Madras HC: Limitation Period Begins from Seizure Date, Upholds Validity of Section 153C IT Notice

According to the Madras High Court, the limitation period for issuing notices under Section 153C to a third party begins on the date the materials are seized or requisitioned, not on the date of the search.

M/s. KLP Projects Private Limited (applicant) has submitted the writ petitions against notices on 30.12.2024 and an order on 13.03.2025 issued by the Assistant Commissioner of Income Tax.

A Writ of Certiorari has been sought by the applicant to quash these notices and the order for Assessment Years (AY) 2017-18 and 2018-19. The petitioner the proceedings were barred by limitation.

The matter emerges from a search performed via the income tax department dated 10.11.2020. From the applicant, the material was collected and determined as the other person under section 153C, dated 30.06.2022.

On 30.12.2024, under Section 153C, the department issued a show-cause notice and another notice u/s 142(1) on 28.02.2025. Objections were been furnished by the applicant dated 03.03.2025 claiming that the notice was limited in time, but the department has rejected these objections.

The limitation period of six years under Section 153C is to be calculated from the date of the show-cause notice the counsel of the applicant. The ruling of the Apex court has been quoted by the applicant in CIT vs. Jasjit Singh.

The applicant has settled a similar case with the Interim Board for Settlement (IBS) following a search on 09.11.2017, the counsel said. Also, it added that the issue of reopening was not fair, supporting the decision of the Delhi High Court in Omaxe Ltd. vs. Assistant Commissioner of Income Tax.

From the date the materials were handed to the assessing officer, the limitation period has started as per the first provision of section 153C(1). The counsel mentioned that the materials were obtained dated 30.06.2022. Also, the counsel furnished that the notice was furnished dated 30.12.2024 within the 6-year limitation period.

It was noted by the bench Justice Krishnan Ramasamy, that section 153C controls the assessment of the person’s income other than the one searched. The court, the first provision of section 153C(1) states that the period of limitation begins from the date the assessing officer gets the seized materials, which in this matter was 30.06.2022.

Read Also: Section 153C of IT Act Requires AO’s Satisfaction, Not Tax Portal Uploads

The notice was within the allowable time duration, which was issued dated 30.12.2024, the court cited. The court also mentioned that the department can start new proceedings based on the new evidence if the settlement arrived at IBS. The court the ruling of the applicant does not apply to the facts of the case.

The impugned notice and orders validity is been carried by the court and allotted to the applicant to submit a response to the SCN within 30 days from the receipt order of the court. The writ petition of the applicant was dismissed.