Search on Third Party Can’t Stretch Limitation: ITAT Quashes 153C Order

Quadra Infratel Synergies Pvt. Ltd. was proceeded against under Section 153C following a search on a third party, A-Tek Enterprises, on 28.06.2018. The seized material was handed over to the Assessing Officer of the assessee on 26.10.2021, and a satisfaction note was recorded on 24.01.2022.

Assessment for AY 2014-15 was thereafter completed under Section 153C read with Section 143(3) on 29.03.2023, making additions for alleged unaccounted sales and commission.

Main Issue: Whether proceedings under Section 153C for AY 2014-15 were barred by limitation, considering that the six-year block had to be computed from the date of handing over of seized material to the Assessing Officer of the non-searched person.

ITAT’s Decision: The Delhi ITAT quashed the assessment as time-barred. Relying on CIT v. Jasjit Singh and PCIT v. Ojjus Medicare Ltd., the Tribunal held that for Section 153C, the relevant date for computing the six preceding assessment years is the date on which seized material is handed over to the AO of the non-searched person.

Since the material was handed over on 26.10.2021, the permissible block extended only from AY 2016-17 to AY 2022-23. AY 2014-15 fell outside this period, rendering the proceedings and assessment order void ab initio. Thus, the Tribunal did not examine the additions on merits.

To Read Full Judgment, Download PDF Given Below