Search, Survey & Block Assessment

Search, Survey & Block Assessment — the law in short

Every authority in this library on search, survey & block assessment, with what each one decided.

• K. Krishnamurthy v DCIT Supreme CourtCuts both ways
  After a search the Assessing Officer levied 10% penalty under section 271AAA on my entire assessed income — can it be confined to the part that was really undisclosed?
  It depends on how each slice of income came to light. The Supreme Court held on 13 February 2025 that penalty under section 271AAA is not automatic: the Assessing Officer must first show that the amount is undisclosed income of the specified previous year found in the course of the search. On the Rs.2,27,65,580 the assessee had admitted in his section 132(4) statement, explained the manner of earning and on which he paid tax with interest — late, but paid — the immunity in section 271AAA(2) applied and no penalty was leviable. Penalty at 10% survived only on Rs.2,49,90,000 offered later, during assessment.
• 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.
• PDIT (Investigation) v Laljibhai Mandalia Supreme CourtHelps department
  Can I get a search warrant quashed by showing the department's material was too thin?
  No. Forming the reason to believe under s.132 is an administrative act, and a writ court will not weigh whether the material was adequate. It will only ask whether the belief was mala fide, a pretence, or built on extraneous or irrelevant material.
• Super Malls Pvt Ltd v PCIT Supreme CourtHelps department
  What if the same officer holds charge of both the searched person and you?
  Then one satisfaction note is enough, provided it records clearly that the seized documents belong to the other person and not to the searched person. There is nothing to transmit, so no second note is needed.
• 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.
• Common Cause v Union of India Supreme CourtHelps taxpayer
  The addition is based on loose sheets and a diary seized in a search. Is that admissible?
  Not on their own. Loose sheets and scraps are not 'books of account' under s.34 of the Evidence Act because they can be detached and replaced at will, and even entries in properly kept books are not by themselves sufficient to charge anyone with liability without independent evidence of the transaction.
• 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.
• CIT v Calcutta Knitwears Supreme CourtHelps department
  When must the satisfaction note be recorded before proceedings are taken against a third party?
  Before the seized records are handed over. It may be recorded at any of three stages — with the initiation of proceedings against the searched person, during them, or immediately after they are completed — but the note itself is a sine qua non.
• Chironjilal Sharma HUF v Union of India Supreme CourtHelps taxpayerSuperseded by amendment
  Cash seized in a search was appropriated against a tax liability that the Tribunal later knocked out. The Department has paid me interest from the date of the assessment to the date of refund. Am I entitled to anything for the years before the assessment?
  Yes. The Supreme Court held that section 132B(4) governs the pre-assessment period in search and seizure matters while sections 240 and 244A govern the post-assessment period as per the order in appeal, and that there is no conflict between them — so interest for the pre-assessment period under section 132B(4) is payable in addition to, and not in substitution for, the interest already paid on the refund. On the provision as it then stood the assessee was held entitled to simple interest at 15 per cent per annum from the day after six months from the section 132(5) order to the date of the last regular assessment.
• ACIT v A.R. Enterprises Supreme CourtHelps department
  I paid advance tax for the year but had not filed my return when the search took place. Can the department still call that income undisclosed?
  Yes. The Supreme Court held that payment of advance tax is not disclosure of income. Advance tax is paid on an estimate of current income; disclosure of total income happens only in a return. Where the due date under section 139(1) had passed and no return had been filed by the date of search, section 158BB(1)(c) requires the returned income to be taken as nil, and the officer was right to conclude the assessee would not have disclosed the income. Tax deducted at source is no different, being computed on the same estimated basis. The Revenue's six appeals were allowed with costs.
• CIT v S. Khader Khan Son Supreme CourtHelps taxpayer
  They recorded your statement in a survey. Can the addition rest on that alone?
  No. Section 133A gives no power to examine anyone on oath, so a survey statement has no evidentiary value on its own and does not bind you — especially once it is retracted. Something more is needed.
