Ten-Year Block For Non-Searched Person To Be Computed From Receipt Of Seized Material, Not Search Date: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that, in the case of a person who was not subjected to a search, the relevant assessment block must be computed with reference to the date on which the jurisdictional Assessing Officer records satisfaction after receiving the seized material and not with reference to the date of the search conducted on a third party.

A bench of Judicial Member Sudhir Kumar and Accountant Member Naveen Chandra dismissed two appeals filed by the Revenue and affirmed the order of the Commissioner of Income Tax (Appeals), which had quashed assessments against Excel Insurance Outsourcing Pvt. Ltd. for Assessment Years 2010-11 and 2011-12.

The bench observed, “date of recording of the satisfaction u/s 153C in the case of the searched person qua the non-searched person becomes date of search in the case of non-searched person.”

The proceedings arose from a search conducted on the Alankit Group on October 18, 2019. The Assessing Officer initiated proceedings against the assessee on the basis of material seized during that search.

The Assessing Officer of the searched person recorded satisfaction on June 24, 2022. The seized material was handed over to the Assessing Officer having jurisdiction over the assessee on the same date.

Thereafter, the Assessing Officer of the assessee recorded satisfaction on November 31, 2022. A notice was subsequently issued to the assessee on July 5, 2023.

The assessee challenged the assessments before the Commissioner of Income Tax (Appeals). It contended that the relevant assessment year had to be determined with reference to the date on which satisfaction was recorded in its case. On that basis, Assessment Years 2010-11 and 2011-12 fell outside the ten assessment years for which assessments could be made.

Before the Tribunal, counsel for the assessee placed reliance on the Supreme Court's ruling in CIT v. Jasjit Singh and the Delhi High Court's decision in Ojjus Medicare Pvt. Ltd., contending that the relevant assessment block had to be determined with reference to the date applicable to a non-searched person.

The Tribunal found that the controversy was no longer open to debate. Referring to the decisions of the Supreme Court and the Delhi High Court, it held that the principles governing the computation of the assessment block in the case of a non-searched person already stood settled.

Applying those decisions, the Tribunal held that the deemed date of search in the assessee's case was November 31, 2022. It further held that Assessment Years 2010-11 and 2011-12 fell beyond the permissible ten-year period reckoned with reference to that date.

The Tribunal therefore upheld the order of the Commissioner of Income Tax (Appeals) and quashed the assessments.

The bench held, “We therefore, have no hesitation in upholding the decision of the CIT(A) and quashing the impugned assessment order having been made without legal and valid assumption of jurisdiction.”

Accordingly, both appeals filed by the Revenue were dismissed.