The ITAT, Bangalore in the case of Ms. Nandini Delux vs. Asst. Commissioner of Income Tax, it was held that where no proceedings were pending and no material was found during a search which has not been unanswered, and even if the assessment is complete regarding any relevant assessment year, the Assessing Officer can still reopen proceedings under section 153A of the Income Tax Act and reassess the total income along with the “undisclosed” income of the assessee, if any, found during the search.
The Tribunal considered a situation where some material was discovered regarding a completed assessment. It was held that section 153A of the Act is applicable if incriminating material is found during a search even if assessments are completed.
However the issue was left open whether any addition can be made regarding assessments in case no such material was found. The judgment raises a doubt as to whether the proceedings under section 153A of the Act can be initiated even if no incriminating material is found in the course of search. In the aforesaid case the appeal was decided against the assessee. The order of the CIT (A) was upheld.
We know that acquiring jurisdiction under section 153A of the Act is not dependent upon recovery and of any incriminating material. The decision of the Karnataka High Court in the case of Canara Housing Development Co. was a significant one as it was held that if the assessment is reopened, the Assessing Officer can assess both disclosed income as well as any undisclosed income found during search and also that which is not disclosed in the earlier return or which is not revealed during search under section 132 of the Act to determine the ‘total income’ of the assessee and accordingly pass the order of assessment.
Provisions of section 153A of the Act:
The section provides that if an assessee against whom a search is initiated as per section 132 of the Act or his books of account or any other document or any asset is sought for under section 132A, the Assessing Officer shall assess or reassess his total income of six assessment years immediately before the relevant assessment year in which a search was conducted provided that the Assessing Officer shall assess or reassess the total income within such six assessment years and further that such assessment or reassessment, as the case may be, in connection with any assessment year within the six assessment years, pending on the date of such search under section 132 or making of requisition as per section 132A, shall abate.