Section 153C of the Income Tax Act
The decision most relied on for Section 153C is National Thermal Power Co. Ltd. v. CIT (229 ITR 383), cited in 5,834 of the 9,619 judgments on BharatTax that turn on this section.
Leading authorities on Section 153C
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.
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.
Corroborative evidence is essential to support evidence found on third-party premises, and an assessment cannot be based on suspicion, surmises, or conjecture.
An addition to income cannot be made merely on the basis of a difference in valuation of assets or a Valuation Officer's report without establishing actual understatement of consideration or the source of unexplained funds through proper enquiry. The Assessing Officer must conduct proper enquiry and satisfy the conditions for making such additions.
