ITAT Holds Assessment Block Is Calculated From Date On Which Satisfactory Note Is Recorded

The ITAT Delhi quashed the Section 153C assessment proceedings for being beyond the period of ten assessment years as reckoned with reference to the date of recording of satisfaction by the assessing officer of the non-searched person. The case pertained to the Assessment Years (AYs) 2010-11 and 2011-12.

On October 18, 2019, the tax authorities carried out a search operation on Alankit Group. In that operation, the AO found certain evidence against the assessee, Mohan Kumar Garg. Consequently, satisfactory notes were obtained by the AO. Subsequently, tax proceedings were initiated against the assessee under Section 153C of the Income-tax Act, 1961.

The assessment under Section 153C of the Income Tax Act for the AY 2010-11 was completed, determining the assessee’s total income at Rs 3.53 crore through an order dated March 28, 2023. The aggrieved assessee approached the Commissioner of Income Tax (Appeals) [CIT(A)], where the appeal was allowed.

Thereafter, the tax authorities, being aggrieved with the CIT(A)’s order, have filed the present appeal before the Income Tax Appellate Tribunal (ITAT) in Delhi.

The Revenue argued that the assessments for AYs 2010-11 and 2011-12 in the case of the assessee were valid. However, the assessee argued that as per the first provision of Section 153C, the relevant date for calculating the assessment block is the date on which the non-searched person’s Assessing Officer receives and records a satisfactory note regarding the seized material, not the original search date.

The tribunal, when analysing the case, noted that the AO had obtained the satisfactory note of the assessee on March 15, 2023, in the present case. The tribunal relied on the Supreme Court’s judgement in the case titled CIT v. Jasjit Singh and the Delhi High Court’s judgement in the case of Ojjus Medicare Pvt. Ltd, which clarified that, for a non-searched person, the assessment period must be reckoned from the date the jurisdictional Assessing Officer receives the seized material and records satisfaction.

Since satisfaction in the present case was recorded on March 15, 2023, the relevant assessment year became AY 2023-24. Consequently, the permissible 10-year block extended only up to AY 2014-15. As AYs 2010-11 and 2011-12 fell outside this period, the Tribunal held that the Assessing Officer lacked jurisdiction to frame the assessments and upheld the CIT(A)’s order quashing them. The Revenue’s appeals were therefore dismissed.