ITAT Quashes Section 153A Assessment as AY 2010-11 Fell Outside Ten-Year Block Period

Nitish Kumar Nagar Vs JCIT(OSD) (ITAT Delhi)

Search Assessment Set Aside Because Notice Covered an Assessment Year Beyond Statutory Block Period; Section 153A Proceedings Held Invalid Because Assessment Year Was Outside Permissible Search Window; ITAT Cancels Assessment Because Jurisdiction Under Section 153A Was Not Available for AY 2010-11; Assessment and Penalties Quashed Because Section 153A Notice Was Invalid.

The appeals before the Income Tax Appellate Tribunal (ITAT), Delhi, arose from assessment and penalty orders relating to Assessment Year (AY) 2010-11. The assessees challenged assessments framed under Section 153A of the Income-tax Act as well as penalties imposed under Sections 271A and 271B. Various grounds were raised, including lack of jurisdiction under Section 153A, absence of valid approval under Section 153D, additions relating to sale of agricultural land, unexplained investments, unexplained money, agricultural income, commission expenses, deductions, and penalties imposed for non-maintenance of books of account and failure to get accounts audited.

The facts showed that search and seizure operations were conducted on 04.03.2020, and the last warrant of authorization in the assessee’s case was executed on 05.11.2020. Thereafter, the case was centralized and a notice under Section 153A was issued on 24.08.2021 requiring the assessee to file returns for the ten assessment years preceding the assessment year in which the search was conducted. For AY 2010-11, the assessee had originally filed a return declaring income of ₹15,25,410. In response to the notice under Section 153A, no return was filed initially, but a return was subsequently filed in response to a notice under Section 142(1). The assessment was completed under Section 153A at a substantially higher income, and the Commissioner (Appeals) dismissed the assessee’s appeal.