Section 144

What a section 144 notice is

Best Judgment / Ex-parte Assessment. Assessment completed without your input, on the officer's own estimate. It is a critical-severity notice in the assessment family under the Income Tax Act 1961.

If you ignore it: Order becomes final. Recovery follows.

Time to reply: this notice type carries no standard period. The date is printed on the notice itself and you must read it off the document. Route is appeal, not reply. Engine should surface the CIT(A) deadline instead.

Under the Income Tax Act 2025: section 271. But read that as reference, not as the provision to cite. Under s.536(2) of the 2025 Act, a proceeding for any tax year beginning before 1 April 2026 stays under the Income Tax Act 1961 from the notice through to the appeal — so a notice arriving today for an earlier year is a 1961 Act matter, whatever today's date is.

Section 144 — the law in short

What the courts have decided on section 144, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Genpact India Pvt Ltd v DCIT Supreme CourtHelps department
  The Assessing Officer has fastened buy-back tax under s.115QA on my company. Do I have a right of appeal, or must I go to the High Court by writ?
  You have a right of appeal. The Supreme Court held that a determination of liability under s.115QA is covered by the words 'an order against the assessee, where the assessee denies his liability to be assessed under this Act' in s.246(1)(a) and s.246A(1)(a), so an appeal lies; and because that remedy exists, the High Court was right to refuse a writ petition.
• Sasi Enterprises v ACIT Supreme CourtHelps department
  The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
  No. The Supreme Court held that the s.276CC offence is complete on the failure to furnish the return in due time and is unrelated to the pendency of the assessment. The proviso does not help unless the return was furnished before the end of the assessment year or the tax payable on the total income determined on regular assessment, less advance tax and TDS, is within the statutory figure — and by s.278E the court presumes the culpable mental state, leaving it to the accused to displace it beyond reasonable doubt.
• 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.
• Kachwala Gems v JCIT Supreme CourtCuts both ways
  Once the books are rightly rejected, how much guesswork is the Assessing Officer allowed in a best judgment assessment?
  The assessee's books were rejected for defects including the absence of a stock register and the income was estimated. The Supreme Court upheld the rejection and confirmed that some guesswork is inevitable in a best judgment assessment, but the estimate must be honest and must bear a reasonable nexus to the available material and the circumstances of the case.
• Kalyan Kumar Ray v CIT Supreme CourtHelps department
  My assessment order does not compute the tax — the figures are only on the ITNS-150. Does that make the assessment bad?
  No, and the argument runs the other way from how it is often quoted. A three-Judge Bench rejected the submission that Form ITNS-150 is not part of the assessment order. The form is itself a form for determination of tax payable, and when signed or initialled by the officer it is an order in writing determining the tax within the meaning of s.143(3), to be treated as part of the assessment order in the wider sense. The assessee lost.
• Brij Bhushan Lal Parduman Kumar v CIT Supreme CourtHelps taxpayer
  I am an MES contractor and the department supplies me cement and steel at fixed rates. The Income-tax Officer added the value of that material to my cash receipts before applying a flat rate. Can he?
  No. The Supreme Court held that where the department supplies stores and materials to a works contractor at fixed rates solely for being used, fixed or incorporated in the works, and the surplus must be returned, there is not even a theoretical possibility of profit in the turnover those stores represent. So on a best judgment assessment the flat rate is to be applied only to the cash payments received from the department, exclusive of the cost of such stores. The Punjab and Haryana High Court's contrary view in Brij Bhushan Lal v CIT (Delhi) was held erroneous.
• CIT v Padamchand Ramgopal Supreme CourtHelps taxpayer
  The officer rejected my books without giving reasons and added half my interest receipts as concealed income for five years. Can he do that?
  No. The Supreme Court upheld the Calcutta High Court and held the additions bad. The officer gave no reason for rejecting the accounts. On appeal only two small errors were found, both in the first year, and nothing at all was found wrong with the accounts of the other four years. Adding half the gross interest receipts of each year as escaped income was, in the Court's words, arbitrary and the method highly capricious. Two insignificant mistakes in one year gave no basis for rejecting the books of the remaining years, and the Tribunal had simply adopted the first appellate authority's findings without examining the facts.
• State of Orissa v Maharaja Shri B.P. Singh Deo Supreme CourtHelps taxpayer
  The officer rejected my books and then simply picked a figure, and the appellate authority enhanced it without saying why. Can an estimate be made like that?
