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?
No. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed.
Decided by the High Court (Vibhu Bakhru J and Tejas Karia J) on 2025-05-13, reported as ITA 782/2023 (lead) and 28 connected appeals: ITA 216/2023, 694/2023, 706/2023, 707/2023, 758/2023, 781/2023, 783/2023, 784/2023, 786/2023, 787/2023, 788/2023, 790/2023, 791/2023, 794/2023, 796/2023, 799/2023, ITA 69/2024, 72/2024, 73/2024, 74/2024, 75/2024, 76/2024, 88/2024, 89/2024, 90/2024, 92/2024, 93/2024, 94/2024 (Delhi High Court). It bears on section 153B, section 153A, section 143(3), section 90, section 90A, section 142(2A), section 158BE, section 69C, section 271(1)(c), section 260A of the Income Tax Act 1961, in Search, Survey & Block Assessment, Assessment & Scrutiny and How Tax Law Is Read matters.
The library had nothing at all on s.153B, and this is the cleanest available statement of the principle that runs through the whole Explanation: an exclusion is earned by a valid trigger, not by the fact that the Department did something. The Court reasoned from the special-audit cases under clause (ii) — where a s.142(2A) direction is set aside, the exclusion goes with it — and carried the same logic to clause (ix). The reach is wider than the HSBC facts: any time the Revenue claims an extension for a foreign information request, a special audit, a valuation reference or a s.144BA reference, the first question is whether the trigger was itself lawful. The competing consideration the Court accepted is that a limitation provision in a fiscal statute is construed strictly (K.M. Sharma), which cuts in the taxpayer's favour here but is a two-edged rule. The regime point: the search was on 28 July 2011, so this is the s.153A/s.153C regime that governs searches initiated between 1 June 2003 and 31 August 2024. For a search initiated on or after 1 September 2024 the limitation provision is not s.153B at all but s.158BE, and its exclusion list in s.158BE(4) is drafted in materially the same terms, including a clause for exchange-of-information references limited to an agreement 'referred to in section 90 or section 90A' — so the reasoning should carry, but the section number in your ground of appeal must change.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A search under s.132 was conducted on 28 July 2011 in the case of Sh. Bhushan Lal Sawhney and connected persons, the authorisation covering Praveen Sawhney among others. Notices under s.153A followed, including one dated 16 May 2012 to Praveen Sawhney for AY 2006-07, in response to which he returned income of Rs 4,54,001 on 25 June 2012. The Revenue had information that the assessee held an HSBC account in Geneva and confronted him with it. On 11 June 2013 the competent authority in the Foreign Tax and Tax Research Division sought administrative assistance from the Swiss tax authorities under the exchange-of-information article of the India-Switzerland DTAA, the information sought relating to the period 1 April 1995 to 31 March 2012. The Swiss authorities replied on 2 July 2019 declining the request on the ground that the treaty imposed no obligation for periods prior to 1 April 2011. Meanwhile assessments under s.153A read with s.143(3) were completed on 4 March 2015 making additions as income from other sources and as unexplained expenditure under s.69C. The Commissioner (Appeals) dismissed the appeals. The Tribunal, by orders of 1 June 2021, 22 July 2022 and 18 May 2023, held the assessments barred by limitation under s.153B and declined to go into the merits. The Revenue's case was that clause (ix) of the Explanation to s.153B gave it an extra year, which would have brought 4 March 2015 within a deadline of 31 March 2015. Twenty-nine appeals in quantum and in s.271(1)(c) penalty were consolidated, the case of Praveen Sawhney for AY 2006-07 in ITA 782/2023 being taken as the lead.
The questions of law were answered against the Revenue and in favour of the assessees, and the appeals were dismissed (paras 72 and 73). The request made to the Swiss authorities for information relating to a period prior to 1 April 2011 was not maintainable under the India-Switzerland DTAA (paras 56 and 59). The exclusion of time under clause (ix) of the Explanation to s.153B is available only where the reference for exchange of information is made as per the agreement under s.90 or s.90A; because the request here was contrary to the limitations expressly specified in Article 14 of the Amending Protocol, no time was excluded and the assessments were beyond limitation (para 71).
