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Facts
The assessee filed appeals against orders passed by the Principal Commissioner of Income-Tax (PCIT) under Section 263 of the Income-tax Act for AYs 2013-14 and 2014-15. The PCIT had set aside the assessment orders passed under Section 153C read with Section 143(3) due to alleged lack of necessary inquiries by the Assessing Officer.
Held
The Tribunal held that the assessment order passed under Section 153C was beyond the period prescribed by law, relying on the Supreme Court judgment in CIT vs. Jasjit Singh. This judgment clarified that for 'other persons' in Section 153C, the period for filing returns is reckoned from the date of receipt of seized materials by their jurisdictional AO, not the date of search. Therefore, the assessment order was considered null and void.
Key Issues
Validity of assessment order passed under Section 153C beyond the prescribed period as per the Supreme Court judgment in CIT vs. Jasjit Singh, and whether the PCIT's revisionary order under Section 263 was justified.
Sections Cited
263, 153C, 143(3), 132
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA KAMBLE
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:
- Delay condoned. These two appeals filed by the assessee are directed against the separate orders passed by the learned Principal Commissioner of Income-Tax (Central), Surat [herein-after referred to as “PCIT”] dated 29.03.2025 and 30.03.2025 respectively, in exercise of revisionary powers under Section 263 of the Income- tax Act, 1961 [hereinafter referred to as “the Act”], for the Assessment Years (AY) 2013-14 & 2914-15.
Since the issues involved in both the appeals are identical, they were heard together and are being disposed of by this common order for the sake of convenience. For the purpose of adjudication, we take for Assessment Year 2013-14 as the lead case.
The assessee has raised the following grounds of appeal:
& 810/SRT/2025 Popatbhai Talashibhai Savani Vs. PCIT Asst. Year : 2013-14 & 2014-15 - 2– “1. On the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in passing the order u/s. 263, although the assessment order passed u/s. 143(3) r.w.s 153C of the I.T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue.
On the facts and circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in setting aside the order passed u/s. 143(3) with a direction to the assessing officer as per para no.7 of the revision order to pass fresh assessment order after taking into consideration, the issues as may be considered together with the issues discussed in order. Accordingly, PCIT has erred in setting aside the assessment order making it wide open Instead of restricting the issues raised in show cause notice.
On the facts and circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in directing the assessing officer to make fresh inquiry and verification in respect of Rs. 1,30,62,500/- on account of undisclosed income and thereby erred in setting aside the assessment with the direction to pass fresh assessment order in consequence to order passed u/s. 263.”
In this case the order u/s 153C of the Act has been passed on 26.03.2023 for Assessment Year 2013-14, accepting the returned income of Rs.6,54,330/- by the Assessing Officer. Proceedings u/s 263 of the Act were initiated by the Ld. PCIT, resulting in passing of an order u/s 263 on 29.03.2025.
Heard the arguments of both the parties and perused the material available on record. On going through the record, we find that the order of the Ld. PCIT is based on the fact that the Assessing Officer had not conducted the relevant and needed enquiries before passing the assessment order. The decision of the Ld. PCIT on this aspect is not in dispute; however, the matter needs to be examined further as to whether the order passed by the Assessing Officer u/s 153C of the Act, based on the search conducted in the case of Janani Group u/s 132 of the Act on 28.06.2018, can be held to be a valid assessment.
The notice u/s 153C of the Act was issued on 30.03.2022. In this context, reliance has been placed on the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh, reported in 155 taxmann.com 155, which is placed on & 810/SRT/2025 Popatbhai Talashibhai Savani Vs. PCIT Asst. Year : 2013-14 & 2014-15 - 3– record. The Hon'ble Court held that in case of a search assessment undertaken under Section 153C of the Act, the previous year of search would stand substituted by the date or the year in which the books of accounts / documents and assets seized are handed over to the jurisdictional Assessing Officer of the other person, as opposed to the year of search which constitutes the basis for an assessment under Section 153A of the Act. Thus, the block period for the proceedings under Section 153C of the Act has to be computed from the date of receipt of books of accounts or documents by the Assessing Officer of the non-searched person. The Hon'ble Supreme Court in the case of CIT vs. Jasjit Singh (supra), held as under: "10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials of the search party, under section 132 would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts."
The Apex Court had held in that case that in case of “other person”, the period for which returns were required to be filed commenced only from the date when the materials were forwarded to their jurisdictional Assessing Officer. The Hon’ble Apex Court categorically held that the proviso to section 153C(1) caters not merely to the question of abatement but also with regard to date from which six-year period was to be reckoned, in respect of which returns were to be filed by third party whose premises were not searched and in respect of whom the specific provision of section 153C was enacted. Accordingly, in the facts of the present case, the assessment year under consideration being beyond the period & 810/SRT/2025 Popatbhai Talashibhai Savani Vs. PCIT Asst. Year : 2013-14 & 2014-15 - 4– prescribed under section 153C of the Act, the assessment order passed is null and void.
We have given our thought as to what would happen even if an addition was to be made in the case of the assessee for AY 2013-14 in the regular course of assessment. Even such an order would have been quashed in view of the judgement of the Hon’ble Supreme Court. Under these circumstances, even if the order u/s 263 is upheld on merits, the subsequent order passed u/s 153C r.w.s. 263 would be barred by limitation owing to the judgment of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh (supra).
Keeping in view of all these facts, since no useful purpose would be served, we set aside the order of the Ld. PCIT.
In the result, both the appeals of the assessee are allowed. The order is pronounced in the open Court on 22.01.2026