Section 153A Invoked for Wrong Year; Second Search Abates First – ITAT Quashes Search Assessment for AY 2020-21

Amolak Singh Bhatia Vs DCIT (ITAT Delhi)

The Delhi Bench ‘E’ of the ITAT quashed the assessment framed under section 153A for AY 2020-21, holding that the proceedings were without jurisdiction and bad in law on multiple counts.

The Tribunal noted that the first search on the assessee was initiated on 27.02.2020 and stood concluded with the last panchnama dated 01.03.2020. The prohibitory order passed under section 132(3) lapsed statutorily after 60 days (30.04.2020) and could not extend the search. Consequently, AY 2020-21 was the search year, for which assessment ought to have been framed under section 143(3) and not under section 153A.

The Department’s action of issuing a second warrant on 21.11.2020 was held to have the effect of abating the first search. As a result, incriminating material found during the first search could not be used for initiating or sustaining proceedings under section 153A pursuant to the second search. Only material found in the second search—limited to certain loose papers—could have formed the basis of any action, and even that only for permissible years.

The Tribunal further observed that the Assessing Officer had in fact made additions under sections 69C, 69B and 69A solely on the basis of material allegedly found in the first search, which was impermissible in law after the second search was initiated. This placed the Revenue in a “catch-22 situation”:

• either AY 2020-21 was the search year (making 153A inapplicable), or
• the second search governed the proceedings (in which case material from the first search could not be relied upon).

On either footing, the invocation of section 153A for AY 2020-21 was invalid. The Tribunal therefore quashed the assessment on legal grounds, without examining the additions on merits, which were left open.

Accordingly, the assessee’s appeal was allowed in full.

FULL TEXT OF THE ORDER OF ITAT DELHI

1. The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)-25, New Delhi [“Ld. CIT (A)”, for short] dated 28.03.2025 for the Assessment Year 2013-14.

2. Brief facts of the case are, a search was initiated under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) on 27.02.2020 on Bhatia Group including the assessee, whose premises were also covered in the search. As per the assessment order, the last warrant was executed on the assessee on 21.11.2020. The case of the assessee was transferred from Central Circle Bilaspur to Central Circle-8, Delhi vide order dated 20.01.2021 passed u/s 127 of the Act. Assessee is an individual, who filed his return of income u/s 139 for AY 2020-21 on 17.03.2021 declaring an income of Rs.26,21,330/-. Notice u/s 153A was issued on 07.09.2021 against which the assessee filed his return on 24.01.2022 declaring the income of Rs.26,12,330/-. Notice u/s 143(2) was issued on 02.02.2022. Assessment order dated 31.03.2022 was passed under section 153A r.w.s 143(3).

3. Aggrieved assessee preferred an appeal before the ld. CIT (A) and filed grounds of appeal as well as written submissions and the ld. CIT(A) vide order dated 28.03.2025 affirmed the order of the Assessing Officer.

4. Against the aforesaid order, the assessee filed appeal before us raising following grounds of appeal :-

“1. The appeal emanates from the impugned order dated 28.03.2025 passed the Ld. Commissioner of Income Tax (Appeals)-25 New Delhi [‘Ld. CIT(A)-25’] dismissing the appeal filed by the Appellant under Section 246 of the Act against the Assessment Order of the Ld. Assessing Officer, Central Circle-8 (“Ld. AO”).

Re: Assessment Order passed without jurisdiction – invalid

2. Because the Ld. CIT(A) ought to have considered that the assessment proceedings undertaken under Section 153A for the Assessment Year (AY 2020-21) in question which was the search year and the Assessment Order consequently passed is without jurisdiction and hence, invalid.

3. Because the Ld. CIT(A) ought to have considered that the Ld. A.O. had admitted in the remand report that the Ld. A.O. failed to issue notice under Section 143(2) for the concerned Assessment Year and therefore, a notice under Section 153A was issued which is bad in law for the search yea;. The search was undertaken in the case of Appellant on 27.02.2020 i.e. FY 2019-20 and AY 2020-21. As per Section 153A of the Act, notice under Section 153A of the Act can only be issued with respect to six assessment years immediately preceding the assessment year relevant to the preceding year in which search is conducted or ten year(s) as the case may.

Re: Assessment Order passed is barred by limitation and hence, invalid

4. Because the Ld. CIT(A) ought to have considered that though the Assessment Order bears date of 31.03.2022 but the same was emailed to the Appellant only on 01.04.2022. It is a settled position that service after the limitation date renders the assessment non-est. Furthermore, generation of DIN on 06.04.2022 and a belated intimation of the same on 21.04.2022 further corroborates delay pertaining to issuance/service.

Re: Assessment Order was non est as it was issued without mentioning DIN on the body of the Assessment Order and was informed via separate intimation letter.

5. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO without mentioning DIN on the body of the Assessment Order as mandated by the CBOT Circular No. 19/2019 dated 14.08.2019.

Re: Approval under Section 153D is mechanical and with application of mind therefore, cannot be considered as a valid approval

6. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO without appreciating that the draft Assessment Order was approved by jurisdiction Ld Add/Joint CIT, Range-2 mechanically, without application of mind and in violation of Section 1530 of the Act.

7. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order passed by Ld. AO on the basis of approval given by the jurisdictional Addl/Joint CIT-Range 2, under Section 1530 of the Act without mentioning DIN in accordance with CBOT Circular No. 19/2019 dated 14.08.2019.

Re: Violation of principles of natural justice

8. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order without giving meaningful opportunity of cross examination to the Appellant.

9. Because the Ld. CIT(A) has erred in law on the facts of the case in confirming the Assessment Order which was framed on the basis of statements and various inadmissible electronic data/evidence, excel sheets, etc. which cannot constitute valid evidence, inter alia, as per provisions of law and the law governing the collection of digital evidence.

10. Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 55,00,00,00/- under Section 69C of the Act as unexplained expenditure without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

11. Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 3,00,0001- under Section 69B of the Act as unexplained investment without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

12. Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 1,75,000/- under Section 69B of the Act as unexplained investment without appreciating that there is no corroborative evidence or independent enquiry conducted by the Ld. AO during the Assessment Proceedings or giving an opportunity of cross examination.

13. Because the Ld. CIT(A) has erred in confirming the order of Ld. AO on account of professional receipt amounting to INR 57,53,000/- under Section 69A of the Act as unexplained money without appreciating that the Appellant has submitted all documents w.r.t source of such amount however the Ld. AO during the Assessment Proceedings has ignored the same and made the addition.”

5. At the time of hearing, ld. AR of the assessee submitted as under :-

1. In this case, a search was initiated on the Bhatia Group, including the assessee, on 27.02.2020, and the following premises relating to the assessee and various key persons allegedly connected with the assessee were searched:

Place Searched	Date of Initiation of search	Date of Conclusion of search	Nature of Conclusion of search recorded in panchnama	P. No. of PB
Bhatia Wines, Near Bank of India, Dayalbandh, Bilaspur, Chhattisgarh (Office of Bhatia Wines)	28.02.2020	29.02.2020	Finally concluded	1-5
GokuldhamKhamardih, Kachna Road, Raipur (Residence & office of Ajay Sandhwani)	27.02.2020	01.03.2020	Finally Concluded	6-14
1, Near Netaji Hotel, Katora Talab, Raipur, Near Swapnil Medical Store, (office of Harjeet Singh Bhatia)	27.02.2020	01.03.2020	Finally Concluded	22-25
Behind Swapnil Medical Store, 1 Netaji Hotel, Katora Talab Raipur	27.02.2020	01.03.2020	Temporarily closed. And Prohibitory order u/s 132(3) was passed on 01.03.2020.	15-21

2. The prohibitory order passed under section 132(3) on 01.03.2020 in respect of the wooden almirah was lifted by the DDIT, Unit 1(4), New Delhi, on 20.11.2020, and the statement of the assessee was recorded under section 132(4) of the Act. However, nothing was seized pursuant to the lifting of such order.

3. Further, apart from the above-mentioned panchnamas, no other panchnama was drawn in relation to the assessee.

4. As per section 153B(2)(a) of the Act, the authorization referred to in section 153B(1) shall be deemed to have been executed, in the case of a search, on the conclusion of the search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued.

5. The last panchnama in relation to the assessee was drawn on 01.03.2020. Therefore, the last authorization of search in respect of the assessee shall be deemed to have been executed on 01.03.2020, and accordingly, the time limit for framing the assessment in the case of the assessee would commence from the end of the financial year 2019-20, i.e., 31.03.2021.

6. As per section 153B(1) of the Act, the time limit for framing assessments in cases where the search was conducted in the financial year 2019-20 is 12 months from the end of the financial year in which the last authorization of search was executed, which ended on 31.03.2021. However, by virtue of the extension granted by the CBDT, the period stood extended till 30.09.2021. Therefore, the last date for framing the assessment in the case of the assessee was 30.09.2021. Accordingly, the impugned assessment framed on 31.03.2022 is time-barred.

7. Further, the lifting of PO on 20.11.2020 does not postpone the date of search for the following reasons:

a) No reason as to impracticability of seizure:

• • • The prohibitory order dated 01.03.2020 is itself bad in law as it was issued without recording any reasons regarding the impracticability of seizing the loose sheets at the time of its passing, as mandated under section 132(3) of the Act.
    • A perusal of the prohibitory order, annexed at page no. 17 of the paper book, clearly shows that no reasons have been mentioned as to how it was impracticable to seize the loose papers referred to in the order.
    • Further, there could not have been any reason as to the impracticability of seizing six loose papers(refer to the statement of the assessee recorded on 20.11.2020, annexed at page no. 58-59 of the paper book) at the time of passing the order, particularly when various other bunches of loose papers were duly seized on the same day.(refer to Annexure A1 to Panchnama at P.No. 19 of PB).
    • The prohibitory order was passed merely to postpone the search and, therefore, cannot be taken into account while computing the period of limitation under section 153B of the Act.
    • For the above proposition assessee relies upon the following judgments:

(i) Pr. CIT v. PPC Business & Products (P.) Ltd. [2017] 84 taxmann.com 10/398 ITR 71 (Delhi High Court).

(ii) CIT v. D.D. Axles (P.) Ltd. [2010] 195 Taxman 277/323 ITR 558 (Delhi).

(iii) CIT v. Deepak Aggarwal [2008] 175 Taxman 1/[2009] 308 ITR 116 (Delhi).

(iv) CIT v. S.K. Katyal [2009] 177 Taxman 380/308 ITR 168 (Delhi).

(v) PCIT Central v. Hitesh Ashok Vaswani, 2011 (11) TMI 347- Gujarat High Court

(vi) C. Ramaiah Reddy v. Assistant Commissioner of Income-tax, /[2011] 339 ITR 210 (Karnataka)

(vii) CIT v. Sandhya P. Naik [2002] 124 Taxman 384/253 ITR 534 (Bom.).

(viii) CIT v. T.S. Chandrasekhar [2009] 221 CTR 385 (Kar.).

(ix) Mohd Yasin v. CIT [2017] 84 taxmann.com 292/398 ITR 33 (Raj.).

(x) CIT v. White & White Mineral (P.) Ltd. [2011] 12 taxmann.com 120/200 Taxman 192 (Mag.)/330 ITR 172 (Raj.).

(xi) CIT v. Om Prakash Mandora [2013] 37 taxmann.com 426/[2014] 222 Taxman 138 (Raj.).

(xii) M/s. Polisetty Somasundaram Versus The Deputy Commissioner of Income Tax, Central Circle-1, Guntur., [2024] 115 ITR (Trib) 548 (ITAT [Viskha])

(xiii) M/s Index Logistics Pvt Ltd Versus ACIT, 2025 (7) TMI 1098 – ITAT MUMBAI

(xiv) Late Pravin M. Shah, Nirmal Banwani Versus Dy. Commissioner of Income-Tax, Central Circle 47, Mumbai- 2011 (3) TMI 1690 – ITAT MUMBAI

b) That it was lifted beyond the period of 60 days which is in contravention to section 132(8A)

• • • That the prohibitory order dated 01.03.2020 was lifted on 20.11.2020 (refer to the statement of the assessee recorded on 20.11.2020, annexed at page no. 58-59 of the paper book), whereas, in terms of section 132(8A) of the Act, it had in fact ceased to be in force after the expiry of 60 days, i.e., on 30.04.2020.
    • That therefore, the search of the almirah on 20.11.2020, being beyond 60 days and without there being any separate authorization, was invalid.
    • Further, even if anything was seized or any panchnama was drawn pursuant to the lifting of such prohibitory order, the same would have no legal sanctity and consequently would not postpone the date of conclusion of search.
    • For the above proposition, the assessee relies upon the following judicial precedents:

i. The judgment of the Hon’ble Delhi High Court in the case of Pr. CIT, Central-3 v. PPC Business and Products Pvt Ltd., in ITA No. 290/2016, dated 4thJuly, 2017 [This judgment involves 13 cases including that of the Pr. CIT v. PPC Business and Products];

ii. D.D. Axles (P.) Ltd. (supra);

iii. Deepak Aggarwal (supra);

iv. Sandhya P. Naik (supra);

v. White & White Mineral (P.) Ltd. (supra)

vi. M/s. Polisetty Somasundaram Versus The Deputy Commissioner of Income Tax, Central Circle-1, Guntur., [2024] 115 ITR (Trib) 548 (ITAT [Viskha])

vii. Narang International Hotels Pvt. Ltd. Versus DCIT, Central Circle – 36, Mumbai., 2020 (8) TMI 313 – ITAT MUMBAI

c) That it was lifted by an unauthorized officer

• • • As per the panchnama dated 01.03.2020 (annexed at page no. 15 of the paper book), pursuant to which the prohibitory order was passed, the authorized officers were DDIT (Inv.) Unit 3(3), Delhi and ITO (Inv.) Unit 2, Delhi. However, the prohibitory order was lifted by DDIT (Inv.) Unit 1(4), who was not authorized to do so under the said panchnama. Therefore, the proceedings undertaken by DDIT (Inv.) Unit 1(4) at the time of lifting of the prohibitory order—whether it was seizing the documents, drawing a panchnama, or recording the statement of the assessee under section 132(4) on 20.11.2020— were invalid, devoid of legal sanctity, and consequently, would not affect the timeline prescribed under section 153B of the Act.
    • For the above proposition, the assessee relies upon the following judicial precedents:

i. Sandhya P. Naik (supra); Sandhya P. Naik (supra)

ii. DCIT CC-40, Mumbai Versus M/s. N.H. Securities Ltd. 2016 (5) TMI 788 – ITAT MUMBAI

d) That no seizure was made pursuant to the lifting of the PO

• • • Nothing was seized pursuant to the lifting of the prohibitory order, and the exercise was a mere formality.
    • It was merely a revisiting of the premises of the assessee, since the almirah in respect of which the prohibitory order was issued had already been searched on 01.03.2020, and nothing new could have been seized upon the lifting of such prohibitory order.
    • It is a settled proposition of law that where nothing newhave been seized in pursuance of the lifting of a prohibitory order, the panchnama drawn at the time of such lifting cannot be considered for determining the date of conclusion of the search.
    • For the above proposition, the assessee relies upon the following judicial precedents:

(i) PPC Business and Products (P.) Ltd. (supra).

