Section 153A

Section 153A — the law in short

What the courts have decided on section 153A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• PCIT v Ramesh Chandra Rai Supreme CourtHelps taxpayer
  The AO has added my share of the syndicate's profit straight to my own return. Can he do that without assessing the syndicate?
  No. An association of persons is a separate person under s.2(31) and its income has to be assessed in its own hands. The Assessing Officer cannot bypass that and club the member's share, and the disallowances he thinks the syndicate should have suffered, into the member's individual assessment. Section 86 then decides what, if anything, the member includes.
• CIT v Jasjit Singh Supreme CourtHelps taxpayer
  A search was made on someone else and my papers were found. From which date are my six years counted - the search, or when my Assessing Officer got the papers?
  From the date your Assessing Officer received the material. The Supreme Court held that the proviso to section 153C(1) does not deal only with abatement: it also fixes the date from which the six year period is reckoned for the person who was not searched. The Revenue's argument that the proviso is confined to abatement, so that the period relates back to the date of the search on the other person, was held insubstantial and without merit. The Court approved the Delhi High Court's reasoning in SSP Aviation and dismissed the Revenue's appeals.
• Dy. CIT v U.K. Paints (Overseas) Ltd Supreme CourtHelps taxpayer
  A section 153C assessment was made on me after a search on someone else, but nothing incriminating about me was found. Does the Abhisar Buildwell rule protect me too?
  Yes. The Supreme Court dismissed a batch of Revenue appeals, holding that where no incriminating material was found during the search — either from the assessee or from the third party — the assessments under section 153C were rightly set aside by the High Court. The Court declined to interfere with those judgments. It did, however, record on the Revenue's request, made on the strength of Abhisar Buildwell, that it remains open to the Revenue to initiate reassessment proceedings under sections 147 and 148 in accordance with law, if that is permissible under the law.
• PCIT v Abhisar Buildwell P Ltd Supreme CourtCuts both ways
  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.
• ITO v Vikram Sujitkumar Bhatia Supreme CourtHelps department
  The search was before June 2015 but the notice came later. Which version of s.153C applies?
  The amended one. The 2015 amendment, which changed 'belongs to' into 'pertains to', applies to searches conducted before 1 June 2015 as well, because the trigger is when the material reaches the officer having jurisdiction over the other person.
• PCIT v Mahagun Realtors P Ltd Supreme CourtHelps department
  Is an assessment on an amalgamated company always void?
  No. Corporate death on amalgamation does not by itself invalidate an assessment — it depends on the terms of the amalgamation and the facts, including whether the department was told and how you conducted yourself. Maruti Suzuki was distinguished.
• CIT v Sinhgad Technical Education Society Supreme CourtHelps taxpayer
  The seized documents say nothing about the years being assessed. Can s.153C still be used for them?
  No. The incriminating material must pertain to the assessment years in question, with a document-wise correlation to each. That is a jurisdictional requirement, and without it the notice for those years cannot stand.
• DGIT (Investigation) v Spacewood Furnishers P Ltd Supreme CourtHelps department
  Can I demand the satisfaction note and the reasons recorded before a search warrant was issued against me, and get the search quashed if they look thin?
  No, not at that stage. The Supreme Court held that reasons for the belief under section 132 must be recorded, but need not be communicated to the person searched when the authorisation is issued; the material is disclosed only when assessment proceedings begin after the search. On a writ challenge the reasons may be placed before the court, and the court may examine their relevance to the formation of belief, but not their sufficiency or adequacy. The Delhi High Court had gone into sufficiency, reproduced the satisfaction notes in detail and suspected the file was manipulated; its order was set aside and the search restored.
• K.K. Builders v DCIT High CourtHelps taxpayerNo later treatment found
  I argued before the Tribunal that the s.153D approval was mechanical and its order says nothing about it. Can I take that straight to the High Court?
  Not usefully. The Kerala High Court declined to answer any issue affirmatively, set aside the Tribunal's order and remitted the appeal for fresh consideration, because the Tribunal had recorded the s.153D ground as one of three issues before it and had not specifically answered it. Every relevant issue must receive the Tribunal's attention before the High Court can adjudicate on it as an appellate forum.
• Saroj Kumar Sahoo v National Faceless Assessment Centre High CourtHelps departmentNo later treatment found
  My scrutiny assessment was still running when they searched me in November 2024. Section 158BA(2) says a pending assessment abates. Can I have the assessment order quashed in a writ on that ground alone?
  Not on that ground alone. The Orissa High Court accepted that a search initiated on or after 1 September 2024 puts the case in the revived block assessment regime of Chapter XIV-B and that s.158BA(2) abates a pending assessment for any year in the block period, but it refused to quash the order because nothing on the record showed that the search had unearthed any undisclosed income of this petitioner, and it relegated him to his appeal.
• PCIT v KRBL Infrastructure Ltd High CourtHelps taxpayerNo later treatment found
  The officer accepts my lender exists but says the lender's own purchases were bogus. Do I have to explain where the lender got the money?
  No, not for an assessment year before 2023-24. Once identity, creditworthiness and genuineness are established the assessee does not have to prove the genuineness of the funds in the lender's hands, and the officer cannot travel into the lender's own purchases without material connecting them to the assessee. The requirement to explain the source of the source of a loan came in with the Finance Act 2022 and operates from assessment year 2023-24.