• Manish Maheshwari v ACIT Supreme CourtHelps taxpayer
  What has to happen before a search at someone else's premises can be used against you?
  Three things, in order: satisfaction recorded that the undisclosed income is yours, the seized material handed to your Assessing Officer, and only then proceedings begun against you. They are conditions precedent, not formalities.
• P.R. Metrani v CIT Supreme CourtHelps taxpayerSuperseded by amendment
  Can papers seized in a search be presumed true against me in the regular assessment?
  That was not the law as this case decided it: the s.132(4A) presumption operated only within the search proceedings and not in a regular assessment under s.143. Parliament changed that by inserting s.292C in 2007. What survives from this judgment is that the presumption is rebuttable and that seized documents can still be used as ordinary evidence even without it.
• CIT v Vindhya Metal Corporation Supreme CourtHelps taxpayer
  The police seized cash from our employee and the Commissioner issued a section 132A warrant because he had no papers for it — is that authorisation valid?
  No. The Supreme Court declined to interfere with the Allahabad High Court's decision quashing an authorisation under section 132A. All the Commissioner had before him was that Rs 4,63,000 had been seized by the Railway Police from a person carrying it, that the person had no documents of ownership or possession, and that he was not on the General Index Register of assessees at Mirzapur. On that material no reasonable person could have entertained the belief that the money represented income that would not be disclosed. Mere unexplained possession, without anything more, is not enough. The Revenue's appeal was dismissed.
• CIT v Tarsem Kumar Supreme CourtHelps taxpayerSuperseded by amendment
  Customs seized my cash and was ordered to return it. Can the income-tax department issue a search warrant and take it from customs instead?
  No, not under section 132 as it then stood. The Supreme Court held that where the exact location of the money is known and it is in the lawful custody of another government department, there is nothing to search for and nothing to seize. Possession under section 132 follows physical custody, not legal title, so the money was not in the assessee's possession while customs held it. One government department cannot search another. The Court noted that the gap was later filled by section 132A, and left the Department free to approach the appropriate authorities under it.
• Pooran Mal v Director of Inspection Supreme CourtHelps department
  The search on me was illegal. Can I stop the department using what it took?
  No. Indian tax law has no exclusionary rule. The Supreme Court upheld s.132 and rule 112 and held that even if a search contravened the section, the material seized was liable to be used, subject to law, before the income-tax authorities against the person from whose custody it was taken. Illegality in the search goes to relief against the search, not to the admissibility of what it produced.
• Pullangode Rubber Produce Co Ltd v State of Kerala Supreme CourtHelps taxpayer
  You admitted something and now want to retract it. Does the admission end the matter?
  No. An admission is extremely important evidence, but it is not conclusive. It is open to the person who made it to show that it is incorrect — though the burden of doing so is on him.
• ITO v Seth Brothers Supreme CourtHelps department
  The search party carted away all our books. Does the way a search was conducted make it illegal?
  Not by itself. Irregularity in executing a search does not vitiate it where the officers acted bona fide. What does vitiate it is a failure of the conditions precedent: information with the competent authority, a consequent reason to believe, the recording of that belief, and a written authorisation naming the officer.
• ACIT v Hotel Blue Moon Supreme CourtCuts both ways
  Is a notice under s.143(2) a jurisdictional precondition, or merely a procedural step the Assessing Officer can skip?
  The Revenue argued that in a block assessment under Chapter XIV-B the words 'so far as may be' in s.158BC(b) made the s.143(2) notice optional. The Supreme Court rejected this and held that where the Assessing Officer repudiates the return and proceeds to enquire, the s.143(2) notice must be issued within the prescribed time. Omission to issue it is not a curable procedural irregularity.
• Rajesh Gupta v ACIT High CourtHelps departmentValidity unconfirmed
  It is well past 120 days since the search and they still hold my jewellery. Must they release it?
