Scope of Reassessment Proceedings in Search Cases In The Light of CBDT Instruction No. 1 of 2023

EXECUTIVE SUMMARY

The Central Board of Direct Taxation (“CBDT”) has recently issued instruction no. 1 of 2023 dated 23rd August, 2023, (hereinafter referred to as “instruction”) in exercise of its powers under section 119 of the Income-tax Act, 1961 (“the Act”) with the object of implementing the decision of the Hon’ble Supreme Court in cases of PCIT vs. Abhisar Buildwell (P) Ltd [2023] 454 ITR 212 (SC) (hereinafter referred to as “Abhisar Buildwell”) and DCIT vs. U. K. Paints (Overseas) Ltd [2023] 454 ITR 441 (SC) (hereinafter referred to as “U K Paints”) in a uniform manner. The CBDT has taken a view that in cases where the proceedings did not abate at the time of the search, reassessment proceedings under section 147 / 148 of the Act will have to be undertaken in view of section 150 of the Act by following the procedure laid down under section 148A of the Act as inserted by Finance Act, 2021 in accordance with the law laid down by Supreme Court in case of Union of India vs. Ashish Agarwal [2022] 444 ITR 1 (SC). This article analyses the scope of the provisions of section 150 of the Act, and it is submitted that the said section is not applicable. Accordingly, the Revenue would be justified to initiate reassessment proceedings only if the time limit presc