• Raj Kumar Kedia v Income Tax Office High CourtHelps departmentNo later treatment found
  My prosecution sanction under s.279(1) was signed by the Principal Director of Income Tax (Investigation), not the Principal Commissioner. Is the sanction bad, and can I say the complaint is premature because no assessment has been made?
  Neither point succeeded. 'Commissioner' in s.279 is read with the definition in s.2(16) and the hierarchy in s.116, so it means and includes the Director and the Principal Director of Income Tax; a sanction by the Principal Director (Investigation) is by a competent authority under a different nomenclature. The complaint is not premature merely because assessment proceedings had not been completed, P. Jayappan being applied.
• Anurag Dalmia v Income Tax Office High CourtHelps taxpayerNo later treatment found
  The Tribunal has deleted the additions and the penalty has been cancelled. The criminal complaint is still pending on exactly the same allegations. Does it survive?
  No, where the complaint rests on the same material. The Delhi High Court quashed complaints under s.276C(1)(i), s.277(1) and s.276D, holding that once the Tribunal had set aside the additions on merits and the penalty had been cancelled, no offence survived and quashing of the prosecution followed automatically. It also held that the presumption of a guilty mind under s.278E arises only if a prima facie case is disclosed in the complaint.
• Neeraj Bharadwaj v ACIT High CourtHelps taxpayerNo later treatment found
  The seized material shows a cash payment made in an earlier year. Can six later years be reopened under s.153C on the strength of it?
  No. A s.153C notice can be issued for an assessment year only if the Assessing Officer is satisfied that the seized books, documents or assets have a bearing on the determination of the total income for that year. Material about a transaction in one financial year says nothing about the years that follow, and notices for those years cannot stand.
• PCIT v Prabodh Kumar Tiwari High CourtCuts both waysNo later treatment found
  The department says the section 278E presumption means I must face the whole trial. Has any court actually held the presumption rebutted, and on what material?
  Yes. The Delhi High Court dismissed the department's leave petitions and let an acquittal under section 276CC stand, holding that the statutory presumption of a culpable mental state under section 278E had been rebutted. It applied the burden at its strictest - once the presumption is triggered the accused must disprove wilful default, and to the criminal standard - and still found it discharged on the Commissioner's own findings and the surrounding circumstances. But the Court reached that result on its own reasoning, and expressly rejected the appellate court's ground that cancellation of a penalty under section 271(1)(b) vitiates a prosecution under section 276CC.
• PCIT v Praveen Sawhney High CourtHelps taxpayerNo later treatment found
  The Department says my search assessment is in time because it made a reference to a foreign tax authority and gets a year excluded under s.153B. The reference was for years the treaty did not cover. Does the exclusion still apply?
  No. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed.
• Shivani Madan v PCIT High CourtHelps taxpayerNo later treatment found
  My husband and I are both on the sale deed. Must half the annual value be taxed on me?
  No. The Delhi High Court held that merely signing the instrument of conveyance raises no presumption that the income is to be assessed in that person's hands; taxability must reflect who actually obtained the benefit of the property, so an equal share cannot be assumed where the deed is silent.
• PCIT v MDLR Hotels Pvt Ltd High CourtHelps taxpayerNo later treatment found
  The Additional Commissioner approved my search assessment along with hundreds of others in a single letter that says nothing but 'approved'. Is that enough under s.153D?
  No. Where the approving authority accorded approval to 246 proposed assessments by one letter that merely directed that the orders be passed before limitation and copies sent for record, the Delhi High Court held there was no substantial question of law in the Tribunal's conclusion that the approval was mechanical, and dismissed eighteen Revenue appeals. Approval that neither mentions the seized material nor shows that the draft orders were examined is a ritual, not the safeguard s.153D creates.
• PCIT v Shiv Kumar Nayyar High CourtCuts both ways
  Does a single, same-day approval covering many years and many cases satisfy s.153D, or does it vitiate the assessment?
  The approving authority granted one approval covering assessment years 2011-12 to 2017-18 and cleared 43 cases in a single day. The Delhi High Court held that approval under s.153D cannot be a ritualistic formality or rubber stamping and must reflect an appropriate application of mind, and upheld the Tribunal's annulment of the search assessments.
• Saksham Commodities Ltd v ITO High CourtHelps taxpayer
  The satisfaction note points to material for one year, but notices under s.153C have come for the whole block of six. Can they stand?
  No. Section 153C confers a power; it does not compel its use across the block. Before issuing a notice the Assessing Officer must identify the assessment year or years to which the seized material relates or which it is likely to affect, and must be satisfied that it is likely to bear on the total income of those years. The proceedings are confined to those years. Where the material speaks to one year, notices for the remaining years of the block are unsustainable, and if the Revenue says a document is incriminating for several years the satisfaction note must record reasons for saying so.
• PCIT v Ojjus Medicare P Ltd High CourtCuts both ways
  How do I count the six and the ten assessment years for a s.153C notice, and does the Rs 50 lakh figure have to be met year by year?
  Count them from different points, and no. For a person who was not searched, the first proviso to section 153C moves the starting point: the date on which the seized books, documents or assets are handed to his own Assessing Officer stands in place of the date of the search. From that point the six assessment years are the six that immediately precede the assessment year relevant to that previous year - the year of the handing over is excluded and treated as the zero year. The further block of 'relevant assessment years' under Explanation 1 to section 153A is not counted the same way: it runs backwards from the END of that assessment year, that is from the 31st of March, and the tenth year is the terminal point. On the money threshold, the Rs 50 lakh in clause (a) of the fourth proviso is satisfied if the escaped income meets the benchmark cumulatively or in the aggregate; it does not have to be reached in each year separately.
• PCIT v Forum Sales Pvt Ltd — an estimate cannot be made without first rejecting the books under s.145(3) High CourtHelps taxpayer
  The Assessing Officer has disallowed forty per cent of my client's purchases on an estimate, but has not rejected the books. Is that open to him?
  No. The Delhi High Court held that it is the settled position of law that the books of account have to be necessarily rejected before the Assessing Officer proceeds to a best judgment assessment on fulfilment of the conditions in the Act, and that any pick and choose method of rejecting certain entries while accepting others, without appropriate justification, is arbitrary. Since the additions in question had been made on an estimate basis without rejecting the books, no substantial question of law arose and the Revenue's appeals were dismissed.
• Prateek Chitkara v Union of India High CourtCuts both waysNo later treatment found
  There is a look-out circular against me while my Black Money Act appeal is pending. Can I get it lifted, and does the appeal need money deposited first?
  The look-out circular was not quashed but was converted into an intimation of arrival and departure under clause 6(I) of the Office Memorandum dated 22 February 2021, on conditions including security over property, the Court holding that this was not a case detrimental to the economic interest of the country as there was no allegation of siphoning of public funds and no criminal proceedings had been initiated despite the demand. On the appeal, the Court recorded that no amount had been deposited under Rule 6(4) of the Black Money Rules, which requires the tax with penalty and interest on the liability not objected to by the assessee to be paid before an appeal under s.15(1) is admitted.
• ACIT v Satish Kumar Keshri High CourtHelps taxpayerNo later treatment found
  The search on me turned up nothing but the AO still made additions for an old year. Can he?
  Where the assessment for a year stood completed before the search and nothing was pending to abate, an order under s.153A cannot simply reopen it. A completed assessment can be reassessed under s.153A only on incriminating material found in the search having some nexus to undisclosed income - and the Court left that route open, upholding a remand to the Assessing Officer to reassess if such material exists.
• ACIT v Serajuddin & Co High CourtCuts both ways
  What must an approval under s.153D actually show on its face, and does last-minute bulk approval survive?
  Draft search assessments were sent to the Additional CIT two days before limitation expired and approval issued with nothing to show the drafts had been read. The Orissa High Court held that while elaborate reasons are not required, there must be some indication that the approving authority examined the draft orders and found they met the requirements of law. The assessments were held invalid, and the Supreme Court later dismissed the Revenue's SLP.
• PCIT v Jai Maa Jagdamba Flour Private Limited High CourtHelps taxpayer
  After a search on or after 1 July 2012, can the officer levy penalty under s.271(1)(c) instead of s.271AAB?
  No, not for the specified previous year. The Jharkhand High Court held that s.271AAB opens with a non obstante clause and excludes s.271(1)(c) where the undisclosed income relates to the specified previous year. Where the search was on 3 September 2014 the penalty, if any, had to be levied under s.271AAB, and because the assessee had admitted nothing in a s.132(4) statement and paid no tax on admitted income, the case fell under clause (c) of s.271AAB(1). The penalty actually levied under s.271(1)(c) could not stand. The Court also held it immaterial that no incriminating document had been found, because the statute keys the choice of section to the date of the search.
• Xiaomi Technology India Private Limited v DCIT High CourtHelps taxpayer
  The Assessing Officer has provisionally attached our deposits under s.281B saying a large demand is likely. Is an expected demand enough?
  No. A mere apprehension that huge tax demands are likely to be raised on completion of assessment is not enough. The officer must record his own formation of opinion, on tangible material, that the assessee is likely to defeat the demand and that attachment is necessary - not merely expedient - to protect the revenue, and the attachment must be proportionate. An order resting on the Investigation Wing's and the Transfer Pricing Officer's findings is borrowed satisfaction, and the Principal Commissioner's approval is not an empty formality.
• Suresh Kumar Agarwal v Union of India High CourtHelps taxpayer
  I filed my post-search return late, paid the tax with interest, no penalty was ever levied and the additions were deleted in appeal. Can the section 276CC prosecution still go on?
  No. The Jharkhand High Court quashed the prosecution as an abuse of the process of law. Three things weighed with the Court: the department had accepted the return with interest, and where the officer levies interest it must be presumed that he extended the time for filing, which excludes wilful default; no penalty proceeding under section 271(1)(a) had been initiated at all, though the provision was available; and the first appellate authority had by order dated 3 July 2019 set aside the whole of the protective assessment. Applying Gopal Ji Shaw, Gujarat Travancore Agency, Autofil, G.L. Didwania and K.C. Builders, the Court held mens rea could not be made out and quashed the complaint and the cognizance order.
• Harsh Dipak Shah v Union of India (Gujarat) High CourtHelps taxpayerNo later treatment found
  Is 20% a floor? Can the Commissioner order me to deposit less — 5% or 10% — pending appeal?
  Yes. The Gujarat High Court held there is nothing magical about the figure of 20%: it is a starting point, not a floor, and the authority may direct 5% or 10% instead if the equities so require. The discretion under s.220(6) is coupled with a duty to be exercised judicially on prima facie case, financial stringency and balance of convenience. Note the limits of what that reasoning produced here: of the three writ applications heard together the Court allowed only Special Civil Application No. 19804 of 2021, setting aside the order and remitting it for fresh consideration, and in the two connected applications it expressly declined to interfere having regard to the quantum of the amount involved, leaving those applicants to move the Commissioner (Appeals).
