No Assessment u/s 153 A in absence of Incriminating Material from Search: Madras HC [Read Order]

Recently Madras High Court (HC) held that Assessment under section 153A of the Income Tax Act, 1961 in absence of incriminating material from the search.

Pavithra Sugichandran, the petitioner challenged the respective assessment orders in respect of three assessment years viz., 2018-19, 201920 and 2020-21 on the ground that by total non-application of mind to Section 153A of the Income Tax Act, even without any authorization for search in respect of the petitioner, a search was conducted as per the provisions of Section 132 of the Income Tax Act.

Section 153A of the Income Tax Act, 1961 specifies the system for assessing income in the case of a searched person. In terms of the stated clause, the Assessing Officer might frame the assessment of a searched individual for six assessment years immediately proceeding the year of search.

An assessee has the right to have the assessment finalised, and the Income Tax Department cannot just keep undertaking re-assessments and litigations without adequate checks and balances. There is no time restriction for issuing a notice under Section 153A because the section refers to issuing rather than serving the notice.

Further Notice a search warrant granted under section 153A is illegal. As a result, any procedures arising from such an invalid notice, including the resulting assessment order, are bad in law and hence liable to be annulled. As a result, AO does not have unrestricted jurisdiction under section 153A.

If a search is conducted by applying Section 153A of the Income Tax Act, there should be a specific authorization. There is no warrant authorization to search as per Section 132 of the Income Tax Act on the petitioner.

A single-member bench consisting of Justice Abdul Quddhose observed that since a search under Section 132 of the Income Tax Act has not been conducted on the petitioner by the law, the impugned assessment orders have to be necessarily quashed and the Writ Petitions will have to be allowed. The Court while allowing the appeal, quashed the impugned assessment orders.

To Read the full text of the Order CLICK HERE

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