Bombay High Court
Zoru Darayus Bhathena vs M/S. Suswarajya Foundation, Satara And ... on 17 November, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-OS:21725-DB
3-WP-2764-2022.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2764 OF 2022
Vijay Bihari Kandhari .. Petitioner
Versus
Assistant Commissioner of Income
Tax, Central Circle 4(1) and Anr. .. Respondents
Mr. Naresh Jain, a/w Mr. Mahaveer Jain, Mr. Shobhit Mishra, Mr.
Nishil Jain, i/b Ms. Neha Anchlia, for the Petitioner.
Mr. Akhileshwar Sharma (through V.C.), a/w Mr. P.A.
Narayanan, for the Respondents.
CORAM: B. P. COLABAWALLA &
AMIT S. JAMSANDEKAR, JJ.
DATE: NOVEMBER 17, 2025
P. C.
1. Rule. Respondents waive service. With the consent of the parties,
Rule is made returnable forthwith and heard finally.
2. The above Writ Petition is filed seeking to quash the impugned
notices for A.Y. 2014-15 to A.Y. 2019-20 issued by Respondent No. 2 under
Section 153C of the Income Tax Act, 1961 (for short "the IT Act"), dated
10.12.2020. The challenge is primarily on the ground that the proceedings
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under Section 153C have become time-barred on 30.09.2021. The
proceedings under Section 153C and issuance of the impugned notices are
being continued even after the proceedings getting time-barred. As a
consequence, the petitioner also challenges notices under Section 143(2) and
show cause notices issued by Respondent No.2 for completion of the
assessment.
3. Number of contentions have been raised in the petition. Mr.
Jain, the learned Counsel for the Petitioner, however, submits that if the
proceedings under Section 153C are held as time-barred, the other
contentions would be merely academic and need not be gone into.
4. Mr. Jain, the learned Advocate of Petitioner, submits that a
search and seizure operation under Section 132 of the IT Act was carried out
on 21.08.2019 in the case of Oberoi Realty Limited & others. In the course of
the aforementioned search, it is alleged by Respondent No. 2 that some
incriminating documents and information concerning the petitioner were
discovered and seized by the Income Tax Department. Because of the same,
proceedings under Section 153C were initiated against the petitioner,
resulting in the issuance of the impugned notices under Section 153C for A.Y.
2014-15 to 2019-20. Mr. Jain further submits that the time limit for
completion of the assessment as per Section 153B of the IT Act, read with the
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Taxation and Other Laws (Relaxation and Amendment of Certain Provisions)
Act, 2020 (for short "TOLA"), expires on 30.09.2021. It is therefore
submitted that the said assessments have not been completed under the said
statutory time limit. Mr. Jain brings to our notice 'Exhibit C' (page Nos. 45-51
of the Writ Petition) to demonstrate that Respondent No.2 has continued to
issue Show Cause Notices dated 11.03.2022 and 16.03.2022, which are
beyond the statutory period for completion of the assessment. It is also
brought to our notice that the Assessing Officer of the searched party, i.e.
Oberoi Realty Limited, as well as the Assessing Officer of the other party/
third party, i.e. Petitioner, is one and the same. The jurisdiction of both the
assessees lies with Central Circle 4(1), Mumbai. It was argued that in such a
case, the time limit for completion of the assessment as per the relevant
proviso of Section 153B(1) expires on 30.09.2021. Mr. Jain relies on the
judgment of the Hon'ble Supreme Court in Super Malls Pvt. Ltd. v. PCIT
(Civil Appeal No. 2006 of 2020) in this regard. Mr. Jain also
categorically states that the assessment under Section 153C was not
completed by 30.09.2021.