  No. The Supreme Court dismissed the State's appeals and upheld the Orissa High Court, which had set aside an enhancement made in a best judgment assessment. The Assistant Collector had found the assessee's material unreliable and had then enhanced the income without giving any reason and without disclosing the basis of the enhancement. The Court held that unreliability of the assessee's material does not empower the authorities to make an arbitrary order. The power to assess to the best of judgment is not an arbitrary power; the assessment must be based on some relevant material. The Tribunal had erred in affirming it without reasons.
• State of Kerala v C. Velukutty Supreme CourtCuts both ways
  What are the outer limits on a 'best of judgment' estimate, and can suppression found in one place be projected onto another?
  A suppression detected in the head office accounts was mechanically applied to estimate turnover of the branch. The Supreme Court held that the words 'best of his judgment' import limits: the estimate must be a judicial exercise, and although guesswork is involved it must not be a wild one and must have a reasonable nexus to the available material. It is the source of the 'guess but not a wild guess' formulation used throughout income-tax practice.
• C. Vasantlal and Co v CIT Supreme CourtHelps department
  The Income-tax Officer examined witnesses behind my back and used their statements against me. Is that material evidence at all?
  It can be, provided it is disclosed to you. The Supreme Court held that the Income-tax Officer is not bound by the technical rules of the law of evidence and may collect material to facilitate assessment even by private enquiry, but if he wishes to use it he must inform the assessee of the material and give an adequate opportunity to explain it. Here nothing showed the material had been withheld, and in any event the Appellate Assistant Commissioner had summoned the two witnesses and allowed cross-examination. The Tribunal was therefore free to rely on their earlier statements and to disbelieve the later ones.
• Dhakeswari Cotton Mills v CIT Supreme CourtCuts both ways
  Can the Assessing Officer estimate income on departmental material the assessee has never been shown?
  The officer estimated gross profit by comparing the assessee with other mills, without disclosing the comparative data or letting the assessee lead rebuttal evidence. The Supreme Court set the assessment aside, holding that an estimate cannot rest on pure guess and that the material relied on must be disclosed to the assessee. It is the foundational Indian authority on natural justice at the assessment stage.
• BVR Projects v Assessment Unit High CourtHelps taxpayerJudgment not reachable
  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.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• PCIT v Forum Sales Pvt Ltd — an estimate cannot be made without first rejecting the books under s.145(3) High CourtHelps taxpayer
  The Assessing Officer has disallowed forty per cent of my client's purchases on an estimate, but has not rejected the books. Is that open to him?
  No. The Delhi High Court held that it is the settled position of law that the books of account have to be necessarily rejected before the Assessing Officer proceeds to a best judgment assessment on fulfilment of the conditions in the Act, and that any pick and choose method of rejecting certain entries while accepting others, without appropriate justification, is arbitrary. Since the additions in question had been made on an estimate basis without rejecting the books, no substantial question of law arose and the Revenue's appeals were dismissed.
• Pankaj Kumar v CIT (Patna High Court) — section 45(5A) is prospective; a joint development agreement signed before 1 April 2018 is taxed in the year of transfer under section 2(47)(v) High CourtHelps department
  I signed a joint development agreement before April 2018 and the project completion certificate came much later. Can I claim the benefit of section 45(5A) and defer my capital gain to the completion year?
  No. The Patna High Court held that sub-section (5A) of section 45, inserted by the Finance Act 2017 and expressly made effective from 1 April 2018, cannot be treated as retrospective — neither by its express words nor by any necessary intendment. A joint development agreement entered into by an individual or HUF before 1 April 2018 continues to be governed by the pre-amendment law, that is by section 2(47)(v) read with sections 45 and 48, so the gain falls in the previous year in which the transfer was effected.
• ACIT v Serajuddin & Co High CourtCuts both ways
  What must an approval under s.153D actually show on its face, and does last-minute bulk approval survive?
  Draft search assessments were sent to the Additional CIT two days before limitation expired and approval issued with nothing to show the drafts had been read. The Orissa High Court held that while elaborate reasons are not required, there must be some indication that the approving authority examined the draft orders and found they met the requirements of law. The assessments were held invalid, and the Supreme Court later dismissed the Revenue's SLP.