• Bhupendra Harilal Mehta v Pr. CIT High CourtHelps taxpayerJudgment not reachable
  My Form 3 charges the higher search-case amount because the addition against me came out of a search on somebody else. Is mine a 'search case' under the 2020 scheme?
  Not on these facts. Row (b) of the Table to section 3 of the Direct Tax Vivad se Vishwas Act, 2020 applies only where the tax arrear includes tax, interest or penalty determined in an assessment made on the basis of a search under section 132 or a requisition under section 132A. The Bombay High Court set aside the Form 3 and directed a fresh Form 3 treating the assessee as a non-search case, applying CBDT Circular 4/2021 dated 23 March 2021, which replaced the answer to FAQ 70 of Circular 21/2020 and now requires three cumulative conditions.
• Mohd. Farhan A. Shaikh v ACIT (Full Bench) High CourtHelps taxpayer
  Bombay had two conflicting lines on defective penalty notices. Which one won?
  The assessee's. A Full Bench held that the grounds must be conveyed through the statutory notice, that an omnibus notice suffers from the vice of vagueness, and that non-striking of the irrelevant portion renders the penalty order bad in law.
• PCIT v Anand Kumar Jain (HUF) High CourtHelps taxpayer
  The addition rests only on an entry operator's search statement. Is that enough to assess me?
  No. A s.132(4) statement has evidentiary value, but standing alone and without any other material found in the search it cannot support the assessment. Where the statement came out of a search of a third party, s.153C is the route and cannot be bypassed, and the deponent must be offered for cross-examination.
• PCIT v Best Infrastructure (India) P Ltd High CourtHelps taxpayerUnder appeal
  The share capital addition rests on a statement I was never allowed to cross-examine. Does it stand?
  No. Statements under s.132(4) do not by themselves constitute incriminating material; a copy of the statement and an opportunity to cross-examine the deponent must be given, and where the statement is retracted or cross-examination is refused it has to be discarded. The s.68 additions fell.
• Ganpati Fincap Services Pvt Ltd v CIT High CourtHelps department
  The same officer is the Assessing Officer of the searched person and of our client. Does he still have to record a satisfaction note, and does he need two?
  He must record one, and it must exist before the s.153C proceedings are started. He does not have to write two notes. The single note is recorded in his capacity as the Assessing Officer of the searched person, it is a note about the other person, and it is placed in the other person's file. It does not have to say in terms that the documents do not belong to the searched person.
• PCIT v Meeta Gutgutia High CourtHelps taxpayer
  A search was carried out on us and the department has reopened six years under section 153A. Can it add to a year where nothing incriminating was found?
  No. The Delhi High Court held that the Revenue was not justified in invoking section 153A against the assessee for assessment years 2000-01 to 2003-04, there being no incriminating material for each of those years. It declined the Revenue's invitation to reconsider Kabul Chawla in the light of Dayawanti Gupta, holding that Dayawanti Gupta turned on distinguishing features - an admission under section 132(4) that transactions were not recorded, a year-wise chart of unrecorded transactions, and habitual concealment - none of which was present here. There was no justification for the Assessing Officer to proceed on surmises and estimates. The appeals were dismissed.
• ARN Infrastructure India Ltd v ACIT High CourtHelps taxpayerSuperseded by amendment
  The document seized is a letter our client wrote to the person searched. Does it belong to our client for s.153C?
  Not under the pre-amendment wording. A letter written by A to B is B's document, and 'belongs to' is not the same as 'relates to'. The words 'pertains to', which would have caught it, were inserted with effect from 1 June 2015 and operate prospectively, so they do not assist a satisfaction note recorded before that date. Note what that limit attaches to: it is the date of the satisfaction note, not the date of the search. In ITO v. Vikram Sujitkumar Bhatia (SC, 2023) the Supreme Court held the amended provision applies even where the search was conducted before 1 June 2015, if the seized material reaches the Assessing Officer of the other person on or after that date. What survives in ARN is the construction of 'belongs to' and the result on its own facts, the satisfaction note there being dated 21 July 2014; what does not survive is any reading of it as making a pre-2015 search enough to keep a case on the narrow 'belongs to' test. Separately, a document relevant only to one year cannot be used to reopen earlier years.
• PCIT v Neeraj Jindal High CourtHelps taxpayer
  After a search I filed higher income in my section 153A return and the officer accepted it. Can he levy concealment penalty just because the figure went up?
  No, not by itself. The Delhi High Court held that once the assessing officer accepts a return filed under section 153A, that return takes the place of the original return under section 139 for all purposes, including penalty, and penalty under section 271(1)(c) can only be on income assessed over and above the income returned under section 153A. A mere increase over the original return, without incriminating evidence, does not show concealment. Explanation 5 could not be invoked either, because no assets relating to assessment years 2005-06 and 2006-07 were found; the cash was found in the year of search. The Revenue's four appeals were dismissed.
• CIT v RRJ Securities Ltd High CourtHelps taxpayer
  Papers of mine were seized in a search on somebody else and I have got notices under section 153C for six years. Which six years, and can completed assessments be reopened when the papers show nothing?
  It depends, and here the answer was no on both counts. The Delhi High Court held that for a person other than the searched person, the six assessment years under section 153C run from the date the seized material is handed over to his Assessing Officer - here the satisfaction note of 8 September 2010 - not from the date of the search. Assessment years 2003-04 and 2004-05 were therefore outside the section. It further held that completed assessments cannot be reopened where the seized documents have no bearing on those years. The Revenue's appeals were dismissed.