  No. The expiry of the 120-day period in the second proviso to s.132B(1)(i) does not by itself trigger release. The proviso is mandatory in character but operates only once the Assessing Officer has determined the existing liability, so mere lapse of time does not turn the seizure into unlawful detention, and the remedy for delay lies in interest rather than automatic restoration.
• Neeraj Bharadwaj v ACIT High CourtHelps taxpayerValidity unconfirmed
  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.
• Pramod Swarup Agarwal v PDIT (Inv) High CourtHelps taxpayerValidity unconfirmed
  The authorised officer who searched us has now summoned us under s.131(1A). Can he?
  No, not after the search is over. The officer who issued the notice was the authorised officer for the s.132 search, and s.131(1A) lets the authorised officer use that power only before he takes action under clauses (i) to (v) of s.132(1). The action having already been taken, the notice was quashed; and the department could not save it by pointing to the same person's substantive designation as Deputy Director.
• Meera Pandey v UOI High CourtHelps taxpayerValidity unconfirmed
  A benami show-cause and attachment have come on the strength of one contractor's statement. Can I go to the High Court now?
  Yes. The Allahabad High Court quashed both the s.24(1) notice and the provisional attachment where the Initiating Officer's whole case was a contractor's statement with no supporting material. It held that s.24(1) requires two things — material in the officer's possession, and material sufficient to cause a reason to believe — and that "reason to believe" is a stronger standard than "is satisfied" or "reason to suspect".
• 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.
• ACIT v Satish Kumar Keshri High CourtHelps taxpayerValidity unconfirmed
  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.
• PCIT v Jai Maa Jagdamba Flour Private Limited High CourtHelps taxpayerValidity unconfirmed
  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.
• 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.
• PCIT v Sri Venkatesh Granites Pvt Ltd High CourtHelps taxpayerValidity unconfirmed
  The s.271AAB penalty order never says which limb of the definition of undisclosed income is satisfied. Can the penalty survive?
  No. The Tribunal held that the Assessing Officer's penalty order had nowhere specified whether the alleged undisclosed income satisfied the statutory parameters in the Explanation to s.271AAB, and cancelled the penalty for that reason alone. The Telangana High Court agreed and concurred that the penalty, whether at 30 per cent or at the 10 per cent the CIT (Appeals) had substituted, could not be sustained, and held that no question of law arose.
• Ashish Jayantilal Sanghavi v ITO High CourtHelps taxpayerValidity unconfirmed
  I applied within thirty days to have the asset seized in a search released and explained the source, and the Assessing Officer has simply sat on the application. The hundred and twenty days have long gone. Can he keep holding it?
  No. The Gujarat High Court held that the time limit in the proviso to clause (i) of sub-section (1) of section 132B is mandatory and not directory, and that it is not permissible for a court to read it as merely directory, because doing so would dilute the statutory rigour and give the Assessing Officer unbridled power to retain seized assets indefinitely against a possible future liability without ever deciding the application. The Court directed the seized diamonds to be handed over to the writ applicant within four weeks.
• 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.
• Pawan Kumar Goel v Union of India High CourtHelps taxpayer
  The officers came in on a survey, I cooperated and showed them everything, and then they turned it into a search and took away the cash. Can they do that?
  No, not on this record. The Punjab and Haryana High Court quashed the action. Section 133A(4) forbids an income-tax authority acting under that section from removing any cash, stock or valuable article from the premises, and it is only where the person refuses or evades cooperation that section 133A(6) lets the authority fall back on the powers in section 131(1). Here the assessee had voluntarily disclosed and handed over Rs 2,09,89,090, the department produced no material to show non-cooperation, and no satisfaction was ever recorded for converting the survey into a search. The summons under section 131 was also vague, specifying nothing that was required of him. The action was quashed with consequential benefits.
• PCIT v Ritu Singal High CourtHelps departmentValidity unconfirmed
  I told the search party the money was my unaccounted income. Is that enough to escape s.271AAA penalty?
