The Supreme Court bench, consisting of Justice C.T. Ravikumar and Justice Manoj Misra, declared that if no evidence indicating wrongdoing is discovered during the search, reassessment proceedings cannot be initiated for assessments that have already been completed or are ongoing.
The Supreme Court stated that if no incriminating material is discovered during a search or requisition, the Assessing Officer (AO) is not allowed to assess or reassess the income based on other material for completed or ongoing assessments.
The present appeal before the Supreme Court was against the final judgment and order dated 22.4.2022 passed by the High Court of Delhi in ITA No. 100/2022.
It was submitted by the counsel on both sides that the issue involved in this appeal is squarely covered by the decision of this Court in Municipal Commissioner of Income Tax v. Abhisar Buildwell Pvt. Ltd.
The Supreme Court bench noted that no evidence indicating wrongdoing was discovered during the search. As a result, the appeal must fail and subsequently dismissed.
However, taking into account the ruling in Abhisar’s case, it was clarified that completed or ongoing assessments could still be reopened by the Assessing Officer (AO) under Sections 147/148 of the Income Tax Act, 1961, provided that the conditions specified under those sections are met. Therefore, the powers of reopening assessments are preserved in accordance with the aforementioned judgment.
The Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. stated that if there is no incriminating material found, it is possible to reiterate the completed assessment and conduct the abated assessment or reassessment. The term ‘assess’ in Section 153A pertains to abated proceedings, meaning those that were pending at the time of the search, while the term ‘reassess’ pertains to completed assessment proceedings.
The provisions of Sections 147 and 148 of the Income Tax Act pertain to the authority of the Assessing Officer (AO) to assess or reassess the income if any income that should have been subject to taxation has been left out from the assessment for a specific assessment year.
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