Search assessment limitation and invalid 153C satisfaction note led to deletion of uncorroborated cash receipt additions.

Search assessments under section 153C were held vulnerable where limitation under section 153B was computed from the conclusion of search in the assessee's own case, recorded in the last panchanama, and the assessment orders were passed after the outer limit expired. Jurisdiction under section 153C also failed because the satisfaction note was generic for multiple years and lacked year-wise linkage to seized incriminating material or undisclosed income. The additions for alleged cash receipts from sub-contractors were further deleted because they rested mainly on third-party statements without corroborating documentary evidence, independent seized material, or effective cross-examination. The assessee therefore obtained complete relief.

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Issues: (i) Whether the assessment orders framed under section 153C were barred by limitation under section 153B; (ii) whether a common satisfaction note for multiple assessment years could validly sustain jurisdiction under section 153C; (iii) whether the additions based on alleged cash receipts from sub-contractors, founded only on third-party statements and without corroboration, were sustainable.

Issue (i): Whether the assessment orders framed under section 153C were barred by limitation under section 153B.

Analysis: The limitation for assessments arising out of search is governed by section 153B, and the execution of authorisation is to be read with the conclusion of search as recorded in the last panchanama. Where a joint warrant covers multiple persons, the assessment of each person remains separate, and the relevant date for limitation is the conclusion of search in the case of the concerned assessee, not the conclusion date in another person's case. On the facts, the search in the assessee's case concluded on 12.02.2020, and even with the extension available under the relaxation measures and notifications, the outer limit expired before the assessment orders dated 28.03.2022.

Conclusion: The assessments were time-barred and liable to be quashed in favour of the assessee.

Issue (ii): Whether a common satisfaction note for multiple assessment years could validly sustain jurisdiction under section 153C.

Analysis: Jurisdiction under section 153C requires satisfaction founded on seized material and a clear nexus with undisclosed income for the relevant assessment year. A generic satisfaction note covering several years without year-wise linkage to incriminating material does not satisfy the statutory requirement. The satisfaction note here was recorded in a sweeping manner and did not identify specific incriminating material or year-wise undisclosed income, rendering the assumption of jurisdiction invalid.

Conclusion: The jurisdiction under section 153C was invalid and the assessments were unsustainable in favour of the assessee.

Issue (iii): Whether the additions based on alleged cash receipts from sub-contractors, founded only on third-party statements and without corroboration, were sustainable.

Analysis: In a search-based assessment, additions must rest on tangible incriminating material and not on suspicion, surmise, or uncorroborated oral statements. Third-party statements, particularly when not supported by documentary evidence and without affording effective cross-examination, cannot by themselves justify an addition. The record did not contain independent evidence of cash being returned to the assessee, and the addition was made mainly on statements of a few persons and not on seized material or other corroboration.

Conclusion: The additions on account of alleged cash receipts from sub-contractors were deleted in favour of the assessee.

Final Conclusion: The search assessments failed on limitation, on the validity of the jurisdictional satisfaction, and on the merits of the cash-receipt additions, resulting in complete relief to the assessee.

Ratio Decidendi: For assessments under section 153C arising from search, the relevant limitation runs from the conclusion of search in the assessee's own case as recorded in the last panchanama, and jurisdiction must rest on assessment year-specific satisfaction founded on incriminating material; additions cannot be sustained solely on uncorroborated third-party statements.

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