Supreme Court Rules on Commencement of Six-Year Period Under Section 153C — Receipt Date Prevails Over Search Date

Overview of the Dispute

In CIT Vs Jasjit Singh, the Supreme Court of India adjudicated upon a significant batch of appeals involving the correct interpretation of Section 153A and Section 153C of the Income-tax Act, 1961. The central question revolved around a critical timing issue: from which date should the six-year assessment period be computed for a third-party assessee — one whose documents or assets were discovered during a search conducted on an entirely different person under Section 132?

The Revenue had challenged a series of Delhi High Court orders that consistently upheld the position taken by the Income Tax Appellate Tribunal (ITAT) — that the six-year window under Section 153C commences from the date the seized material is received by the Assessing Officer having jurisdiction over the third-party assessee, and not from the date on which the original search was conducted.

Background and Factual Matrix

The facts giving rise to the lead appeal (arising from SLP (C) No. 6644 of 2016) are as follows:

  • Search and seizure operations were carried out at the premises of M/s KOUTON Group on 19.02.2009 under Section 132 of the Income-tax Act, 1961.
  • During the course of scrutiny following the search, the Assessing Officer concluded that certain documents and materials "belonging to" the respondent-assessees were found among the seized items.
  • Consequently, the jurisdictional Assessing Officers issued notices to the respective third-party assessees on varying dates:
    • 25.02.2010 — in SLP(C) No. 6644 of 2016 and SLP(C) No. 14447 of 2016
    • 12.03.2009 — in SLP(C) No. 23621 of 2016
    • 11.08.2014 — in SLP(C) Diary No. 30718/2023

These third-party assessees took the position before their respective Assessing Officers that the six-year period for which they were required to furnish returns should be computed only from the date on which the seized material was forwarded to and received by their jurisdictional AOs.

The Revenue, however, contended that the relevant date for computing the six-year period must be anchored to the date of the original search and seizure proceedings conducted under Section 132 against the principal searched party — and not the date of receipt by the third-party's AO.

Statutory Framework — Sections 153A and 153C Explained

To appreciate the legal controversy, it is essential to examine the relevant statutory provisions:

Section 153A(1) of the Income-tax Act, 1961 reads as under: