SRI SRINIVASA EDUCATIONAL & CHARITABLE TRUST,BANGALORE vs. DCIT, CENTRAL CIRCLE-2(3), BANGALORE

ITA 939/BANG/2025Status: DisposedITAT Bangalore13 November 2025AY 2020-21145 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment orders for AY 2020-21 and AY 2021-22 were barred by limitation under section 153B of the Income Tax Act. The Tribunal's reasoning focused on the interpretation of when a search is deemed to have concluded for limitation purposes. It found that the crucial event for determining the limitation period is the drawing of the last panchnama evidencing the conclusion of the search, as stipulated in section 153B(2). In this case, the search operations were initially carried out in February 2021, but prohibitory orders under section 132(3) were issued. These orders were revoked on April 20, 2021, and a final panchnama was drawn on that date. The Tribunal held that the search was concluded on April 20, 2021, not February 20, 2021, as contended by the assessee. This conclusion was supported by the Supreme Court's judgments in VLS Finance Ltd. vs. CIT and Shri Anil Minda vs. CIT, which held that the limitation period for block assessments (pari materia with section 153B) is reckoned from the date of the last panchnama, and that prohibitory orders keep the search proceedings alive. The Tribunal also addressed the assessee's arguments regarding the validity of prohibitory orders and CBDT instructions, finding them unconvincing in light of the statutory provisions and binding judicial precedents. Consequently, the Tribunal ruled that the assessments completed on November 24, 2023, and November 28, 2023, were beyond the prescribed time limit. The Tribunal did not decide on the merits of the additions made, as the primary issue was limitation.

What were the facts?

The assessee, M/s Sri Srinivasa Educational & Charitable Trust, is appealing against orders for Assessment Years (AY) 2020-21 and 2021-22. The appeals arise from orders passed by the Dy. Commissioner of Income Tax, Central Circle – 2(3), Bangalore, and confirmed by the Commissioner of Income Tax (Appeals)-15 Bengaluru. The assessee is a charitable trust operating educational institutions. Search proceedings under section 132 of the Income Tax Act were initiated on February 17, 2021, at the trust's head office and two educational institutes. Prohibitory orders were placed on certain premises and later revoked. Assessments under section 153A for AY 2020-21 and section 143(3) for AY 2021-22 were completed on November 24, 2023, and November 28, 2023, respectively, assessing substantial income against returned income. The assessee's appeals to the CIT(A) were dismissed, leading to the present appeals before the Tribunal.

What were the issues?

The primary issue before the Tribunal is whether the assessment orders for AY 2020-21 and AY 2020-21 are barred by limitation under section 153B of the Income Tax Act, rendering them void ab initio. This issue is raised through four limbs of argument by the assessee: 1. **Date of Conclusion of Search:** Whether the search concluded on February 20, 2021, when the search team left the premises, or on April 20, 2021, when prohibitory orders were revoked, for the purpose of computing the limitation period under section 153B. 2. **Interpretation of 'Search Year':** Whether the 'search year' for determining the limitation period is the financial year in which the last search authorization was executed (FY 2020-21) or the financial year in which the search was initiated (FY 2020-21). 3. **Validity of Prohibitory Orders:** Whether the prohibitory orders issued under section 132(3) were invalid due to non-compliance with legal requirements, thus invalidating subsequent panchnamas and extending the limitation period. 4. **Adherence to CBDT Instructions:** Whether the delay in revoking prohibitory orders beyond one month, contrary to CBDT instructions, invalidates the subsequent panchnamas and assessment limitation. **Assessee's Contentions:** * The search concluded on February 20, 2021, as the search team left the premises. Subsequent revocation of prohibitory orders is administrative and does not extend the search conclusion date. Reliance on C. Ramaiah Reddy v. ACIT. * The 'search year' is determined by the financial year of the last authorization execution (FY 2020-21), making AY 2021-22 the 'search assessment year', as per the sixth proviso to section 153B(1) and CBDT Circular No. 23/2022. * Prohibitory orders were issued without valid reasons (impracticability to seize) and thus invalid, as per B.K. Nowlakha v. Union of India, Dr. C. Balakrishna Nair v. CIT, and CIT v. Sandhya P. Naik. * Delay in revoking prohibitory orders beyond one month, contrary to CBDT instructions (Search & Seizure Manual, 2007; Instruction F No. 286/57/2002-IT), invalidates later panchnamas and extends limitation. Reliance on Polisetty Somasundaram v. DCIT. **Revenue's Contentions:** * The search concludes on the date of the last panchnama drawn after revocation of prohibitory orders, as per section 153B(2). Reliance on VLS Finance Ltd. vs. CIT and Shri Anil Minda vs. CIT. * The 'search year' is determined by the year the search is initiated under section 132, not concluded. Reliance on section 153A and its second proviso. * Prohibitory orders are legally valid extensions of the search process, and their revocation marks the conclusion of the search. * CBDT instructions cited by the assessee are not applicable to section 132(3) orders, are pre-amendment, or are administrative in nature and cannot override statutory provisions.

Which sections of the Income-tax Act were involved?

Section 132,Section 132(3),Section 132(4A),Section 132(8A),Section 143(3),Section 153A,Section 153B,Section 142A,Section 37,Section 119,Section 12A

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Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K

For Appellant: Shri M.V Prasad, CA & Shri KS Rajendra Kumar
For Respondent: Shri Muthu Shankar, CIT &, Shri Subramanian S, JCIT - (DRs)
Hearing: 14.11.2025Pronounced: 26.11.2025

PER WASEEM AHMED, ACCOUNTANT MEMBER:

These are set of 2 appeals filed at instance of the assessee for assessment years 2020-21 and 2021-22 arising out of separate orders of Learned Commissioner of Income Tax (Appeals)-15 Bengaluru (hereafter learned CIT-A) under the provision of section 250 of the Income tax (here after the Act) dated 31st March 2025 bearing DIN: ITBA/APL/M/250/2024-25/1075322373(1) and ITBA/APL/M/250/2024- 25/1075322383(1) respectively.

2.

First, we take up ITA No. 939/Bang/2025, an appeal by the assessee fo

The order continues below.

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