashed the assessment. Every step of s.144B has to be treated with the same seriousness, because s.144B(9), as it then stood and before its retrospective omission, made a non-compliant assessment non est.
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Trendsutra Client Services P Ltd v ACIT
High CourtHelps taxpayerSuperseded by amendment
The faceless order made additions but no show cause notice or draft order ever came. What is the order worth?
Nothing. Where the final order varies the returned income to the assessee's prejudice and no show cause notice or draft assessment order was served, the assessment is not made in accordance with s.144B and is non est. The Bombay High Court quashed it outright.
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Sanjay Aggarwal v National Faceless Assessment Centre
High CourtHelps taxpayerValidity unconfirmed
You asked for a personal hearing and the faceless unit ignored it. Does 'may' mean they can?
No. Section 144B(7) uses 'may', but that usage cannot absolve the Revenue of the obligation to consider a request for a personal hearing. The assessment order was set aside.
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Vrinda Sharad Bal v ITO
High CourtHelps taxpayerValidity unconfirmed
CPC keeps adjusting my refunds against a demand that is under appeal, and says the Centralised Processing Scheme requires it. Does that scheme override the CBDT's stay instructions?
No. Clause 10 of the Centralised Processing of Return of Income Scheme, 2011 cannot be read in isolation; the power to set off a refund against an outstanding demand is circumscribed by the provisions of the Act and by the CBDT's subsisting instructions, circulars and office memoranda. The Court restrained recovery beyond what those instructions permit and directed that the excess already recovered be returned with interest, and that refunds not be adjusted until the appeal is decided.
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Trust for Reaching the Unreached v CIT
High CourtHelps taxpayer
Our audit report was not e-filed with the return and exemption was denied. Can the delay be condoned?
Yes. The requirement to furnish the audit report with the return is procedural and directory, so exemption under ss.11 and 12 cannot be refused merely for late filing. The Commissioner's refusal to condone was set aside because the s.119(2)(b) discretion must be exercised equitably and judiciously, not on an exclusively pro-revenue view.
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Jayesh T Kotak v DCIT
High CourtHelps taxpayerValidity unconfirmed
A company in which my client holds shares lent money to two other companies in which he also holds shares. He received nothing. Can the reassessment stand?
No, on these reasons. The Gujarat High Court quashed a s.148 notice issued more than four years after the assessment year, holding that where the reasons recorded show only that the lender advanced unsecured loans to sister concerns, and contain no information that the payment was made for the benefit of the petitioner, no obligation lay on him to disclose those transactions. Without a finding that income had accrued to him, the first proviso to s.147 was not satisfied.
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Kunal Structure (India) Pvt Ltd v Dy CIT
High CourtHelps taxpayer
My return was defective and I cured the defect ten months later. Does the s.143(2) clock run from the original filing or from the day I removed the defect?
From the original filing. Where the defect is removed within the time the Assessing Officer allowed, the return relates back to the date on which it was originally furnished, and the six-month limitation for a s.143(2) notice is counted from the end of the financial year in which that original return was filed. On the facts the scrutiny notice was issued nearly a year after that period had run out and was held barred. The Revenue's special leave petition was dismissed.
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Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd v DCIT
High CourtHelps departmentValidity unconfirmed
The department has attached my bank account under s.226(3) because I did not pay the 20%. I say I have already paid more than that. Will the High Court interfere?
Not if the payment you point to was self-assessment tax paid against your own returned income, and not against the assessment demand. The Court upheld the garnishee notice to the bank: the assessee was obliged under the CBDT circulars to pay 20% of the outstanding demand, it had not done so, and the department was therefore justified in proceeding under s.226(3).
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Rajendra Kumar Dwivedi v CIT, Kanpur
High CourtHelps departmentValidity unconfirmed
I sold my agricultural land in small plots over several years, leaving roads and drains. The Assessing Officer has taxed part as business income and part as capital gains and invoked s.45(2). Can he split it like that?
Yes, on facts like these. The Allahabad High Court upheld a finding that land held in an urban area as a capital asset, carved into 43 plots of 60 to 1,815 sq. mtrs. and sold over seven years with roads and drainage provided, had been converted into stock-in-trade, so that s.45(2) applied and the profits on sale were business income. Both substantial questions were decided in favour of the Revenue and the appeals were dismissed.
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DIT v Ericsson AB
High CourtHelps taxpayerValidity unconfirmed
We import telecom equipment that comes with embedded software, and the department wants to tax the software portion as royalty — is that right?
No. The Delhi High Court dismissed the Revenue's appeals on 23 December 2011, holding the consideration for the supply was not royalty. Property in the goods and the risk both passed outside India, so no taxable event occurred here, and the fact that the contract was signed in India was irrelevant. Hardware and software supplied as one piece of equipment could not be split for section 9(1)(vi). Since the payment was not royalty, the Explanation below section 9 inserted by the Finance Act 2010 had no application at all. Interest under section 234B was also deleted, tax being deductible at source on the income chargeable in India.