  No, not by itself. The Delhi High Court held that all three conditions in s.271AAA(2) must be fulfilled before the escape route opens. The assessee had said the amounts advanced were her unaccounted income for the year, but did not specify how she had derived that income or what head it fell under - rent, capital gain, professional income, business income out of money lending, or the source of the money. Unless such facts are given with some specificity the requirement of substantiating the manner is not met. The appellate authorities had misdirected themselves and the penalty was restored.
• PCIT v Sandeep Chandak High CourtHelps departmentValidity unconfirmed
  The s.271AAB penalty notice came on the printed s.274 read with s.271 form. Does that by itself kill the penalty?
  Not on these facts. The Allahabad High Court looked past the caption to the body of the notice, which told the assessee that proceedings under s.271AAB were being taken and that his reply would be considered before any order was made under s.271AAB. Because the officer had never initiated any s.271(1)(c) proceeding in the s.143(3) assessment, and because the assessee's own reply showed he had understood the notice as a s.271AAB notice, the Court held the initiation was in accordance with law and restored the penalties the Tribunal had cancelled.
• 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.
• PCIT v Mukeshbhai Ramanlal Prajapati High CourtHelps taxpayerValidity unconfirmed
  The officer never asked me how I earned the surrendered income. Can he still levy s.271AAA penalty because I did not substantiate the manner?
  No. The Gujarat High Court held that the requirement in s.271AAA(2)(ii) to substantiate the manner in which the undisclosed income was derived is consequential to, or a corollary of, the base requirement in clause (i) to specify that manner in the s.132(4) statement. The duty to substantiate begins only when the officer recording the statement elicits a response on the point. Where the Revenue failed to question the assessee at all about how the income was derived, it cannot jump to the later requirement, and when the base requirement itself fails the question of denying the immunity does not arise. The Tax Appeal was dismissed and the deletion of the penalty stood.
• PCIT v Meeta Gutgutia High CourtHelps taxpayerValidity unconfirmed
  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.
• Ganpati Fincap Services Pvt Ltd v CIT High CourtHelps departmentValidity unconfirmed
  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.
• 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 Harjeev Aggarwal High CourtCuts both ways
  The department is taxing me on what I admitted in my statement during the search. Can an addition rest on that statement alone?
  No. The Delhi High Court held that a statement recorded under section 132(4) is not itself "evidence found as a result of search" for the purposes of section 158BB(1). It is information, and it can support a block assessment only so far as it is relatable to incriminating material actually unearthed in the search. A standalone admission, with no document or asset behind it, cannot trigger a block assessment. On the facts, though, the Court found there was such material - a diary of unaccounted sales and books that did not record admittedly cash payments - so the addition of Rs.74 lakh was restored.
• CIT v RRJ Securities Ltd High CourtHelps taxpayerValidity unconfirmed
  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 Satya Narain Patni High CourtHelps taxpayer
  The search party left our jewellery alone but the AO has still added part of it. Can he do both?
  No, on these facts, and the reason is wider than the seizure decision. The Rajasthan High Court held that once the Board has expressed the opinion in Instruction No. 1916 that jewellery up to 500 grams for a married lady, 250 grams for an unmarried lady and 100 grams for a male member is not to be seized, it should normally follow that jewellery within those quantities will not be questioned as to its source and acquisition either. Here the family's entitlement was 2,700 grams against 2,202.464 grams found, the authorised officer had seized nothing, and the Assessing Officer's later addition on part of the same jewellery had no basis — he gave no reason for fixing 1,600 grams as the reasonable quantity. The Court preserved the department's power over the excess: jewellery beyond those weights can be questioned and, if not properly explained, treated as unexplained investment.
• Dipen Laljibhai Mandalia v DGIT High CourtHelps taxpayer
  The department is justifying my search warrant with discrepancies it discovered after the satisfaction note was recorded. Can material found later prop up the authorisation?
