AY 2010-11 income-tax assessment after s.153A search notice held time-barred u/s153; Revenue appeal dismissed

The dominant issue was whether an assessment made pursuant to a notice under s.153A for AY 2010-11 was barred by limitation under s.153 of the Income-tax Act. The ITAT held that the statutory time limit prescribed by s.153 for completing the assessment had expired before the assessment was framed based on the notice dated 24.05.2022, rendering the assessment time-barred and invalid. Consequently, the Revenue's appeal was dismissed and the assessee's objection on limitation was accepted.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the assessment for the concerned year, framed pursuant to notice under section 153A after a search conducted on 18.10.2019, was barred by limitation because it fell outside the statutorily permissible block of ten assessment years.

(ii) Whether, for computing the ten assessment-year block under section 153A, the period is to be reckoned from the end of the assessment year relevant to the previous year of search (thereby excluding the impugned year), as accepted by binding judicial precedent relied upon by the appellate authority and the Tribunal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i) & (ii): Limitation/jurisdiction under section 153A and computation of the ten-year block

Legal framework (as discussed in the order): The Tribunal proceeded on the basis that initiation and completion of an assessment under section 153A must fall within the permissible block period; if the impugned year is outside the ten assessment years as computed, the Assessing Officer lacks jurisdiction and the assessment is vitiated as time-barred.

Interpretation and reasoning: The Court treated as determinative the view (followed in a coordinate bench decision and based on the jurisdictional High Court's exposition) that, for the ten-year block, the "relevant assessment year" is the assessment year corresponding to the financial year in which the search occurred, and that the ten assessment years are to be reckoned from the end of that assessment year. Applying this computation to a search on 18.10.2019, the Tribunal accepted that the ten-year span extended only up to assessment year 2011-12 at the oldest, rendering the impugned assessment year 2010-11 outside the permissible block.

Conclusions: The Tribunal held that the assessment framed pursuant to notice under section 153A for assessment year 2010-11 was barred by limitation and consequently could not be sustained. Since the appeal was dismissed on this legal ground, adjudication on the additions on merits was held to be academic and was not undertaken.

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