Notice under Section 153B

Section 153B (1): “Notwithstanding anything contained in section 153, the time limit for the completion of assessment or reassessment under section 153A shall be as follows:”

• Clause (a): Two years from the end of the financial year, the last authorisations for search under Section 132 or requisition under Section 132A were executed.
• Clause (b): In the case of other persons referred to in Section 153C, two years from the end of the financial year in which the last of the authorisations for search under Section 132 or requisition under Section 132A was executed or one year 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.

Section 153B(2): “Where a search is initiated, or books of account, other documents or any assets are requisitioned after the 31st day of March 2018, the provisions of sub-section (1) shall have effect as if for the words ‘two years’, the words ‘eighteen months’ had been substituted.”

Section 153B(3): “The period commencing from the date on which the authorisation for search under Section 132 or requisition under Section 132A is executed to the date on which the last of the pathnames is drawn about any person referred to in clause (a) or clause (b) of sub-section (1) or sub-section (1A) of Section 153A or clause (a) or clause (b) of sub-section (1) of Section 153C, or in the case of a requisition under Section 132A, until the date on which the books of account or other documents or any assets are handed over to the requisitioning officer, shall be excluded in computing the period of limitation for this section.”

Example:

• Search Conducted: A search operation was conducted on 15th May 2022.
• Execution of Authorization: The last authorisation for the search is executed on 20th May 2022.
• Time Limit for Completion: The assessment under Section 153A should be completed by 31st March 2024 (two years from the end of the financial year in which the last authorisation was executed).

Purpose:

Section 153B ensures that assessments in cases involving searches and requisitions are completed within a defined time frame, thereby providing certainty and avoiding prolonged litigation and uncertainty for taxpayers.

Legal Implication:

Please complete the assessment within the stipulated time frame to ensure the evaluation is considered time-barred. Consequently, further proceedings regarding that assessment year may become invalid, and the taxpayer may not be liable for the assessed tax demand.

Legal Recourse:

1. Filing Objections:
   • If a taxpayer receives a notice under Section 153B, they can file objections with the Assessing Officer (AO) challenging the validity or basis of the assessment.
2. Appeal:
   • If the assessment order is not in favour of the taxpayer, they can appeal to the Commissioner of Income Tax (Appeals) [CIT(A)].
3. ITAT:
   • If the CIT(A) order is still unfavourable, the taxpayer can appeal to the ITAT.
4. High Court and Supreme Court:
   • For significant questions of law, the taxpayer can approach the High Court and, if necessary, the Supreme Court.

Penalties and Prosecution:

1. Penalties:
   • Under Section 271(1)(c), a penalty for concealment of income or furnishing inaccurate particulars can range from 100% to 300% of the tax sought to be evaded.
   • Under Section 271AAB, a penalty related to undisclosed income found during a search can range from 30% to 90% of the undisclosed income.
2. Prosecution:
   • Under Section 276C, if the taxpayer wilfully attempts to evade tax, they may face rigorous imprisonment ranging from six months to seven years, along with a fine.
   • Under Section 277, making false statements or delivering false accounts can lead to imprisonment ranging from three months to seven years and a fine.

What to Do If Notice Is Received:

1. Review the Notice:
   • Carefully review the notice to understand the reasons for the assessment and the documents or information required.
2. Consult a Tax Professional:
   • Seek advice from a qualified tax consultant or chartered accountant to understand the implications and prepare a response.
3. Prepare Documentation:
   • Gather all relevant documents, records, and evidence to support your case.
4. File a Response:
   • Respond to the notice within the stipulated time frame, providing all required information and documentation.
5. Attend Hearings:
   • If required, attend any hearings scheduled by the AO and present your case clearly and accurately.
6. Keep Records:
   • Maintain copies of all correspondences, submissions, and notices for future reference.

Conclusion

Understanding the time limits for assessments under Section 153B is crucial for taxpayers who have undergone a search or requisition. Prompt and appropriate action, including seeking professional advice, is essential to effectively manage the assessment process and ensure compliance with the legal requirements.