• Mantra Industries Ltd v NFAC High CourtHelps taxpayerSuperseded by amendment
  The faceless order says I filed no reply when I did, and my hearing request was ignored. Is it valid?
  It was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred.
• CIT v Y. Ramachandra Reddy High CourtHelps taxpayer
  The officer made a best judgment assessment and fixed my profit at a percentage of receipts. Does that wipe out my claim to depreciation and to interest?
  No. The High Court held that depreciation and interest, which are otherwise deductible in the ordinary course of assessment, keep the same legal character even where the profit is determined on a percentage basis. There was no reason to withhold from the assessee, merely because his profit had been estimated, a facility he would have had on a regular computation. The Revenue's appeal was dismissed. Note the boundary of this: the assessee's receipts were far above the s.44AD threshold, so s.44AD did not apply to him at all. Where income is actually returned under s.44AD, s.44AD(2) provides that deductions under ss.30 to 38 are deemed to have been given full effect, and depreciation under s.32 falls inside that range.
• Pramod Kumar (Lajja Rice and Oils Mills) v CIT — a fall in gross profit is not the ground, but unexplained cost movement is High CourtHelps departmentNo later treatment found
  My client's books were rejected because the gross profit rate fell. Is a fall in gross profit by itself enough?
  By itself, no — and that is exactly what the assessee argued here. But the Punjab and Haryana High Court dismissed his appeal because the rejection did not rest on the fall in gross profit alone: the Assessing Officer had compared two years and found that the paddy milled was almost equal and sales had risen by 29 per cent while manufacturing expenses had risen by 45.93 per cent, which on the officer's finding showed that the assessee had either inflated the expenses or depressed the sales. The court held that the judgments the assessee relied on turned on their own facts, that no substantial question of law arose, and dismissed the appeal.
• CIT v Gian Chand Labour Contractors High CourtHelps department
  The officer rejected my books and applied a flat net profit rate. Can I still claim my freight and other expenses separately?
  No. Once the books are rejected and income is estimated by applying a net profit rate, that rate is taken to have already absorbed every deduction that would otherwise be computed under sections 30 to 43A. You cannot have the estimate and the expenses too.
• Malik Packaging v CIT High CourtHelps taxpayerNo later treatment found
  The officer completed a best judgment assessment under s.144 because I did not attend in answer to the s.143(2) notice. Was he required to give me a separate show cause notice first?
  Yes. The proviso to s.144(1) requires that the opportunity of being heard be given by serving a notice calling on the assessee to show cause, on a date and time specified, why the assessment should not be completed to the best of the officer's judgment. Where the record showed no notice other than the s.143(2) notice had been issued, the Allahabad High Court held that no notice under the proviso had been issued, set aside the Commissioner's order refusing relief under s.264 and directed him to pass a fresh order in accordance with law.
• Awadhesh Pratap Singh Abdul Rehman v CIT High CourtHelps department
  The officer rejected my books and made a best-judgment assessment because I kept no stock register. Is that enough on its own to reject?
  Not on its own — but it does not have to be. The absence of a stock register or cash memos may not by itself show that the accounts are false or incomplete; where it is coupled with unverifiable purchases and sales, missing vouchers for expenses and an implausibly low profit, the officer is justified in rejecting the books and assessing to the best of his judgment.
• Dinesh Chandra Das v ITO — s.44AD(6) shuts out the agent and the s.44AA(1) professional, but the whole receipt is still not income ITATCuts both waysNo later treatment found
  The Assessing Officer says my client, who runs a pathology sample collection centre, cannot use s.44AD at all and has added the entire understated receipt. Is that right?
  On the first point the department was upheld: s.44AD(6) excludes a person carrying on a profession referred to in s.44AA(1), a person earning income in the nature of commission or brokerage, and a person carrying on any agency business, and the Tribunal agreed the assessee was a commission agent so that s.44AD did not apply. On the second point the assessee got relief: the entire differential receipt could not be treated as income because expenses had to be incurred, and the Tribunal directed a net profit rate of forty-five per cent on the gross receipts the Assessing Officer had worked out.
• Muniswamappa Ananda v. ITO, Ward 6(1)(1), Bengaluru (ITAT Bangalore) — population and aerial-distance certificates admitted as additional evidence under Rule 29, and the section 2(14)(iii) exclusion applied to delete a Rs 1.28 crore addition ITATHelps taxpayerNo later treatment found
  My client sold inherited farm land, filed no return because he thought it was exempt, and an ex parte assessment has taxed the whole sale consideration. He now has the population and distance certificates. Can he still produce them?