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Shri Jagannath Temple Managing Committee v CIT
High CourtHelps taxpayerValidity unconfirmed
We are a statutory committee administering a religious endowment and have always been treated as exempt under s.10(23BBA). Can the department withdraw that and require returns?
Not on the facts here. The Orissa High Court held that s.10(23BBA) exempts the income of a body or authority set up by or under a Central, State or Provincial Act and entrusted with the administration of public religious or charitable trusts or endowments, and that where the proviso does not apply the exemption is a total unconditional exemption. The withdrawal order was quashed and the committee was held not required to file returns pursuant to the s.142(1) direction.
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Ranchi Club Ltd v CIT (Patna)
High CourtHelps taxpayerValidity unconfirmed
I filed my return on time and paid the self-assessment tax; the officer then added a disputed item in a best-judgment assessment and charged s.234A interest because I did not comply with a s.142(1) notice. Is that right?
The Patna High Court said no. Where the return was filed within time with proof of payment, the mere issue of a s.142(1) notice calling for accounts or information does not attract s.234A, because the s.142(1) notice that s.234A speaks of is the notice to FURNISH A RETURN issued to a person who has not filed one — not the notice under clauses (ii) and (iii) calling for accounts or particulars.
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Polynova Industries Limited v DCIT 14(1)(1), Mumbai
ITATHelps taxpayerValidity unconfirmed
An internal audit objection has produced a s.263 notice saying CSR spending is not voluntary and so is not a 'donation' at all for s.80G. Does that argument let the Commissioner revise my assessment?
No, not while the point remains genuinely open. The Tribunal held that the eligibility of CSR expenditure for s.80G is a question on which Benches differ — the Bangalore and Kolkata Benches allow it, the Delhi Bench in Agilent Technologies disallows it — so an Assessing Officer who allows it has adopted one of two reasonably possible views and the s.263 jurisdiction does not arise.
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Rohit Khandelwal v AC/DCIT, Central Circle, Muzaffarpur
ITATHelps taxpayerValidity unconfirmed
I disclosed the seized cash and paid the s.115BBE tax, but my return was a belated one under s.139(4). The AO says the proviso to s.271AAC(1) only saves a return under s.139(1). Is he right?
No. The proviso says "return of income furnished under section 139" and does not confine itself to s.139(1); the Tribunal held that where the legislature meant a particular sub-section it said so, and deleted the penalty on a belated return filed under s.139(4).
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Shri Madhusudan Dhakad v ITO-1, Harda
ITATHelps taxpayerValidity unconfirmed
I am a farmer. Cash deposits in my bank account during demonetisation have been added under s.69A because I could produce bills and vouchers for only part of my crop sales. How much proof of cultivation is enough?
Enough to show that you had sufficient sources for the deposits, not vouchers for every rupee. The Indore Tribunal deleted an addition of Rs 9,42,063 where the assessee produced vouchers covering about 72 per cent of the year's total deposits, held 99.195 acres in the family with 40.90 acres in his own name, was a full-time agriculturist with government awards for yield, had made cash withdrawals of Rs 33,86,980 from the same accounts during the year, and had no other source of income. The Tribunal held the explanation that part of the crop was sold direct to consumers without bills deserved credence.
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JMS Mining Pvt Ltd v PCIT-2, Kolkata
ITATHelps taxpayerValidity unconfirmed
I added back my company's CSR spend under Explanation 2 to s.37(1) and then claimed 50 per cent of it under s.80G. The Commissioner says s.37 blocks that and has revised the assessment under s.263. Is he right?
No. Explanation 2 to s.37(1) operates only while computing business income under Chapter IV-D; it says nothing about Chapter VI-A, so a CSR contribution that independently satisfies s.80G remains deductible under s.80G. Parliament carved out only two CSR items in s.80G itself — clauses (iiihk) and (iiihl), the Swachh Bharat Kosh and the Clean Ganga Fund — and by expressio unius that exclusion implies every other qualifying donation survives.
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Motorola Inc v DCIT
ITATHelps taxpayerValidity unconfirmed
The Assessing Officer issued me a notice under section 142(1) calling for a return after the assessment year had already ended. Is the assessment made on that notice valid?
No. The Delhi Special Bench held that a notice under section 142(1)(i) calling for a return cannot be issued after the end of the relevant assessment year. Where no return has been filed and the year has closed, the case is one of escaped assessment and the Assessing Officer must proceed under section 148 after satisfying section 147 - recording reasons and forming a reason to believe. Allowing him to call for a return under section 142(1)(i) instead would let those requirements be sidestepped, and the two provisions cannot operate in the same field at the same time. The notices in Motorola's and Ericsson's cases were issued after the year ended, so those assessments were invalid.
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Vatsalabai Karbhari Deore v ACIT
ITATHelps taxpayerValidity unconfirmed
You missed the notices and got a best judgment assessment. Is the officer's estimate final?
Not if it is arbitrary. An 8% net profit estimate was set aside as lacking proper substantiation, and the matter was remanded so the audited books and supporting evidence could be produced.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.