Opinion Of Eminent Legal Luminaries On Controversial Issues

What Is The Time Limit For Completing The Assessment U/s. 153C?

QUERY: AB & Co., is a partnership firm having two partners A & B. In April, 2011 search u/s. 132 was conducted on both A & B partners, while survey u/s. 133 was conducted on AB & Co. Some unaccounted sale bills of AB & Co. relating to financial year 2010-11 were found at residence of A. Notice u/s. 153C dated October, 2013 was served on AB & Co. for previous six years. AO has added total of all sale bills found at residence of A in the total income of AB & Co., in financial year 2010-11.

a) Whether notice u/s. 153C issued to AB & Co., in October, 2013 is valid or time barred?

b) Whether total sale bills (and not G.P.) added is proper?
ANSWER: Section 153B provides time limit for completion of assessment under section 153A. Time limit for completion of assessment for all seven years i.e. preceding six years and the year of search, is two years from the end of the financial year in which last of the authorisation for search under section 132 or for requisition under section 132A executed.

First proviso to section 153B(1) provides that in case of another person referred to in section 153C, the period of limitation for making assessment or reassessment shall be two years from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person. So from the facts, it can safely be presumed that last authorisation on searched person was in April, 2011. Therefore, time limit for completing the assessment was two years from end of the financial year i.e. March 31, 2014. Naturally, assessment on other person would be subsequent to the assessment on the person searched.

Hence, notice under section 153C was served on AB & Co., on October, 2013 was valid notice, if it was issued after following due process of law.

As at the time of search, the unrecorded sales bills were found, the AO should add only GP on the said bills on the basis of following decisions:

(i) CIT v. President Industries [258 ITR 654 (Guj.)]

(ii) Jyotichand Bhaichand Saraf & Sons v. DCIT [139 ITD 10 (Pune)]
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