  Yes, and it worked. The Tribunal admitted the population certificate and the distance certificate as additional evidence under Rule 29 of the ITAT Rules because they related to the core issue contested and had not been available before the revenue authorities, condoned a 180-day delay, and held on those documents that the land sold was agricultural land situated beyond the prescribed municipal limits and distance in section 2(14)(iii), so that it did not constitute a "capital asset" and the gain was not chargeable as capital gains under section 45. The addition of Rs 1,28,00,000 made ex parte under section 144 as undisclosed short-term capital gain, and sustained by the Commissioner (Appeals), was deleted and the appeal allowed.
• TSC Fashions Pvt Ltd v ITO ITATHelps departmentNo later treatment found
  My client missed the tax audit because the old auditor stopped cooperating. Is that a reasonable cause that kills the s.271B penalty?
  Not on assertion alone. The Tribunal confirmed the penalty because the assessee produced no correspondence, email, letter, complaint or affidavit against the earlier auditor, and showed no proactive steps of its own; a bald plea of auditor non-cooperation is a mere allegation and does not discharge the burden under s.273B.
• Neeraj v PCIT — a s.263 revision directing a s.68 addition against a s.44AD return quashed for want of jurisdiction ITATHelps taxpayerNo later treatment found
  The Principal Commissioner has revised my client's assessment under s.263 and directed the officer to tax his cash deposits under s.68, although he filed under s.44AD and keeps no books. Can that order stand?
  The Delhi Bench quashed it. Once an assessee has surrendered himself to a particular statute he becomes entitled to all its attending benefits; an assessee under s.44AD computes income as a percentage of turnover and is not required to maintain books of account, so the Principal Commissioner's direction to make a s.68 addition was questionable and the revision order suffered from a lack of requisite jurisdiction. The Bench recorded that it has consistently held that invocation of s.263 is not permissible in cases where the assessee files his return under s.44AD.
• Jaya Rinkubhai Bandukwala v ITO, Ward 3(3)(1), Surat ITATCuts both waysNo later treatment found
  The Assessing Officer has levied Rs 30,000 under section 272A(1)(d) — Rs 10,000 for each of three notices I did not answer. Can he multiply the penalty like that, and what can I actually get reduced?
  Yes, the section provides a penalty of Rs 10,000 per default and the Assessing Officer may levy one for each unanswered notice; the Surat Bench said so in terms. But section 273B is not all-or-nothing on the facts: finding that reasonable cause existed for some of the defaults and not for others, the Tribunal restricted the total from Rs 30,000 to Rs 10,000.
• Vatsalabai Karbhari Deore v ACIT ITATHelps taxpayerNo later treatment found
  You missed the notices and got a best judgment assessment. Is the officer's estimate final?
  Nothing was decided about the estimate. The Tribunal set the assessment aside and remitted every issue to the Jurisdictional Assessing Officer for de novo adjudication because the assessee had placed no details before either the Assessing Officer or the Commissioner (Appeals); that the 8 per cent rate was too high was counsel's submission, not a finding. The appeal was allowed for statistical purposes only.
• ACIT v Bidhan Chandra Choudhary — the merchant banker's Rule 3(8)(iii) value fixes the sweat equity perquisite, and a foreign investor's DCF price paid a month later cannot be substituted ITATHelps taxpayerNo later treatment found
  My employer valued my unlisted sweat equity shares through a merchant banker, but the Assessing Officer says the company sold shares to a foreign investor a month later at a far higher price and has taxed me on the difference. Can he do that?
  No, on these facts — and this is stage one, the perquisite that arises on exercise under s.17(2)(vi). The Tribunal held that where the shares are unlisted the fair market value is the value determined by the merchant banker under Rule 3(8)(iii), and that a price fixed under the Reserve Bank of India's foreign direct investment pricing guidelines on a discounted free cash flow basis for an issue to a non-resident investor cannot be substituted for it, because the two sets of provisions deal with altogether different situations. The Revenue's appeal against deletion of a perquisite addition of Rs 4,53,18,900 was dismissed.
