Search-assessment limitation and Section 153C threshold determine whether proceedings can continue for specified assessment years

Under Section 153C of the Income-tax Act, 1961, the relevant search date for determining the assessment block is generally the date on which seized books or documents are received by the Assessing Officer; where that date is unavailable, the satisfaction-note date may be used. Applying this approach with Section 153A, assessment years 2008-09 to 2010-11 fell outside the permissible period and were treated as time-barred. For the remaining years, Section 153C proceedings required aggregate undisclosed income to exceed the prescribed threshold. Because the recorded cash payments did not cross that threshold, the jurisdictional condition was not satisfied, and the assessments could not be sustained.

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Issues: (i) Whether assessments for assessment years 2008-09 to 2010-11 were barred by the limitation period applicable to search assessments; (ii) whether the Assessing Officer retained jurisdiction under the search-assessment provisions for the remaining assessment years where the aggregate undisclosed income did not exceed the prescribed threshold.

Issue (i): Whether assessments for assessment years 2008-09 to 2010-11 were barred by the limitation period applicable to search assessments.

Analysis: Under the first proviso to Section 153C of the Income-tax Act, 1961, the date of search for the assessee is determined with reference to the date on which the seized books of account or documents are received by the Assessing Officer. In the absence of information regarding the date of receipt, the date of recording the satisfaction note, 31 March 2021, was treated as the relevant date. Applying Explanation 1 to Section 153A of the Income-tax Act, 1961, the permissible block comprised assessment years 2011-12 to 2020-21. Assessment years 2008-09 to 2010-11 therefore fell outside the permissible period.

Conclusion: The assessments for assessment years 2008-09 to 2010-11 were barred by limitation.

Issue (ii): Whether the Assessing Officer retained jurisdiction under the search-assessment provisions for the remaining assessment years where the aggregate undisclosed income did not exceed the prescribed threshold.

Analysis: For the subsequent assessment years, the recorded cash payments did not result in aggregate undisclosed income exceeding Rs. 50 lakhs. Consequently, the jurisdictional condition for passing orders under Section 153C of the Income-tax Act, 1961 was not satisfied.

Conclusion: The Assessing Officer lacked jurisdiction to pass the assessments under Section 153C of the Income-tax Act, 1961 for the remaining assessment years.

Final Conclusion: The assessments across all fourteen appeals could not be sustained, either because the relevant years were outside the permissible search-assessment period or because the jurisdictional threshold was not met.

Ratio Decidendi: Where the relevant date for a search assessment under Section 153C of the Income-tax Act, 1961 places the assessment year outside the permissible period under Section 153A, the assessment is time-barred; additionally, proceedings under Section 153C cannot be sustained where the prescribed undisclosed-income threshold is not met.

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