The Court took the second framed question first and traced the treaty: the India-Switzerland DTAA notified on 21 April 1995 contained an exchange-of-information article as Article 24; the Supplementary Protocol notified on 7 February 2001 renumbered it as Article 26 without altering its content; the Amending Protocol of 30 August 2010 substituted it; and Notification S.O. 2903(E) of 27 December 2011 provided that the exchange-of-information article applies to information relating to fiscal years beginning on or after 1 April 2011 (paras 39 to 42). It followed that no request made after 30 August 2010 for information relating to a period before 1 April 2011 could be made under the treaty (para 56), and the Tribunal was right that such a request was not maintainable (para 59). On the effect of that invalidity the Court reasoned from the parallel exclusion for special audits in clause (ii). In VLS Finance Ltd v. CIT the Supreme Court had excluded the period during which a s.142(2A) direction was under stay, holding that the exclusion does not depend on the final outcome of the proceeding in which the stay was granted; but the Court noted that the Supreme Court had NOT excluded the period between the issue of the direction and the stay order, from which it drew the implication that where the direction itself is invalid the exclusion is unavailable (paras 65 and 66). In Sahara India (Firm) v. CIT the Supreme Court had to give its ruling prospective effect precisely so as to save assessments that would otherwise have been time-barred once the s.142(2A) orders were held bad, which again showed that an invalid direction carries no exclusion (paras 67 and 68). The Bombay High Court in PCIT v. Vilson Particle Board Industries Ltd had applied Sahara to uphold the setting aside of an assessment as time-barred where the special audit direction was vitiated (para 69). Adding K.M. Sharma v. ITO on the strict construction of limitation provisions in a fiscal statute (para 70), the Court read clause (ix) on its plain language and held the exclusion conditional on a reference made in terms of the agreement (para 71).
Thus, on a plain reading of Clause (ix) of the Explanation to Section 153B of the Act, the exclusion of time taken for obtaining the information (or one year) for completion of the assessment under Section 153A of the Act is applicable only if a reference for exchange of information has to be made as per the Agreement under Section 90/90A of the Act. It is necessary that reference be made in terms of the agreement.
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Handle my notice → Ask a CA on WhatsAppNo. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed. This was decided by the High Court (Vibhu Bakhru J and Tejas Karia J) and bears on section 153B, section 153A, section 143(3), section 90, section 90A, section 142(2A), section 158BE, section 69C, section 271(1)(c), section 260A of the Income Tax Act 1961. It is reported as ITA 782/2023 (lead) and 28 connected appeals: ITA 216/2023, 694/2023, 706/2023, 707/2023, 758/2023, 781/2023, 783/2023, 784/2023, 786/2023, 787/2023, 788/2023, 790/2023, 791/2023, 794/2023, 796/2023, 799/2023, ITA 69/2024, 72/2024, 73/2024, 74/2024, 75/2024, 76/2024, 88/2024, 89/2024, 90/2024, 92/2024, 93/2024, 94/2024 (Delhi High Court). The library had nothing at all on s.153B, and this is the cleanest available statement of the principle that runs through the whole Explanation: an exclusion is earned by a valid trigger, not by the fact that the Department did something. The Court reasoned from the special-audit cases under clause (ii) — where a s.142(2A) direction is set aside, the exclusion goes with it — and carried the same logic to clause (ix). The reach is wider than the HSBC facts: any time the Revenue claims an extension for a foreign information request, a special audit, a valuation reference or a s.144BA reference, the first question is whether the trigger was itself lawful. The competing consideration the Court accepted is that a limitation provision in a fiscal statute is construed strictly (K.M. Sharma), which cuts in the taxpayer's favour here but is a two-edged rule. The regime point: the search was on 28 July 2011, so this is the s.153A/s.153C regime that governs searches initiated between 1 June 2003 and 31 August 2024. For a search initiated on or after 1 September 2024 the limitation provision is not s.153B at all but s.158BE, and its exclusion list in s.158BE(4) is drafted in materially the same terms, including a clause for exchange-of-information references limited to an agreement 'referred to in section 90 or section 90A' — so the reasoning should carry, but the section number in your ground of appeal must change. If it applies to you, the first step is this: Build the limitation calendar first, from the date of execution of the last of the authorisations, and put every claimed exclusion on it separately with its start and end date.