• CIT v Kabul Chawla High CourtHelps taxpayer
  A search was carried out at my premises and the Assessing Officer has reopened six years under section 153A — can he add to years already assessed when nothing incriminating was found?
  No. The Delhi High Court held on 28 August 2015 that a completed assessment can be interfered with in a section 153A assessment only on the basis of incriminating material unearthed in the search, or undisclosed income or property discovered in it, which was not produced or disclosed in the original assessment. Where an assessment for a year is not pending on the date of the search it does not abate, and in the absence of such material the completed assessment can only be reiterated. Here the assessments for 2002-03, 2005-06 and 2006-07 stood completed, nothing was found, and the deemed dividend and other additions fell.
• Pepsi Foods Pvt Ltd v ACIT High CourtHelps taxpayerSuperseded by amendment
  The satisfaction note says the officer is satisfied and nothing else. Is that enough to found a s.153C notice?
  On s.153C as it stood before 1 June 2015. No. Anything found during a search is presumed by law to belong to the person searched. Before the Assessing Officer of the searched person can say a document belongs to somebody else, he must rebut that presumption on cogent material, and the satisfaction note itself must show the reasons. A note that only recites the word 'satisfied' fails the first step, and everything built on it goes. Read the decision only against that older wording: with effect from 1 June 2015 s.153C was widened to cover books or documents that 'pertain to' the other person or contain information 'relating to' him, and in ITO v. Vikram Sujitkumar Bhatia (SC, 2023) the Supreme Court held the amended provision applies even where the search was conducted before that date. The 'belongs to' analysis in this case is therefore not the current test.
• CIT v Anil Kumar Bhatia High CourtHelps departmentNo later treatment found
  I was searched, and my earlier returns had only been processed under section 143(1). Can the Assessing Officer reopen all six years under section 153A and add things that have nothing to do with the search?
  Yes, section 153A is validly invoked. The Delhi High Court held the Tribunal was wrong to say section 153A cannot be used where the six years' returns had only been processed under section 143(1). Section 153A opens with a non obstante clause that removes the fetters of sections 147, 148, 149, 151 and 153, and it empowers the Assessing Officer to assess or reassess the total income - disclosed and undisclosed - for each of the six years. Pending proceedings abate; completed ones do not, and are simply reopened. The Court expressly left open what happens where no incriminating material at all is found.
• SSP Aviation Ltd v DCIT High CourtHelps department
  A search was carried out on someone else and my agreements were seized. Can the department open six years of my assessments under section 153C when everything was already in my audited books?
  Yes, it can start the enquiry. The Delhi High Court dismissed the writ petition and held that section 153C(1) requires the searched person's Assessing Officer to be satisfied only that the seized document belongs to another person - not that it discloses undisclosed income of that person. Unlike section 158BD, section 153C does not mention undisclosed income at all. The section is only the first step: the documents go to the other person's Assessing Officer, who then follows the section 153A procedure, and if the returns show the income was accounted for, the proceedings must be closed. Inconvenience is not a ground to strike the machinery down.
• Ashok Chaddha v Income Tax Officer High CourtHelps department
  My post-search assessment under section 153A was completed without any notice under section 143(2). Does Hotel Blue Moon make that fatal?
  No. The Delhi High Court held that there is no specific provision in the Act requiring an assessment under section 153A to be preceded by a notice under section 143(2). Hotel Blue Moon turned on clause (b) of section 158BC, which expressly applies sub-sections (2) and (3) of section 143 to a block assessment; section 153A contains no such provision. The words 'so far as may be' in clause (a) of section 153A(1) cannot be stretched to make a section 143(2) notice mandatory, because a specific notice is already required under that clause calling for the return. In any event the two detailed questionnaires issued here served the purpose. The appeal was dismissed.
• DCIT v IPCA Laboratories Ltd ITATCuts both waysNo later treatment found
  After Apex Laboratories, has the Assessing Officer to disallow my entire sales promotion budget as freebies to doctors, or only part of it?
  Only part of it, and only after a head-wise examination. The Mumbai Tribunal upheld a Commissioner (Appeals) order that confined the Explanation 1 disallowance to expenditure on travel facilities and hotel accommodation for medical practitioners, and allowed patient detection and education camps, symposiums and exhibition stalls, sponsorship of trade bodies, journals and periodicals, field printing, taxi hire for the company's own field staff and nominal brand recall items. Both the assessee's appeal and the Revenue's appeal on this issue were dismissed.
• ACIT v Transworld Garnet India Private Limited ITATHelps taxpayerNo later treatment found
  The officer took the TPO's adjustment straight into a final order without giving me a draft order. The department says s.292B cures it. Does it?
  It does not, on this line of authority. The Tribunal held that once the assessee answers the description of an 'eligible assessee' under s.144C(15)(b) and a variation prejudicial to it is proposed, s.144C(1) is mandatory, and passing the final order without first forwarding a draft is a failure of a jurisdictional condition precedent, not a procedural lapse. Section 292B cures only technical or clerical defects in proceedings otherwise validly initiated and cannot confer a jurisdiction that was never lawfully assumed. The Revenue's alternative plea for a remand to let the officer start again was also rejected: a nullity cannot be revived by remand.
• Dhiren Rambhai Bharwad v ACIT ITATHelps departmentNo later treatment found
  Is the mechanical-approval argument under s.153D a certainty? My approval covers several years in one order, given on the day the draft orders went up.