5. On the other hand, Mr. Sharma, the learned Counsel appearing
for the Revenue, strongly opposes the said contention of the Petitioner and
contends that the limitation for the completion of the assessment under
Section 153C would expire on 31.03.2022. He stated that the assessment
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order has not been passed till date because of the ad-interim relief granted by
this Court on 28.03.2022. He contends that the seized documents concerning
the Petitioner were "handed over" to the Assessing Officer of the searched
party (Oberoi Realty) and the Assessing Officer of the Petitioner (the other
party/Third Party), who happens to be the same officer, on 21.08.2020. Mr.
Sharma relies on the counter Affidavit to say that the Assessing Officer of the
Petitioner (who incidentally happens to be the Assessing Officer of the
searched person also) received the documents seized in the search and
seizure proceedings at Oberoi Realty Limited & others on 21.08.2020. Mr.
Sharma brings to our notice Exhibit 1 of the counter affidavit, showing that
the records are transferred by the Investigation Wing of the Income Tax
Department on 21.08.2020 to the Assessing Officer of the searched party.
According to Mr. Sharma, there are 2 limbs of the time limit provided by the
third proviso to Section 153B(1), which is applicable for the present
assessment under Section 153C. The first limb of clause (ii) of the said
proviso provides a time limit for completion of the assessment under Section
153C within 12 months from the end of the financial year in which the search
was conducted. However, the second limb of the same clause provides a
further time limit of 12 months from the end of the Financial Year in which
the records found in the search relating to a third party are transferred under
Section 153C to the jurisdictional Assessing Officer of the third party.
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According to Mr. Sharma, the second limb of the time limit provided by the
clause (ii) of the third proviso to Section 153B(1) should be applicable in the
present case, as the Investigation Wing of the Income Tax Department has
transferred the seized records concerning the petitioner on 21.08.2020,
though the search was conducted on 21.08.2019. In such a scenario, Mr.
Sharma contends that the time to complete the assessment proceedings was
till 31.03.2022.
6. We have heard the parties. Section 153C of the IT Act reads as
under:-
"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,--
(a) any money, bullion, jewellery or other valuable article or
thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized o
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 and that Assessing Officer shall
proceed against each such other person and issue notice and assess or
reassess the income of the other person in accordance with the
provisions of section 153A, if, that Assessing Officer 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 six assessment years immediately preceding the assessment year
relevant to the previous year in which search is conducted or requisition
is made and] for the relevant assessment year or years referred to in
sub-section (1) of section 153A :
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Provided 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 sub-section (1) of section 153A
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 jurisdiction over such other person :"
7. As per Section 153C, if during the course of search action on a
particular assessee, the incriminating documents or material is found
concerning a third party, the case of the third party can be reopened for six
assessment years and "relevant assessment years" preceding the previous
year in which the search is conducted.
8. The time limit for completing such assessment is provided under
Section 153B of the IT Act. The relevant extract of the section is reproduced
below:-
"153B. (1) Notwithstanding anything contained in section 153, the
Assessing Officer shall make an order of assessment or reassessment--
(a) in respect of each assessment year falling within six
assessment years 68[and for the relevant assessment year or years]
referred to in clause (b) of sub-section (1) of section 153A, within a
period of twenty-one 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;
(b) 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, within a period of twenty-one 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:
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Provided that in case of other person referred to in section 153C, the
period of limitation for making the assessment or reassessment shall be
the period as referred to in clause (a) or clause (b) of this sub-section or
nine months 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:
Provided further that in the case where the last of the authorisations for
search under section 132 or for requisition under section 132A was
executed during the financial year commencing on the 1st day of April,
2018,--
(i) the provisions of clause (a) or clause (b) of this sub-
section shall have effect, as if for the words "twenty-one months", the
words "eighteen months" had been substituted;
(ii) the period of limitation for making the assessment or
reassessment in case of other person referred to in section 153C, shall
be the period of eighteen 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 or twelve months 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:
Provided also that in the case where the last of the authorisations for
search under section 132 or for requisition under section 132A was
executed during the financial year commencing on or after the 1st day
of April, 2019,--
(i) the provisions of clause (a) or clause (b) of this sub-
section shall have effect, as if for the words "twenty-one months", the
words "twelve months" had been substituted;
(ii) the period of limitation for making the assessment or
reassessment in case of other person referred to in section 153C, shall
be the period of twelve 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 or twelve months 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:"
(emphasis supplied)
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9. As the search and seizure on Oberoi Realty Limited and Ors. was
conducted after 01.04.2019 (i.e. 21.08.2019), the limitation provided under
the third proviso to Section 153B(1) shall be applicable for the completion of
the assessment.