• Santosh Kumar v ITO ITATHelps taxpayerNo later treatment found
  The AO has taxed my entire cash deposit as undisclosed income. Can he be made to tax only the presumptive percentage of it instead?
  Yes, where the deposits are the takings of an eligible business. The Tribunal deleted an addition of the whole Rs 25,56,700 deposited and substituted income of Rs 2,05,000, computed at 8% of those deposits under s.44AD, on the footing that the real income and not the entire receipt is what is taxable.
• PME Power Solutions India Ltd v DCIT ITATHelps taxpayerNo later treatment found
  The officer declared your return invalid for non-payment of self-assessment tax and then assessed you under s.143(3) starting from the figures in that very return. Can he do both?
  No. The Tribunal held that once a return is treated as defective and invalid under s.139(9), the only recourse legally available to the Assessing Officer is to frame the assessment under s.144. An assessment under s.143(3) built on the income returned in a return the officer has himself declared invalid cannot stand, and the Tribunal quashed it.
• Masudan Tanti v ITO — s.44AD is unavailable once the claimed turnover crosses the ceiling, but the deposits still cannot be added whole ITATCuts both waysNo later treatment found
  My client asked the officer to tax his bank deposits at eight per cent under s.44AD. The deposits are more than the s.44AD limit and the whole amount has been added. What now?
  Where the deposits said to be the turnover themselves exceed the s.44AD ceiling, s.44AD does not apply — the ceiling is part of the definition of 'eligible business' in the Explanation, not a rate condition. But that does not entitle the Assessing Officer to add the entire deposits: even in a best judgment assessment he must estimate the income, and the Tribunal set aside the CIT(A)'s order for a fresh estimate after the assessee produced the evidence he had withheld below.
• Bright Singh Chelladurai v ITO ITATHelps taxpayerHigh Courts differ
  The officer penalised my client Rs 25,000 under s.271A for not keeping books and then another Rs 1,50,000 under s.271B for not getting them audited. Can he do both for the same year?
  No. Having levied the s.271A penalty for not maintaining books under s.44AA, the officer ought not to have levied a s.271B penalty as well — if no books were kept there was nothing to audit, so s.44AB was not violated. The Tribunal deleted the s.271B penalty and left the s.271A penalty standing.
• Latafat Hussain v ITO (ITAT Jaipur) — stamp value taken on the agreement date because part of the price came by account payee cheque, in AY 2010-11 ITATHelps taxpayerNo later treatment found
  My agreement to sell was in 2005 and the sale deed was registered in 2009, and I took a small part of the price by account payee cheque on the agreement date. Can I use the 2005 stamp value, and does the ten per cent tolerance band help me for an old year?
  On the agreement-date point, yes. The Tribunal directed the Assessing Officer to compute the gain on the stamp (DLC) value as at the date of the agreement, 3 January 2005, and not the date of registration, because Rs.35,000 of the consideration had been received by account payee cheque at the time the agreement was executed and the bank statements were on record. On the tolerance band, the order gives you less than it appears to: paragraph 10 records that on the 2005 value the difference between the agreed consideration and the DLC value was 9.34 per cent, "which is less than the prescribed 10 %" band, but that sentence follows a recital of what the assessee's representative demonstrated, and the operative direction at paragraph 10.2 rests on the agreement-date proviso alone and says nothing about the band. Do not cite this order as authority that the ten per cent band reaches back to AY 2010-11.
• Net Agri Company Pvt Ltd v ITO ITATHelps taxpayer
  The Commissioner (Appeals) accepted my explanation for the investment but then made a fresh addition for cash deposits he spotted in my bank statement, without telling me. Can he do that?
  No. The Delhi Tribunal held that the Commissioner (Appeals) cannot determine taxability from a new source, and cannot enhance without show-causing the assessee. The Assessing Officer had added the investment in property as unexplained under section 69. Having accepted the evidence and deleted most of it, the Commissioner (Appeals) went on to tax cash deposits in the bank account used to repay the bridging loan, treating them as unexplained cash credits under section 68. That was a different exercise from the one the officer had done, it went beyond the Tribunal's earlier remand, and no notice was given. The addition of Rs 1,75,50,000 was deleted.
• Shri Samadhan Rambhau Patil v ITO, Ward-1, Malegaon ITATHelps departmentNo later treatment found
  I explained my cash deposits as loans taken in cash from local farmers and filed their Aadhaar cards and 7/12 extracts. The Assessing Officer added the amount under s.69A because the farmers did not turn up. What happens on appeal?
