Facts of the Case

A batch of writ petitions, including that filed by Alankit Finsec Limited, arose from search and seizure operations conducted by the Income Tax Department, pursuant to which notices under Sections 153A and 153C of the Income-tax Act, 1961 were issued for assessment or reassessment of several years. The impugned notices covered assessment years extending beyond the ordinary six-year period and, in certain cases, beyond ten years from the relevant assessment year. The assessees challenged these notices as being without jurisdiction and contrary to the statutory scheme, particularly the Fourth Proviso to Section 153A.

Issues Involved

  1. Whether reassessment notices issued pursuant to a search for years beyond the permissible statutory block period were valid.
  2. Whether the extended ten-year period under the Fourth Proviso to Section 153A could be invoked without satisfying the statutory threshold of escaped income of ₹50 lakh represented in the form of an asset.
  3. Whether completed assessments could be reopened solely on the basis of a search without fulfillment of statutory conditions.
  4. Whether the Assessing Officer’s satisfaction recorded for initiation of proceedings was legally sufficient.

Petitioner’s Arguments

  • The impugned notices were issued for assessment years falling outside the permissible statutory time limits.
  • The mandatory condition of escaped income amounting to ₹50 lakh or more, represented in the form of an asset, had not been satisfied.
  • The satisfaction note did not demonstrate any credible basis for invoking the extended period.
  • Once limitation had expired, the completed assessments attained finality and could not be reopened arbitrarily.

Respondent’s Arguments

  • Search assessment provisions constitute a special code and operate independently of ordinary reassessment provisions.
  • The law permits reopening for up to ten years subject to conditions, and determination of escaped income at the notice stage is necessarily tentative.
  • The expression “amounts to or is likely to amount to” indicates that precise quantification is not required at initiation.
  • The finality of earlier assessments does not bar action triggered by a valid search.

Court Order / FINDINGS

  • Invocation of the extended ten-year period is permissible only if the escaped income represented in the form of an asset amounts to or is likely to amount to ₹50 lakh or more.
  • The Assessing Officer must record reasons indicating that the threshold is satisfied; mere suspicion or conjecture is insufficient.
  • The statutory requirement may be evaluated on a cumulative basis rather than year-wise in isolation.
  • Notices issued for assessment years beyond the ten-year limit are without jurisdiction and liable to be quashed.
  • Search assessment provisions override ordinary reassessment provisions but remain subject to statutory safeguards.

Important Clarification

  • The ₹50-lakh threshold under the Fourth Proviso to Section 153A is a mandatory jurisdictional condition.
  • Satisfaction must be evident from the record at the time of issuing notice.
  • Finality of earlier assessments does not confer an absolute immunity against search-based proceedings.
  • Search provisions constitute a special regime with overriding effect, but they cannot be invoked beyond statutory limits.

Link to download the order – https://www.mytaxexpert.co.in/uploads/1772263391_ALANKITFINSECLIMITEDVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.