RUPESH KANTILAL SAVLA ,MUMBAI vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 20(3), MUMBAI

Facts

The assessee's original assessment for A.Y. 2011-12 was completed. Subsequently, information from a search on the Globe Group indicated the assessee received bogus Long Term Capital Gains (LTCG). A reassessment was initiated under section 147. Later, a search on another group yielded incriminating documents related to the assessee, leading to a notice under section 153C, and the section 147 proceedings were abated. The assessment was then completed under section 153C read with 143(3), making additions for unexplained money and cash credits, which the assessee challenged as time-barred and lacking a proper satisfaction note.

Held

The Tribunal ruled that the assessment under Section 153C read with Section 143(3) for A.Y. 2011-12 was invalid as it was time-barred. Relying on Supreme Court and Delhi High Court decisions, it held that for a non-searched person, the block period for Section 153C proceedings should be counted from the date of receipt of documents by the jurisdictional AO or the recording of a satisfaction note, not the search date. Since the satisfaction note was recorded in AY 2018-19, and the search was conducted before April 1, 2017, A.Y. 2011-12 fell outside the permissible six-year block period, thus quashing the assessment.

Key Issues

1. Whether the assessment proceedings initiated under Section 153C of the Income Tax Act, 1961 for A.Y. 2011-12 against a non-searched person were time-barred. 2. What is the correct 'date of initiation' for computing the limitation period under Section 153C for a non-searched person, especially in relation to the requirement of a satisfaction note and the applicability of Finance Act, 2017 amendments.