2026 (1) TMI 746 - AT - Income Tax

Validity of proceedings under section 153C: limitation bars assessments where search date is handing over or satisfaction recorded.

Date of search for unsearched persons is the date on which seized documents are handed over to their Assessing Officer or the date the Assessing Officer ... Validity of proceedings u/s 153C as barred by limitation - date of handing over of seized material/recording of satisfaction by the AO of the searched person - 'relevant asstt. year' as defined in Expln-1 below 4 Proviso to Sec.153A HELD THAT:- We observe that the assessment year 2011-12 under consideration clearly falls outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded. Therefore, the contention of the assessee is found to be correct on this count. Impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions in view of the decision of Jasjit Singh [2023 (10) TMI 572 - SUPREME COURT] and Ojjus Medicare (P.) Ltd. [2024 (4) TMI 268 - DELHI HIGH COURT] Decided against revenue. Issues: (i) Whether the assessment year 2011-12 falls outside the scope of section 153C of the Income-tax Act, 1961 and is barred by limitation where seized material/satisfaction was handed/recorded on 24.05.2021.Analysis: The question requires determining the commencement point for reckoning the period of limitation under section 153C. The assessment under section 153C can be initiated only within the period measured from the date on which the seized books/documents/assets are handed over to, or the date on which satisfaction is recorded by, the Assessing Officer of the non-searched person. Where the seized material and satisfaction relate to a later date than the original search date, the relevant assessment years to be examined for limitation commence from that later date. Reliance was placed on controlling precedents establishing that the period for which returns are required to be filed, and hence the limitation period for section 153C, commences from the date materials are forwarded/received by the jurisdictional Assessing Officer or from the date of recording of satisfaction by that officer.Conclusion: The assessment year 2011-12 falls outside the limitation period under section 153C and the assessment framed for A.Y. 2011-12 is barred by limitation; the assumption of jurisdiction by the Assessing Officer is not tenable. The Revenue's grounds challenging this legal conclusion are dismissed and the Revenue's appeals in quantum and in the connected penalty proceedings do not survive.Ratio Decidendi: For proceedings under Section 153C of the Income-tax Act, 1961, the relevant date for commencement of the limitation period is the date on which seized books/documents/assets are handed over to, or the date on which satisfaction is recorded by, the Assessing Officer of the non-searched person, and limitation is to be reckoned from that date.