Revenue files MA in SC seeking clarification regarding applicability of judgement in the light of provisions of Section 150 of IT Act 1961
After the judgement of Supreme Court in the case of Abhisar Buildwell Pvt ltd was announced on 24th April, 2023, the Income-tax Department has filed a Miscellaneous Application on 26th April, 2023 seeking clarification regarding applicability of the judgement in the light of provisions of Section 150 of the Income-tax Act,1961 which deals with limitation in respect of assessment/reassessment in pursuance to finding/directions. It will be interesting to see the result of this MA as this will probably decide the course of action, the department will take in the light of Abhisar Buildwell case as to issue of notices u/s 147/148
in respect of those years where there was no incriminating material found as a course of search which has other become barred by limitation.
In these circumstances, the Revenue is moving this petition seeking clarification before this Hon’ble Court. It is a matter of fact that the amended Section 153A came into force in 2003 till it got substituted in 2021. Assessments therefore under 153A
could have been passed during this period covering almost 18 years. Having initiated proceedings under Section 153A the assessing officers would have completed the proceedings by bringing to tax such incomes the source materials of which could have been gathered by the AO other than the search and inspite of having found no incriminating materials, would have completed the assessments under section 153A
bringing these incomes to tax, since the AO was under a bona fide belief that all incomes must be part of the assessment made under section 153A.
Assessments cannot be made U/S 153A in case no incriminating evidence is found during search:
Core issue involved in the appeals is the scope of assessment u/s 153A. question posed for consideration is, as to whether in respect of completed assessments/unabated assessments, whether the jurisdiction of AO to make assessment is confined to incriminating material found during the course of search u/s 132 or requisition u/s 132A or not
Observations of the Hon Supreme Court on the issue:
1. In case of search u/s 132 or requisition u/s 132A, the AO assumes the jurisdiction for block assessment u/s 153A.
2. All pending assessments/reassessments shall stand abated.
3. 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.
4. 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.
5. 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 u/s 132 or requisition under Section 132A.
6. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers u/s 147/148, subject to fulfilment of the conditions as envisaged/mentioned u/s 147/148 and those powers are saved.