(ii) Judgment of the Hon’ble Delhi High Court in the case of D.D. Axles (P.) Ltd. (supra).

(iii) Judgment of the Hon’ble Delhi High Court in the case of Deepak Aggarwal (supra).

(iv) Hon’ble Bombay High Court in the case of Sandhya P. Naik (supra).

(v) Hon’ble Rajasthan High Court in the case of White & White Mineral (P.) Ltd. (supra).

(vi) Commissioner of Income Tax Versus Capt. Vijay Kumar Raichand, 2015 (4) TMI 556 – ITAT DELHI

8. Even the Ld. CIT(A) and the Ld. AO, in the remand report, accepted that AY 2020-21 is the search year:

• • Before the CIT(A), the assessee had taken a ground that since the search upon the assessee was conducted on 27.02.2020, the search year would be AY 2020-21, and therefore, the assessment in respect of the impugned year ought to have been framed under section 143(3) instead of section 153A. The CIT(A) specifically called for a remand report from the AO on this issue. The AO, in the remand report dated 30.04.2024 (reproduced at page nos. 39–40 of the CIT(A) order), did not deny the fact that AY 2020-21 was the search year and, in fact, admitted that the date of search in the case of the assessee was 27.02.2020.
  • Similarly, the Ld. CIT(A), in paras 10.4 and 10.5at P.No. 45 & 46 of the order, while holding that the assessment for the search year can be framed under section 153A instead of section 143(3), also accepted the fact that the search was conducted upon the assessee in FY 2019-20, relevant to AY 2020-21. Therefore, it is submitted that the time limit for framing the assessment for AY 2020-21 would necessarily run from the end of FY 2019-20.

A. WITHOUT PREJUDICE, ASSUMING THE LIMITATION TO FRAMED ASSESSMENT ENDS ON 31.03.2022, THE ASSESSMENT ORDER IS STILL TIME BARRED

9. Without prejudice to the aforesaid submission that the limitation to frame the impugned assessment ended on 30.09.2021, it is submitted that even if, for the sake of argument, it is assumed that the limitation to make the impugned assessment order was to end on 31.03.2022, the order is still barred by limitation.

10. Section 153B of the Act prescribes the time-limit within which an order under section 153A shall be made. It provides that, in the case of a search initiated on or after 01.04.2019, the assessment orders under section 153A “shall be made” within twelve months from the end of the financial year in which the last authorization for search under section 132 of the Act was executed.

11. Therefore, the question arises as to when an order can be said to be “made.” In this regard, reference may be made to certain judicial decisions wherein the meaning of the word “made” has been examined:

i. Collector of Central Excise, Madras v. M/s M.M. Rubber and Co., Tamil Nadu [1991 AIR 2141; 1992 SCC 471] (SC)

ii. Govt. Wood Workshop v. State of Kerala [1987] 1 KLT 804 (Ker. HC)

iii. Smt. Mema Paul v. Income-tax Officer [2024] 164 taxmann.com 778 (Manipur HC)

iv. Commissioner of Agricultural Income-tax v. Kappumalai Estate [1998] 234 ITR 187 (Ker.) and K. Joseph Jacob v. Agricultural ITO [1991] 190 ITR 464 (Ker.)

v. B J N Hotels Ltd. (2017) 79 taxmann.com 336 (Kar. HC)

vi. Instrumentation Laboratory India Pvt. Ltd. v. DCIT, 2024 (4) TMI 925- ITAT DELHI

vii. Dhanterash Sales Pvt. Ltd. v. ITO, 2024 (2) TMI 1554- ITAT KOLKATA

viii. Shanti Lal Godawat v. ACIT [2009] 126 TTJ 135 (Jodhpur)

ix. Pankaj Sharma v. DCIT (Central) ITA Nos. 3556 & 3557/Del/2015 (ITAT Delhi, order dated 08.02.2019)

x. Sri Trinadh Chowdary v. ACIT IT(SS)A Nos. 44–46/CTK/2016 (ITAT Cuttack)

xi. Geetarani Panda v. ACIT IT(SS)A Nos. 01 & 02/CTK/2017 (ITAT Cuttack, order dated 05.07.2018)

xii. M/s. Nidan v. ACIT (2018) 53 CCH 0046 (ITAT Cuttack)

12. In the cases referred at serial numbers vii to x above, various benches of the Hon’ble Tribunal have held that assessment orders under section 153A are time-barred if they are merely made within the period prescribed under section 153B but dispatched thereafter (even by a single day). The Tribunals have distinguished between an “order of assessment” and the mere “assessment.”

13. Therefore, in view of the aforesaid judgments of the Hon’ble Supreme Court, various High Courts, and different benches of the Tribunal, it is now well settled that an order can be said to be “made” only when it is issued to the assessee. Issuance occurs when the order is dispatched, i.e., when it goes beyond the control of the Assessing Officer.

