PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-3 vs. ABHISAR BUILDWELL P. LTD.

CIVIL APPEAL No. 6580/2021Supreme Court[2023] 7 S.C.R. 89924 April 2023Bench: 1 Judge40 pages
AI SummaryDismissed

What were the facts?

The Supreme Court was hearing appeals concerning the scope of assessment under Section 153A of the Income Tax Act, 1961, following a search under Section 132 or requisition under Section 132A. The core issue revolved around whether the Assessing Officer (AO) could make additions to income in completed or unabated assessments in the absence of any incriminating material found during the search. The Revenue contended that the AO could assess or reassess total income using other available material even without incriminating evidence. The assessee's position, supported by High Court judgments from Delhi (Kabul Chawla) and Gujarat (Saumya Construction), was that additions in completed assessments are permissible only if incriminating material is unearthed during the search.

What did the Supreme Court hold?

The Supreme Court held that in the case of a search under Section 132 or requisition under Section 132A, the Assessing Officer (AO) assumes jurisdiction for block assessment under Section 153A. All pending assessments and reassessments shall stand abated. Crucially, if any incriminating material is found or unearthed, even in respect of unabated or completed assessments, the AO would have the jurisdiction to assess or reassess the total income, taking into account the incriminating material found during the search and other available material, including income declared in returns. However, if no incriminating material is unearthed during the search, the AO cannot assess or reassess income in respect of completed or unabated assessments by relying on other material. In such a scenario, for completed/unabated assessments, no addition can be made by the AO in the absence of any incriminating material found during the search. The Court agreed with the views of the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction. The Court also noted that completed/unabated assessments can be re-opened by the AO under Sections 147/148, subject to their conditions, and these powers are saved.

What were the issues?

1. Whether, in respect of completed or unabated assessments, the Assessing Officer's jurisdiction to make an assessment under Section 153A of the Income Tax Act, 1961, is confined to assessing incriminating material found during a search under Section 132 or requisition under Section 132A? (Mixed question of law and fact, concerning Section 153A). Assessee's Contention: No addition can be made in respect of completed assessments in the absence of any incriminating material found during the search. Relied on Delhi High Court in Kabul Chawla and Gujarat High Court in Saumya Construction. Revenue's Contention: In case of a search, even where no incriminating material is found, the AO can assess or reassess the total income by considering other available material, even in unabated/completed assessments.

Which sections of the Income-tax Act were involved?

Section 153A,Section 132,Section 132A,Section 147,Section 148,Section 158BA,Section 113,Section 143(1)(a),Section 143(3)

AI-generated summary — verify with the full judgment below

A B C D E F G H 899 PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-3 v. ABHISAR BUILDWELL P. LTD. (Civil Appeal No. 6580 of 2021) APRIL 24, 2023 [M. R. SHAH AND SUDHANSHU DHULIA, JJ.] Income Tax Act, 1961 – ss.153A, 132, 132A – Assessment u/s.153A – Scope of – Whether in respect of completed assessments/ unabated assessments, the juri iction 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 – Held: In case of search u/s.132 or requisition u/s.132A, the AO assumes the juri iction for block assessment u/s.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 juri iction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available 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 assess

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 153A

All 18,560 judgments and leading authorities on Section 153A →

Recent GST High Court judgments

Search GST case law →