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TMI BlogInterpreting the Scope and Limits of Sections 153A and 153C: A Judicial PerspectiveX X X X Extracts X X X X X X X X Extracts X X X X ..... A and 153C , the time frames for initiating search assessments, and the interplay between these provisions and the regular assessment or reassessment procedures. Arguments Presented The primary contention raised by the petitioners revolved around the argument of finality and closure of assessments. They asserted that once the statutory time frames prescribed for assessment or reassessment u/ss 147 and 148 had lapsed, it would inevitably lead to the creation of a vested right in favor of the assessee, precluding any further action. The petitioners further challenged the applicability of the extended ten-year block period introduced by the 2017 amendments to Section 153A , arguing that it could not be applied retrospectively to searches condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove and beyond the ordinary reassessment provisions, triggered by the fortuitous recovery of material during a search. Computation of the Six-Year and Ten-Year Block Periods Regarding the computation of the six-year and ten-year block periods, the Court provided the following guidance: The six assessment years (AYs) would be those immediately preceding the AY relevant to the previous year of search. For a non-searched entity u/s 153C , the previous year of search is substituted by the date or year when the seized books of accounts or documents are handed over to the jurisdictional Assessing Officer (AO). The ten-year period is reckoned from the 31st day of March of the AY relevant to the year of search, as per Explanation 1 of Section 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at allegedly escaped assessment was likely to amount to INR 50 lakhs or more, as per the principles enunciated in the judgment. The Court dismissed the Department's appeal (ITA 52/2024), finding no perversity in the Income Tax Appellate Tribunal's (ITAT) findings regarding the computation of the six-year block and the non-applicability of the 2017 amendments to searches conducted prior to their introduction. Doctrine or Principle Discussed The judgment primarily revolves around the interpretation and application of Sections 153A and 153C of the Income Tax Act, which govern search assessments. It also touches upon the doctrine of finality of assessments and the distinction between the liability to tax and the right to assess and enfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esented in the form of an asset amounting to or likely to amount to INR 50 lakhs or more, emphasizing the AO's obligation to record reasons for the satisfaction of this condition. Furthermore, the judgment recognized the retrospective application of Sections 153A and 153C , subject to the time frames specified in the provisions. It also upheld the principle that the finality of assessments does not create a vested right in favor of the assessee, as the liability to tax exists independently of time limitations, unless statutorily imposed. Overall, the judgment provides clarity on the interpretation and application of search assessment provisions, striking a balance between the revenue's power to initiate assessments and the assessee& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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