14. In the present case, the impugned order was issued to the assessee via email, which was received on 01.04.2022 at 3:20 AM (copy annexed at P. No. 174 of PB).

15. Furthermore, the impugned order was not uploaded on the e-filing portal up to 31.03.2022 (12:00 midnight).

16. Thereafter, an intimation [DIN: ITBA/AST/S/91/2022-23/1042800042(1)] dated 06.04.2022 was issued to the assessee, intimating that the order passed under section 153A on 31.03.2022 bore DIN ITBA/AST/M/1/153A/2022-23/104255229(1).

17. Upon authenticating the DIN of the aforesaid intimation letter through the ITBA portal, it was revealed that although the intimation bears the date 06.04.2022, it was in fact issued only on 21.04.2022 (screenshot annexed at P. No. 196 of PB).

18. Further, the ITBA portal itself reflects that the proceedings were actually closed on 21.04.2022, while the limitation date as per ITBA records was 31.03.2022. (screenshot annexed at P. No. 198 of PB).

19. To ascertain the actual date of making of the impugned order, the assessee filed an RTI application before the Ld. AO seeking details of the mode and time of service of the order, whether by speed post, email, or ITBA portal. In his reply dated 18.08.2025(P. No. 217-218 of PB), the Ld. AO provided the following information:

a. The impugned order was passed on 31.03.2022;

b. The impugned order was uploaded on ITBA on 31.03.2022

c. The impugned order was served through ITBA online;

d. The order bearing DIN ITBA/AST/M/1/153A/2022-23/104255229(1) was uploaded on ITBA on 31.03.2022 (copy of ITBA case history screenshot annexed).

20. In this regard, it is submitted that the assertion of the AO that the impugned order bearing DIN ITBA/AST/M/1/153A/2022-23/104255229(1) was uploaded on 31.03.2022 so as to be “issued” on that date, is contradictory and untenable. This is because the DIN of the impugned order itself was generated in FY 2022–23, i.e., after 31.03.2022. The screenshot of the ITBA case history, annexed by the AO in his RTI reply, shows that the order dated 31.03.2022 was generated with DIN ITBA/AST/M/1/153A/2022-23/104255229(1). The process of DIN generation is automatic and necessarily incorporates the financial year in which it is generated. Therefore, once the DIN itself reflects FY 2022–23, the order could not possibly have been uploaded/issued before 31.03.2022.

21. This aspect has been directly considered by the Hon’ble Delhi High Court in Acropolis Realty (P.) Ltd. v. ITO [2024] 168 com406 (Delhi), wherein it was held as under:

“In the present case, the impugned notice was digitally signed on 01.04.2023. Thus, the process of digitally generating the same on the system was completed on 01.04.2023. Plainly, the impugned notice could not have been issued prior to the same being signed. The fact that the steps to generate the impugned notice commenced on 31.03.2023 cannot be a ground to hold that the impugned notice was issued on 31.03.2023. The date of the said notice is correctly reflected as 01.04.2023. In addition, it is also pointed out that the DIN & Notice Number mentioned in the impugned notice – ITBA/AST/F/148A(SCN)/2023-24/1051828274(1) – also indicates that the impugned notice was issued in the financial year 2023–24.”

23. In view of the above, it is respectfully submitted that the impugned order under section 153A was issued after the period prescribed under section 153B, and is, therefore, barred by limitation.

B. AY 2020-21 BEING THE SEARCH YEAR, ITS ASSESSMENT COULD NOT BEFRAMED U/S 153A

23. Section 153A of the Act provides for the framing of assessments for six assessment years preceding the search year, as well as for the “relevant assessment years” not beyond ten years computed from the end of the search year.

24. It is significant to note that section 153A does not provide for framing the assessment of the search year itself (i.e., the assessment year in which the search was conducted). The assessment for the search year is required to be completed under the normal procedure prescribed in section 143(3). However, the limitation period for completion of the search year assessment is still governed by section 153B, similar to the preceding six years or relevant assessment years.

25. Where the assessment of the search year has been erroneously framed by invoking section 153A, such assessments have consistently been held to be invalid by the Hon’ble Tribunal in the following decisions:

a) Upendra Kumar Sharma v. DCIT [2010 (4) TMI 1190 – ITAT Delhi]

b) A.N. Rangaswamy v. ACIT [2009 (2) TMI 516 – ITAT Bangalore]

c) Rajiv Kumar v. ACIT [2016 (12) TMI 1722 – ITAT Chandigarh]

d) Deepak Jain v. ACIT, CC-1, Ludhiana [2020 (1) TMI 1034 – ITAT Chandigarh]

e) M/s. Mundra Jain and Marbles v. DCIT [2018 (6) TMI 1448 – ITAT Jaipur]

f) Mahesh Jain v. ACIT [2017 (12) TMI 1744 – ITAT Chandigarh]

g) Ajay Kumar v. ITO [2023 (7) TMI 979 – ITAT Amritsar]

26. This ground was specifically raised before the CIT(A), contending that AY 2020-21 being the search year ought to have been assessed under section 143(3) and not under section 153A. It was also pointed out that the assessee had filed its return of income for AY 2020-21 under section 139 on 17.03.2021, and since no notice under section 143(2) was issued up to 30.06.2021, the assessment could not have been reopened under section 153A. Instead, a notice under section 153A was wrongly issued for the impugned year.