  It is not a certainty. On facts of exactly that kind — one approval covering multiple assessment years, granted on the same day as or immediately after the Assessing Officer's proposal and with reference to the draft assessment orders — the Ahmedabad Bench found no infirmity in the s.153D approval and dismissed the ground. The library should carry this because the s.153D line is not one-way at Tribunal level.
• MCM Developers v DCIT, Central Circle-1, Aurangabad ITATHelps taxpayerNo later treatment found
  The assessment order said s.269ST and s.271DA. The AO has now passed a s.154 order changing it to s.269SS and s.271D. Can he do that?
  No. The Tribunal held that mentioning s.269ST together with its own penalty section s.271DA is not a typographical error — it could only have been one if s.269ST had been typed alongside s.271D — so the original assessment order reflected a conscious application of mind. Substituting s.269SS and s.271D for them under s.154 was a change of opinion between two possible legal views, not the correction of a mistake apparent from the record, and the rectification order was quashed.
• DCIT v Priya Blue Industries P Ltd ITATHelps taxpayerNo later treatment found
  The AO has levied a s.271AA penalty saying I did not maintain transfer pricing documentation, without saying which documents. Does that penalty stand?
  No, on this decision. A penalty under s.271AA has to identify the information or document prescribed by s.92D read with rule 10D that was not maintained or furnished; a general assertion will not do, and here neither the assessment order nor the penalty order said which document was missing. The Tribunal gave a second and independent ground: the penalty was passed in a perfunctory manner without the requisite show-cause notice and without proper opportunity, the officer having called for rule 10D documents without naming any clause of the rule. That the transactions the penalty was levied on had not been adjusted by the Transfer Pricing Officer at all was added as a further point, not as the basis of the decision.
• Garware Technical Fibres Ltd v DCIT ITATCuts both waysNo later treatment found
  The addition rests on a pen drive seized in the search and no s.65B certificate was drawn at the time. Does that kill it?
  No, not on these facts, and the reason is narrower than the headlines. The Commissioner (Appeals) called for a remand report, the Assessing Officer produced a certificate under s.65B(4) for the pen drive, and the assessee - which had never taken the point before the Assessing Officer - made no counter-comment when the certificate was put to it. On the record as the Commissioner (Appeals) found it the certificates had been drawn at the time of the search and were merely produced late. In the absence of any contrary material the addition based on the pen drive was upheld, for all eight years. The order was not otherwise against the assessee: on quantum it confined the tax to the profit element in the unrecorded receipts and directed year-by-year percentages, and on the weighted deduction it allowed the whole of the revenue expenditure for one year.
• Rameshchandra Balachand v JCIT (OSD) ITATHelps taxpayerNo later treatment found
  The officer says my partner is a sleeping partner because she is not in the office every day. Can he disallow her remuneration?
  No, on these facts — but the case is decided on a wider ground first. For five of the seven years the disallowance fell on jurisdiction: those years were unabated when the search took place, and a statement recorded under s.132(4) is not incriminating material capable of supporting an addition under s.153A. On the merits, taken in the alternative and carrying the remaining two years, the Tribunal held that not attending the office daily does not make a partner a sleeping partner where the work she did was proved, and noted that the remuneration was taxed in her hands under s.28(v). The disallowance was made under s.37 as expenditure not for the purposes of the business, not under s.40(b).
• Seo Lehenga House v DCIT ITATHelps taxpayerNo later treatment found
  I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
  Not where the commission is already inside the profit you offered. The Tribunal deleted a s.69C addition for cash commission paid to a broker for arranging bogus purchases and sales, in each of six consolidated appeals covering two assessees and five assessment years, because in every year the gross profit the assessee had already declared on those transactions exceeded the commission the Assessing Officer himself had determined. For the leading year the gross profit was Rs. 14,57,154 at 1.60 per cent against a determined commission of Rs. 5,31,795, and the Rs. 3,32,371 the first appellate authority had sustained was deleted. The rates differ year by year.
• ACIT v Nishant Kanodia ITATHelps taxpayer
  I left India to run my own business abroad, not for a job. Do I get the 182-day test?
  Yes. Explanation 1(a) to s.6(1) is not confined to salaried employment — leaving India to carry on business or a profession abroad falls within it. With a stay of 176 days in India, below 182, the assessee was a non-resident and the Revenue's appeal was dismissed.
• Finesse International Design v DCIT ITATHelps taxpayerNo later treatment found
  The section 153D approval for my search assessment carries no DIN, even though the assessment order itself does. Does that invalidate the assessment?
  Yes, on this Tribunal's view. The Delhi Bench held that CBDT Circular No. 19/2019 requires a computer-generated DIN in the body of every departmental communication issued from 1 October 2019, and that a communication issued without one is invalid and deemed never to have been issued. The approval under section 153D dated 19 February 2021 carried no DIN. Because that approval is the fulcrum on which the final order rests, the Tribunal treated it as non est in law, and quashed the section 153A assessment and the section 156 demand notice built on it. It did not go into the merits.
• Francisco X. Pacheco v DCIT ITATHelps taxpayerNo later treatment found
  The officer treated some of your s.153A returns as defective for non-payment of self-assessment tax and others as valid, on the same facts. Can the Tribunal put that right?
  The Tribunal directed the Assessing Officer to treat the returns as valid, by condoning the delay, for those years in which the defect had in fact been removed. The proviso to s.139(9) was the source of the direction: where the defect is cured before the assessment is made, the delay can be condoned and the return treated as valid.
