Topic
Section 153A of the Income Tax Act, 1961, governs assessment proceedings initiated after a search and seizure operation by tax authorities, allowing assessment of undisclosed income for up to six previous years.
The ITAT Delhi held that reassessment under section 148 is valid only if the escaped income is an asset as per Explanation 2 to section 153A, noting that unsecured loans received by the assessee qualify as such assets and that liability-side entries do not defeat the extended limitation when the escaped amount exceeds ₹50 lakh.
The ITAT Mumbai has ruled that seized financial calculations, without independent corroboration or borrower confirmation, cannot substantiate an addition for undisclosed interest income. This reinforces the burden of proof on the revenue and protects taxpayers from speculative assessments based solely on circumstantial material recovered during searches.
The ITAT Pune has ruled that penalty under Section 271(1)(c) cannot be imposed when an assessee voluntarily discloses undisclosed income in response to a notice under Section 153A, provided no incriminating material was found during the search. This affirms that disclosure in compliance with statutory procedure negates the presumption of concealment, offering critical relief to taxpayers who cooperate post-search.
ITAT Delhi holds that failure to appear before CIT(A) in search assessment cases does not justify ex parte orders; remand with cost imposition ensures fair adjudication.
ITAT Delhi holds that under Section 153A, the Rs.50 lakh threshold for extended assessment applies to cumulative undisclosed income, not per assessment year, clarifying jurisdictional limits.
ITAT Delhi quashes assessment issued to deceased assessee, holding that notices under Section 153A must be issued to legal representatives post-death.