Abatement of prior search bars use of first-search materials in a later search assessment; only new second-search evidence sustains the later assessment.

Abatement of an earlier search by executing a subsequent warrant prevents use of incriminating material seized in the first search to support a later search-based assessment; material from the earlier search may only support reassessment proceedings (reopening) and not a fresh search-assessment for the later search year. The assessing officer treated the later warrant date as the search date and completed a search-assessment for the same AY using materials from the first search, which the tribunal found improper. Only new incriminating material seized in the second search may be relied on for the second search assessment and for initiating assessments for immediately preceding years.

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Issues: (i) Whether the assessment framed under section 153A for AY 2020-21 was time-barred and therefore invalid; (ii) Whether AY 2020-21 being the search year, the assessment could lawfully be framed under section 153A (or whether the assessment under section 153A is invalid because the search year must be assessed under section 143(3) and/or the first search was abated by a subsequent search).

Issue (i): Whether the assessment framed under section 153A for AY 2020-21 was time-barred and therefore invalid.

Analysis: The Tribunal examined the dates of search initiation and conclusion, the panchnama entries, the prohibitory order and its lifting, the statutory timeline under section 153B for assessments relating to searches, and the process of issuance/upload and DIN generation for the impugned assessment order. It applied authorities on the meaning of when an order is "made" (issuance/dispatch/upload beyond the control of the AO) and considered the financial year reflected in the DIN generation and ITBA records. The Tribunal found that the last panchnama relevant to the search was drawn on 01.03.2020, the prohibitory order ceased by operation of section 132(8A), and the statutory period under section 153B ran accordingly; further, the DIN and system records indicated issuance after the limitation date, demonstrating the order was issued after the prescribed period.

Conclusion: The assessment order under section 153A is time-barred and invalid.

Issue (ii): Whether AY 2020-21 being the search year, the assessment could lawfully be framed under section 153A (or whether the assessment under section 153A is invalid because the search year must be assessed under section 143(3) and/or the first search was abated by a subsequent search).

Analysis: The Tribunal analysed the legal scope of section 153A and the scheme of sections 153A/153B, the recorded chronology of two distinct search authorisations (27.02.2020 and later warrant executed on 21.11.2020), the effect of lifting the prohibitory order and of a subsequent warrant of authorization. It held that where the earlier search was abated by a subsequent search, the material from the first search cannot be used in proceedings under section 153A initiated in relation to the second search; the search year remains the year of the concluded (last relevant) panchnama unless abatement/cessation occurs by operation of law, and the search year itself must ordinarily be assessed under section 143(3). The Tribunal concluded that the department had improperly invoked section 153A for AY 2020-21 by relying on materials of the first search after the second search had intervened and by treating AY 2020-21 as a 153A year.

Conclusion: The assessment framed under section 153A for AY 2020-21 is invalid because AY 2020-21 was the search year and/or because the first search was abated by the subsequent search, making the use of the earlier search material under section 153A impermissible.

Final Conclusion: The Tribunal quashed the assessment order dated 31.03.2022 framed under section 153A for AY 2020-21 and allowed the assessee's appeal. Other grounds were left open as the assessment was quashed on the legal issues decided.

Ratio Decidendi: Where (a) the statutory timeline under section 153B is computed from the conclusion of the search as recorded in the last panchnama, and (b) a subsequent valid warrant/search abates the earlier search such that material from the earlier search cannot be used in proceedings under section 153A initiated for the later search, an assessment under section 153A that relies on the abated search or is issued after the limitation under section 153B is invalid and liable to be quashed.

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