10. As per clause (ii) of the third proviso, there are two limbs that
provide the time limit for completion of the assessment under Section 153C.
The first limb of clause (ii) of the said proviso provides the time limit for
completion of the assessment to be 12 months from the end of the Financial
Year in which the last authorisation of search under Section 132 is executed.
As per this time limit, the assessment under Section 153C should have been
completed by 31.03.2021 in the present case, as the date of search under
Section 132 is 21.08.2019. The second limb of clause (ii) of the said proviso
provides the time limit as 12 months from the end of the Financial Year in
which the Books of Account or documents seized are handed over under
Section 153C to the Assessing Officer of a third party. As per Mr. Sharma, the
second limb to the above provision should be applicable in the present case
as the investigation wing of the Income Tax Department has handed over the
documents to the Assessing Officer of the third party on 21.08.2020.
Therefore, according to Mr. Sharma, the time limit should be counted from
the date of handing over of documents by the Investigation Wing to the
Assessing Officer of the third party, namely, the Petitioner.
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11. Under Section 153C, the handing over of documents takes place
when the Assessing Officer of the searched party, after recording satisfaction
that the documents found during the course of the search, belongs to a
person other than the searched person, and thereafter transfers the records
seized to the Assessing Officer of such other person. In the present case, there
is no question of such transfer under Section 153C. The Assessing Officer of
the searched person and the third person (Petitioner) is one and the same. In
this regard, a useful reference can be made to the Hon'ble Supreme Court's
judgment in the case of Super Malls Pvt. Ltd. (Supra), where the
interpretation of Section 153C and transfer of records are duly considered.
The relevant portion of this decision is reproduced hereunder :-
"6. This Court had an occasion to consider the scheme of Section 153C
of the Act and the conditions precedent to be fulfilled/complied with
before issuing notice under Section 153C of the Act in the case of
Calcutta Knitwears (supra) as well as by the Delhi High Court in the
case of Pepsi Food Pvt. Ltd. (supra).
As held, before issuing notice under Section 153C of the Act, the
Assessing Officer of the searched person must be "satisfied" that, inter
alia, any document seized or requisitioned "belongs to" a person other
than the searched person.
That thereafter, after recording such satisfaction by the Assessing
Officer of the searched person, he may transmit the
records/documents/things/papers etc. to the Assessing Officer having
jurisdiction over such other person. After receipt of the aforesaid
satisfaction and upon examination of such other documents relating to
such other person, the jurisdictional Assessing Officer may proceed to
issue a notice for the purpose of completion of the assessment under
Section 158BD of the Act and the other provisions of Chapter XIV-B
shall apply.
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6.1 It cannot be disputed that the aforesaid requirements are held to be
mandatorily complied with. There can be two eventualities. It may so
happen that the Assessing Officer of the searched person is different
from the Assessing Officer of the other person and in the second
eventuality, the Assessing Officer of the searched person and the other
person is the same. Where the Assessing Officer of the searched person
is different from the Assessing Officer of the other person, there shall be
a satisfaction note by the Assessing Officer of the searched person and
as observed hereinabove that thereafter the Assessing Officer of the
searched person is required to transmit the documents so seized to the
Assessing Officer of the other person. The Assessing Officer of the
searched person simultaneously while transmitting the documents shall
forward his satisfaction note to the Assessing Officer of the other person
and is also required to make a note in the file of a searched person that
he has done so. However, as rightly observed and held by the Delhi
High Court in the case of Ganpati Fincap (supra), the same is for the
administrative convenience and the failure by the Assessing Officer of
the searched person, after preparing and dispatching the satisfaction
note and the documents to the Assessing Officer of the other person, to
make a note in the file of a searched person, will not vitiate the entire
proceedings under Section 153C of the Act against the other person. At
the same time, the satisfaction note by the Assessing Officer of the
searched person that the documents etc. so seized during the search and
seizure from the searched person belonged to the other person and
transmitting such material to the Assessing Officer of the other person
is mandatory. However, in the case where the Assessing Officer of the
searched person and the other person is the same, it is sufficient by the
Assessing Officer to note in the satisfaction note that the documents
seized from the searched person belonged to the other person. Once the
note says so, then the requirement of Section 153C of the Act is fulfilled.