A search under s.132 was conducted on 28 July 2011 in the case of Sh. Bhushan Lal Sawhney and connected persons, the authorisation covering Praveen Sawhney among others. Notices under s.153A followed, including one dated 16 May 2012 to Praveen Sawhney for AY 2006-07, in response to which he returned income of Rs 4,54,001 on 25 June 2012. The Revenue had information that the assessee held an HSBC account in Geneva and confronted him with it. On 11 June 2013 the competent authority in the Foreign Tax and Tax Research Division sought administrative assistance from the Swiss tax authorities under the exchange-of-information article of the India-Switzerland DTAA, the information sought relating to the period 1 April 1995 to 31 March 2012. The Swiss authorities replied on 2 July 2019 declining the request on the ground that the treaty imposed no obligation for periods prior to 1 April 2011. Meanwhile assessments under s.153A read with s.143(3) were completed on 4 March 2015 making additions as income from other sources and as unexplained expenditure under s.69C. The Commissioner (Appeals) dismissed the appeals. The Tribunal, by orders of 1 June 2021, 22 July 2022 and 18 May 2023, held the assessments barred by limitation under s.153B and declined to go into the merits. The Revenue's case was that clause (ix) of the Explanation to s.153B gave it an extra year, which would have brought 4 March 2015 within a deadline of 31 March 2015. Twenty-nine appeals in quantum and in s.271(1)(c) penalty were consolidated, the case of Praveen Sawhney for AY 2006-07 in ITA 782/2023 being taken as the lead. The matter was decided on 2025-05-13 by the High Court (Vibhu Bakhru J and Tejas Karia J). On those facts the High Court held as follows. The questions of law were answered against the Revenue and in favour of the assessees, and the appeals were dismissed (paras 72 and 73). The request made to the Swiss authorities for information relating to a period prior to 1 April 2011 was not maintainable under the India-Switzerland DTAA (paras 56 and 59). The exclusion of time under clause (ix) of the Explanation to s.153B is available only where the reference for exchange of information is made as per the agreement under s.90 or s.90A; because the request here was contrary to the limitations expressly specified in Article 14 of the Amending Protocol, no time was excluded and the assessments were beyond limitation (para 71).
The Court took the second framed question first and traced the treaty: the India-Switzerland DTAA notified on 21 April 1995 contained an exchange-of-information article as Article 24; the Supplementary Protocol notified on 7 February 2001 renumbered it as Article 26 without altering its content; the Amending Protocol of 30 August 2010 substituted it; and Notification S.O. 2903(E) of 27 December 2011 provided that the exchange-of-information article applies to information relating to fiscal years beginning on or after 1 April 2011 (paras 39 to 42). It followed that no request made after 30 August 2010 for information relating to a period before 1 April 2011 could be made under the treaty (para 56), and the Tribunal was right that such a request was not maintainable (para 59). On the effect of that invalidity the Court reasoned from the parallel exclusion for special audits in clause (ii). In VLS Finance Ltd v. CIT the Supreme Court had excluded the period during which a s.142(2A) direction was under stay, holding that the exclusion does not depend on the final outcome of the proceeding in which the stay was granted; but the Court noted that the Supreme Court had NOT excluded the period between the issue of the direction and the stay order, from which it drew the implication that where the direction itself is invalid the exclusion is unavailable (paras 65 and 66). In Sahara India (Firm) v. CIT the Supreme Court had to give its ruling prospective effect precisely so as to save assessments that would otherwise have been time-barred once the s.142(2A) orders were held bad, which again showed that an invalid direction carries no exclusion (paras 67 and 68). The Bombay High Court in PCIT v. Vilson Particle Board Industries Ltd had applied Sahara to uphold the setting aside of an assessment as time-barred where the special audit direction was vitiated (para 69). Adding K.M. Sharma v. ITO on the strict construction of limitation provisions in a fiscal statute (para 70), the Court read clause (ix) on its plain language and held the exclusion conditional on a reference made in terms of the agreement (para 71). In the words reproduced by the source cited on this page: "Thus, on a plain reading of Clause (ix) of the Explanation to Section 153B of the Act, the exclusion of time taken for obtaining the information (or one year) for completion of the assessment under Section 153A of the Act is applicable only if a reference for exchange of information has to be made as per the Agreement under Section 90/90A of the Act. It is necessary that reference be made in terms of the agreement." The decision followed or applied VLS Finance Limited and Anr. v. Commissioner of Income Tax and Anr. (SC) — considered, on Explanation 1 to s.158BE and the special-audit exclusion; Sahara India (Firm), Lucknow v. CIT and Anr. (SC) — considered, on the prospective ruling that saved assessments from limitation; Principal Commissioner of Income-tax v. Vilson Particle Board Industries Limited (Bombay High Court) — followed; K.M. Sharma v. Income Tax Officer, Ward 13(7), New Delhi (SC) — applied, on strict construction of a limitation provision; Commissioner of Income-tax v. Bajrang Textiles (Rajasthan High Court) and Sadana Electric Stores v. CIT (Allahabad High Court) — relied on by the Tribunal below and noted by the Court.
It was decided by the High Court on 2025-05-13 and is reported as ITA 782/2023 (lead) and 28 connected appeals: ITA 216/2023, 694/2023, 706/2023, 707/2023, 758/2023, 781/2023, 783/2023, 784/2023, 786/2023, 787/2023, 788/2023, 790/2023, 791/2023, 794/2023, 796/2023, 799/2023, ITA 69/2024, 72/2024, 73/2024, 74/2024, 75/2024, 76/2024, 88/2024, 89/2024, 90/2024, 92/2024, 93/2024, 94/2024 (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 153B, section 153A, section 143(3), section 90, section 90A, section 142(2A), section 158BE, section 69C, section 271(1)(c), section 260A, 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. The questions of law were answered against the Revenue and in favour of the assessees, and the appeals were dismissed (paras 72 and 73). The request made to the Swiss authorities for information relating to a period prior to 1 April 2011 was not maintainable under the India-Switzerland DTAA (paras 56 and 59). The exclusion of time under clause (ix) of the Explanation to s.153B is available only where the reference for exchange of information is made as per the agreement under s.90 or s.90A; because the request here was contrary to the limitations expressly specified in Article 14 of the Amending Protocol, no time was excluded and the assessments were beyond limitation (para 71). It arises in Search, Survey & Block Assessment, Assessment & Scrutiny and How Tax Law Is Read matters, on section 153B, section 153A, section 143(3), section 90, section 90A, section 142(2A), section 158BE, section 69C, section 271(1)(c), section 260A of the Income Tax Act 1961, and was decided by Vibhu Bakhru J and Tejas Karia 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. For each claimed exclusion, demand the underlying document: the letter of reference and the competent authority's communication for clause (ix), the s.142(2A) direction and its approval for clause (ii), the s.142A reference for the valuation clause. Then attack the trigger, not just the arithmetic. If the reference could not lawfully have been made — wrong period, wrong treaty article, no agreement in force for those years — the exclusion never begins to run. Read the notification giving effect to the treaty, not just the treaty. Here Notification S.O. 2903(E) of 27 December 2011 confined the amended exchange-of-information article to information relating to fiscal years beginning on or after 1 April 2011, and that is what defeated the Revenue. Note what the Court did NOT do: it did not go into the merits of the HSBC additions at all. A limitation win is complete, so take the point first and separately. If your search was initiated on or after 1 September 2024, run the same argument under s.158BE(4) and s.158BE(2), not s.153B. For a search initiated between 1 April 2021 and 31 August 2024 the limitation provision is neither s.153B nor s.158BE: s.152(3) makes the case a s.147 to s.151 reassessment, timed by s.149 and s.153 in their pre-Finance (No. 2) Act 2024 form.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:106008433 returns nothing. A second search for "Praveen Sawhney" with "153B" returns 25 documents, of which only the judgment itself is relevant; the remainder are unrelated Delhi Tribunal orders in Rajinder Kumar v ACIT. No later decision cites the 13 May 2025 judgment on limitation under s.153B where the exchange-of-information reference was invalid, and no Supreme Court matter was found. The judgment is recent and leads a batch of 29 connected appeals, so absence of citation is unsurprising. 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.
Read three times. The first pass returned a paragraph-by-paragraph paraphrase rather than a transcription and must not be relied on; the second and third passes, aimed at specific paragraph ranges, returned the text of paras 60 to 73 verbatim, and the holding and quote recorded here come from those. The judgment as printed contains two obvious slips that have been left as they are and not quoted: para 32 refers to 'assessments under Section 143A of the Act' where s.153A is plainly meant, and para 72 spells 'Assesses' for assessees. The full text of paras 1 to 59 was not transcribed verbatim; the facts recorded here rest on a summarised reading of those paragraphs together with the verbatim paras 60 to 73, and a later pass wanting to quote from the earlier part of the judgment must re-retrieve it. 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.
The questions of law were answered against the Revenue and in favour of the assessees, and the appeals were dismissed (paras 72 and 73). The request made to the Swiss authorities for information relating to a period prior to 1 April 2011 was not maintainable under the India-Switzerland DTAA (paras 56 and 59). The exclusion of time under clause (ix) of the Explanation to s.153B is available only where the reference for exchange of information is made as per the agreement under s.90 or s.90A; because the request here was contrary to the limitations expressly specified in Article 14 of the Amending Protocol, no time was excluded and the assessments were beyond limitation (para 71).
TaxSphere, “PCIT v Praveen Sawhney”, https://taxnotice.vittsphere.com/caselaw/case/pcit-v-praveen-sawhney-153b-invalid-exchange-of-information-reference/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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