Search assessment block under section 153C must run from satisfaction and seized material; regular assessment cannot apply within that block.

In a section 153C search-assessment context, the block period for a non-searched person is computed from the date of recording satisfaction and receipt of seized material, not the date of search on the other person. On that basis, assessment years outside the six-year block were treated as beyond jurisdiction, while a year falling within the special block could not be assessed under section 143(3) and had to proceed under the search assessment code. For profit estimation, the fair gross profit rate was taken from the average of the assessee's disclosed results, with recomputation directed at 0.18% or the declared rate, whichever was higher.

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Issues: (i) Whether the assessments for assessment years 2013-14 and 2014-15 were barred by limitation and void for want of valid jurisdiction under section 153C read with section 153A. (ii) Whether the assessment for assessment year 2019-20 framed under section 143(3) was invalid when the year fell within the statutory block to be dealt with under section 153C read with section 153A. (iii) Whether the profit estimation for assessment years 2015-16 to 2018-19 required adoption of a fair gross profit rate based on the average of the assessee's disclosed results.

Issue (i): Whether the assessments for assessment years 2013-14 and 2014-15 were barred by limitation and void for want of valid jurisdiction under section 153C read with section 153A.

Analysis: The assessments for these two years were examined in the context of the first proviso to section 153C and the amended post-01.04.2017 regime. The relevant date for computing the block was treated as the date of recording of satisfaction and handover of seized material, not the date of search on the searched person. On that basis, assessment year 2021-22 was taken as the year relatable to the triggering event, and the six preceding years comprised assessment years 2015-16 to 2020-21. Since assessment years 2013-14 and 2014-15 fell outside that block, and the additions for those years did not satisfy the statutory threshold for extending the reach to the relevant assessment years beyond six years, the jurisdictional preconditions were not met.

Conclusion: The assessments for assessment years 2013-14 and 2014-15 were held to be invalid and unsustainable.

Issue (ii): Whether the assessment for assessment year 2019-20 framed under section 143(3) was invalid when the year fell within the statutory block to be dealt with under section 153C read with section 153A.

Analysis: Assessment year 2019-20 was found to fall within the six-year block attracted by section 153C read with section 153A. Once the special search assessment machinery became applicable, the regular assessment route under section 143(3) was not open for that year. The reasoning was supported by the settled principle that when a year forms part of the special search block, assessment must be framed under the special code and not under the normal assessment provision.

Conclusion: The assessment for assessment year 2019-20 was held to be without jurisdiction and was quashed.

Issue (iii): Whether the profit estimation for assessment years 2015-16 to 2018-19 required adoption of a fair gross profit rate based on the average of the assessee's disclosed results.

Analysis: For these years, the dispute was confined to the quantum of estimated profit. The assessee's disclosed gross profit rates across the years were aggregated and averaged, and the fair rate was worked out at about 0.18%. The court accepted this average as the appropriate basis for estimation, with the higher of the declared rate or the adopted rate to be applied on factual verification.

Conclusion: The estimated profit was directed to be recomputed at 0.18% or the assessee's declared gross profit rate, whichever was higher.

Final Conclusion: The appeals relating to assessment years 2013-14, 2014-15 and 2019-20 were allowed, while the appeals for assessment years 2015-16 to 2018-19 were allowed only to the extent of modification in the estimated profit rate.

Ratio Decidendi: For a non-searched person, the block under section 153C is computed from the date of receipt of seized material or satisfaction, and where a year falls within the special search block, assessment must be made under the special search code rather than section 143(3).

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