In case, where the Assessing Officer of the searched person and the
other person is the same, there can be one satisfaction note prepared by
the Assessing Officer, as he himself is the Assessing Officer of the
searched person and also the Assessing Officer of the other person.
However, as observed hereinabove, he must be conscious and satisfied
that the documents seized/recovered from the searched person belonged
to the other person. In such a situation, the satisfaction note would be
qua the other person. The second requirement of transmitting the
documents so seized from the searched person would not be there as he
himself will be the Assessing Officer of the searched person and the
other person and therefore there is no question of transmitting such
seized documents to himself."
(Emphasis supplied)
12. The transfer of records under Section 153C is done by the
Assessing Officer of the searched party to the Assessing Officer of the third
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party. The mechanism is that the Investigation Wing, after conducting a
search, transfers the seized records to the Assessing Officer of the searched
party. While examining the record, the Assessing Officer of the searched
party then determines whether certain documents and evidences belong to a
person other than the searched party. Thereafter, he is required to record
satisfaction in this regard and transfer the records to the Assessing Officer of
the third party. In that situation, the second limb of clause (ii) of the third
proviso to Section 153B(1) comes into operation and a fresh time limit is
permitted to the Assessing Officer of the third party to complete the
assessment within 12 months from the end of the Financial Year in which the
record found in the search is handed over to the Assessing Officer of the third
party. In case the assessing officer of the searched party and the Assessing
Officer of the third party is one and the same, the question of transfer of
records to oneself does not arise. The Hon'ble Supreme Court in case of
Super Malls Pvt. Ltd. (supra) has categorically stated and clarified the same.
In that situation, the second limb of the clause(ii) of the third proviso to
153B(1) time limit cannot be made applicable.
13. Mr. Sharma's contention that transfer of records from the officer
of the Investigation Wing to the common Assessing Officer of the searched
party as well as the third party, should trigger the application of the second
limb of clause (ii) of the third proviso, cannot be accepted as there is no
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reference of such transfer in the third proviso to Section 153B(1). The fresh
time given in the second limb is applicable only if the Assessing Officer of the
searched party transfers the record from himself to the assessing officer of
the third party, in case where both the Assessing Officers are different. There
is no provision of granting time for completion of the assessment with
reference to the transfer of records from the Investigation Wing to the
Assessing Officer. In such a case, the cumulative time taken by all the wings
of the Income Tax Department, including the Investigation Wing, is covered
in the first limb of the proviso, which provides the time limit for completion
of assessment as 12 months from the end of the Financial Year in which the
search took place.
14. If the above contention raised by Revenue is accepted, the first
limb of clause (ii) of the third proviso providing time of 12 months from the
end of the Financial Year in which the search took place, shall become
completely redundant and otiose. In every case, there will be a time gap
between the conduct of search and transfer of the seized record to the
Assessing Officer of the searched party by the Investigation Wing. If the
department's contention is accepted, then the time provided by the first limb
of the said proviso can never be applied, and the second limb will always be
applicable. This would make the first limb completely otiose. Such an
interpretation can never be permitted.
