Case Studies

In a landmark ruling on block assessment procedures, the Supreme Court has clarified that material discovered during simultaneous survey operations at connected third-party premises can validly be used to compute undisclosed income under Chapter XIV-B of the Income Tax Act. The Court overturned the High Court’s decision and restored the Assessing Officer’s block assessment that included Rs 95.16 lakhs cash payment discovered during survey at the builder’s premises. This judgment establishes that ‘such other materials or information as are available with the Assessing Officer and relatable to such evidence’ under Section 158BB includes evidence gathered through simultaneous surveys under Section 133A when connected to the search subject.

In this landmark judgment, the Supreme Court reinforced the doctrine of exhaustion of alternative remedies in tax matters. The Court overturned the High Court’s decision to quash reassessment proceedings under Section 148 of the Income Tax Act, holding that the assessee should have first pursued the statutory appeal before the Commissioner of Income Tax (Appeals) rather than directly invoking writ jurisdiction. The ruling underscores that writ petitions under Article 226 should be exceptional, not routine, in tax disputes where the statute provides a specialized appellate mechanism. The Court allowed the Revenue’s appeal but granted the assessee liberty to file a statutory appeal within four weeks, with condonation of limitation.