ACIT., CENTRAL CIRCLE-2(4), HYDERABAD vs. PRATHIMA INFRASTRUCTURE LIMITED, HYDERABAD

Facts

A search and seizure operation was conducted in the case of Prathima Infrastructure Limited based on a joint warrant. The assessee's search concluded on February 12, 2020, but the Revenue contended that the search concluded on July 23, 2020, due to ongoing proceedings related to other individuals named in the joint warrant. Additions were made based on seized documents and email data, which the assessee argued were not linked to its business.

Held

The Tribunal held that the limitation period for assessment under Section 153B is determined by the conclusion of the search as recorded in the last panchanama. While the assessee's individual search concluded on February 12, 2020, the ongoing prohibitory order in relation to associated individuals meant the search under the joint warrant concluded on July 23, 2020. Therefore, the assessment order passed within 12 months from the end of that financial year was within the prescribed time limit. Regarding additions, the Tribunal remanded the issue for fresh consideration by the Assessing Officer, emphasizing the need for proper evidence to link the seized material to the assessee's transactions and for correct application of Section 115BBE.

Key Issues

Whether the assessment order was barred by limitation given the conclusion date of the search under a joint warrant, and whether additions based on seized electronic data are sustainable without establishing a nexus to the assessee's business.