Limitation for non-searched person assessments under s153C: counting the 10-year block from seized material receipt date, not search date

The dominant issue was limitation for initiating assessment u/s 153C and computing the "ten relevant assessment years" when seized material is received by the AO of a non-searched person. The ITAT held that, by virtue of the first proviso to s.153C(1), the operative "date of search" for the non-searched person is the date on which the AO receives the seized records; consequently, the ten-year block must be counted backward under Expln. 1 to s.153A from the end of the AY relevant to the PY in which such receipt occurs. Since receipt occurred in AY 2022-23, the block ended at AY 2013-14, rendering AY 2012-13 outside scope; the Revenue's plea to adopt the original search date was rejected as contrary to binding HC precedent.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether an assessment for AY 2012-13 made under section 143(3) read with section 153C was without jurisdiction and liable to be quashed because AY 2012-13 fell outside the permissible block of six/ten assessment years, when reckoned from the date of receipt/handing over of seized material to the Assessing Officer of the non-searched person (and not from the original search date).

(ii) Whether, on the admitted dates of receipt of seized material and recording of satisfaction/issuance of notice under section 153C, the "year of search" for the non-searched person stood shifted by the first proviso to section 153C such that the ten-year computation under Explanation 1 to section 153A ended at AY 2013-14, rendering AY 2012-13 outside scope.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i)-(ii) (Grouped): Jurisdiction/limitation for invoking section 153C for AY 2012-13 and correct reckoning date for the six/ten-year block

Legal framework (as applied in the decision): The Court proceeded on the statutory scheme that section 153C assessments of a non-searched person follow section 153A mechanics, and that by virtue of the first proviso to section 153C the operative "date of search" (for the non-searched person) is treated as the date on which the seized material is received/handed over to the Assessing Officer having jurisdiction over that non-searched person. It further applied that the ten-year reach is to be computed in terms of Explanation 1 to section 153A, i.e., by counting back with reference to the "end of the assessment year relevant to the previous year" in which the search (as so deemed) is conducted.

Interpretation and reasoning: The Court accepted the decisive factual position that the original search was conducted on 18.10.2019 on another group, but the seized material relating to the assessee (a non-searched person) came into the possession of the assessee's Assessing Officer during the later period (the Court recorded receipt and satisfaction in the relevant year 2022-23). Applying the first proviso to section 153C, the Court held that this receipt date becomes the operative reference point ("date of search itself") for the assessee's section 153C proceedings. On that basis, the Court held that the ten "relevant assessment years" must be computed backward as per Explanation 1 to section 153A from the end of the assessment year relevant to that deemed search year. It found that, since the receipt was in AY 2022-23, the ten-year block could extend back only up to AY 2013-14; therefore AY 2012-13 was outside the permissible block.

Conclusions: The Court upheld the annulment of the assessment as non est for lack of jurisdiction because AY 2012-13 fell beyond the ten-year block when reckoned from the legally relevant date under section 153C (receipt/handing over of seized material to the non-searched person's Assessing Officer). It rejected the revenue's contention that the computation should instead run from the original search date (18.10.2019), holding that such an approach was contrary to the binding interpretation applied by the Court. Consequently, the revenue's appeal was dismissed and all other issues were treated as academic.

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