Assessments under s.153C invalid as time-barred; delayed satisfaction and same assessing officer made assessments prejudicial and quashed

HC held assessments under s.153C invalid as barred by limitation. Search occurred 11.10.2012 but satisfaction was recorded only on 27.03.2019, about seven years later; this delay, coupled with identical assessing officer for searched person and petitioner, rendered handover and consequential assessments prejudicial and unjustified. Reckoning six-year limitation from satisfaction limited reach to AY 2013-14, leaving contested assessment years time-barred and the s.153B completion periods lapsed. Impugned assessment orders quashed; decision for the assessee.

---

---

Issues involved:
Challenge to assessment orders for assessment years 2011-2012 and 2012-2013 based on limitation under Section 153C of the Income Tax Act, 1961.

Assessment Year 2011-2012:
The petitioner, a partnership firm engaged in real estate, filed returns of income for the relevant assessment year. A search at a partner's premises led to satisfaction under Section 153C recorded in 2019, followed by assessment orders in 2019. Petitioner argues limitation based on Supreme Court judgment in Commissioner of Income Tax 14 v. Jasjit Singh, emphasizing the calculation of the six-year period from satisfaction date.

Assessment Year 2012-2013:
Similar to the previous year, the petitioner challenges the assessment order on the grounds of limitation under Section 153C. The respondent relies on the judgment in Commissioner of Income Tax III v. Calcutta Knitwears to argue that satisfaction note under Section 153BD can be prepared at various stages, including before assessment proceedings against the searched person are completed.

Interpretation of Section 153C(1) and Section 153B(1):
The proceedings revolve around the interpretation of Section 153C(1) and Section 153B(1) of the Income Tax Act. The Supreme Court's analysis in Jasjit Singh highlights the importance of calculating the limitation period from the date of satisfaction to prevent prejudice to the third party involved. In this case, the delay in recording satisfaction after the search in 2012 renders the assessment proceedings for both years barred by limitation.

Conclusion:
The High Court quashes the assessment orders for both assessment years as they are deemed barred by limitation. The delay in recording satisfaction and the lapse of the specified periods for assessment completion support the decision. The petitioner's petitions are allowed without costs, and connected miscellaneous petitions are closed.

---