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15. In the facts of the present case, the search and seizure action at
Oberoi Reality took place on 21.08.2019. The Assessing Officer of the
searched party, as well as the third party, i.e. the Petitioner, is one and the
same. Therefore, the time limit provided by the first limb of clause (ii) of the
third proviso to Section 153B(1) shall apply, which is 12 months from the end
of the Financial Year in which the search took place. The said time limit
expired on 31.03.2021. In light of TOLA and Notification No. S.O. 966(E)
dated 27.02.2021, the aforesaid time limit stood extended till 30.09.2021.
Therefore, the assessment under Section 153C should have been completed
for A.Y. 2014-15 to 2019-20 by 30.09.2021. As the Assessing Officer has not
completed the assessment by 30.09.2021 and is still seeking replies to the
show cause notices issued on 11.03.2022 and 16.03.2022, assessment
proceedings are time-barred as they are not completed by 30.09.2021.
16. We must mention that Mr. Sharma, the learned Advocate
appearing for the Revenue, placed reliance on the judgment of the Madras
High Court in the case of LKS Gold House (P.) Ltd. Vs. Deputy
Commissioner of Income-tax [(2024) 161 taxmann.com 604
(Madras)] to support his argument that the present assessment
proceedings are not time-barred. In this regard, Mr. Sharma placed reliance
on paragraph No.103 of the said judgment. Paragraph No.103 of the said
decision states that even if the Assessing Officer of the searched person and
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the Assessing Officer of other person (3rd person) are one and the same, the
date of the satisfaction note is to be the deemed date of handing over of the
books of account or documents or assets seized or requisitioned for the
purpose of computation of limitation. The judgment further states that twelve
months from the end of the Financial Year, from the date on which the
documents were handed over or deemed to have been handed over to the
Assessing Officer of the other person, would start running for computation of
limitation.
17. Firstly, the aforesaid judgment will not be applicable because in
the facts of the present case, the satisfaction note is undated. This is admitted
by Mr. Sharma. Even otherwise, we are unable to agree with the learned
Single Judge of the Madras High Court that the date of the satisfaction note is
to be the deemed date for handing over the books of account or documents or
assets seized or requisitioned for the purpose of computation of limitation.
We find no such stipulation in clause (ii) of the third proviso to Section
153B(1)(b).
18. We also find, with the greatest respect to the learned Single
Judge of the Madras High Court, that the decision of the Hon'ble Supreme
Court in the case of Super Malls Pvt. Ltd. (supra) has not been distinguished
and read in the correct perspective. As mentioned earlier, as held by the
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Hon'ble Supreme Court in Super Malls Pvt. Ltd. (supra), the second
requirement of transmitting the documents so seized from the searched
person would not arise if the Assessing Officer of the searched person and the
third person is one and the same. There is no question of transmitting such
seized documents to oneself. For all these reasons, we find that the Madras
High Court's decision cannot be applied to the facts of the present case.
19. In view of the foregoing discussion, we hold that the proceedings
under Section 153C for A.Y. 2014-15 to 2019-20 are time-barred. Hence, they
are hereby quashed, and the Petition is allowed in terms of the prayer clause
(a) as below:-
"(a) that this Hon'ble Court be pleased to issue a writ of Certiorari or
a writ in the nature of Certiorari or any other appropriate writ under
Article 226 of the Constitution of India, calling for records pertaining to
the impugned notice dated 10th December, 2020 issued by Respondent
No. 1 u/s 153C of the Act for the Assessment Year 2014-15 to 2019-20
(being EXHIBIT "A-Colly" hereto) and after examining the validity and
legality thereof to quash and set aside the same."
20. Rule is made absolute in the aforesaid terms. However, there
shall be no order as to costs.
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21. This order will be digitally signed by the Private Secretary/
Personal Assistant of this Court. All concerned will act on production by fax
or email of a digitally signed copy of this order.
[AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.]
NOVEMBER 17, 2025
Darshan Patil
Signed by: Darshan Patil
Designation: PA To Honourable Judge
Date: 21/11/2025 11:19:50
