Section 153C jurisdiction fails absent incriminating seized material and when the limitation period is computed beyond the permissible block period.

Section 153C proceedings were held unsustainable where the ten-year block period was computed from the end of the assessment year relevant to the year of search or receipt of seized material, leaving the impugned years outside limitation; the notices and assessments were therefore barred. Jurisdiction was also found invalid because the additions were made from regular books and audited financial statements, not from incriminating seized material relating to the assessee and the relevant years; the statutory precondition for assumption of jurisdiction was not met. The appellate relief was upheld and the Revenue's appeals were dismissed.

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Issues: (i) Whether the notice and assessment under Section 153C of the Income-tax Act, 1961 for the impugned assessment years were barred by limitation on computation of the relevant block period. (ii) Whether jurisdiction under Section 153C could be assumed when the additions were not founded on incriminating material pertaining to the assessee.

Issue (i): Whether the notice and assessment under Section 153C of the Income-tax Act, 1961 for the impugned assessment years were barred by limitation on computation of the relevant block period.

Analysis: The relevant assessment years fell beyond the ten-year period when reckoned from the end of the assessment year relevant to the year in which the seized material was handed over to the Assessing Officer of the non-searched person. The Tribunal followed the jurisdictional High Court's interpretation that the ten-year block under Sections 153A and 153C is computed from the end of the assessment year relevant to the year of search or receipt of seized material, and not from an earlier date suggested by the Revenue. On that computation, the impugned years were outside the permissible range.

Conclusion: The notices and assessments under Section 153C for the impugned years were barred by limitation and could not be sustained.

Issue (ii): Whether jurisdiction under Section 153C could be assumed when the additions were not founded on incriminating material pertaining to the assessee.

Analysis: The additions were found to have been made from regular books of account and audited financial statements rather than from seized incriminating material. Jurisdiction under Section 153C requires seized material having a nexus with the assessee and with the relevant assessment year. In the absence of such material, the statutory precondition for initiating proceedings was not satisfied.

Conclusion: Jurisdiction under Section 153C was invalidly assumed because no incriminating material pertaining to the assessee and the relevant years was shown.

Final Conclusion: The Tribunal upheld the appellate relief, held the Section 153C proceedings unsustainable, and dismissed the Revenue's appeals.

Ratio Decidendi: For invoking Section 153C, the seized material must pertain to the assessee and the relevant assessment year, and the permissible block period must be computed in accordance with the statutory reference point for the year of search or receipt of material; absent these conditions, the proceedings are without jurisdiction.

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