PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-3 versus ABHISAR BUILDWELL P. LTD.

Citation: [2023] 7 S.C.R. 899 · Decided: 24-04-2023 · Supreme Court of India · Disposal: Dismissed

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Judgment (excerpt)

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PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-3
v.
ABHISAR BUILDWELL P. LTD.
(Civil Appeal No. 6580 of 2021)
APRIL 24, 2023
[M. R. SHAH AND SUDHANSHU DHULIA, JJ.]
Income Tax Act, 1961 – ss.153A, 132, 132A – Assessment
u/s.153A – Scope of – Whether in respect of completed assessments/
unabated assessments, the jurisdiction of AO to make assessment is
confined to incriminating material found during the course of search
u/s.132 or requisition u/s.132A or not – Held: In case of search
u/s.132 or requisition u/s.132A, the AO assumes the jurisdiction for
block assessment u/s.153A – All pending assessments/reassessments
shall stand abated – In case any incriminating material is found/
unearthed, even in case of unabated/completed assessments, the
AO would assume the jurisdiction to assess or reassess the ‘total
income’ taking into consideration the incriminating material
unearthed during the search and the other material available
including the income declared in the returns – In case no
incriminating material is unearthed during the search, the AO cannot
assess or reassess taking into consideration the other material in
respect of completed assessments/unabated assessments– Thus, in
respect of completed/unabated assessments, no addition can be made
by the AO in absence of any incriminating material found during
the search u/s.132 or requisition u/s.132A – View taken by the Delhi
High Court in Kabul Chawla and the Gujarat High Court in Saumya
Construction case is agreed with.
Income Tax Act, 1961 – s.153A – Object and purpose of –
Discussed.
Dismissing the appeals and the review petition, the Court
HELD: 1.1 That prior to insertion of Section 153A in the
statute, the relevant provision for block assessment was under
Section 158BA of the Act, 1961. The erstwhile scheme of block
assessment under Section 158BA envisaged assessment of
‘undisclosed income’ for two reasons, firstly that there were two
[2023] 7 S.C.R. 899
899
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SUPREME COURT REPORTS
[2023] 7 S.C.R.
parallel assessments envisaged under the erstwhile regime, i.e.,
(i) block assessment under section 158BA to assess the
‘undisclosed income’ and (ii) regular assessment in accordance
with the provisions of the Act to make assessment qua income
other than undisclosed income. Secondly, that the ‘undisclosed
income’ was chargeable to tax at a special rate of 60% under
section 113 whereas income other than ‘undisclosed income’ was
required to be assessed under regular assessment procedure
and was taxable at normal rate. Therefore, section 153A came to
be inserted and brought on the statute. Under Section 153A
regime, the intention of the legislation was to do away with the
scheme of two parallel assessments and tax the ‘undisclosed’
income too at the normal rate of tax as against any special rate.
Thus, after introduction of Section 153A and in case of search,
there shall be block assessment for six years. Search
assessments/block assessments under Section 153A are
triggered by conducting of a valid search under Section 132 of
the Act, 1961. The very purpose of search, which is a prerequisite/
trigger for invoking the provisions of sections 153A/153C is
detection of undisclosed income by undertaking extraordinary
power of search and seizure, i.e., the income which cannot be
detected in ordinary course of regular assessment. Thus, the
foundation for making search assessments under Sections 153A/
153C can be said to be the existence of incriminating material
showing undisclosed income detected as a result of search. [Para
9.1][932-G-H; 933-A-D]
1.2 As per the provisions of Section 153A, in case of a search
under Section 132 or requisition under Section 132A, the AO
gets the jurisdiction to assess or reassess the ‘total income’ in
respect of each assessment year falling within six assessment
years. However, it is required to be noted that as per the second
proviso to Section 153A, the assessment or re-assessment, if
any, relating to any assessment year falling within the period of
six assessment years pending on the date of initiation of the search
under Section 132 or making of requisition under Section 132A,
as the case may be, shall abate. As per sub-section (2) of Section
153A, if any proceeding initiated or any order of assessment or
reassessment made under sub-section (1) has been annulled in
appeal or any other legal proceeding, then, notwithstanding
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anything contained in sub-section (1) or section 153, the
asses

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