Whether the assessment framed u/s 153A for Assessment Year 2010-11 (pursuant to search action) was barred by limitation, as it fell beyond the permissible extended period of 10 years prescribed under Explanation 1 to Section 153A(1), particularly in light of the binding judgment of the Delhi High Court in Ojjus Medicare Pvt. Ltd..

 

DCIT, Central Circle-28 v. Alok Kumar Agarwal

ITAT Delhi | ITA No. 3685/Del/2025 | Order dated 05.12.2025

 

Statutory Provision: Section 153A & Computation of 10-Year Period

Section 153A(1) mandates issue of notice requiring filing of returns for six assessment years preceding the year of search.

The Finance Act, 2017 inserted the “extended 10-year period” applicable only if:

The AO has books of account or other documents or evidence revealing that income representing assets (as defined) that escaped assessment exceeds ₹50 lakh, for that year or cumulatively,

And such income is represented in the form of an asset, and

Such asset pertains to such assessment year.

 

Explanation 1 to Section 153A(1)

Defines how the 10-year period is to be computed backward from the year of search, subject to fulfilment of the conditions above.

 

3. Background Facts

Search conducted;

Assessment order passed u/s 153A on 24.05.2022 for AY 2010-11;

CIT(A) set aside the assessment (order dated 28.02.2025), holding the year was outside the 10-year permissible window;

Revenue appealed before ITAT.

 

4. Revenue’s Contentions

CIT(A) erred in cancelling the assessment.

Department has already filed an appeal before the Supreme Court against the Delhi High Court judgment in Ojjus Medicare Pvt. Ltd., so the issue is not final.

Additions have been made on merits and should not be nullified merely on limitation.

Therefore, Tribunal should interfere and restore the assessment.

 

5. Assessee’s Contentions

The search year and timeline clearly show that AY 2010-11 lies beyond the outer limit of 10 years under Explanation 1 to Section 153A(1).

Ojjus Medicare Pvt. Ltd. (Delhi HC) squarely applies and is binding on the authorities.

CIT(A)’s computation is correct and in accordance with statutory interpretation laid down by the High Court.

 

6. Reliance on Judicial Precedent – Ojjus Medicare Pvt. Ltd.

Delhi High Court in Ojjus Medicare Pvt. Ltd. (2023-24) held:

The 10-year extended scope under Section 153A cannot be applied automatically;

                •              It applies only where the statutory conditions (income represented in the form of an asset exceeding ₹50 lakh) are satisfied;

The computation of the 10-year block must strictly follow Explanation 1;

Assessments beyond that period are void and without jurisdiction.

 

This judgment is binding on all authorities within Delhi.

 

7. Findings of CIT(A) (summarised by ITAT)

After calculating the 10-year backward window,

AY 2010-11 DOES NOT fall within the permissible years for which assessment could be framed u/s 153A.

Therefore, the assessment order dated 24.05.2022 was barred by limitation.

CIT(A) followed binding precedent of Delhi High Court.

 

8. Tribunal’s Analysis & Conclusion

The ITAT upheld the CIT(A)’s reasoning:

                1.            Correct computation of 10-year period:

CIT(A) demonstrated that AY 2010-11 lies beyond the extended period, rendering the assessment illegal.

                2.            Binding nature of Delhi High Court judgment:

                •              Ojjus Medicare Pvt. Ltd. is jurisdictional and must be followed.

                •              Mere pendency of SLP before Supreme Court does not dilute its binding character (settled law).

                3.            No contrary authority or factual rebuttal was presented by the Department.

                4.            Revenue’s argument of “tax recovery on merits” cannot override limitation prescribed by statute.

 

Accordingly:

                •              The ITAT found no error in the CIT(A)’s decision.

                •              The assessment was void ab initio due to lack of jurisdiction.

                •              Revenue’s appeal dismissed