ITAT Ahmedabad: Section 153C Assessment Must Factor in Last Assessed Income and Crystallized Losses

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has delivered a significant ruling regarding assessments framed under Section 153C of the Income Tax Act 1961. In the case of GHCL Limited Vs DCIT, the Tribunal established that in the absence of incriminating material discovered during a search, the Assessing Officer (AO) is obligated to commence the assessment from the last assessed income. The Bench further clarified that the AO cannot disregard brought-forward losses that were already crystallized and determined in prior proceedings, even if the assessee inadvertently failed to claim them in the return filed in response to the notice under Section 153C.

Background of the Case

The dispute arose for the Assessment Year (AY) 2015-16. The assessee, GHCL Limited, had originally filed its return of income on 27.11.2015, declaring a total income of Rs. 184,75,65,720/-. This return was initially processed under Section 143(1) on 04-11-2016.