  Identity documents and land records of the lenders are not enough by themselves. The Pune Tribunal held that Aadhaar cards and 7/12 extracts failed to serve any purpose once the lenders, when summoned, did not confirm the loans, and that the absence of the one-time settlement papers the loans were said to have funded left the explanation unverified at every stage. But because the assessee had in fact produced the farmer-lenders before the Assessing Officer on 20 October 2019 and they could not be examined owing to the officer's own unavailability, and because the Departmental Representative did not controvert that, the Tribunal remanded the issue for de novo verification and allowed the appeal for statistical purposes.
• Shri Madhusudan Dhakad v ITO-1, Harda ITATHelps taxpayer
  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.
• Niranjan Lal Gupta v ITO ITATCuts both waysNo later treatment found
  Neither your original nor your revised return carried the self-assessment tax. The officer ignored that and assessed you on the original return. Is the assessment good?
  No. The Tribunal held that both returns were defective under s.139(9) because the self-assessment tax had not been paid, that the Assessing Officer should have directed the assessee to rectify the defect and had issued no defect notice at all, and that the assessment could not simply be built on the original return. The entire assessment was set aside and the officer directed to pass a fresh order under s.144.
• P. Murali Mohana Rao v Addl. CIT, Range-1, Hyderabad ITATHelps taxpayerNo later treatment found
  The Additional Commissioner has levied Rs 30,000 on me personally, as the chartered accountant representing my client, for not attending on three dates in answer to section 131 summons. Does he even have the power to pass that order?
  On this reasoning, no. Because section 272A(1) imposes Rs 10,000 for each default, the penalty in law was Rs 10,000 per default and not Rs 30,000 in aggregate; and on the thresholds in section 274(2) a penalty of that amount is for the Income-tax Officer to impose, so the Tribunal held the Addl. CIT had no jurisdiction to pass the order. It also held there was reasonable cause under section 273B, that one show-cause notice cannot support penalties for three separate defaults, and that the completion of the client's assessment under section 143(3) rather than section 144 showed the subsequent compliance was good compliance.
• ACIT v Robert Arthur Keltz — where the employee did not render service in India for the whole grant period, only the proportion of the ESOP perquisite relatable to Indian service is taxable in India ITATHelps taxpayerNo later treatment found
  My client came to India part way through the vesting period of his options and exercised them here. The Assessing Officer has taxed the whole perquisite. Can he apportion?
  Yes, on these facts — and this is stage one, the perquisite on exercise. The Delhi Tribunal upheld the Commissioner (Appeals) in holding that because the assessee had not rendered service in India for the whole grant period, only such proportion of the ESOP perquisite as was relatable to the service he rendered in India was taxable in India. The Revenue's appeal was dismissed.
• CBDT letter of 12 December 2017 on defective returns selected under CASS CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  What is the department's own instruction on what an officer must do when a s.139(9) defect has not been cured and the case is under scrutiny?
  The Board's letter states that under the proviso to s.139(9) an assessee can rectify the defect until the assessment order is passed, provided the officer condones the delay, and directs that in pending cases where the defect has not been rectified the officer is immediately to initiate proceedings under s.144, and that where the defect is not removed by the time of passing the assessment order the case is to be concluded by an order under s.144.
• Statutory position — what the ICDS actually govern: s.145(2), s.145(3) and the preamble limits CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer says my client's accounts must be redone under the ICDS. How far do the ICDS actually reach?
  Not as far as the notice usually assumes. The ten ICDS notified under s.145(2) apply only to a person following the mercantile system of accounting, and only for computing income under "Profits and gains of business or profession" and "Income from other sources" — the preamble to every ICDS says in terms that they are "not for the purpose of maintenance of books of accounts", and that where an ICDS conflicts with the Act, the Act prevails to that extent. They do not apply to an individual or Hindu undivided family whose accounts are not required to be audited under s.44AB, and they do not apply to a person on the cash system at all.
• Statutory position — s.124: how an Assessing Officer gets jurisdiction over you, who decides a dispute about it, and the three deadlines in s.124(3) after which you cannot object at all CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The notice has come from an officer in a place I have nothing to do with. Can I say he has no jurisdiction, who decides that, and have I already lost the point by filing my return and answering him?
