Section 131(1A) of the Income Tax Act
Income-tax Act, 2025: s.246
Section 131(1A) falls under section 131 of the Income-tax Act, 1961, which corresponds to section 246 (Power regarding discovery, production of evidence, etc) of the Income-tax Act, 2025.
Read section 246 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 131(1A) is Pepsico India Holdings (P) Ltd. v. ACIT (370 ITR 295), cited in 249 of the 443 judgments on BharatTax that turn on this section.
Leading authorities on Section 131(1A)
Section 153C of the Income-tax Act is invoked only when it is established that seized documents do not belong to the searched person, or if the searched person disclaims them; the satisfaction note must specifically indicate this fact.
The Supreme Court holds that circulars issued by the Central Board of Direct Taxes (CBDT) are binding on all officers and persons employed in the execution of the Income-tax Act. These circulars are binding even if they deviate from the provisions of the Act, particularly when issued to relieve hardships.
Tax authorities have an obligation to act in accordance with law and assist assessees who are over-assessed due to mistake, misconception, or lack of proper instruction, ensuring only legitimate taxes are collected.
Tax planning is legitimate only if it is within the framework of law. Colourable devices cannot be part of tax planning, and it is wrong to encourage avoiding tax through dubious methods.
Expenditure is capital or revenue in nature based on its aim, object, and resultant advantage to the business.
The assessee bears the burden of proving necessary facts to claim deductions. If the assessee fails to establish these facts, the deduction is not admissible.
Penalty under Section 271(1)(c) is not automatically imposed upon an assessee's failure to contest a quantum addition or if two views are possible; the Assessing Officer must prove the charge of concealment or inaccurate particulars. Furthermore, an Assessing Officer can disallow a claim during assessment if it is patently false on examination of facts.
The first appellate authority, the Commissioner (Appeals), cannot enhance an assessment by considering a new scope or source of income that was not part of the original assessment proceedings. Its power to enhance under Section 251(1)(a) is restricted to what was originally assessed.
