Reassessment On Non-Searched Entity Is Governed By Limitation In First Proviso To Sec 149(1) R/w Sec 153C & 153A: Delhi High Court

The Delhi High Court quashed a reassessment notice issued to an Assessee based on a search operation conducted on a third party, ruling it barred by limitation under the first proviso to Section 149(1) read with Sections 153C and 153A of the Income Tax Act. The court held that reassessment initiated post-April 1, 2021, must meet the time frames specified in these sections.

The court rejected the AO's argument that the notice was within the limitation period from the date of the third-party search. The Assessee's notice for AY 2013-14 was based on a search on February 9, 2022. The court emphasized that reassessment for non-searched entities must consider when the AO decides to proceed against them.