DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, SURAT, MAJURA GATE V. KAUSHALKUMAR NANDLAL KHANDELIA, PARLE POINT, SURAT

ITSSA 18/SRT/2025

AI Insights

The case involves six appeals by the revenue against separate orders passed by the Commissioner of Income-tax (Appeals), which quashed the assessment orders as time-barred. The assessments were related to the search and seizure operation conducted under section 132 of the Income-tax Act on 21.10.2020 at the premises of the PVS Sarma group. The main legal contention was whether the assessments completed on 24.09.2022 were within the statutory time limit, considering the amendments to section 153B of the Act by the Finance Act, 2022, which extended the time limit for assessments in cases of search operations conducted during FY 2020-21.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827897 (ITAT-SURAT)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-01-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 30-03-2025
• Other Referred Cases: Agni Estates and Foundations (P.) Ltd. vs. CIT, Dhaval Bharatkumar Shah vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Set aside; Opportunity of being heard; Period of limitation; Search and seizure; Block assessment; Assessment record; Time period of passing order
• Section: 143(3); 132; 153A

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI T. R SENTHIL KUMAR, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER IT(SS)A Nos.14 to 16/SRT/2025 AYs: (2016-17, 2018-19 & 2019-20) (Hybrid hearing) DCIT, Central Circle-1, Surat Vs. Kusum Khandelia, 4031, Jash Yarn N Textile Market, Ring Road, Surat - 395 007 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AELPK1224R (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) IT(SS)A Nos.17 to 19/SRT/2025 AYs: (2018-19 to 2020-21) DCIT, Central Circle-1, Surat Vs. Kaushalkumar Nandlal Khandelia, 6/B Brijvatika Apartment, Somnath Mahadev Road, B/h Parle Point, Surat - 395 007 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AFMPK5879E (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) Appellant by Shri Mukesh Jain, CIT- DR Respondent by Shri Sapnesh Sheth, Advocate Date of Hearing 12/11/2025 Date of Pronouncement 07/01/2026 आदेश / O R D E R PER BENCH: These six appeals by the revenue emanate from the separate orders passed u/s 250 of the Income-tax Act, 1961 (in short, ‘the Act’), all dated 20.01.2025 by the Commissioner of Income-tax (Appeals)-4, Surat [in short, ‘CIT(A)’] for the assessment years (AY) 2016-17 and 2018-19 to 2020-21, which in turn arise out of separate assessment orders passed by the Assessing Officer (in short, ‘AO’) u/s 153A r.w.s. 143(3) of the Act on 23.09.2022 and 24.09.2022. Printed from counselvise.com 2 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia Since facts are similar and the grounds of appeals raised by the revenue are identical, with the consent of both parties, all the appeals were clubbed, heard together and a common order is passed for the sake of convenience and brevity. IT(SS)A No.17/SRT/2025 for AY 2018-19 is taken as ‘lead’ case. 2. Grounds of appeal raised by the revenue in IT(SS)A No.14/SRT/2025 for AY 2016-17 are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Section 153B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 3. Grounds of appeal raised by the revenue in IT(SS)A No.15/SRT/2025 for AY 2018-19 are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Section 153B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 4. Grounds of appeal raised by the revenue in IT(SS)A No.16/SRT/2025 for AY 2019-29 are as under: Printed from counselvise.com 3 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Scetion1 53B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 5. Grounds of appeal raised by the revenue in IT(SS)A No.17/SRT/2024 for AY 2018-19 are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Section 153B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” 6. Grounds of appeal raised by the revenue in IT(SS)A No.18/SRT/2025 for AY 2019-20 are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Section 153B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” Printed from counselvise.com 4 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 7. Grounds of appeal raised by the revenue in IT(SS)A No.19/SRT/2025 for AY 2020-21 are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in quashing the assessment order passed on 24.09.2022 as time barred, without appreciating the fact that after considering the date of last handing over of the seized materials to the jurisdictional AO by the Investigation Wing, the case of the assessee is covered under the clause (xi) of explanation to the Section 153B of the Act and accordingly, the extended date of limitation to complete the assessment proceedings is 27.09.2022. 2. The appellant craves to add, amend, alter, substitute, modify the above ground of appeal, raise any new ground of appeal, if necessary, either before or during the course of the hearing of the appeal on the basis of submissions to be made.” IT(SS)A No.17/SRT/2025 (AY 2018-19): 8. The facts of the case in brief are that a search action carried out u/s 132 of the Act on 21.10.2020 at the residential and business premises of the PVS Sarma group of Surat. Pursuant to the search, proceedings u/s 153A were initiated and assessments for six AYs preceding the year of search were framed by the Assessing Officer (in short, ‘AO’) on 24.09.2022. In all cases, the CIT(A) has allowed the appeal of the assessee by holding that the assessment orders were passed beyond the statutory time limit. Hence, the said order being invalid was quashed and set aside. 