2025 (12) TMI 1644 - AT - Income Tax

Search-seized material handed to other person's tax officer after 01.04.2021; s.153C notices dated 08.09.2022 quashed

The dominant issue was whether notices issued under s.153C were valid in light of s.153C(3), which excludes application of s.153C where the relevant 'date ... Validity of notice issued u/s 153C whether complying with the requirements prescribed u/s 153C(3) - HELD THAT:- In this case, the handing over of seized materials to the Jurisdictional Assessing Officer (JAO) of the assessee was on 08.09.2022. In such case, the said date has to be construed as the date of initiation of search in terms of Section 153C(3) of the Act, which says that nothing contained in Section 153C shall apply in relation to a search initiated u/s 132 or books of account or documents or assets requisitioned u/s 132A on or after the 1st day of April, 2021. As respectfully following the judgment of Harigovind [2025 (11) TMI 103 - MADRAS HIGH COURT] we set aside /quash all the notices issued u/s.153C on the assessee as the date of handing over of the seized materials, i.e., 08.09.2022, is the date of initiation of search. The issuance of impugned notices u/s 153C dated 08.09.2022 by the AO is without any authority and contrary to Sub-Section (3) of Section 153C of the Act and thus, the same is liable to be quashed. Decided in favour of assessee. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether notices issued under Section 153C, when issued after 01.04.2021 on the basis of seized material found in a third-party search, are barred by Section 153C(3) if the seized material was handed over to the assessee's jurisdictional Assessing Officer after 01.04.2021. (ii) Whether, for the purposes of Section 153C(3), the 'date of initiation of search' in the case of the 'other person' is to be construed as the date of handing over/receipt of seized material by the assessee's jurisdictional Assessing Officer. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i) & (ii) (Grouped): Validity of Section 153C notices in light of Section 153C(3) where seized material is handed over after 01.04.2021 Legal framework (as discussed by the Court): The Court examined Section 153C(3), which provides that nothing contained in Section 153C shall apply in relation to a search initiated under Section 132 or requisition under Section 132A on or after 01.04.2021. The Court also treated the 'date of initiation of search' for the 'other person' as linked to the handing over/receipt of seized material by the jurisdictional Assessing Officer of that 'other person', as applied from the reasoning adopted in the jurisdictional High Court decision relied upon. Interpretation and reasoning: The Court found, on the facts, that although the physical search occurred earlier in the premises of a third party, the seized materials relevant to the assessee were handed over to the assessee's jurisdictional Assessing Officer on 08.09.2022. The Court construed 08.09.2022 as the operative 'date of initiation of search' for the assessee for purposes of Section 153C(3). Since that operative date fell after 01.04.2021, the Court held that Section 153C proceedings could not be invoked against the assessee, and therefore the notices lacked legal authority. Conclusions: The Court quashed/set aside the notices issued under Section 153C dated 08.09.2022 as being contrary to Section 153C(3), holding that the relevant initiation date (for the assessee as 'other person') was the date of handing over of seized materials (08.09.2022), which was after 01.04.2021. As the same legal issue governed all years under appeal, the ruling was applied mutatis mutandis across all connected appeals, resulting in the assessee's appeals being allowed and the revenue's appeal being dismissed.