Search Assessment Year Must Be Included While Computing 10-Year Block Under Section 153A
Meetu Kumari | Mar 7, 2026 |
HC: Reopening for Assessment Year Invalid as It Falls Outside 10-Year Limit in Search Cases
Jaini Tradelink Pvt. Ltd., engaged in trading and commission agency business, filed its return for AY 2015-16 on 06.10.2015 declaring income of Rs. 16,07,260. A search under Section 132 of the Income Tax Act, 1961 was later conducted in the case of the MSK and Madhav Group, during which material allegedly indicated accommodation purchase entries routed through banking channels with cash returned to beneficiaries. Based on this material, the Assessing Officer formed a belief that the petitioner had also obtained such accommodation entries leading to the escapement of income.
A notice was issued under Section 148 to reopen AY 2015-16 after obtaining approval from the competent authority. The petitioner filed a return and objected that the reopening was barred by limitation. The objections were rejected by the Assessing Officer through orders, following which the petitioner approached the High Court challenging the validity of the notice.
Main Issue: Whether reopening of AY 2015-16 based on material found in a search conducted in May 2024 was barred by limitation under the ten-year block period prescribed in Explanation 1 to Section 153A.
HC’s Decision: The High Court allowed the writ petition and quashed the notice under Section 148 holding that it was time-barred. The Court held that Explanation 1 to Section 153A uses the phrase “not later than ten assessment years from the end of the assessment year relevant to the previous year in which the search is conducted,” which requires including the search assessment year while computing the ten-year block.
Since the search was conducted on 18.05.2024 (FY 2024-25), AY 2025-26 was the relevant assessment year, and the permissible ten-year block extended only up to AY 2016-17. The notice fell outside the statutory period and was therefore without jurisdiction. The Court also noted similar interpretations adopted in Jayantibhai Karamshibhai Maniya v. ITO and by other High Courts while interpreting limitation under Section 153A.
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