9. Before proceeding to examine the rival legal contentions, it is necessary to record the undisputed factual chronology emerging from the assessment records, which has a direct bearing on the computation of limitation period. The search and seizure operation u/s 132 of the Act was conducted on 21.10.2020, i.e. during financial year 2020-21. The seized books of account and documents Printed from counselvise.com 5 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia were admittedly handed over by the Investigation Wing to the jurisdictional AO on 13.10.2021. The assessment orders u/s 153A r.w.s 143(3) of the Act were thereafter passed on 24.09.2022. These dates are not in dispute. The controversy is, therefore, not factual but legal, namely, whether the period between the date of initiation of search and the date of handing over of seized material is required to be excluded while computing limitation and whether the outer limitation for assessment in these cases stood extended in view of the sixth proviso to section 153B as inserted by the Finance Act, 2022. 10. The CIT(A) proceeded on the premise that the normal limitation for completion of assessments pursuant to the search u/s 132 of the Act expired on 31.03.2022. The CIT(A) further held that Explanation (xi)to section 153B, having been inserted with effect from 01.04.2021, could not be applied to extend limitation for the years under consideration. On this basis alone, the CIT(A) concluded that the assessments completed on 24.09.2022 were time-barred and quashed them without examining the additions on merits. 11. The learned Commissioner of Income-tax- Departmental Representative (ld. CIT-DR), at the outset, submitted that the impugned orders of the CIT(A) suffer from a fundamental legal infirmity inasmuch as the assessments have been annulled on a purely technical view of limitation, without undertaking a holistic examination of section 153B of the Act as it stood at the relevant time. It was contended that the CIT(A) has adopted a rigid and mechanical approach by treating 31.03.2022 as the limitation date, ignoring the statutory amendments Printed from counselvise.com 6 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia specifically enacted to govern searches conducted during FY 2020-21. According to the ld. CIT-DR, the impugned set aside is not the result of any ambiguity in facts, but due to wrong application of law. 12. The ld. CIT-DR submitted that the factual chronology is undisputed and, in fact, supports the revenue’s case. The search u/s 132 was executed on 21.10.2020 squarely falls in FY 2020-21. The seized books and documents were handed over to the jurisdictional AO only on 13.10.2021, and the assessments were duly completed within the statutory period on 24.09.2022. It was argued that once these dates are admitted, the computation of limitation cannot be undertaken by ignoring statutory exclusions and extensions provided u/s 153B of the Act. The ld. CIT-DR emphasized that limitation in search cases is not to be computed in isolation, but strictly in accordance with the express legislative framework governing such assessments. 13. The ld. CIT-DR invited attention to the sixth proviso to section 153B of the Act, inserted by the Finance Act, 2022. He submitted that this proviso was consciously introduced by the Legislature to address searches executed during FY 2020-21, a period severely impacted by the COVID-19 pandemic. The proviso explicitly extends the time limit for completion of assessment to 30.09.2022. It was contended that the CIT(A) failed to even advert to this proviso, despite it being an integral part of section 153B of the Act. The ld. CIT-DR submitted that once the statute itself extends the outer limit of the time barring date with respect to assessments for searches conducted during FY 2020-21, the CIT(A) Printed from counselvise.com 7 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia could not have nullified the assessments by applying the pre-amendment timeline. 14. The ld. CIT-DR further submitted that the CIT(A) also committed a serious legal error in ignoring Explanation (xi) to section 153B, which mandates exclusion of a period not exceeding 180 days commencing from the date of initiation of search till the date of handing over of seized material to the AO. It was pointed out that in the present case, the seized material was handed over almost one year after the search, and therefore, the statutory exclusion squarely applies. The ld. CIT-DR clarified that Explanation (xi) does not create a new charge or reopen closed assessments, but merely protects the AO’s effective statutory time by neutralizing administrative delays beyond his control. 15. Addressing the issue of prospective operation, the ld. CIT-DR submitted that even assuming Explanation (xi) to be prospective from 01.04.2021, the CIT(A) erred in concluding that it was altogether inapplicable. It was submitted that the correct test is not the date of search, but whether the computation of limitation period arose after the effective date of the amendment. In the present case, the limitation had not expired as on 01.04.2021, the seized material itself was handed over after that date, and the assessment proceedings were conducted thereafter. Hence, the computation of limitation period necessarily had to be undertaken under the amended provisions, making Explanation (xi)fully applicable. Printed from counselvise.com 8 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 16. The ld. CIT-DR also emphasized on the block assessment scheme u/s 153A of the Act and submitted that all six assessment years reopened pursuant to a search u/s 132 of the Act constitute a single and integrated block. Section 153B of the Act, in turn, prescribes a unified limitation for completion of such search assessments. It was contended that the interpretation adopted by the CIT(A) fragments the search assessment block artificially, leading to an illogical outcome where the search year could be assessed up to 30.09.2022, but the immediately preceding years, dependent on the same seized material, would allegedly become time-barred earlier. According to the ld. CIT-DR, such a construction defeats the very foundation of section 153A of the Act and renders the procedure for block-assessment u/s 153A of the Act pursuant to a search action u/s 132 of the Act not workable. 