27. The CIT(A) called for a remand report from the AO on this ground. In his report (reproduced at P. No. 39–40 of the CIT(A)’s order), the AO admitted that till the issuance of notice under section 153A on 07.09.2021, the time limit for issuing a notice under section 143(2) had already expired, and further, that the seized material was received only on 17.09.2021. The AO contended, however, that since the assessee had filed a return in response to notice under section 153A, and a notice under section 143(2) was subsequently issued, the defect was cured by operation of sections 292B and 292BB of the Act. It is noteworthy that the AO never disputed the fact that AY 2020-21 is the search year. In reply, it was submitted before the CIT(A) that sections 292B and 292BB cannot cure a jurisdictional defect, as they apply only to procedural irregularities.

28. The CIT(A), while adjudicating upon this ground, accepted the fact that AY 2020-21 is indeed the search year. However, relying on the decisions of the Hon’ble Madras High Court in A.R. Safiullah v. ACIT [W.P.(MD) No. 4327 of 2021, dated 24.03.2021] and of the Hon’ble Delhi High Court in PCIT v. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com160 (Delhi), the CIT(A) held that even the assessment of the search year can be framed under section 153A (see paras 10.4 and 10.5 of the CIT(A)’s order at P. No. 45–46).

29. In this regard, it is respectfully submitted that the reliance of the CIT(A) on R. Safiullah is misplaced. The issue before the Hon’ble Madras High Court in that case was confined to the computation of “relevant assessment years” as per Explanation 1 to section 153A, where it was held that such computation must be from the end of the search year. The Court did not hold that the assessment of the search year itself could be framed under section 153A.

30. Similarly, the reliance placed on O//us Medicare is also misconceived. As is evident from the relevant portion and table reproduced by the CIT(A), the Hon’ble Delhi High Court computed the block period under section 153C only after specifically excluding the search year. Thus, the judgment in fact supports the assessee’s contention rather than the Department’s case. Nowhere has it been held by the High Courts that the assessment of the search year can be framed by invoking section 153A instead of section 143(3).

31. In view of the above discussion, it is respectfully submitted that the assessment for AY 2020-21 being the search year could not have been framed under section 153A of the Act. The legislative scheme of sections 153A and 153B clearly envisages assessment of six preceding assessment years and other “relevant assessment years” but not the search year itself, which continues to be governed by the normal provisions of section 143(3). The consistent judicial view of various Benches of the Hon’ble Tribunal, as cited above, fortifies this interpretation. The reliance placed by the CIT(A) on the decisions of Hon’ble High Courts in A.R. Safiullah and O//us Medicare is misplaced and does not support the Department’s stand. Accordingly, the assessment framed under section 153A for AY 2020-21 is bad in law and deserves to be quashed.

Thus in the light of the above-mentioned facts and law, it is humbly prayed that the assessment order dated 31.03.2022 may kindly be quashed.”

6. On the other hand, ld. DR of the Revenue submitted as under :-

“Ld. AR of the assessee has taken several legal grounds on the basis of which it has been claimed that the assessment made U/S 153A is barred by limitation. Assessee’s grounds as well as my submissions on them are as under:

1. Assessee’s ground is that the date of Search is 27.02.2020 and consequent to that a Prohibitory order was placed on 1.03.20 on one of the premises. However, no Panchnama was drawn and the restraint expired on 30.9.2020. Hence the time limit for completion of Assessment order was 30.9.2021. As the order was passed on 31.3 .2022, the same is time barred.

In this regard the undersigned would like to bring to your notice the fact-that in case of assessee, not 1 but 2 Searches had taken place by issuing 2 separate Warrants of Authorization. The first one was executed on 27.02.20 and the second one on 21.11.2020. This fact has been mentioned in para one of the Assessment order and is reproduced as under for your kind perusal:

“A Search and seizure action u/s 132 of the Income Tax Act 1961(herein after referred to as the Act) was carried out on Raipur group of cases on 27.02.20. The assessee Sri Amolak Singh Bhatia (herein after referred to as the assessee) and his premises were covered under the search action. Subsequently another warrant of authorization/s 132 of the Act was issued and executed on the assessee on 21.11.2020.”

The chronology of events in this case is as under:

Date of First Search 27.02.2020

Date of Second Search 21.11.2020 (initiated on 19.11.2020 and concluded on 21.11.2020)

Notice U/S 153A issued on 07.09.2021

Order U/S 153A passed on 31.03.2022

From the above it is clear that the Search action concluded on the assessee in A Y 2021-22 which is the Search Year. Hence the limitation for completion of Search expired On 31.3.2022. Since the order u/s 153A was passed on that date, hence the order is not barred by limitation.

