Time-bar on reassessment under Section 153(3) bars retention of seized assets; jewellery must be returned to the petitioner.

Failure to complete reassessment within the statutory outer limit under Section 153(3) renders the remand ineffective and bars fresh assessment, and Section 132B requires applying seized assets to recognized liabilities and returning any surplus to the person from whose custody they were taken; because the reassessment was not completed within the prescribed period and no liability now subsists, the operative effect is that the seized jewellery must be released to the petitioner within six weeks.

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Issues: (i) Whether jewellery seized during search should be released to the petitioner where the ITAT set aside the assessment addition and no fresh assessment order was passed within the statutory time limit under Section 153(3) of the Income-tax Act, 1961.

Analysis: The ITAT remanded the matter for a fresh adjudication of the addition relating to the seized jewellery and the remand order was served on the Principal Commissioner in September 2016. Section 153(3) of the Income-tax Act, 1961 prescribes the outer time limit for completion of reassessment proceedings after receipt of such a remand order; that statutory period expired on 31st December, 2017. Section 132B(1)(i) and Section 132B(3) of the Income-tax Act, 1961 permit application of seized assets towards recognized liabilities and require return of any surplus to the person from whose custody the assets were seized once liabilities are discharged. The Revenue did not complete the reassessment within the statutory period and no fresh assessment order has been passed despite the lapse of several years. Prior authority of this Court on similar facts recognises that failure by the Revenue to act pursuant to an appellate remand and within the statutory time frame warrants release of seized jewellery.

Conclusion: The seized jewellery shall be released to the petitioner within six weeks, as the reassessment is time barred and no liability now subsists that would justify continued withholding of the jewellery.

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