• Jafferali K. Rattonsey v DCIT ITATHelps taxpayer
  I held shares in physical form for years and dematerialised them just before selling. The AO says my holding period runs from the demat date. Is he right?
  No. The date of purchase is taken from the broker's note or contract note, and the period of holding runs from that date, not from the date of dematerialisation. The Assessing Officer had converted a long-term gain into a short-term one by treating the demat date as the date of acquisition and the market price on that date as cost; the Tribunal rejected both moves.
• Statutory position — the Finance Act, 2026 and reassessment: s.147A, s.292BC, the thirty-day floor in s.148(1), and ss.153(10) and 153B(1A) CBDT Circulars & InstructionsCuts both waysUnder appeal
  The Finance Act 2026 seems to have changed the reassessment rules backwards in time. What exactly did it change, from which dates, and which of my grounds has it taken away?
  The Finance Act, 2026 (No. 4 of 2026), assented to on 30 March 2026, amended the Income-tax Act, 1961 through clauses 4 to 33, and six of those clauses are about assessment and reassessment. Clause 9 inserted section 147A, deemed in force from 1 April 2021, which makes the Assessing Officer for sections 148 and 148A an officer other than the National Faceless Assessment Centre or a section 144B(3) assessment unit, notwithstanding any judgment, section 151A or any scheme under it; clause 33 inserted section 292BC, also deemed in force from 1 April 2021, which makes an approval in any assessment or reassessment administrative and supervisory in nature and immune to attack for insufficient reasons or a missing digital signature. Clause 10 gave the section 148 notice a thirty-day floor from 30 March 2026, clause 11 substituted section 150 from 1 February 2026, and clauses 12 and 13 inserted section 153(10) and section 153B(1A), reaching back to 2009, to fix when a draft order under section 144C(1) may be made. Sections 147, 148A, 149, 151 and 151A were not amended at all. Section 147A has since been struck down by the Punjab and Haryana High Court in Jyoti Sareen v. Union of India on 10 September 2026, and that judgment was stayed by the Supreme Court on 18 September 2026, which hears the appeal on 3 December 2026.
• 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 — section 158BB: how the block figure is built, what is kept out of it, and why Abhisar Buildwell does not simply carry across CBDT Circulars & InstructionsCuts both ways
  The block assessment adds amounts for which nothing was found in the search. Can I take the Abhisar Buildwell point that there must be incriminating material?
  Not in the form in which that case decides it, because Abhisar Buildwell construes section 153A and section 158BB is worded differently. Section 158BB(1) makes the total undisclosed income of the block period the aggregate of only two things — what the assessee declares as undisclosed income in his section 158BC return, and what the Assessing Officer determines under section 158BB(2); and section 158BB(2) requires that determination to be made 'on the basis of evidence found as a result of search or survey or requisition of books of account or other documents and any other material or information as are either available with the Assessing Officer or come to his notice during the course of proceedings under this Chapter'.
• Statutory position — s.124: how an Assessing Officer gets jurisdiction over you, who decides a dispute about it, and the three deadlines in s.124(3) after which you cannot object at all CBDT Circulars & InstructionsCuts both waysSuperseded by amendment
  The notice has come from an officer in a place I have nothing to do with. Can I say he has no jurisdiction, who decides that, and have I already lost the point by filing my return and answering him?
  Jurisdiction reaches an Assessing Officer through section 120: the Board issues directions, those directions may authorise another authority to issue written orders, and section 124(1) then gives the officer vested with an area jurisdiction over a business whose place or principal place is in that area and over every other person residing in it. A dispute about whether he has jurisdiction is not for him and not for the Tribunal in the first instance: section 124(2) sends it to the Principal Director General, Director General, Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, and to the Board if two of them disagree. The provision that decides cases is section 124(3), which fixes three deadlines — one for a person who has filed a return, one for a person who has not, one where there has been a search or requisition — after which no person shall be entitled to call the jurisdiction in question at all. Section 124(4) then obliges the officer, on a timely objection he does not accept, to refer the matter for determination before he makes the assessment. Whether the section 124(3) bar is absolute is genuinely disputed: the Delhi and Karnataka High Courts have applied it against assessees, and the Gujarat High Court has held it no answer where no order under section 127 transferred the case at all. For a tax year beginning on or after 1 April 2026 the provision is section 242 of the Income-tax Act, 2025, where the bar sits in sub-section (4).
• Statutory position — s.144C(2), (4), (5), (12) and (13): the thirty days to object run from receipt, but the officer's one month and the Panel's nine months both run from the END OF THE MONTH, and the two one-month clocks start on different events CBDT Circulars & InstructionsCuts both ways
  We received a draft order on 12 March. Nobody objected. When was the final order due, and if we had objected, by when must the Dispute Resolution Panel have issued its directions and by when must the officer have given effect to them?
  Four clocks, and only one of them runs from a date. Section 144C(2) gives the eligible assessee thirty days "of the receipt by him of the draft order" to file acceptance with the Assessing Officer or objections with the Panel and the Assessing Officer — that one runs from the date of receipt. The other three run from the end of a month, and that is where the counting goes wrong. Section 144C(4): where the assessee accepts or files no objection, "The Assessing Officer shall, notwithstanding anything contained in section 153 or section 153B, pass the assessment order under sub-section (3) within one month from the end of the month in which,— (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires." Section 144C(12): "No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to the eligible assessee." Section 144C(13): "Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section 153 or section 153B, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received." Note the four different starting EVENTS. The thirty days in (2) start on RECEIPT by the assessee. The nine months in (12) start at the end of the month in which the draft order is FORWARDED — the officer's act of despatch, not the assessee's receipt, so the (2) clock and the (12) clock can start in different months on the same draft order. The one month in (4) starts at the end of the month in which the acceptance is received or the thirty-day period expires. The one month in (13) starts at the end of the month in which the DIRECTION is received by the officer. Both (4) and (13) run notwithstanding s.153 and s.153B.
