Pr. Commissioner Of Income Tax vs. Abhisar Buildwell P. Ltd. - (Supreme Court) (24 Apr 2023)

No addition can be made by the Assessing Officer in absence of any incriminating material relating to completed assessments

MANU/SC/0434/2023

Direct Taxation

The core issue involved in the present batch of appeals is the scope of assessment under Section 153A of the Income Tax Act, 1961. According to the Revenue, the Assessing Officer ( ‘AO’) is competent to consider all the material that is available on record, including that found during the search, and make an assessment of ‘total income’. Some of the High Courts have agreed with the said proposition. However, according to the respective assessees and as per some of the High Courts’ decisions, if no assessment proceeding is pending on the date of initiation of the search, the AO may consider only the incriminating material found during the search and is precluded from considering any other material derived from any other source.

In case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A. All pending assessments/reassessments shall stand abated. In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns.

In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. Review petition preferred by the Revenue are dismissed.

Tags : ASSESSMENT ADDITIONS JURISDICTION