Facts of the Case

The present matter formed part of a large batch of appeals and writ petitions before the Delhi High Court arising out of search and seizure operations conducted by the Income Tax Department. Following the search, the Department issued notices under Sections 153A and 153C of the Income-tax Act, 1961 seeking assessment or reassessment for multiple assessment years, including years extending beyond the ordinary statutory period. Alankit Forex India Limited challenged the validity of these notices on the ground that they were issued without satisfying the statutory preconditions governing extended search assessments.

Issues Involved

  1. Whether notices issued pursuant to a search for assessment years beyond the permissible statutory block period were valid in law.
  2. Whether the extended ten-year period under the Fourth Proviso to Section 153A could be invoked without establishing escaped income of ₹50 lakh or more represented in the form of an asset.
  3. Whether completed assessments could be reopened absent compliance with mandatory jurisdictional requirements.
  4. Whether the satisfaction recorded by the Assessing Officer was sufficient to justify initiation of proceedings.

Petitioner’s Arguments

  • The impugned notices pertained to assessment years falling outside the legally permissible time frame.
  • The statutory requirement of escaped income amounting to ₹50 lakh or more in the form of an asset had not been fulfilled.
  • The satisfaction recorded by the Assessing Officer lacked credible material demonstrating compliance with the Fourth Proviso.
  • Reopening concluded assessments beyond limitation violated settled principles of finality and legal certainty.

Respondent’s Arguments

  • Search assessment provisions constitute a special code and operate independently of ordinary reassessment provisions.
  • The statute permits reopening for up to ten years subject to fulfillment of prescribed conditions.
  • At the stage of issuing notice, determination of escaped income is necessarily tentative, and precise quantification is not required.
  • Prior completion of assessments does not bar action triggered by a valid search operation.

Court Order / FINDINGS

  • Invocation of the extended ten-year period under the Fourth Proviso to Section 153A is permissible only when escaped income represented in the form of an asset amounts to or is likely to amount to at least ₹50 lakh.
  • The Assessing Officer must record reasons demonstrating satisfaction of this jurisdictional threshold.
  • Notices issued for assessment years beyond the permissible statutory period without fulfilling these conditions are without jurisdiction.
  • Search assessment provisions override ordinary reassessment provisions but remain subject to statutory safeguards and limitations.

Important Clarification

  • The ₹50-lakh threshold under the Fourth Proviso is a mandatory jurisdictional condition for invoking the extended period.
  • Satisfaction must be apparent from the record at the time of issuing notice.
  • Completed assessments do not enjoy absolute immunity from search-based proceedings, but such proceedings must strictly conform to statutory limits.
  • Search provisions, though special in nature, cannot be used to bypass legislative safeguards.

Link to download the order – https://www.mytaxexpert.co.in/uploads/1772263467_ALANKITFOREXINDIALIMITEDVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

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