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 records satisfaction; applying that principle the assessment year under review falls outside the temporal scope for initiation of seizure-based proceedings, rendering the subsequently framed assessment time-barred and the assumed jurisdiction invalid. The conclusion relies on higher court precedents treating handing over/recording of satisfaction as determinative for limitation, resulting in assessments against revenue being struck down on limitation grounds.

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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.

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