PCIT Vs Surendra L Hiranandani (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeals under Section 260A of the Income Tax Act concerning the exercise of revisionary powers under Section 263 in assessments pursuant to search. The Revenue raised the question whether the Principal Commissioner of Income Tax could invoke Section 263 where an assessment order passed after a search was prejudicial to the interests of the Revenue despite there being no addition other than that arising from incriminating material in an unabated assessment year. The Court noted that the issue was covered by the Supreme Court’s decision in Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell (P) Ltd. It observed that the Supreme Court held that completed or unabated assessments are not intended to be reopened unless incriminating material relating to the relevant assessment year is found during the search, and that the object of Section 153A is to bring to tax undisclosed income found during the search or requisition. Holding that the issue stood concluded by the Supreme Court decision in favour of the assessee, the High Court held that no substantial question of law arose and dismissed the appeals.
Core Issue. The principal issue before the Bombay High Court was whether the Principal Commissioner could invoke the revisional jurisdiction under section 263 to revise a search assessment completed under section 153A for an unabated assessment year, where the Assessing Officer had made no addition except on the basis of incriminating material found during the search.