2. Assessee claims that as the present year under consideration i.e., A Y 2020-21 is the Search Year, assessment should have been framed u/s 143(3) rather than 153A.

As is obvious from above discussion in point 1, the date of second search was 21.11.2020, hence the Search year was A Y 2021-22 and not the present year 2020-21. Hence the assessment has been rightly framed u/s 153A.

3. Another ground of the assessee is that the order u/s 153A was received on 1.4.2022 hence it is time barred.

This again is an infructuous ground as section 153B mandates that the assessment order should be passed within the time limit. In this case the assessment order was passed on 31.3 .2022 and uploaded on the ITBA portal on the same date i.e. 31.3.2022. A screenshot of the same is enclosed for your kind perusal. Hence the mandate of the section has been fully complied with and the argument taken up by the assessee is baseless.

4. Another legal ground taken by the assessee is that the approval granted by the Range Head is mechanical and without application of mind.

In this regard it is submitted that a perusal of the letter granting approval u/s 153D shows that the approval granted is only for a single Assessment year and the single assessee and is not a combined approval.

Further, The Range Head has clearly mentioned in the letter that he has examined the additions made on various grounds on merit, and has had various discussions with the AO on the issues under consideration, and only after considering all records, he has granted approval. Relevant portion of the letter is reproduced for your kind perusal:

“The additions/disallowances made in the order on the following accounts have been examined on merit and found to be in order:

a) Addition on account of unexplained expenditure u/s 69C Rs.55,00,00,000/-

b) Addition on account of unexplained expenditure u/s 69C Rs.4,75,000/-

c) Addition on account of unexplained money u/s 69A Rs.57,53,000/-

In view of the details furnished, perusal of assessment records and various discussions with you in this regard, approval u/s 153D of the IT Act, 1961 is hereby accorded. “

From the above, it is evident that the approval has been accorded after discussing the issues in detail several times with the Assessing Officer, and after considering all the relevant records. Hence the allegation of non-application of mind is baseless and deserves to be dismissed.

5. Assessee has also raised the legal ground that Assessment order was passed on the basis of statements made and various inadmissible digital evidences without giving any meaningful opportunity to cross examine.

This, again is a meaningless argument for the reason that 2 additions of 55 Cr and 4.75 lakhs were made on the basis of assessee’s own statement, hence the issue of giving opportunity for cross examination doesn’t arise. The only addition made of Rs 57.53 lakhs was made on the basis of statement of Sri Yadubansh Prasad Prajapati, assessee’s Manager who handled all the cash of the assessee. However, considering the fact that this addition was based not only on the statement, but the hard cash of Rs 57.53 lakhs found during Search, the addition cannot be said to be not corroborated by evidence. Further, it is not evident anywhere from the record that the assessee actually asked for cross examination of Sri Prajapati, and AO denied it. Hence, if no cross examination is asked for, the plea for no opportunity given cannot be taken at a later date.

Reliance is further placed on the following decisions wherein various Courts have ruled that the opportunity for cross examination is not a part of Natural justice. As long as the party charged has a fair and reasonable opportunity to see, comment and criticize the evidence, the demands and test of natural justice are satisfied.

a) Nokia India Pvt Ltd (ITAT Delhi)

b) Motilal Padampat Udyog 160 taxman 233

c) Nova promoters and Finlease (Delhi HC) 342 ITR 169

d) Udit Kalra (Delhi HC) ITA 220/2019 and CM No 10774/2019

6. Assessee has taken another legal ground that as no Notice u/s 143(2) has been issued during assessment proceedings, therefore notice u/s 153A is bad in law.

On this issue, reliance is placed on the decision of Hon’ble Delhi High Court in the case of Ashok Chaddha (2012) 20 taxmann.com 387 wherein Hon’ble high court has held that issuing notice U/S 143(2) in 153A proceedings is not mandatory.

In view of above discussions, it is requested that the various legal grounds taken by the assessee may be dismissed and the case may be decided on merits.”

7. Considered the rival submissions material placed on record. First, we shall deal with the issues raised on the grounds 2 to 4 raised by the assessee. We observed from the records submitted before us, the relevant dates of search operation for initiation and completion of the search proceedings, since the relevant grounds raised by the assessee towards which is the relevant assessment year of search, whether the assessment should be completed u/s 143(3) or 153A, they are as under :-

(i) Search was initiated on 27.02.2020

(ii) Last pachnama was raised on 01.03.2020

(iii) Prohibitory order (PO) was passed on 01.03.2020

(iv) As per records, the above PO was lifted on 20.11.2020

(v) Statement of the assessee was recorded u/s 132(4) on 20.11.2020

(vi) Second search was initiated on 19.11.2020 (as submitted by the Ld DR)

(a) The second search was completed on 21.11.2020

(b) Notice u/s 153A was issued on 07.09.2021

(c) Assessment order u/s 153A was passed on 31.03.2022.

