Facts of the Case

The petitioner, Anuradha Bakshi, an entrepreneur engaged in apparel design and consultancy, was subjected to a search and seizure operation under Section 132 of the Income Tax Act, 1961 in March 2021. The search extended to multiple lockers belonging to her and her family members.

Subsequently:

  • Notices were issued under Section 153A for Assessment Years (AY) 2015–16 to 2020–21.
  • The petitioner filed returns in response.
  • Assessment for AY 2015–16 was completed on 31 March 2023, with minor additions.

Later, the Principal Commissioner invoked Section 263, issuing a notice dated 24 August 2023, alleging that the assessment order was erroneous and prejudicial to the interest of revenue.

The petitioner challenged this notice before the Delhi High Court, primarily on the ground of limitation.

Issues Involved

  1. Whether the assessment order dated 31 March 2023 under Section 153A was barred by limitation prescribed under Section 153B.
  2. Whether the revisional jurisdiction under Section 263 could be validly invoked when the underlying assessment was allegedly time-barred.
  3. Determination of the “last panchnama” date for computing limitation.

Petitioner’s Arguments

  • The search was effectively concluded in March 2021, and subsequent inspections in April 2021 were merely repetitive with no seizure of material.
  • Therefore, the last panchnama should be considered from March 2021.
  • Under Section 153B, limitation expired on 31 March 2022, making the assessment order dated 31 March 2023 invalid.
  • Proceedings under Section 263 cannot survive if the underlying assessment is void.
  • Relied on precedents including:
    • CIT v. Katyal
    • CIT v. Sarb Consulate Marine Products (P) Ltd.
    • Pr. CIT v. PPC Business and Products Pvt. Ltd.

Respondent’s Arguments

  • The last panchnama was drawn on 29 April 2021, particularly with respect to Locker No. 299.
  • The search was ongoing and concluded only on that date.
  • Hence, limitation under Section 153B was correctly computed, and the assessment order was within time.

Court’s Findings / Order

The Delhi High Court dismissed the writ petition and upheld the validity of the proceedings:

  • The Court held that Locker No. 299 was searched for the first time on 29 April 2021 based on a fresh authorization.
  • This search constituted the concluding search, and therefore, the last panchnama date was 29 April 2021.
  • Consequently, the limitation under Section 153B was to be computed from the end of FY 2020–21, making the assessment order dated 31 March 2023 within the prescribed time.
  • Since the assessment was valid, invocation of Section 263 could not be challenged on limitation grounds.
  • The Court clarified that it had not examined the merits of the assessment, only the jurisdictional issue.

Important Clarifications

  • A panchnama with “nil recovery” can still be relevant if it pertains to a valid search authorization.
  • The concept of “last panchnama” depends on factual determination of when the search actually concludes.
  • Separate authorization for a locker can extend the limitation period.
  • Courts will strictly interpret limitation provisions but will also examine substance over technical objections.

Sections Involved

  • Section 132 – Search and Seizure
  • Section 153A – Assessment in case of search
  • Section 153B – Time limit for completion of assessment
  • Section 263 – Revision of orders prejudicial to revenue
  • Section 292B – Validity of proceedings despite defects

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/SVN19102023CW138442023_154813.pdf

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