  No. The Gujarat High Court held that material collected after the satisfaction note is recorded and the search authorisation issued cannot be pressed into service to support that authorisation. The Court read the satisfaction note itself, found that the department already knew of the gold, had the lease documents and the assessee's books before it, and that the explanation offered was corroborated by the goldsmiths' statements. There was therefore no material on which a reasonable belief under section 132(1)(c) could be formed. The petitions were allowed and the search and seizure operations were quashed.
• CIT v Anil Kumar Bhatia High CourtHelps departmentValidity unconfirmed
  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 departmentValidity unconfirmed
  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.
• CIT v Dhingra Metal Works High CourtHelps taxpayerValidity unconfirmed
  A partner surrendered income during a survey and we have since reconciled the stock. Can we withdraw it?
  Yes. Section 133A does not give a statement recorded in a survey evidentiary value, and an admission is not conclusive: the maker may show it to be wrong. Once the stock difference was reconciled from the records and the officer had made no independent enquiry, nothing was left to support the addition.
• CIT v Ratanlal Vyaparilal Jain High CourtHelps taxpayer
  Does the jewellery instruction explain the source of the gold, or only stop the department seizing it?
  It explains the source, to the extent of the quantities in it. The Gujarat High Court held that the Board's circular proceeds on recognised customs prevailing in Hindu society, so possession of jewellery within those quantities is taken to be explained unless the Revenue shows otherwise.
• CIT v S.K. Katyal High CourtHelps taxpayer
  The last panchnama only records the seals being broken and my keys being handed back. Does that date start the limitation clock?
  No. The panchnama that fixes limitation is the one that records the conclusion of a search, and a document drawn up only to give effect to the revocation of a s.132(3) restraint order records no search at all. The Delhi High Court agreed with the Tribunal that such a panchnama is "merely a release order", so the search had concluded on the earlier date and the block assessment was out of time.
• Kailashben Manharlal Chokshi v CIT High CourtHelps taxpayer
  I disclosed a large sum in the search statement and retracted two months later. Will the retraction hold?
  Partly, and only for what the department cannot corroborate. An admission is evidence but not conclusive, so additions for house property, gold and furniture that rested only on the retracted statement were deleted, while the amount matched by unaccounted cash actually found was upheld.
• CIT v Mahendra C. Shah High CourtHelps taxpayerValidity unconfirmed
  I declared the seized assets in my section 132(4) statement but nobody asked me how I earned the money, and I paid the tax only with a revised return. Do I lose the Explanation 5 immunity?
  No. The Gujarat High Court held that the assessee had complied with the second exception to Explanation 5 and cancelled the penalty. Where the authorised officer does not ask how the undisclosed income was derived, the assessee cannot be denied immunity because the statement does not say so; the officer is bound to explain Explanation 5 in full and cannot stop short so that the Revenue may take advantage of the lapse. As for payment, the provision fixes no time for paying the tax and interest, and it is enough that payment is shown before the assessment is completed. Disclosure in the return itself is not what the exception turns on.
• Commissioner of Income Tax v Girish Chaudhary High CourtHelps taxpayer
  A loose sheet seized in the search has bare figures on it and the officer has read '48' as Rs 48 lakhs of undisclosed income. Can that stand without anything more?
  No. The Delhi High Court upheld the deletion of the Rs 48 lakh addition. There was no material on record to show on what basis the officer concluded that the figure 48 was to be read as Rs 48 lakhs. Following the Supreme Court in CBI v V.C. Shukla, a file of loose sheets is not a book of account, so entries in it are not admissible under section 34 of the Evidence Act, 1872, and the seized annexure was a dumb document leading nowhere. The Court endorsed the Tribunal's view that it was for the Revenue to put life into the document by collecting other relevant and connected material, which it had not done. The appeal was dismissed.
• Paul Mathews and Sons v CIT High CourtHelps taxpayer
  Can the officer treat what I said during a survey as sworn evidence against me?
