Landmark Cases on Search and Seizure Assessments
384 decisions, ranked by how many judgments on BharatTax rely on them.
An addition can be limited to the extent supported by evidence, even if a broader claim was made.
Action under section 132A, followed by a deemed search, requires a 'reason to believe' that monies would have escaped assessment had the requisition not taken place. Assessments made without such belief are liable to be quashed.
A search is held to be valid when conducted under similar facts and circumstances, as decided by the Delhi High Court.
In search and seizure proceedings, the Assessing Officer must provide the assessee with all critical information seized from computers, not just a portion, to ensure a fair assessment.
Recording of a satisfaction note by the Assessing Officer of the searched person is a mandatory prerequisite for assuming jurisdiction to issue a notice under section 153C of the Income-tax Act, 1961. This requirement applies even when the Assessing Officer of the searched person and the 'other person' are the same.
A statement made under section 132(4) alone, without reference to other material discovered during a search and seizure, cannot empower the Assessing Officer to frame a block assessment or make additions under section 153C.
The authorization of a search is distinct from the initiation of a search. A search is initiated only when it has actually commenced or begun.
The Supreme Court admits Special Leave Petitions (SLPs) on issues related to search and seizure assessments and the scope of assessments under Section 153A read with Section 132.
Assessments arising from incriminating material found during a third-party search must be made under section 153C, not section 147, unless fresh information is collected otherwise.
Statements made under Section 132(4) of the Income-tax Act, 1961, during a search and seizure operation can be retracted, but such retractions must be substantiated.
If an addition of undisclosed income is made solely on the basis of a statement recorded under section 132(4) without corroborating material evidence, such a statement is not conclusive, and no addition can be made.
The Gujarat High Court examined the legality of a warrant of authorization and subsequent seizure of cash under Section 132A of the Income Tax Act, where the cash was found with a cotton broker apprehended by police.
A preliminary report from the CBI does not constitute 'information' sufficient for an income-tax officer to form a 'reason to believe' that income has escaped assessment, which is a prerequisite for authorizing a search.
Estimation of undisclosed sales in the absence of corroborative material found during search is not permitted. Ad-hoc additions are not permissible in law.
Income not unearthed as a result of a search or requisition cannot be used to proceed against the assessee. Statements made by third parties after the search, if not part of the search sequence, are of no consequence.
An assessee is not obliged to volunteer an explanation on the manner of determining or substantiating undisclosed income during a search under Section 132(4) unless specifically asked by the Authorized Officer. If the manner of earning undisclosed income is not inquired into during the search, an adverse inference cannot be taken against the assessee.
Estimation of income is permissible even in search assessments under Section 158BB, provided there is supporting evidence like sale slips, bills, and recorded statements.
Where seized documents indicate unaccounted transactions, the Assessing Officer can estimate undisclosed income. The onus is on the assessee to prove that the apparent state of affairs is not the real state of affairs.
Evidence found during a search indicating understatement of income for a specific period can be used to extrapolate income for that period. However, this evidence cannot be used to determine income for other periods where no incriminating documents were found.
An assessment under Section 153A does not require the assessment to be based on seized material, and the absence of seized material does not render the assessment void. Section 153A can be invoked solely because a search has taken place.
The Supreme Court has admitted appeals on the issue of whether additions can be made in search assessments even in the absence of incriminating material.
Assessments based on share capital or premium require incriminating material or documents to be found and seized during the assessment proceedings.
The preconditions for exercising powers under Section 132 of the Income Tax Act are subject to judicial review. If these preconditions are absent, the authorisation and subsequent proceedings are vitiated. While the sufficiency of information cannot be examined, the existence and relevance of the information forming the basis of belief can be.
The date of handing over of material, not the date of search, is the reference date for computing the ten-year block period for initiating action under Section 153C of the Income-tax Act.
A reassessment based on material found during a search is justified, even if the Assessing Officer made an incorrect presumption in the assessment order. The presumption under section 132(4A) is rebuttable, but failure to rebut it is a finding of fact, and no substantial question of law arises.
The Assessing Officer must record satisfaction having jurisdiction over the searched person before issuing a notice under Section 158BD. Failure to record such satisfaction renders the assessment proceedings under Section 158BD void for want of jurisdiction.
A notice issued under section 153A cannot survive if it is not founded on a search conducted under section 132, and a defective notice cannot be saved by section 292BB.
Assessment under section 153A can be made even if no incriminating material is found during a search, and statements recorded during the search can be relied upon. However, this judgment has been stayed by the Supreme Court.
The Assessing Officer (AO) can initiate action under section 147 to bring to tax material found in a search, even if the initial search was under section 132, provided the material relates to undisclosed income of a person other than the one searched.
Additions under Section 153A are not justified in the absence of incriminating material, even if the assessee refused to sign a waiver.
Section 153C of the Income-tax Act cannot be invoked if no incriminating document or evidence against the assessee is discovered during a search under Section 132.
Unaccounted cash receipts found in seized documents during a search are additions that can be made by the Assessing Officer.
A statement recorded under Section 132(4) can form the basis for a block assessment order, even if the assessee later retracts it.
No assessment can be made under Section 153A/153C if assessment proceedings were already concluded and no incriminating material was found during a subsequent search.
