Notice u/s 153A for AY 2010-11 quashed as time-barred; ten-year block runs AY 2020-21 to 2011-12

ITAT Delhi allowed the assessee's appeal and quashed the notice issued u/s 153A and the consequential assessment for AY 2010-11. It held that, given the search on 18.10.2019, Explanation 1 to s.153A mandates that the ten-year block of assessable years runs from AY 2020-21 back to AY 2011-12. AY 2010-11 falls outside this statutory block, rendering the notice and assessment without jurisdiction and barred by limitation. Relying on binding HC precedent, the Tribunal concluded that the Assessing Officer committed a fundamental jurisdictional error, and the proceedings were void ab initio. The appeal was decided against the Revenue.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the notice issued under Section 153A for Assessment Year 2010-11, pursuant to a search conducted on 18.10.2019, was barred by limitation as being beyond the permissible block period of ten assessment years under Section 153A read with Explanation 1.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and limitation of notice under Section 153A for AY 2010-11 in light of the ten-year block period

Legal framework (as discussed)

2.1 The Tribunal noted that the core controversy arose from the notice issued under Section 153A of the Income-tax Act, 1961, for AY 2010-11, following a search under Section 132 conducted on 18.10.2019. The question was the interpretation and application of Section 153A, particularly Explanation 1, regarding computation of the block of six and ten assessment years and identification of the "relevant assessment year".

2.2 The Tribunal referred to and relied upon the binding decisions of the jurisdictional High Court in the matters interpreting Section 153A and Explanation 1, specifically holding that the ten assessment years are to be computed "from the end of the assessment year relevant to the previous year in which the search was conducted or requisition made".

Interpretation and reasoning

2.3 The Tribunal recorded that the search in the case was conducted on 18.10.2019. Applying the interpretation laid down by the High Court, it held that the "relevant assessment year" for the purposes of Explanation 1 to Section 153A is the assessment year corresponding to the previous year in which the search was conducted. Since the search took place in financial year 2019-20, the "relevant assessment year" is AY 2020-21.

2.4 Relying upon the High Court's exposition, the Tribunal emphasized the distinction between (a) computation of six assessment years which "immediately precede" the assessment year relevant to the year of search, and (b) computation of the ten assessment years for the extended block, which are to be reckoned "from the end of the assessment year relevant to the previous year in which the search was conducted". The latter serves as the anchor point for the ten-year block.

2.5 Following this interpretation, the Tribunal enumerated the ten assessment years permissible for initiation of proceedings under Section 153A, starting from AY 2020-21 as the anchor year. The block of ten assessment years, as computed by the Tribunal, comprised AY 2020-21, 2019-20, 2018-19, 2017-18, 2016-17, 2015-16, 2014-15, 2013-14, 2012-13 and 2011-12. On this computation, AY 2010-11 falls outside the statutory block of ten assessment years.

2.6 The Tribunal noted that the jurisdictional High Court, in the cited decisions, had already settled the manner in which the "relevant assessment year" is to be identified and how the ten-year block is to be reckoned, and that those decisions were directly applicable, the search in the present matter having arisen from the same group search and factual matrix.

Conclusions

2.7 The Tribunal concluded that, with the search having been conducted on 18.10.2019, the ten-year block under Section 153A read with Explanation 1 extended only up to AY 2011-12. AY 2010-11 being outside this block, the Assessing Officer lacked jurisdiction to issue notice or frame assessment for that year under Section 153A.

2.8 It was held that issuance of notice under Section 153A for AY 2010-11 constituted a fundamental jurisdictional error and the resultant assessment order was vitiated for being barred by limitation and contrary to the statutory scheme as interpreted by the jurisdictional High Court.

2.9 Accordingly, the notice issued under Section 153A for AY 2010-11 and the consequential assessment order were quashed as time-barred, and the Revenue's grounds challenging the order of the appellate authority were dismissed, resulting in dismissal of the Revenue's appeal.

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