Keeping in mind a ruling by the Supreme Court, the Central Board of Direct Taxes (CBDT) has come out with detailed guidelines in opening of old cases under Income Tax Law.

In April this year, disposing an appeal filed by the Income Tax in the matter of Abhisar Buildwell Pvt Ltd, the apex court had held that assessment under Section 153A of the Income Tax Act can be done only if ‘incriminating’ material is available. However, the judgment seems to leave a window open for revenue, indicating that the avenue to re-open cases under Section 147 and 148 of the Income Tax Act would be available where any ‘other material’ is found.

Section 153 A of the Income Tax Act, 1961, aims to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Section 147/148 prescribes reopening the assessment.

Now, CBDT has said that as significant time has elapsed from the decisions received in completed cases wherein the assessment was made based on the other ‘materials’ and to provide tax certainty to the taxpayers, it has been decided that “no action is required to be taken under Section 147/148 of the Income Tax Act in cases, where decision of appellate authorities have become final because these decisions have not been contested in further in appeal.”

Application

Further, it has been decided that the said judgement is required to be applied in three types of cases— first, the lead and tagged cases in the Supreme Court judgment; second, all cases which are pending at appellate levels or before Assessing Officer (AO) or any tax authority; and third, all cases in which contrary decisions have been given by appellate authorities after the apex court judgment dated April 24, 2023. All such cases would be categories into two — pending/abated assessments and competed/unabated assessments.

CBDT has fixed September 30 for initiation of proceedings under section 148A in lead and tagged cases. Proceeding in these cases under Section 147/148 to be completed by April 30 next year. In cases where decisions given by the appellate authorities after April 24 and are not in consonance with the apex court, CBDT has said that these cases need to need to identified by September 30 and miscellaneous application need to be filed by November 30.

Incriminating material

Earlier, a Division Bench of the Apex Court had said: “In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns.”

Further, it said that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. “Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961,” the Bench said.

However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under Sections 147/148 of the Act and those powers are saved, added the Bench.

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