6-Year Limitation Period u/s 153C Commences from Date of Material Handover to AO, Not Date of Search or Notice: Madras HC [Read Order]
The Madras High Court held that the six-year limitation under Section 153C starts from the date the Assessing Officer receives documents, not from the date of search or notice.
![6-Year Limitation Period u/s 153C Commences from Date of Material Handover to AO, Not Date of Search or Notice: Madras HC [Read Order]](https://images.taxscan.in/h-upload/2025/08/23/2079879-6-year-limitation-period-commences-date-of-material-handover-ao-date-of-search-notice-madras-hc-taxscan.webp "6-Year Limitation Period u/s 153C Commences from Date of Material Handover to AO, Not Date of Search or Notice: Madras HC [Read Order]")
In a recent ruling, the Madras High Court held that under Section 153C of the Income Tax Act, the six-year limitation period for issuing a notice to a person other than the one searched begins from the date on which the documents or materials are received by the Assessing Officer, not from the date of the search or notice.
Sunil Khetpalia, the petitioner, filed writ petitions challenging notices under Section 153C dated 30 December 2024 and assessment orders dated 13 March 2025 for the assessment years 2017-18 and 2018-19.
A search was conducted on 09 November 2017, after which the petitioner settled the matter before the Interim Board for Settlement. A second search took place on 10 November 2020, and documents relating to the petitioner were received by the Assessing Officer on 30 June 2022.
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Despite the petitioner’s fresh application to the Settlement Board on 28 December 2023, notices were issued, and objections raised on 03 March 2025 were rejected.
The petitioner’s counsel argued that under Section 153C, a notice must be issued within six years from the assessment year in question, and for AY 2017–18, the limitation had already expired. It was also argued that the matter had already been settled once before the Settlement Board, and reopening it was not justified.
In response, the department’s counsel argued that the limitation under the first proviso to Section 153C(1) begins from the date on which the documents are received by the Assessing Officer from the searched person. In this case, the documents were received on 30 June 2022, and the notice dated 30 December 2024 was issued well within time.
The counsel also explained that the earlier settlement did not prevent it from reopening the matter if fresh material was found.
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The bench comprising Justice Krishnan Ramasamy observed that in the case of a person other than the one searched, the limitation under Section 153C is to be calculated from the date of receipt of books, documents, or assets by the Assessing Officer, not from the date of search. Since the documents were received on 30 June 2022, the notice issued on 30 December 2024 was within the six-year time limit.
The court also observed that the earlier settlement before the Interim Board did not prevent the department from initiating fresh proceedings when new material had been received. It explained that the petitioner’s objections on limitation and finality of settlement had no merit in the present case. The court dismissed the writ petitions.
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