Income Tax Act | Gujarat High Court Quashes S.153C Assessment As Time-Barred, Rejects Revenue's Reliance On S.153(6)(i)

The Gujarat High Court quashed assessment order as well as a demand notice issued to an entity under Section 153C Income Tax Act after noting that the assessment order was issued invoking Section 153(6)(i) was beyond the limitation period.

The petitioner had moved the high court for quashing Assessment Order dated 30.04.2024 as well as the demand Notice dated 30.04.2024 for the Assessment Year 2011-12. It was contended that the assessment order passed by the respondent was clearly barred by limitation and hence, was without any jurisdiction.

A search was conducted of a third party–H. N. Safal Group (searched person) on 04.09.2013, which culminated into re-assessment of tax of the petitioner entity. It was submitted that relevant materials were gathered during the search and the satisfaction note was also drawn by the Assessing Officer of the searched person, which was received by the respondent authority on 28.08.2017 in the Financial Year 2017-18/Assessment Year 2018-19.

As per the first proviso under Section 153B of the IT Act, the last date of framing the assessment was on 31.12.2018.

However, since the matter was sub judice before the High Court and interim relief was granted in favour of petitioner on 20.12.2018, whereby the notice under Section 153(C) was challenged, the limitation period of eleven days for framing the assessment was remaining, as on the date of grant of such interim relief.

It was submitted that the issue came to be settled in favour of the Income Tax Department by the Supreme Court in its judgment dated 06.04.2023 passed in ITO vs. Vikram Sujitkumar Bhatia (2023).

Pursuant to the said decision, the respondent was again authorised to frame the assessment in the case of the petitioner. It was submitted that as per the provisions of Section 153 B of the IT Act, if the remaining period of limitation is less than sixty days, the same stands extended for another sixty days for the purpose of undertaking the assessment proceedings.

It was submitted that in the present case, the assessment order was supposed to have been passed on 05.06.2023, however, the same has been passed on 30.04.2024.

While referring to the contents of the affidavit-in-reply dated 21.04.2025, it was submitted that the order of the Supreme Court dated 06.04.2023 was received by the office of the jurisdictional Assessing Officer on 16.05.2023 and even then also the same would be beyond the period of limitation prescribed under the Act.

It is submitted that the respondent authority cannot place reliance on the provisions of Section 153(6)(i) of the IT Act and extend the period of limitation for a period of one year for justifying the Assessment Order passed on 30.04.2024.

As per Section 153(6) (i) the Assessing Officer must complete the assessment or reassessment within twelve months from the end of the month in which such order is received or passed by the relevant authority.

Meanwhile the tax authority submitted that the order of the Supreme Court was received on 16.05.2023 by the jurisdictional Assessing Officer and as per the provisions, the Assessment Order has to be passed before the expiry of twelve months from the end of the month in which such order is received. Accordingly, after the reassessment came to be completed on 30.04.2024 before the expiry of the limitation period of twelve months the order has been passed.

It is further submitted that the limitation in the present matter is not governed by the provision of Section 153 (B) of the IT Act but rather governed by the provisions of Section 153(6)(i) of the IT Act

For context, Section 153B pertains to the time limit for completion of assessment under section 153A–which refers to assessment in case of search or requisition.

A division bench of Justice AS Supehia and Justice Pranav Trivedi said:

"Thus, the period of limitation is required to be extended for sixty days as there were only eleven days left for passing Assessment Order, when the interim order dated 20.12.2018 was passed by this Court in the writ petition challenging the notice under Section 153 C of the Act, in the case of present petitioner. Accordingly, if the necessary calculation is done and if the sixty days period of limitation is added the limitation would stand extended to 05.06.2023 reckoned from 06.04.2023 i.e. the decision of the Supreme Court. Admittedly, the impugned Assessment Order was passed on 30.04.2024. Even if, the date of receipt of the order of the Supreme Court by the jurisdictional Assessing Officer on 16.04.2023 is considered, then also the Assessment Order passed on 30.04.2024 would still cross the limitation period".

The court further said that the reliance placed by the tax authorities on Section 153(6)(i) of the Act to encompass the Assessment Order dated 30.04.2024 within a limitation period of 12 months, is misconceived.

It said that the provision would be only applicable to the general assessment proceedings under Section 143 or Section 144 of the IT Act and not to the provision of Section 153C of the IT Act, as they are explicit provisions governing the search proceedings emanating from the provision of Section 132 of the IT Act.

"These provisions are distinct and the legislature has prescribed specific limitations period for undertaking assessment," the bench said.

The court allowed the petition and quashed the assessment order and demand notice.

Case title: SWAGAT INFRASTRUCTURE PRIVATE LIMITED v/s THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(4), AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 9176 of 2024

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