  Jurisdiction reaches an Assessing Officer through section 120: the Board issues directions, those directions may authorise another authority to issue written orders, and section 124(1) then gives the officer vested with an area jurisdiction over a business whose place or principal place is in that area and over every other person residing in it. A dispute about whether he has jurisdiction is not for him and not for the Tribunal in the first instance: section 124(2) sends it to the Principal Director General, Director General, Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, and to the Board if two of them disagree. The provision that decides cases is section 124(3), which fixes three deadlines — one for a person who has filed a return, one for a person who has not, one where there has been a search or requisition — after which no person shall be entitled to call the jurisdiction in question at all. Section 124(4) then obliges the officer, on a timely objection he does not accept, to refer the matter for determination before he makes the assessment. Whether the section 124(3) bar is absolute is genuinely disputed: the Delhi and Karnataka High Courts have applied it against assessees, and the Gujarat High Court has held it no answer where no order under section 127 transferred the case at all. For a tax year beginning on or after 1 April 2026 the provision is section 242 of the Income-tax Act, 2025, where the bar sits in sub-section (4).
• Statutory position — sections 184 and 185: what a firm loses when it is not assessed as a firm CBDT Circulars & InstructionsCuts both ways
  The AO has invoked section 185 because of a defect in the partnership deed filed with our return. What exactly do we lose, and does the partner get any relief?
  The firm loses every rupee it paid its partners. Section 185 provides that where a firm does not comply with section 184 for any assessment year, it is so assessed that no deduction by way of interest, salary, bonus, commission or remuneration to any partner is allowed in computing its business income. Section 184(5) imposes the same consequence where there is a section 144 failure. The partner is not taxed on the same amounts, because both provisions end by saying those sums are not chargeable under clause (v) of section 28.
• Statutory position — s.234D: interest on a refund granted under s.143(1) that regular assessment shows should not have been granted — the rate, the period, the reduction under sub-section (2), and Explanation 2 for assessment years commencing before 1 June 2003 CBDT Circulars & InstructionsCuts both ways
  We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
  Yes, on the conditions in sub-section (1). Section 234D charges simple interest where a refund is granted to the assessee under s.143(1) and either (a) no refund is due on regular assessment, or (b) the amount refunded under s.143(1) exceeds the amount refundable on regular assessment. The rate is one-half per cent, on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The section was inserted by the Finance Act, 2003 with effect from 1 June 2003, and the words "one-half per cent" were substituted for "two-third" by the Taxation Laws (Amendment) Act, 2003 with effect from 8 September 2003 — both recorded in footnotes printed against the section. Sub-section (2) provides that where, as a result of an order under s.154, s.155, s.250, s.254, s.260, s.262, s.263 or s.264, or an order of the Settlement Commission under s.245D(4), the refund granted under s.143(1) is held to be correctly allowed either in whole or in part, the interest chargeable under sub-section (1) shall be reduced accordingly. Explanation 1 makes a first-time assessment under s.147 or s.153A a regular assessment for the purposes of the section. Explanation 2, which the later editions of the section print and the earlier ones do not, reads: "For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." Which amending Act inserted Explanation 2, and from what date, is not established here — the editions of the section that print it carry no footnotes, and the editions that carry footnotes do not print it.
• Statutory position — s.171: the fiction that a family assessed as undivided continues until a finding of partition is recorded, the s.171(3) order, and what the Explanation means by "partition" CBDT Circulars & InstructionsCuts both ways
  Our family divided years ago and each of us has been showing his own income since. The Assessing Officer has issued a notice to the HUF for those very years and says the HUF is still alive. Can he do that when we have actually separated?
  Yes, unless and until a finding of partition has been recorded under s.171. Section 171(1) creates a fiction: a Hindu family hitherto assessed as undivided is deemed for the purposes of the Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under the section. The machinery is s.171(2) and (3) — a claim made at the time of an assessment under s.143 or s.144, an inquiry after notice to all the members, and a finding recorded by the Assessing Officer as to whether there has been a total or partial partition and the date on which it took place. Severance of status is not enough: the Explanation defines "partition" as a physical division of the property where the property admits of a physical division, and expressly provides that a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition.
• Ranchi Club Ltd v CIT (Patna) High CourtHelps taxpayerOverruled
  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.

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.