Section 153C limitation and unreliable third-party evidence led to quashing of assessments and deletion of additions.

Jurisdiction under section 153C was upheld where the Assessing Officer recorded satisfaction on seized material, even though the information originated from the Investigation Wing and the same officer assessed both persons. The proceedings under sections 153C and 153B were nevertheless held time-barred, as the satisfaction note and assessment were recorded beyond the permissible limitation period, rendering the assessments void ab initio. Additions under section 69A and the consequential section 115BBE levy were deleted because the alleged nexus rested on uncorroborated electronic extracts and third-party statements, with no meaningful cross-examination and insufficient reliable evidence linking the material to the assessee.

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Issues: (i) Whether jurisdiction under section 153C of the Income-tax Act, 1961 could be validly assumed on the basis of information from the Investigation Wing where the same Assessing Officer had jurisdiction over the searched person and the other person; (ii) Whether the proceedings initiated and completed under sections 153C and 153B were barred by limitation and hit by the statutory cut-off; (iii) Whether the additions under section 69A and the consequential invocation of section 115BBE could be sustained on the basis of uncorroborated electronic material and third-party statements without cross-examination.

Issue (i): Whether jurisdiction under section 153C of the Income-tax Act, 1961 could be validly assumed on the basis of information from the Investigation Wing where the same Assessing Officer had jurisdiction over the searched person and the other person

Analysis: The assessment framework under section 153C requires satisfaction of the Assessing Officer and transmission of seized material to the officer having jurisdiction over the other person. Where the same officer holds jurisdiction over both, the handing over and receiving of material is a notional exercise and the initial trigger from seized material is not invalid merely because the information originated through the Investigation Wing, provided the officer applies mind to the seized material and records satisfaction.

Conclusion: The jurisdictional objection was rejected and the assumption of jurisdiction under section 153C was upheld against the assessee.

Issue (ii): Whether the proceedings initiated and completed under sections 153C and 153B were barred by limitation and hit by the statutory cut-off

Analysis: The limitation provisions were examined on the basis of the original search date, the deemed date of handing over of material, and the date of recording satisfaction. On each construction, the proceedings were beyond time. The block period under section 153C had to be reckoned from the relevant triggering date for the other person, and the statutory bar in section 153C(3) excluded searches initiated on or after 01.04.2021. The satisfaction note and consequent assessment were recorded and completed much later than the permissible period, rendering the initiation and completion unsustainable.

Conclusion: The assessments were held to be barred by limitation and void ab initio.

Issue (iii): Whether the additions under section 69A and the consequential invocation of section 115BBE could be sustained on the basis of uncorroborated electronic material and third-party statements without cross-examination

Analysis: The additions rested on coded entries in seized electronic data, a third party's admission before the Settlement Commission, and assumptions linking the code to the assessee. The material was not independently corroborated, the identity of the person referred to was doubtful, and no meaningful opportunity of cross-examination was afforded in respect of the statements relied upon. In the absence of reliable nexus evidence, the electronic extracts remained insufficient to fasten the alleged cash loan and interest income on the assessee.

Conclusion: The additions under section 69A and the consequential application of section 115BBE were deleted on merits.

Final Conclusion: The common orders of assessment were quashed and the connected additions were deleted, leaving the assessee fully successful in the appeals.

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