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Controversy over existence of seized “incriminating material” for re (assessment) under section 153A/153C of the Income Tax Act laid to rest by the Hon’ble Supreme Court!
Lead case: Abhisar Buildwell P. Ltd. Case (CA No. 6580 of 2021) (SC) & Others.
Ratio: Assessment under Section 153A of the Act is linked with the search and requisition actions. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material arising out of Search/requisition; the Assessing Officer would assume the jurisdiction to assess or reassess total income.
Type I cases: Abated/Incomplete Assessments: Irrespective of Incriminating material found or not (de hors); Total Income can be assessed for that Year. It is not clear whether sub.se. 153A(2) is to be resorted to.
Type II cases: Unabated/Completed Assessments: Only if Incriminating material seized; Total Income can be re-assessed
Type III cases: Unabated/Completed Assessments: If No Incriminating material seized; Total Income can not be re-assessed u/section 153A/153C. Assessments quashed, though notices are valid.
Type IV cases: Unabated/completed Assessments: Can be re-opened u/section 147/148 of the Act – Revenue’s Powers for section 148/147 are saved.
Type IV cases and the saving of right of Revenue to issue section 148 notices/reassess under section 147 pose certain interesting scenarios!! Will it go the Ashish Agarwal way?
The copy of the order is as under: