Papers of mine were seized in a search on somebody else and I have got notices under section 153C for six years. Which six years, and can completed assessments be reopened when the papers show nothing?
It depends, and here the answer was no on both counts. The Delhi High Court held that for a person other than the searched person, the six assessment years under section 153C run from the date the seized material is handed over to his Assessing Officer - here the satisfaction note of 8 September 2010 - not from the date of the search. Assessment years 2003-04 and 2004-05 were therefore outside the section. It further held that completed assessments cannot be reopened where the seized documents have no bearing on those years. The Revenue's appeals were dismissed.
Decided by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Vibhu Bakhru, J)) on 2015-10-30, reported as ITA 164/2015 and connected matters (Delhi High Court). It bears on section 153C, section 153A, section 153C(1), section 132, section 69C of the Income Tax Act 1961, in Search, Survey & Block Assessment and Reassessment & Reopening matters.
Two of the most-used propositions on section 153C come from this judgment. The first shifts the six-year block forward to the date of handing over, which routinely knocks out the earliest one or two years the department has assessed; the Court's reason is that on the Revenue's reading the non-searched person would be exposed to a longer reach-back than the searched person himself, which the scheme cannot have intended. The second carries Kabul Chawla across from section 153A: a concluded assessment survives unless incriminating material is seized. It also resolves the tension in SSP Aviation - the searched person's officer need not judge whether the document shows undisclosed income, but the recipient officer may not press on when the document plainly has no bearing on the years in question. The Pepsico point on "belongs to" is applied too: a chartered accountant's working papers about a client do not belong to the client.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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Search and seizure operations under section 132 were carried out on 20 October 2008 in the cases of B.K. Dhingra, Poonam Dhingra and Madhusudan Buildcon Pvt Ltd. Two things said to belong to RRJ Securities Ltd were seized: pages 126 to 179 of Annexure A-34, and a computer hard disk in Annexure A-102 containing soft copies of working papers, balance sheets and income tax filing data. The Assessing Officer, who had jurisdiction over both the searched persons and RRJ, recorded a satisfaction note on 8 September 2010 and issued notice under section 153C for assessment years 2003-04 to 2008-09. Assessments under section 143(3) read with section 153C followed on 31 December 2010, adding the declared purchases under section 69C on the footing that the company could not substantiate its purchases of textile stock, and disallowing all expenses as unverifiable. The Commissioner (Appeals) deleted the additions and the Tribunal affirmed. It later emerged, on a Right to Information request, that Annexure A-34 was a single record slip of a cheque book with three entries dated August and December 2008 and the rest blank; and B.K. Dhingra, a chartered accountant, affirmed on affidavit that the hard disk was his firm's, held in his professional capacity, and that the data merely supported the returns filed.
All four Revenue appeals were dismissed. On the six-year block, the Court held that in a section 153C case the reference to the date of search in section 153A must be read as the date on which the Assessing Officer of the other person receives the seized assets or documents - here 8 September 2010 - so assessment years 2003-04 and 2004-05 fell outside the section and the officer had no jurisdiction over them. On the hard disk, following Pepsico India Holdings, a computer belonging to a chartered accountant's firm holding a client's working papers does not "belong to" the client, and the disk in any event contained nothing incriminating, so it could not support section 153C proceedings. On the record slip, the Court accepted that it belonged to the assessee, so the searched person's officer was right to hand it over; but its three entries related to a later year and had no bearing on assessment years 2003-04 to 2008-09. Since the concluded assessments could only be disturbed on incriminating material, and no investigation was even necessary, the officer had no jurisdiction to reassess.
The Court worked through the mechanics of section 153C. Recording of satisfaction by the searched person's officer is mandatory and is the foundation of everything that follows, even where the same officer holds both files. Once satisfied and once the material is transferred, the assessment of the other person proceeds under section 153A, and in that setting the second proviso to section 153A must be read with the date of receipt of the documents substituted for the date of search. It follows that the six years are counted from that date. The Court tested the Revenue's contrary reading and found it produced an absurdity: because handing over always comes after the search, a person who was never searched would face a longer reach-back than the person who was, which is contrary to the scheme of section 153C(1). On reopening, the Court applied the summary of section 153A law from Kabul Chawla, decided two months earlier, and held those principles apply equally under section 153C because section 153C(1) directs the officer to proceed in accordance with section 153A. It then reconciled SSP Aviation. That decision means the searched person's officer need not form any view on undisclosed income before forwarding a document, and the recipient officer need not have concluded that it shows undisclosed income before issuing notice; section 153C exists to enable investigation. But it cannot be read as conferring jurisdiction to reassess in every case where a document is handed over. Where it is apparent that the document has no bearing on the assessee's income for the relevant years, an enquiry is impermissible.
The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized.
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Handle my notice → Ask a CA on WhatsAppIt depends, and here the answer was no on both counts. The Delhi High Court held that for a person other than the searched person, the six assessment years under section 153C run from the date the seized material is handed over to his Assessing Officer - here the satisfaction note of 8 September 2010 - not from the date of the search. Assessment years 2003-04 and 2004-05 were therefore outside the section. It further held that completed assessments cannot be reopened where the seized documents have no bearing on those years. The Revenue's appeals were dismissed. This was decided by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Vibhu Bakhru, J)) and bears on section 153C, section 153A, section 153C(1), section 132, section 69C of the Income Tax Act 1961. It is reported as ITA 164/2015 and connected matters (Delhi High Court). Two of the most-used propositions on section 153C come from this judgment. The first shifts the six-year block forward to the date of handing over, which routinely knocks out the earliest one or two years the department has assessed; the Court's reason is that on the Revenue's reading the non-searched person would be exposed to a longer reach-back than the searched person himself, which the scheme cannot have intended. The second carries Kabul Chawla across from section 153A: a concluded assessment survives unless incriminating material is seized. It also resolves the tension in SSP Aviation - the searched person's officer need not judge whether the document shows undisclosed income, but the recipient officer may not press on when the document plainly has no bearing on the years in question. The Pepsico point on "belongs to" is applied too: a chartered accountant's working papers about a client do not belong to the client. If it applies to you, the first step is this: Get the satisfaction note and the date the material was handed over, then count the six years back from that date and challenge any earlier year as outside section 153C.
Search and seizure operations under section 132 were carried out on 20 October 2008 in the cases of B.K. Dhingra, Poonam Dhingra and Madhusudan Buildcon Pvt Ltd. Two things said to belong to RRJ Securities Ltd were seized: pages 126 to 179 of Annexure A-34, and a computer hard disk in Annexure A-102 containing soft copies of working papers, balance sheets and income tax filing data. The Assessing Officer, who had jurisdiction over both the searched persons and RRJ, recorded a satisfaction note on 8 September 2010 and issued notice under section 153C for assessment years 2003-04 to 2008-09. Assessments under section 143(3) read with section 153C followed on 31 December 2010, adding the declared purchases under section 69C on the footing that the company could not substantiate its purchases of textile stock, and disallowing all expenses as unverifiable. The Commissioner (Appeals) deleted the additions and the Tribunal affirmed. It later emerged, on a Right to Information request, that Annexure A-34 was a single record slip of a cheque book with three entries dated August and December 2008 and the rest blank; and B.K. Dhingra, a chartered accountant, affirmed on affidavit that the hard disk was his firm's, held in his professional capacity, and that the data merely supported the returns filed. The matter was decided on 2015-10-30 by the High Court (High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Vibhu Bakhru, J)). On those facts the High Court held as follows. All four Revenue appeals were dismissed. On the six-year block, the Court held that in a section 153C case the reference to the date of search in section 153A must be read as the date on which the Assessing Officer of the other person receives the seized assets or documents - here 8 September 2010 - so assessment years 2003-04 and 2004-05 fell outside the section and the officer had no jurisdiction over them. On the hard disk, following Pepsico India Holdings, a computer belonging to a chartered accountant's firm holding a client's working papers does not "belong to" the client, and the disk in any event contained nothing incriminating, so it could not support section 153C proceedings. On the record slip, the Court accepted that it belonged to the assessee, so the searched person's officer was right to hand it over; but its three entries related to a later year and had no bearing on assessment years 2003-04 to 2008-09. Since the concluded assessments could only be disturbed on incriminating material, and no investigation was even necessary, the officer had no jurisdiction to reassess.
The Court worked through the mechanics of section 153C. Recording of satisfaction by the searched person's officer is mandatory and is the foundation of everything that follows, even where the same officer holds both files. Once satisfied and once the material is transferred, the assessment of the other person proceeds under section 153A, and in that setting the second proviso to section 153A must be read with the date of receipt of the documents substituted for the date of search. It follows that the six years are counted from that date. The Court tested the Revenue's contrary reading and found it produced an absurdity: because handing over always comes after the search, a person who was never searched would face a longer reach-back than the person who was, which is contrary to the scheme of section 153C(1). On reopening, the Court applied the summary of section 153A law from Kabul Chawla, decided two months earlier, and held those principles apply equally under section 153C because section 153C(1) directs the officer to proceed in accordance with section 153A. It then reconciled SSP Aviation. That decision means the searched person's officer need not form any view on undisclosed income before forwarding a document, and the recipient officer need not have concluded that it shows undisclosed income before issuing notice; section 153C exists to enable investigation. But it cannot be read as conferring jurisdiction to reassess in every case where a document is handed over. Where it is apparent that the document has no bearing on the assessee's income for the relevant years, an enquiry is impermissible. In the words reproduced by the source cited on this page: "The concluded assessments cannot be interfered with under Section 153A of the Act unless the incriminating material belonging to the Assessee has been seized."
It was decided by the High Court on 2015-10-30 and is reported as ITA 164/2015 and connected matters (Delhi High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 153C, section 153A, section 153C(1), section 132, section 69C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. All four Revenue appeals were dismissed. On the six-year block, the Court held that in a section 153C case the reference to the date of search in section 153A must be read as the date on which the Assessing Officer of the other person receives the seized assets or documents - here 8 September 2010 - so assessment years 2003-04 and 2004-05 fell outside the section and the officer had no jurisdiction over them. On the hard disk, following Pepsico India Holdings, a computer belonging to a chartered accountant's firm holding a client's working papers does not "belong to" the client, and the disk in any event contained nothing incriminating, so it could not support section 153C proceedings. On the record slip, the Court accepted that it belonged to the assessee, so the searched person's officer was right to hand it over; but its three entries related to a later year and had no bearing on assessment years 2003-04 to 2008-09. Since the concluded assessments could only be disturbed on incriminating material, and no investigation was even necessary, the officer had no jurisdiction to reassess. It arises in Search, Survey & Block Assessment and Reassessment & Reopening matters, on section 153C, section 153A, section 153C(1), section 132, section 69C of the Income Tax Act 1961, and was decided by High Court of Delhi - Dr Justice S. Muralidhar and Mr Justice Vibhu Bakhru (judgment by Vibhu Bakhru, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask for copies of the seized material at the outset; here the assessee had to use the Right to Information Act to discover the document was a single cheque book record slip with three entries from 2008. Where the assessment for a year was already concluded and not pending on the handing-over date, argue there is no abatement and no jurisdiction to reassess without incriminating material bearing on that year. If the material was seized from a professional adviser's own records or computer, take the "belongs to" point - data about a client does not become the client's document.
Still good law. A citator search restricted to superior courts returns 203 decisions, overwhelmingly from the Delhi High Court, which continues to treat this judgment as settling the reckoning of the block period under section 153C. The Delhi High Court applied it in ARN Infrastructure India Ltd v ACIT (25 April 2017): at para 12, in its own reasoning rather than in the recital of counsel's citation at para 10, the Bench held that 'The decision in CIT-7 v. RRJ Securities Ltd. (supra) is categorical that under Section 153C of the Act, the period of six years as regards the person other than the searched person would commence only from the year in which the satisfaction note is prepared', and excluded assessment years 2007-08 and 2008-09 from the reopened assessments on that basis; at para 17 it added that the requirement of year-wise relevance of the seized material 'again stands settled by the decision in CIT-7 v. RRJ Securities Ltd (supra)'. It is relied on again through the Delhi High Court's batch of 9 April 2024 (Neelkanth Steel and Alloys, Mamta Agarwal, Ashutosh Agarwal, Naresh Mittal). A separate Supreme Court search returns nothing, so there is no Supreme Court decision on it and no traceable pending challenge. Nothing overruling, doubting or confining it was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The harvested page is clipped in the middle: pages 14 to 22 of 40 are absent, covering the Revenue's submissions and the Court's discussion of the earlier authorities on section 153C down to its citation of the Delhi Full Bench line on satisfaction notes. The framed questions, the facts, the whole of the Court's reasoning from paragraph 20 onwards, and the operative order all survive. The batch line listed sections 153C, 153A and 132; sections 153C(1) and 69C are added from the judgment. The Court expressly declined to answer the two questions originally framed - on section 69C and on bringing the disallowed amounts to tax in a search assessment - having decided the jurisdictional question, so this record says nothing about them. The source page carried no reporter citations, so the case numbers are given instead. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All four Revenue appeals were dismissed. On the six-year block, the Court held that in a section 153C case the reference to the date of search in section 153A must be read as the date on which the Assessing Officer of the other person receives the seized assets or documents - here 8 September 2010 - so assessment years 2003-04 and 2004-05 fell outside the section and the officer had no jurisdiction over them. On the hard disk, following Pepsico India Holdings, a computer belonging to a chartered accountant's firm holding a client's working papers does not "belong to" the client, and the disk in any event contained nothing incriminating, so it could not support section 153C proceedings. On the record slip, the Court accepted that it belonged to the assessee, so the searched person's officer was right to hand it over; but its three entries related to a later year and had no bearing on assessment years 2003-04 to 2008-09. Since the concluded assessments could only be disturbed on incriminating material, and no investigation was even necessary, the officer had no jurisdiction to reassess.
TaxSphere, “CIT v RRJ Securities Ltd”, https://taxnotice.vittsphere.com/caselaw/case/cit-v-rrj-securities-ltd/ (validity last checked 2026-08-29)
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The block assessment adds amounts for which nothing was found in the search. Can I take the Abhisar Buildwell point that there must be incriminating material?
The Department says my search assessment is in time because it made a reference to a foreign tax authority and gets a year excluded under s.153B. The reference was for years the treaty did not cover. Does the exclusion still apply?
I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
A search was made on someone else and my papers were found. From which date are my six years counted - the search, or when my Assessing Officer got the papers?
