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Facts
A search and seizure operation was conducted on the assessee on 23.10.2019. Pursuant to the search, a notice under section 153A was issued for six preceding assessment years. The assessee filed a return for AY 2011-12, declaring income of ₹6,95,180/-. The assessment was completed, determining total income at ₹17,83,757/- with additions of ₹10,52,217/-.
Held
The tribunal held that the assessment framed under section 153A for Assessment Year 2011-12 was bad in law and barred by limitation. The search was conducted on 23.10.2019, and AY 2011-12 falls beyond the permissible period prescribed under the Act for initiating proceedings under section 153A, especially since the total additions were below ₹50,00,000.
Key Issues
Whether the assessment proceedings initiated under section 153A for Assessment Year 2011-12, which is more than seven years prior to the search, are barred by limitation.
Sections Cited
153A, 143(3), 250, 132, 132-A, 139, 147, 148, 149, 151, 153, 153C
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Income Tax Appellate Tribunal, BENCH-RANCHI
Before: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahay
order
: January 06, 2026 ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the assessee is directed against the order of the CIT(A)-3, Patna (hereinafter referred to as “CIT(A)”) dated 28.11.2023 passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
Brief Facts of the case are that a search and seizure operation under section 132 of the Act was conducted in the case of the assessee group on 23.10.2019. Pursuant to the said search, the Assessing Officer (AO) issued a notice under section 153A of the Act calling upon the assessee to file its return of income for six assessment years preceding the year of search. In response to the notice under section 153A, the assessee filed its return of income for Assessment Year 2011–12, declaring a total income of ₹6,95,180/-. During the course of assessment proceedings, several statutory notices were issued to the assessee, which Manish Agarwal were duly complied with. The assessment was ultimately completed by the AO vide order dated 16.09.2021 under section 153A read with section 143(3) of the Act, determining the total income of the assessee at ₹17,83,757/-, by making the following additions of ₹10,52,217/- on account of alleged unexplained cash deposits, and ₹36,690/- on account of interest income.
Aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). The ld. CIT(A), after considering the submissions of the assessee, dismissed the appeal and sustained the additions made by the AO.
The assessee is now in appeal before the Tribunal raising multiple grounds. Apart from challenging the additions on merits, the assessee raised a pure legal ground, contending that the assessment framed under section 153A for Assessment Year 2011–12 is bad in law and barred by limitation. The search was conducted on 23.10.2019. The impugned assessment year 2011–12 falls beyond the permissible period prescribed under the Act for initiating proceedings under section 153A. The total addition made is less than ₹50,00,000, and therefore, the extended period beyond seven years is not applicable. The learned counsel for the assessee submitted that as per the provisions of section 153A read with section 153C and the provisos thereto (as applicable), assessments can be reopened only up to six years, and in specified cases, up to seven years, subject to the condition that income escaping assessment exceeds ₹50 lakh. The ld. counsel in this respect has referred to section 153A which reads as under:
"153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are Manish Agarwal requisitioned under section 132-A after the 31st day of May, 2003, the Assessing Officer shall-- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132-A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a)the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b)the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c)the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.—For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.
Manish Agarwal 4.1 The ld. counsel further submitted that in this case, the search was conducted on 23.10.2019, whereas the assessment year involved is 2011–12, which is more than seven years prior to the year of search. The additions made are far below the threshold limit of ₹50,00,000, and therefore, the assessment proceedings are clearly barred by limitation. The learned Departmental Representative supported the orders of the authorities below but could not controvert the statutory position pointed out by the assessee regarding the limitation prescribed under the Act.
We have carefully considered the rival submissions and perused the material available on record. It is an undisputed fact that the search under section 132 was conducted on 23.10.2019 and the assessment year involved is 2011–12. The total additions made by the AO aggregate to ₹10,88,907/-, which is well below ₹50,00,000. As per the scheme of section 153A of the Act, read with the applicable provisos, reassessment pursuant to search can ordinarily be made for six assessment years preceding the year of search. The extended period beyond six years is permissible only where the escaped income exceeds ₹50,00,000, subject to fulfilment of statutory conditions. In the present case, the impugned assessment year 2011–12 is more than seven years prior to the date of search, and admittedly, the additions made are below the monetary threshold of ₹50,00,000. The Revenue has not placed any material on record to demonstrate that the case falls within the exception permitting reopening beyond the prescribed period. In view of the above facts and the clear statutory mandate, we are of the considered opinion that the initiation of proceedings under section 153A for Assessment Year 2011– 12 is barred by limitation and bad in law. Once the assessment itself is held to be invalid on jurisdictional grounds, the additions made therein do not survive and need not be adjudicated on merits. In view of the Manish Agarwal above discussion, we hold that the assessment order passed under section 153A read with section 143(3) for Assessment Year 2011–12 is void ab initio and barred by limitation. Accordingly, the appeal filed by the assessee is allowed, and the assessment order as well as the order of the ld. CIT(A) are set aside.
In the result, the appeal of the assessee is allowed. Kolkata, the 6th January, 2025.