Section 132 of the Income Tax Act
Income-tax Act, 2025: ss.247, 249, 251
Section 132 of the Income-tax Act, 1961 corresponds to section 247 (Search and seizure), section 249 (Reasons not to be disclosed) and section 251 (Copying, extraction, retention and release of books of account and documents seized or requisitioned) of the Income-tax Act, 2025.
Read section 247 of the 2025 ActRead section 249 of the 2025 ActRead section 251 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 132 is National Thermal Power Co. Ltd. v. CIT (229 ITR 383), cited in 5,834 of the 14,598 judgments on BharatTax that turn on this section.
Leading authorities on Section 132
Appellate authorities can consider new claims and additional grounds if the relevant facts are already on record. The purpose of assessment is to correctly determine tax liability, allowing both parties to raise issues.
In a search assessment under Section 153A, additions can only be made for completed or non-abated assessment years if incriminating material relevant to those years is found during the search, although notice under Section 153A(1) is mandatorily issued for six assessment years preceding the search.
When two equally plausible interpretations of a taxing provision are possible, or when conflicting views exist from non-jurisdictional High Courts, the interpretation that favors the assessee must be adopted.
An assessment under section 153A is without jurisdiction if there is an absence of incriminating material for an unabated assessment year.
In Section 153A proceedings, the scope of assessment extends to abated proceedings, enabling an assessee to raise fresh legal claims that could have been made in regular assessment proceedings.
For assessments under Section 153C, a notice is legally unsustainable if there is no incriminating material correlated to the specific assessment years for which reassessment is sought.
Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported bogus purchases.
The Commissioner of Income Tax (Appeals) possesses co-terminus powers with the Assessing Officer and can direct the Assessing Officer to perform actions he failed to do, but cannot introduce a new source of income in the assessment. The appellate assessment must be confined to the items of income that were the subject matter of the original assessment.
An assessee must be given an opportunity to cross-examine third parties whose statements are relied upon for adverse findings. Failure to provide this opportunity is a serious flaw rendering the order a nullity.
In search assessments under Section 153A, additions to income are permissible only if incriminating material is found during the search; in the absence of such material, completed assessments cannot be disturbed. A statement recorded under Section 132(4) and later retracted may not, on its own, constitute sufficient incriminating evidence for making additions.