ITAT Mumbai Quashes Section 153C Assessment in Mita Sheth Case on Limitation

The “H (SMC)” Bench of the Income Tax Appellate Tribunal, Mumbai, allowed the appeal of Mita Madhukar Sheth for AY 2014–15 and quashed the assessment framed under Sections 144 read with 153C on the ground of limitation.

Delay Condoned; Additional Legal Ground Admitted

The Tribunal first condoned a delay of 20 days in filing the appeal, accepting the assessee’s explanation regarding serious illness and subsequent demise of her husband, who handled her tax matters. An additional legal ground was admitted challenging the limitation for passing the order under Section 153C. The Tribunal held that this ground went to the root of jurisdiction and required no fresh factual investigation.

Six-Year Block to Be Computed from Satisfaction Date

A search was conducted in the OPG Group on 15 November 2017. Satisfaction under Section 153C was recorded on 14 October 2020, based on digital data allegedly belonging to the assessee. Relying on the Supreme Court ruling in CIT v. Jasjit Singh, the Tribunal held that for Section 153C proceedings, the six assessment years must be computed from the end of the financial year in which the seized material is handed over (or deemed to be handed over) to the Assessing Officer of the “other person.”

Since the same Assessing Officer handled both the searched person and the assessee, the date of recording satisfaction (14.10.2020) was treated as the deemed date of transfer. Accordingly, the permissible block covered AYs 2015–16 onwards. As AY 2014–15 fell outside this block, the assumption of jurisdiction was barred by limitation. The assessment was declared void ab initio and quashed.

Other grounds were rendered academic.