  No. The officer conducting a s.133A survey has no power to administer an oath or record a sworn statement, so the statement is not given evidentiary value and cannot by itself found an addition. Section 132(4), by contrast, expressly allows a search statement to be used as evidence.
• L.R. Gupta v Union of India High CourtHelps taxpayer
  I did not return a receipt because I believe it is not taxable yet. Can the Department search me on the footing that I have undisclosed income?
  No, not on that basis alone. The Delhi High Court quashed a search authorisation and everything done under it. Undisclosed income means income liable to tax which the assessee has kept back in an effort to escape assessment, knowing it to be taxable. A failure to file a return or to disclose what the Department believes is taxable is not enough. The satisfaction note said only that the family had not been disclosing their true income and wealth, which answers neither clause (b) nor clause (c) of section 132(1). The cash, jewellery and documents seized were ordered returned within two weeks.
• 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 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.
• DCIT v Smt. Ashu Ashok ITATHelps taxpayerValidity unconfirmed
  I declared more than 8 per cent under s.44AD. The officer has disallowed my expenditure for want of vouchers and allowed only 30 per cent on estimate. Can he do that?
  No. Where the case falls under s.44AD and the assessee has declared income above the prescribed rate of 8 per cent of gross receipts, she is not required to maintain books or documents to justify the expenditure, and estimating expenses and recomputing income is not within the Assessing Officer's domain. The Revenue's appeal against deletion of the addition was dismissed.
• DCIT v ACE Infracity Developers P Ltd ITATHelps taxpayer
  My lenders are NBFCs that make hundreds of loans. How much of their own affairs do I have to prove?
  Not their internal affairs. Where the lender is a non-banking finance company and lending is its regular business, identity is not in doubt, and creditworthiness is tested against its share capital, reserves and long-term advances rather than its turnover for the year. Allegations that the lender's directors were dummies do not touch the borrower unless the borrower is shown to be connected to them.
• Garware Technical Fibres Ltd v DCIT ITATCuts both waysValidity unconfirmed
  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 taxpayerValidity unconfirmed
  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 taxpayerValidity unconfirmed
  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.
• Finesse International Design v DCIT ITATHelps taxpayerValidity unconfirmed
  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.
• Rashmi Jalan v ACIT ITATHelps taxpayer
  The 271AAB notice does not say which clause or what rate. Can the penalty survive?
  No. Section 271AAB contains clauses (a), (b) and (c) with different conditions and different rates, so an omnibus show-cause notice that names neither the clause nor the rate leaves the assessee unable to know the case to be met and denies a real opportunity under s.274. The Tribunal also held, independently, that the levy had no foundation where no statement was recorded under s.132(4) and the returned income was accepted under s.143(3) without any addition.
• 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.
• CBDT letter of 18 December 2014 — coercion in recording statements CBDT Circulars & InstructionsHelps taxpayer
  What is the department's own position if you were pressured into an admission?
  That it will be viewed adversely. The Board directed strict compliance with its earlier instructions, told officers to avoid obtaining admissions under pressure, and repeated that the focus must be on gathering evidence.
• CBDT Instruction of 10 March 2003 — no confessions in search or survey CBDT Circulars & InstructionsHelps taxpayer
  Are officers allowed to press you for an admission during a search or survey?
  No. The Board's own instruction says no attempt should be made to obtain a confession as to undisclosed income. Officers are to collect evidence instead, because confessions without credible evidence get retracted and achieve nothing.
• CBDT Instruction No. 1916 of 11 May 1994 — jewellery that is not to be seized CBDT Circulars & InstructionsHelps taxpayer
  The search party found my family's gold. Is there a quantity the department is not supposed to touch?
  Yes, for seizure. The Board's instruction tells the authorised officer not to seize gold jewellery and ornaments up to 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family where the person is not assessed to wealth-tax, and to leave more than that where the status of the family and the customs of the community justify it. It is written as a seizure instruction, and whether it also bars an addition is a separate fight.

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.