8. From the above factual matrix, we observed that the first search was conducted on 27.02.2020 and temporarily completed the search by passing the panchnama on 01.03.2020 and also passed PO u/s 132(3) on 01.03.2020. Meantime, the department has not carried out any action until they visited the assessee and lifted the PO on the Almira which was kept under PO only on20.11.2020. They also taken statement of the assessee on 20.11.2020 and subsequently another warrant of authorisation u/s 132 of the Act was issued and executed on 21.11.2020.

9. From the above information available on record, we observed that PO was passed on 01.03.2020, as per the provisions of section 132(8A) of the Act, the above PO ceased to be in force after expiry of 60 days. That being the case, the search proceedings deem to have completed on 30.04.2020. Even though the search was deemed to have concluded on 30.04.2020, as per the provisions of section 153B(2)(a), as it states, “in the case of search, on the conclusion of search as recorded in the last panchnama drawn in whose case the warrant of authorisation has been issued”. Therefore, in the given case, the last panchnama was drawn on 01.03.2020. Hence, the search assessment year in the given case would be only AY 2020-21.

10. As per the assessment order, the AO had recorded that the another warrant of authorisation was issued on 21.11.2020. We observed from the statement recorded u/s 132(4)/133A of the Act on 20.11.2020, which is placed on record. From the statement recorded, we observed that the officer informed the assessee in Q3 that the restraint order passed u/s 132(3) had been placed on the Almira in the room, which was lifted today (20.11.2020) and above said Almira was searched and found some papers which are identified as A-1. Which are loose papers recovered from the Almira and the assessee was asked to explain the details of the contents of each pages of Annexure A-1.

11. From the above facts on record, in our considered view, since the department issued another warrant of search and executed on 21.11.2020, the department consciously abatedthe earlier search conducted on 27.02.2020. The consequences of the same are, the material found during the first search cannot be treated as incriminating material for the second search. The incriminating material found during the search can also be used to initiate proceedings only u/s 147/148, the same material cannot be used to initiate proceedings u/s 153A of the Act after execution of second search. We observed that the AO had initiated the proceedings u/s 153A by reckoning the date of search on 21.11.2020. Accordingly, the AO had completed the assessment u/s 153A in the year under consideration i.e., AY 2020-21. In our view, this is not the correct procedure and the department has deemed to have lifted the PO on 30.04.2020, any action subsequent to the above date are illegal and moreover, the statement was recorded with the assessee on 20.11.2020 u/s 132(4), when the search itself is concluded on 30.04.2020, there is no room to take statement u/s 132(4) of the Act.

12. Further, the AO can proceed with the assessment u/s 153A based on the material found during the second search, that is loose papers found in the Almira on 21.11.2020 and can frame as well as complete the assessment u/s 143(3) in the search assessment year and if there is any impact of those material in the proceedings assessment years, can initiate proceedings u/s 153A for immediately preceding 6 assessment years. The relevance is the new incriminating materials found in the second search proceedings that are the loose papers found in the Almira. They cannot utilise any of the incriminating materials found in the first search in the assessment proceedings-initiated u/s 153A for the second search initiated on 21.11.2020. As discussed above, the alternative available to the department is only to initiate the proceedings under the provisions of the section 147 of the Act.

13. From the records we observed that the AO had completed the assessment u/s 153A only based on the material seized during the first search to complete the assessment year under consideration on the various issues as under:

(i) Addition u/s 69C from the WhatsApp conversation found in the mobile dated 04.06.2019;

(ii) Addition u/s 69B from the WhatsApp conversation dated 21.07.2019; and

(iii) Addition u/s 69A towards the cash found in Almira of the company.

14. All the above additions are found during the first search conducted on 27.02.2020. Therefore, the materials utilised to make addition which was found during the first search are illegal as the department had initiated the second search, they have abated the first search and the incriminating material found during the first search are material cannot be utilised to complete the proceedings u/s 153A initiated in the second search proceedings. Even on the merit, the assessee has a case that the proceedings-initiated u/s 153A is bad in law. The material found during the second search i.e., the loose sheets alone can be considered as incriminating material to initiate the proceedings u/s 153A for the second search.

15. Considering the peculiar facts on record, in our considered view, the proceedings initiated for the impugned assessment year under consideration u/s 153A is bad in law in both counts, a) the search AY for the first search is AY 2020-21, therefore the proceedings should have been initiated u/s 143(3) not under section 153A. b) if we take the second search as key to initiate proceedings based on the material found during the second search, the incriminating material found during the second search is only the loose papers, the proceedings initiated should be only on the above incriminating material and using the incriminating material of the first search is wrong since the department had already abated the first search proceedings. The assessment can only be done u/s 147/148 utilising the material found during the first search, hence the proceeding-initiated u/s 153A for the year under consideration is bad in law. The revenue is in catch 22 situation and both the counts, the proceedings initiated under section 153A for the AY 2020-21 is bad in law.

16. In the result, the relevant grounds raised against the initiation of proceedings u/s 153A by the assessee are allowed.

17. Since we have quashed the assessment order on the legal issue, the other grounds raised by the assessee were not adjudicated at this stage and are kept open.

18. In the result, appeal preferred by the assessee is allowed.

Order pronounced in the open court on this 28^thday of January, 2026.