In case of a search conducted by the income tax department, Section 153A of the Income Tax Act allows an officer to assess the income of the individual or firm for six years before that. But the condition for such an assessment is that the officer must find incriminating evidence during the search. Now the Supreme Court has asked if other materials that the officer has on hand and third party records can be used for assessing total income, apart from incriminating evidence, after conflicting High Court judgments.
What the ASG has explained
Responding to this query, the Additional Solicitor General of India has explained how search and regular assessments were conducted parallelly between 1995 and 2003. But after that they were combined under 153A, and once search or enquiry into records is finished under 132 or 132A, the original assessment under 143 and escaped assessment under 147 are ousted. Another view expressed by courts on this matter is that the assessment under 153A should be confined to incriminating evidence.
Can 143 and 147 be used for reassessment?
He also added that there is a jurisdictional failure under section 153A if no incriminating evidence is found during the search. If a search is initiated under 153A, then assessment under 143 and 147 is suspended. But if no incriminating evidence is seized under Section 153A, all three can't be used for assessment.
On the other hand, if someone challenges the assessment under Section 153A and calls search faulty or illegal, and the court rules in favour of the petitioner, then 147 and 143 are applicable. But if the court finds that the search under Section 153A was valid, then assessment needs to be conducted under it. Provisions also say that section 147 can be used for reassessment.
Total income assessment as the goal
The ASG added that reassessment can be done using all material available instead of just incriminating evidence. He concluded by adding that if the objective is to assess total income, it can't be done if incriminating evidence is taken as the only basis.
