Section 113

Section 113 — the law in short

What the courts have decided on section 113, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Vatika Township P Ltd Supreme CourtHelps taxpayer
  An amendment adds a new levy. Does it reach back to earlier years?
  Not unless the statute says so. Legislation is presumed not to operate retrospectively, and that presumption applies with full force where the amendment imposes a new burden. Only clarificatory or beneficial amendments may be read back.
• T. S. Balaram, ITO v Volkart Brothers Supreme CourtHelps taxpayer
  What actually counts as a 'mistake apparent from the record' under s.154?
  An obvious and patent mistake. Not one that must be established by a long drawn process of reasoning on points where two opinions are conceivable. A decision on a debatable point of law cannot be rectified.
• Indus Finance Corporation Ltd v CIT High CourtHelps department
  The appeal has been decided against me. Can I now file a section 154 application raising the point I dropped in that appeal?
  No. Section 154(1A) permits rectification only in relation to a matter OTHER than one considered and decided in appeal or revision, and the Madras High Court held that what is excluded from rectification is what has already been the subject matter of appeal. A point that was raised in the appeal and then abandoned is a new plea dressed up as a rectification, not a mistake apparent from the record, and a section 154 application is not a second chance at a plea you gave up.
• T.S. Kumarasamy v Assistant Commissioner of Income-Tax ITATCuts both ways
  In my block assessment the officer said my seized books were unreliable, and then taxed the loan entries in those same books as undisclosed income. Can he have it both ways?
  No. The Chennai Bench deleted the addition of Rs 1.68 crores. An officer who doubts the veracity of the accounts cannot at the same time rely on entries in them to make an addition; that is blowing hot and cold in the same breath. Section 132(4A) requires the contents of books found in a search to be presumed true, so it is not open to the officer to say the loan entries are false, and loans recorded in the books are not undisclosed income within section 158B(b). The estimate that half the remaining creditors were bogus, drawn from an enquiry with four out of 43 whose report was never put to the assessee, was arbitrary. The Rs 50 lakhs admitted on oath, however, could not be retracted.
• Statutory position — which regime governs a search: the four dating windows and the revived Chapter XIV-B from 1 September 2024 CBDT Circulars & InstructionsCuts both ways
  A search was carried out at my client's premises in March 2025 and the notice quotes section 158BC. My whole file of authority is on section 153A. Which law actually applies to him?
  Chapter XIV-B, as substituted by section 49 of the Finance (No. 2) Act 2024 with effect from 1 September 2024. Section 158BA(1) applies the revived Chapter to every search initiated under section 132, and every requisition under section 132A, on or after 1 September 2024, and to nothing earlier. Section 153A cannot apply to him at all: sub-section (1) of that section is by its own words confined to a search initiated after 31 May 2003 but on or before 31 March 2021.
• Statutory position — the block charge: sixty per cent under section 113, interest at one and a half per cent, and a flat fifty per cent penalty under section 158BFA(2) CBDT Circulars & InstructionsCuts both ways
  What will a block assessment actually cost my client, and is there any way to keep the penalty off?
  Tax at sixty per cent of the total undisclosed income of the block period under section 113, plus surcharge under the proviso; interest under section 158BFA(1) at one and a half per cent per month where the block return is late or not filed; and a penalty under section 158BFA(2) of a sum 'equal to fifty per cent of tax so leviable' on the undisclosed income determined by the Assessing Officer. The first proviso to section 158BFA(2) gives complete immunity from that penalty, and from penalty under sections 271AAD(1), 271D, 271DA and 271E for the block period, if four conditions are met — the return was furnished under section 158BC(1)(a), the tax on it was paid or the seized money offered for adjustment, evidence of payment accompanied the return, and no appeal is filed against the assessment of the income shown in the return.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.