Search assessment for a year already completed, but nothing incriminating was found. Can the officer still add?
No — not under s.153A. For completed or unabated assessments the addition must rest on incriminating material found in the search. But the Court preserved the department's power to reopen those years under ss.147 and 148 instead.
Decided by the Supreme Court (M.R. Shah J and Sudhanshu Dhulia J) on 2023-04-24, reported as (2023) 454 ITR 212 (SC); 293 Taxman 141; 332 CTR 385; 149 taxmann.com 399 (SC); 2023 LiveLaw (SC) 346; Civil Appeal No. 6580 of 2021 and others. It bears on section 153A, section 132, section 132A, section 147, section 148, section 143 of the Income Tax Act 1961, in Search, Survey & Block Assessment and Assessment & Scrutiny matters.
This is the single most cited recent authority in search assessments, and half of it is usually left out. It does not end the department's case — it redirects it to ss.147 and 148, where limitation under s.149 then becomes the real fight.
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A batch of Revenue appeals raised the common question of the scope of assessment under s.153A following a search under s.132 or requisition under s.132A: specifically, whether the Assessing Officer can make additions in completed or unabated assessments when no incriminating material was found during the search. The lead matter was heard with numerous connected appeals.
The conclusions are at para 14. On a search under s.132 or a requisition under s.132A the Assessing Officer assumes jurisdiction for block assessment under s.153A, and all pending assessments and reassessments abate. Where incriminating material is found, the officer may assess or reassess total income even for completed or unabated assessments, taking that material together with the other material available to him including the returned income. Where no incriminating material is unearthed, he cannot assess or reassess completed or unabated assessments on other material - no addition can be made - but the power to reopen under ss.147 and 148 is expressly saved, subject to the conditions those sections impose. The Revenue's appeals and its review petition were dismissed with no costs. The Court also dismissed appeals by two assessees: those of Kesarwani Zarda Bhandar, Sahson, where the Allahabad High Court had upheld reassessment after incriminating material was found (para 15), and those of Dayawanti through legal heir, where additions had been made on incriminating material found in the search (para 16).
Section 153A replaced the block assessment scheme in s.158BA, which had run two parallel assessments and taxed undisclosed income at a special rate; the object of the new section was to do away with parallel assessments and tax undisclosed income at the normal rate. Search assessments under ss.153A and 153C are triggered by a valid search under s.132, whose very purpose is to detect income that cannot be detected in an ordinary assessment, so the foundation of a search assessment is the existence of incriminating material showing undisclosed income found in the search (paras 9.1 and 10). On the second proviso to s.153A, only pending assessments abate; it does not say that completed or unabated assessments abate. If the Revenue's construction were accepted, the second proviso and s.153A(2) would be rendered redundant, which would amount to rewriting the provisions and is not permissible (para 12). The Court expressed complete agreement with the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction, and with the other High Courts taking the same view (para 13).
However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved.
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Handle my notice → Ask a CA on WhatsAppNo — not under s.153A. For completed or unabated assessments the addition must rest on incriminating material found in the search. But the Court preserved the department's power to reopen those years under ss.147 and 148 instead. This was decided by the Supreme Court (M.R. Shah J and Sudhanshu Dhulia J) and bears on section 153A, section 132, section 132A, section 147, section 148, section 143 of the Income Tax Act 1961. It is reported as (2023) 454 ITR 212 (SC); 293 Taxman 141; 332 CTR 385; 149 taxmann.com 399 (SC); 2023 LiveLaw (SC) 346; Civil Appeal No. 6580 of 2021 and others. This is the single most cited recent authority in search assessments, and half of it is usually left out. It does not end the department's case — it redirects it to ss.147 and 148, where limitation under s.149 then becomes the real fight. If it applies to you, the first step is this: Separate the years into abated and unabated; the rule only helps for completed, unabated years.
A batch of Revenue appeals raised the common question of the scope of assessment under s.153A following a search under s.132 or requisition under s.132A: specifically, whether the Assessing Officer can make additions in completed or unabated assessments when no incriminating material was found during the search. The lead matter was heard with numerous connected appeals. The matter was decided on 2023-04-24 by the Supreme Court (M.R. Shah J and Sudhanshu Dhulia J). On those facts the Supreme Court held as follows. The conclusions are at para 14. On a search under s.132 or a requisition under s.132A the Assessing Officer assumes jurisdiction for block assessment under s.153A, and all pending assessments and reassessments abate. Where incriminating material is found, the officer may assess or reassess total income even for completed or unabated assessments, taking that material together with the other material available to him including the returned income. Where no incriminating material is unearthed, he cannot assess or reassess completed or unabated assessments on other material - no addition can be made - but the power to reopen under ss.147 and 148 is expressly saved, subject to the conditions those sections impose. The Revenue's appeals and its review petition were dismissed with no costs. The Court also dismissed appeals by two assessees: those of Kesarwani Zarda Bhandar, Sahson, where the Allahabad High Court had upheld reassessment after incriminating material was found (para 15), and those of Dayawanti through legal heir, where additions had been made on incriminating material found in the search (para 16).
