Ten-Year Block Under Section 153A Includes Search Year: Gujarat High Court

The Gujarat High Court on 23 February held that tax authorities must include the search year when computing the ten-year block for reopening assessments under Section 153A of the Income Tax Act, 1961.

A Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi quashed a notice issued in 2025 for Assessment Year 2014-2015, as it fell outside the ten-year period, with the tenth year being Assessment Year 2015-16.

The Court observed that to reopen proceedings under Section 153A, “the date of search would be taken into consideration.”

The petitioner, Bankim Chandramanishanker Joshi, a partner in real estate company PSY Group, declared an income of Rs.3,57,340 for Assessment Year 2014-2015. During a search, authorities recovered incriminating material, including a hard disk showing unaccounted cash and cheque transactions.

The Directorate General of Income Tax (Investigation) alleged that the petitioner received Rs.57 lakh in cash. On this basis, the Revenue issued a notice dated 26 March 2025 under Section 148 for AY 2014-15 after obtaining DGIT (Investigation), Ahmedabad's approval.

Joshi challenged the notice on limitation grounds. He argued that the ten-year block must include the search year, starting from Assessment Year 2024-2025 and ending with Assessment Year 2015-2016, which excluded AY 2014-15. The Revenue contended that authorities should exclude the search year, treating the ten-year block like a “six plus four years” model to cover earlier years, including AY 2014-15.

After hearing the parties, the Gujarat High Court analysed the statutory scheme. The Court noted the difference between six-year and ten-year blocks and stated:

“This linguistic distinction is deliberate and must be given full effect. Under Section 153A(1)(b) of the Act, the anchor point is 'the assessment year relevant to the previous year in which search is conducted'. Therefore, six years must be 'immediately preceding' that assessment year. The phrase 'immediately preceding' necessarily excludes the search assessment year itself. In contrast thereto, Explanation 1 introduces a materially different formulation: 'not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted'. This computation mechanism does not use the phrase 'immediately preceding' but instead, requires reckoning from the end of the assessment year relevant to the previous year of search. Thus, the assessment year relevant to the previous year of search becomes the reference year and the ten-year period is counted from the end of that assessment year. This necessarily includes the search assessment year within the ten-year framework and resultantly, the search year becomes the first year in the reckoning of the ten-year block.”

The Court explained that excluding the search year, as in the six-year block, would render the phrase “from the end of the assessment year” meaningless and merge two distinct statutory schemes, violating settled principles of statutory interpretation. It reaffirmed its earlier decisions that Section 153A establishes two independent computational regimes for extended ten-year search assessments under Sections 153A and 153C.

Accordingly, the High Court quashed and set aside the notice dated 26 March 2025 under Section 148 for Assessment Year 2014-15 on limitation grounds.

For Petitioner: Senior Advocate Tushar Hemani and Advocate Vaibhavi K. Parikh