Procedure for Assessment of Search and Seizure of Assets Cases [Sections 153A, 153B and 153C]

1. Notice for Filing Return [Section 153A(1)(a)]:

2. Assessment in case of Search or Requisition of Assets [Section 153A(1)(b)]:

3. Separate Assessment of Six Assessment Years and for the relevant Assessment Year or Years [First proviso to Section 153A]:

4. Time Limit for Completion of Assessment of Search and Seizure of Assets [Section 153B]

5. Assessment of income of any other person [Section 153C]

(A) Notice for Filing Return [Section 153A(1)(a)]:

Where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years and of the relevant assessment year or years1 (also see amendment below) immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A.

Such return of income shall have to be furnished in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Further, in the case of such return, all the provision of the Act shall, as far as may be, apply accordingly as if such return were a return required to be furnished undersection 139.

In certain circumstances notice can be issued upto 10 assessment years preceding the assessment year relevant to the previous year in which the search is conducted [Fourth proviso under section 153A]

Notice under section 153A can be issued for an relevant assessment year or years (i.e. beyond the sixth assessment year already provided upto the tenth assessment year) if—

1. the Assessing Officer has in his possession books of accounts or other documents or evidence which reveal that the income which has escaped assessment amounts to or is likely to amount to `50,00,000 or more in one year or in aggregate in the relevant four assessment years (falling beyond the sixth year);

2. such income escaping assessment is represented in the form of "asset";

3. the income escaping assessment or part thereof relates to such year or years.

These provisions shall apply where search under section 132 is initiated or requisition under section 132A is made on or after the 1.4.2017.

(B) Assessment in case of Search or Requisition of Assets [Section 153A(1)(b)]:

Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31.5.2003, the Assessing Officer shall assess or reassess the total income of six assessment years and of the relevant assessment year or years2 immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made.

(C ) Separate Assessment of Six Assessment Years and for the relevant Assessment Year or Years [First proviso to Section 153A]:

As per proviso 1 to section 153A, the Assessing Officer shall assess or reassess the total income of each of such six assessment years and for the relevant assessment year or years.

Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. [Second proviso to section 153A]

(D) Time Limit for Completion of Assessment of Search and Seizure of Assets [Section 153B]

(i) Time limit of completion of assessment of 6 assessment years and for the relevant assessment year or years [Section 153B(1)(a)]:

The Assessing Officer shall make an order of assessment or reassessment in respect of each assessment year, falling within six assessment years and for the relevant assessment year or years under section 153A within a period of 21 months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Where the search was executed and during the course of proceedings for the assessment or reassessment, a reference under section 92CA(1) is made the period for making an order of assessment or reassessment in respect of each assessment year shall be extended by 12 months. [Second proviso to section 153B(1)]

For search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order under section 153A shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Further, for search and seizure cases conducted in the financial year 2019-20 and onwards, the said time limit shall be further reduced to 12 months (24 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(ii) Time limit of completion of assessment year relevant to the previous year in which search is conducted, or requisition is made [Section 153B(1)(b) and second proviso]:

This section also provides that the time-limit for completion of assessment in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be a period of 21 months [33 months, in case a reference is made under section 92CA(1) to TPO] from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed.

Although the return of income of the previous year in which search was conducted shall be filed as per the normal provisions but the assessment of assessment year relevant to such previous year shall have to be completed within 21 months (33 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year (not the assessment year) in which the search was conducted.

However, for search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order in respect of the assessment year relevant to the previous year in which the search is conducted under section 132 or requisition is made under section 132A shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

Further, for search and seizure cases conducted in the financial year 2019-20 and onwards, the said time limit shall be further reduced to 12 months (24 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(iii) Time limit for completion of assessment of other person referred to in section 153C [First and second provisos to section 153B(1)]:

In case of such other person, the time limit for making assessment or reassessment of total income of the assessment years referred to in clause (a) i.e. block period of six assessment years and for the relevant assessment year or years and clause (b) i.e. assessment year of search of the said sub-section, shall be the either:

1. 21 months (33 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of authorisations for search under section 132 or for requisition under section 132A was executed; or

2. 9 months (21 months, in case a reference is made under section 92CA(1) to TPO) 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,

whichever is later.

However, for search and seizure cases conducted in the financial year 2018-19, the time limit for making an assessment order for other person referred to in section 153C shall be reduced from existing 21 months to 18 months (30 months, in case a reference is made under section 92CA(1) to TPO) from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed.

(E) Assessment of income of any other person [Section 153C]

(I) Assessment of past 6/10 years, as the case may be

As per section 153C(1), notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that—

1. any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or

2. any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to,

a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person”.

The Assessing Officer having jurisdiction over such other person shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A if he is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1).

In other words, firstly, the satisfaction will be recorded by the Assessing Officer who is handing over the books of accounts or documents or assets to the Assessing Officer having jurisdiction over such other person.

Secondly, the Assessing Officer to whom the books of account or documents or assets seized or requisitioned have been handed over, before proceeding under section 153A, will have to record the satisfaction that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in section 153A(1).

Further, proceedings under section 153A(1) read with section 153C can be taken by him only for those assessment year or years to which undisclosed income belong instead of past 6/10 assessment years, as the case may be.

For purpose of section 153C, the date of initiation of the search under section 132 or on the date of making of requisition under section 132A shall be taken as date of receiving the books of account [First proviso to section 153C]:

Second proviso to section 153A(1) provides that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in the said section pending on the date of initiation of the search under section 132 or on the date of making of requisition under section 132A, as the case may be, shall abate.

The above second proviso for the purpose of other person has been amended by inserting a proviso to section 153C(1) so as to provide that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to section 153A(1) shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having the jurisdiction over such other person.

In case of other person, the assessment of assessment year relevant to previous year in which search was conducted shall also be done under section 153A read with section 153C.

Notice under 153C may not be issued for six assessment years and for the relevant assessment year or years in notified cases [Second proviso to section 153C]

(II) Assessment of previous year of search or requisition

Assessment in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, in case of other person [Section 153C(2)]:

Where books of account or documents or assets seized or requisitioned referred to in section 153C(1) has been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of the assessment year—

1. no return of income has been furnished by such person and no notice under section 142(1) has been issued to him, or

2. a return of income has been furnished by such person but no notice under section 143(2) has been served and limitation of serving the notice under section 143(2) has expired, or

3. assessment or reassessment, if any, has been made, before the date of receiving of books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person,

such Assessing Officer shall issue the notice and assess or re-assess total income of such other person for such assessment year in the manner provided in section 153A(1).

The above amendment has been made only in respect of assessment year relevant to the previous year in which search is conducted. In this case, the assessment/re-assessment of such assessment year shall be made in the manner provided under section 153A and not under section 143/144/147 provided both the following conditions are satisfied:

1. The books of accounts, documents, assets, etc. are received by the jurisdictional officer after due date of filing the return of income of the relevant assessment year, and

2. Any of the conditions mentioned in clause (a) or (b) or (c) is satisfied.