Section 153A replaced the block assessment scheme in s.158BA, which had run two parallel assessments and taxed undisclosed income at a special rate; the object of the new section was to do away with parallel assessments and tax undisclosed income at the normal rate. Search assessments under ss.153A and 153C are triggered by a valid search under s.132, whose very purpose is to detect income that cannot be detected in an ordinary assessment, so the foundation of a search assessment is the existence of incriminating material showing undisclosed income found in the search (paras 9.1 and 10). On the second proviso to s.153A, only pending assessments abate; it does not say that completed or unabated assessments abate. If the Revenue's construction were accepted, the second proviso and s.153A(2) would be rendered redundant, which would amount to rewriting the provisions and is not permissible (para 12). The Court expressed complete agreement with the Delhi High Court in Kabul Chawla and the Gujarat High Court in Saumya Construction, and with the other High Courts taking the same view (para 13). In the words reproduced by the source cited on this page: "However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." The decision followed or applied CIT v. Kabul Chawla [2015] 61 taxmann.com 412 / 234 Taxman 300 / [2016] 380 ITR 573 (Delhi) - affirmed; Pr. CIT v. Saumya Construction (P.) Ltd. [2017] 81 taxmann.com 292 / [2016] 387 ITR 529 (Guj) - affirmed; Pr. CIT v. Gahoi Dal & Oils Mills [2020] 117 taxmann.com 117 (MP) - affirmed; Dayawanti v. CIT [2017] 390 ITR 496 (Delhi) - affirmed.
It was decided by the Supreme Court on 2023-04-24 and is reported as (2023) 454 ITR 212 (SC); 293 Taxman 141; 332 CTR 385; 149 taxmann.com 399 (SC); 2023 LiveLaw (SC) 346; Civil Appeal No. 6580 of 2021 and others. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 153A, section 132, section 132A, section 147, section 148, section 143, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The conclusions are at para 14. On a search under s.132 or a requisition under s.132A the Assessing Officer assumes jurisdiction for block assessment under s.153A, and all pending assessments and reassessments abate. Where incriminating material is found, the officer may assess or reassess total income even for completed or unabated assessments, taking that material together with the other material available to him including the returned income. Where no incriminating material is unearthed, he cannot assess or reassess completed or unabated assessments on other material - no addition can be made - but the power to reopen under ss.147 and 148 is expressly saved, subject to the conditions those sections impose. The Revenue's appeals and its review petition were dismissed with no costs. The Court also dismissed appeals by two assessees: those of Kesarwani Zarda Bhandar, Sahson, where the Allahabad High Court had upheld reassessment after incriminating material was found (para 15), and those of Dayawanti through legal heir, where additions had been made on incriminating material found in the search (para 16). It arises in Search, Survey & Block Assessment and Assessment & Scrutiny matters, on section 153A, section 132, section 132A, section 147, section 148, section 143 of the Income Tax Act 1961, and was decided by M.R. Shah J and Sudhanshu Dhulia J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For each unabated year, ask what incriminating material found in the search supports the addition — and whether it relates to that year. Expect a s.148 notice to follow; check it against the s.149 limitation window straight away.
Still good law. The Revenue's application seeking clarification was not entertained, the Court holding the prayers amounted to a form of review and directing a proper review application. The Delhi High Court in Sanjay Singhal v ACIT (17 December 2024) held the decision does not permit reopening beyond the s.149(1) limitation period. Separately, for searches initiated on or after 1 September 2024, ss.153A to 153D no longer govern — block assessment under Chapter XIV-B (ss.158B to 158BI) was reintroduced by the Finance (No. 2) Act 2024. That finding was checked against a published source, which is linked on this page, on 2026-08-25. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
For searches initiated on or after 1 September 2024 this section is no longer the governing machinery - see the validity note. It still governs every search before that date, which is most of what is in appeal now. Two points on scope. The saved power to reopen under ss.147 and 148 is expressly made 'subject to fulfilment of the conditions' of those sections (para 14(iv)), so it is not an unqualified licence to reassess. And the judgment is not uniformly pro-assessee: appeals by Kesarwani Zarda Bhandar and by Dayawanti through legal heir were dismissed because incriminating material had in fact been found (paras 15 and 16), and the Delhi High Court's judgment in Dayawanti was affirmed. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The conclusions are at para 14. On a search under s.132 or a requisition under s.132A the Assessing Officer assumes jurisdiction for block assessment under s.153A, and all pending assessments and reassessments abate. Where incriminating material is found, the officer may assess or reassess total income even for completed or unabated assessments, taking that material together with the other material available to him including the returned income. Where no incriminating material is unearthed, he cannot assess or reassess completed or unabated assessments on other material - no addition can be made - but the power to reopen under ss.147 and 148 is expressly saved, subject to the conditions those sections impose. The Revenue's appeals and its review petition were dismissed with no costs. The Court also dismissed appeals by two assessees: those of Kesarwani Zarda Bhandar, Sahson, where the Allahabad High Court had upheld reassessment after incriminating material was found (para 15), and those of Dayawanti through legal heir, where additions had been made on incriminating material found in the search (para 16).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My return was only processed under 143(1). Does that stop the department reopening it later?
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The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
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