Third-party seized material and limitation under Section 153 cannot sustain additions without corroboration or valid electronic evidence.

Limitation under Section 153 was applied to hold that the assessment for assessment year 2022-23 was time-barred, because the exclusion in clause (xii) of Explanation 1 covered only the period actually lost in handing over seized material and did not extend the statutory period beyond that basis. The additions under Section 56(2)(x) were deleted because the case rested on third-party seized material, which did not attract the presumptions under Sections 132(4A) and 292C against the assessee without independent corroboration; the pen drive extract also lacked evidentiary value without a Section 65B certificate. In the absence of proof of the assessee's role or receipt of consideration, the statutory ingredients were not established.

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Issues: (i) whether the assessment for assessment year 2022-23 was barred by limitation under Section 153 of the Income-tax Act, 1961 after excluding the period covered by clause (xii) of Explanation 1; (ii) whether the additions under Section 56(2)(x) of the Income-tax Act, 1961 based on seized material of a third party, along with the related presumptions and electronic evidence objections, were sustainable.

Issue (i): whether the assessment for assessment year 2022-23 was barred by limitation under Section 153 of the Income-tax Act, 1961 after excluding the period covered by clause (xii) of Explanation 1.

Analysis: The limitation for the relevant year commenced from 01.04.2023 and ordinarily expired on 31.03.2024. The exclusion under clause (xii) of Explanation 1 to Section 153 was held to cover only the period lost in handing over seized material to the Assessing Officer, and not to extend the limitation in a manner inconsistent with that exclusion. On the facts, the seized material was received on 11.05.2023, and the Tribunal applied its earlier identical decision to hold that the period actually lost within the limitation window was 41 days, taking the completion date to 11.05.2024.

Conclusion: The assessment for assessment year 2022-23 was held to be barred by limitation and invalid; this issue was decided in favour of the assessee.

Issue (ii): whether the additions under Section 56(2)(x) of the Income-tax Act, 1961 based on seized material of a third party, along with the related presumptions and electronic evidence objections, were sustainable.

Analysis: The addition rested on a pen drive and records seized from third parties, together with an initially recorded statement that was later retracted and denied in cross-examination. The Tribunal held that material seized from a third party does not attract the statutory presumption under Sections 132(4A) and 292C against the assessee, and that such material cannot, by itself, support an adverse addition without independent corroboration. It further held that the electronic extract from the pen drive lacked evidentiary value in the absence of the mandatory certificate under Section 65B of the Indian Evidence Act, 1872. In the absence of proof that the assessee had any role in the land transaction or that the alleged cash was actually received by the assessee without consideration, the ingredients of Section 56(2)(x) were not established.

Conclusion: The additions under Section 56(2)(x) were deleted and this issue was decided in favour of the assessee.

Final Conclusion: Both appeals succeeded, the limitation objection was accepted for the first year, and the merits additions were also rejected for both years, resulting in complete relief to the assessee.

Ratio Decidendi: Material seized from a third party cannot be used to sustain an addition against an assessee unless it is independently corroborated and legally admissible, and the statutory presumption under search provisions does not extend to such third-party material; further, where the receipt itself is not proved, Section 56(2)(x) cannot be invoked merely on suspicion.

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