Scope of incriminating material in block assessments

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Customer Care No. 91-11-45562222
Scope of incriminating material in block
assessments
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• Introduction - Provisions of Section 153 A
• 1. With the introduction of the group of
  sections, viz., Sections 153A to 153C, the
  concept of a single block assessment was given a
  go-by. Where a search was made after 31.05.2003
  the AO is obliged to issue notices calling upon
  the searched person to furnish returns for the
  six assessment years immediately preceding the
  assessment year relevant to the previous year in
  which the search was conducted. Under section
  153A, the AO is required to exercise normal
  assessment powers in respect of the previous year
  in which the search took place. Another
  significant feature is that the AO has power to
  assess and reassess the 'total income' of the
  aforementioned six years in separate assessment
  orders for each of the six years. This meant that
  there could be only one Assessment Order in
  respect of each of the six assessment years "in
  which both the disclosed and the undisclosed
  income would be brought to tax".

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• Issuance of notice is a mandatory requirement
• 2. Once a search takes place under section 132,
  notice under section 153 A (1) will have to be
  mandatorily issued to the person searched
  requiring him to file returns for six assessment
  years immediately preceding the previous year
  relevant to the assessment year in which the
  search takes place.
• In terms of section 153A (1) it is mandatory for
  the AO to issue a notice to the searched person
  once a search took place whether or not any
  incriminating material was found. The logical
  corollary of this is that irrespective of whether
  any such incriminating material was found during
  the search, since notice has been issued under
  section 153A (1) (a), the returns for the six
  preceding years has mandatorily to be filed by
  the Assessee and the assessment for each of the
  six previous years has to be carried to the
  logical end. If in that process any undisclosed
  income relating to completed assessment came to
  light, it would be open to the AO to proceed to
  make such additions.
• Pending assessments and completed assessments
• 3. Assessments and reassessments pending on the
  date of the search shall abate. The total income
  for such assessment years will have to be
  computed by the AO as a fresh exercise.
• The AO will exercise normal assessment powers in
  respect of the six years previous to the relevant
  assessment year in which the search takes place.
  The AO has the power to assess and reassess the
  'total income' of the aforementioned six years in
  separate assessment orders for each of the six
  years. In other words there will be only one
  assessment order in respect of each of the six
  assessment years "in which both the disclosed and
  the undisclosed would be brought to tax".

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• Insofar as pending assessments are concerned, the
  jurisdiction to make the original assessment and
  the assessment under section 153A merges into
  one. Only one assessment shall be made separately
  for each assessment year on the basis of the
  findings of the search and any other material
  existing or brought on the record of the AO. In
  the case of completed assessments the 'total
  income' would be reassessed on the basis of
  evidences/materials or documents found during the
  search.
• Addition when and where
• 4. Although section 153A does not say that
  additions should be strictly made on the basis of
  evidence found in the course of the search, or
  other post-search material or information
  available with the AO which can be related to the
  evidence found, it does not mean that the
  assessment "can be arbitrary or made without any
  relevance or nexus with the seized material.
  Obviously an assessment has to be made under this
  section only on the basis of seized material."
• In absence of any incriminating material, the
  completed assessment can be reiterated and the
  abated assessment or reassessment can be made.
  The word 'assess' in section 153A is relatable to
  abated proceedings (i.e. those pending on the
  date of search) and the word 'reassess' to
  completed assessment proceedings.
• Comp1eted assessments can be interfered with by
  the AO while making the assessment under section
  153A only on the basis of some incriminating
  material unearthed during the course of search or
  requisition of documents or undisclosed income or
  property discovered in the course of search which
  were not produced or not already disclosed or
  made known in the course of original assessment.

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