• Statutory position — s.144C(8) with its Explanation, and s.144C(10) and (11): the Panel may confirm, reduce or ENHANCE but may not set aside or remit, the Explanation inserted by the Finance Act 2012 is retrospective to 1 April 2009, the direction binds the Assessing Officer, and no direction may issue without an opportunity of being heard — with what s.253 and s.246A provide about appeal CBDT Circulars & InstructionsCuts both ways
  We are considering objecting to a draft order. Can the Dispute Resolution Panel make our position worse, can it send the matter back for fresh enquiry, and if we lose before it, do we appeal to the Commissioner (Appeals) or straight to the Tribunal?
  It can make your position worse; it cannot send the matter back; and the appeal lies to the Tribunal, not to the Commissioner (Appeals). Section 144C(8), as printed on the departmental edition stamped Year 2025, reads: "The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order." The Explanation to that sub-section reads: "For the removal of doubts, it is hereby declared that the power of the Dispute Resolution Panel to enhance the variation shall include and shall be deemed always to have included the power to consider any matter arising out of the assessment proceedings relating to the draft order, notwithstanding that such matter was raised or not by the eligible assessee." Footnote 76 on the departmental edition stamped Year 2014 records that Explanation verbatim as "Inserted by the Finance Act, 2012, w.r.e.f. 1-4-2009" — note the date: it is retrospective to 1 April 2009, the date the section itself was inserted from, and not 2012. The original edition stamped Year 2009 prints sub-section (8) with no Explanation at all. Sub-section (10): "Every direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer." Sub-section (11): "No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively." Sub-section (9) resolves a difference of opinion among the members by the opinion of the majority. On appeal: s.246A(1)(a), on the departmental edition stamped Year 2025, excepts from the first appeal "an order passed in pursuance of directions of the Dispute Resolution Panel", and s.253(1)(d), on the edition stamped Year 2024 (No. 2), gives a direct right of appeal to the Appellate Tribunal against "an order passed by an Assessing Officer under sub-section (3), of section 143 or section 147 or section 153A or section 153C in pursuance of the directions of the Dispute Resolution Panel or an order passed under section 154 in respect of such order". Sub-sections (2A) and (3A) of s.253 are printed as "[***]" on the current editions, and the departmental edition stamped Year 2016 carries footnotes against both reading "Omtt. by Act No. 28 of 2016 (w.e.f. 1-6-2016)."
• Statutory position — s.234D: interest on a refund granted under s.143(1) that regular assessment shows should not have been granted — the rate, the period, the reduction under sub-section (2), and Explanation 2 for assessment years commencing before 1 June 2003 CBDT Circulars & InstructionsCuts both ways
  We were given a refund when the return was processed under s.143(1). On scrutiny the Assessing Officer has now raised a demand and has also charged interest under s.234D on the refund. Is that right, for how long does the interest run, and can he do it for an assessment year that is older than the section itself?
  Yes, on the conditions in sub-section (1). Section 234D charges simple interest where a refund is granted to the assessee under s.143(1) and either (a) no refund is due on regular assessment, or (b) the amount refunded under s.143(1) exceeds the amount refundable on regular assessment. The rate is one-half per cent, on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. The section was inserted by the Finance Act, 2003 with effect from 1 June 2003, and the words "one-half per cent" were substituted for "two-third" by the Taxation Laws (Amendment) Act, 2003 with effect from 8 September 2003 — both recorded in footnotes printed against the section. Sub-section (2) provides that where, as a result of an order under s.154, s.155, s.250, s.254, s.260, s.262, s.263 or s.264, or an order of the Settlement Commission under s.245D(4), the refund granted under s.143(1) is held to be correctly allowed either in whole or in part, the interest chargeable under sub-section (1) shall be reduced accordingly. Explanation 1 makes a first-time assessment under s.147 or s.153A a regular assessment for the purposes of the section. Explanation 2, which the later editions of the section print and the earlier ones do not, reads: "For the removal of doubts, it is hereby declared that the provisions of this section shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date." Which amending Act inserted Explanation 2, and from what date, is not established here — the editions of the section that print it carry no footnotes, and the editions that carry footnotes do not print it.
• Batukbhai Premjibhai Kalathiya v ITO — a search in May 2024 is neither a section 153A case nor a block assessment: section 152(3) sends it to the old reassessment code High CourtHelps taxpayerOverruled
  My client was searched in May 2024 and has a section 148 notice for assessment year 2015-16. Which limitation applies, and is the notice good?
  The Gujarat High Court held that because the search fell between 1 April 2021 and 1 September 2024, section 152(3) required sections 147 to 151 to be applied as they stood immediately before the Finance (No. 2) Act 2024, and that the first proviso to section 149(1) then imports the section 153A and section 153C time limits. Computing the ten-year outer limit from the end of the assessment year relevant to the previous year of search, as Explanation 1 to section 153A(1) directs, assessment year 2025-26 is the first year and the tenth is 2016-17. Assessment year 2015-16 was therefore beyond the ten years, and the notice was quashed.

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.