Section 133A of the Income Tax Act
Income-tax Act, 2025: s.253
Section 133A of the Income-tax Act, 1961 corresponds to section 253 (Powers of survey) of the Income-tax Act, 2025.
Read section 253 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 133A is ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500), cited in 1,030 of the 5,893 judgments on BharatTax that turn on this section.
Leading authorities on Section 133A
For initiating reassessment proceedings under Section 147, the Assessing Officer needs only prima facie material providing a reason to believe that income has escaped assessment. Conclusive proof or the sufficiency/correctness of the material is not required at the stage of issuing the notice under Section 148.
The Supreme Court held that while legitimate tax planning is permissible, transactions structured as a "colourable device" or "subterfuge" solely to avoid tax are impermissible. It mandates a judicial shift to look beyond the form to the substance of a transaction, allowing the lifting of the corporate veil in tax evasion arrangements.
Statements recorded during a survey under Section 133A do not have evidentiary value as Section 133A does not empower examination on oath. Consequently, additions to income cannot be made solely based on such uncorroborated statements without other credible evidence.
For attracting Section 14A disallowance, there must be a proximate cause relating the expenditure to actual tax-exempt income, and such disallowance is not automatic but requires positive material. Additionally, Section 94(7) on dividend stripping only ignores losses to the extent of dividend received for assessment years post-April 1, 2002, allowing the remaining loss.
When books of account are rejected and unaccounted sales or receipts are discovered, the income addition is restricted to the net profit element embedded in these undisclosed transactions, not the entire sale proceeds or receipts, especially if corresponding purchases are not proven to be outside the books.
In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back to the assessee's income.
A statement recorded under duress during a survey, if subsequently retracted, has no evidentiary value and cannot be the sole basis for an income-tax assessment; the assessment should instead rely on audited accounts.
Where purchases are found to be non-genuine or fictitious, a reasonable disallowance of 25% of such purchases or the peak credit, whichever is higher, can be made. This is applied to address unexplained expenditure under Section 69C when actual goods are likely procured from the grey market.
Reassessment of income, especially after a summary assessment under Section 143(1), requires the Assessing Officer to possess fresh, tangible material to form a reason to believe that income has escaped assessment; a mere reappraisal of existing records or a change of opinion without new material is not permissible.
A statement recorded under Section 133A of the Income-tax Act has no evidentiary value because Section 133A does not empower an Income-tax Officer to examine any person on oath.
