ITAT Dismisses Revenue Appeal in Section 153C Limitation Dispute:

The assessee is Nutshell Vyapaar Pvt. Ltd. which had originally filed its return of income for AY 2016-17 declaring income of Rs. 1,96,060. Following a search and seizure operation under Section 132 of the Income Tax Act conducted on the Alankit Group on 18.10.2019, certain seized material was stated to relate to the assessee. Consequently, proceedings under Section 153C were initiated and notice dated 28/12/2021 was issued.

The AO completed the assessment under Section 153C, making additions of Rs. 3.61 crore and Rs. 56.96 lakh under Section 69A of the Act. The assessee challenged the assessment before the CIT(A), who quashed the proceedings on the ground of limitation.

The Tribunal considered the chronology of the search, transfer of jurisdiction, satisfaction note, issuance of notice under Section 153C and completion of assessment. It noted that the search under Section 132 was conducted in 2019 and the assessee’s case was subsequently transferred under Section 127. The satisfaction note was recorded on 24/12/2021 and notice under Section 153C was issued on 28/12/2021.

The Tribunal held that, in the present case, limitation commenced from the date of transfer of the assessee’s case under Section 127. Accordingly, the assessment order dated 31/03/2023 was held to have been passed beyond the prescribed limitation period.

The Tribunal held that the assessment proceedings under Section 153C were barred by limitation and upheld the quashing of the assessment.