ITAT: Section 153C Assessments Time-Barred When Satisfaction Note Recorded Late

Abhi Capital Services Limited, engaged in derivatives and equity trading along with earning commission income, filed its return for AY 2011-12, declaring income of Rs. 62,750, which was initially processed under Section 143(1). Pursuant to a search conducted on the Alankit Group, certain documents allegedly pertaining to the assessee were found. A satisfaction note under Section 153C was recorded by the Assessing Officer on 24 June 2022, and notices under Sections 153C read with 153A were issued.

The Assessing Officer thereafter made additions of Rs. 5.15 lakh for AY 2011-12 and framed assessments for AYs 2011-12 and 2012-13. The CIT(A) quashed the assessments, holding them to be invalid. The Revenue challenged this relief before the ITAT.

Issue Raised: Whether assessments under Section 153C for AYs 2011-12 and 2012-13 were barred by limitation, considering the date of recording of the satisfaction note in the case of the non-searched person.

ITAT Decided: The Tribunal dismissed the appeals filed and upheld the order given by CIT(A). Relying on theSC’s decision in CIT v. Jasjit Singh and PCIT v. Ojjus Medicare Pvt. Ltd., the Tribunal held that for a non-searched person, the date of recording of the satisfaction note is deemed to be the date of search.

As the satisfaction note was recorded on 24 June 2022, the deemed year of search was FY 2022-23. Applying the ten-year block period backward, the Assessing Officer could assume jurisdiction only up to AY 2014-15. As AYs 2011-12 and 2012-13 fell outside this permissible period, the assessments were held to be outside jurisdiction and were thereby quashed.

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