17. With regard to the decisions relied upon by the assessee, the ld. CIT-DR submitted that the decision of the Hon’ble Madras High Court in case of Agni Estates and Foundations (P.) Ltd., 157 taxmann.com 312 (Mad.) was rendered in a materially different factual background, where limitation had substantially expired even before 01.04.2021. The ld. CIT-DR pointed out that the Hon’ble High Court did not examine the sixth proviso to section 153B of the Act, did not deal with searches conducted during FY 2020-21, and did not consider delayed handover of seized material post-amendment. Similarly, the ld. CIT-DR submitted that the decision of the ITAT, Surat Bench in cases of Dhaval Bharatkumar Shah, in IT(SS)A Nos.130 & 131/SRT/2023, dated 18.01.2024 and Printed from counselvise.com 9 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia subsequent Miscellaneous Application No.18/SRT/2024, arising out of IT(SS)A Nos.130 & 131/SRT/2023 (supra) simply followed Agni Estates (supra) without examining the Memorandum to the Finance Bill, Notes on Clauses, or Explanatory Notes to the provisions of the Finance Act, 2022 as contained in Circular No.23/2022, dated 06.02.2023 and therefore, cannot be treated as a binding precedent for the present appeals. 18. The ld. CIT-DR further referred to the CBDT Circular No.23/2022 (supra) to demonstrate the legislative intent underlying the amendments to section 153B of the Act. It was submitted that these Explanatory Notes unequivocally show that legislature intended to recalibrate the limitation framework so that administrative delays in transfer of seized material and pandemic-related disruptions do not result in annulment of otherwise valid assessments. The ld. CIT-DR submitted a copy of the CBDT Circular (supra) during the course of hearing and invited the attention to para 33 of the said Circular, which explains the legislative changes made in section 153B of the Act. The same reads as under: “33. Amendment of section 153B to extend time barring date in search cases 33.1 As per the existing provisions of the Act, in cases where search or requisition were concluded during the Financial Year 2020-21 or in case of other person referred to in section 153C, the books of account or document or assets seized or requisitioned are handed over u/s 153C to the AO having jurisdiction over such other person during the financial year 2020-21, assessment or reassessment is required to be completed by 31st March, 2022. 33.2 However, the extended due date of 15th March, 2022 for filing ITR may also be applicable in cases where searches have been concluded or in case of other person referred to in section 153C, the books of account or document or assets seized or requisitioned are handed over u/s 153C to the AO having jurisdiction over such other person during the financial year 2020-21. This led to Printed from counselvise.com 10 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia situations where AOs have less than 15 days to conclude assessment in cases of taxpayers who choose to file the return on 15th March, 2022. 33.3 Therefore, a sixth proviso to sub-section (1) is introduced in section 153B of the Act to provide that in cases where the last of the authorisations for search or for requisition was executed during FY 2020-21 or in case of other person referred to in section 153C, the books of account or document or assets seized or requisitioned are handed over u/s 153C to the AO having jurisdiction over such other person during the financial year 2020-21, the assessment in such cases shall be made on or before 30th September, 2022 as opposed to 31st March, 2022. 33.4 Applicability: This amendment is proposed to be effective retrospectively From 1st April 2021.” 18.1 The ld. CIT-DR submitted that when these statutory aids are read harmoniously with the sixth proviso and Explanation (xi), the only possible conclusion is that the assessments completed on 24.09.2022 were within limitation. He submitted that para 33 reproduced above makes it abundantly clear that the limitation for all searches conducted in FY 2020-2021 shall be on 30.09.2022 as opposed to 31.03.2022. Thus, according to the ld. CIT-DR, since the present search took place in FY 2020-2021 (21.10.2020), the limitation of all assessments emanating from the said search action is 30.09.2022. 19. Finally, the ld. CIT-DR submitted that the CIT(A) erred in law in setting aside the assessments without considering the complete statutory scheme, the legislative intent behind the amendments, and the undisputed factual chronology. He requested to set aside the order of CIT(A) and direct him to decide the appeal on merits. 20. On the other hand, the learned Authorized Representative (ld. AR) of the assessee supported the orders of the CIT(A) and submitted that setting aside the Printed from counselvise.com 11 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia assessment order on the ground of limitation is justified in law. The ld. AR submitted that limitation provisions under the Act is mandatory and go to the very root of jurisdiction. It was argued that once the statutory period prescribed for completion of assessment expires, the AO becomes functus officio and any order passed thereafter is void ab initio. He submitted that the CIT(A) has correctly applied the settled legal principle that limitation cannot be extended by implication or equity, and that any ambiguity must necessarily be resolved in favour of the assessee. 21. The ld. AR submitted that in the present case, the search was conducted on 21.10.2020 and, under the un-amended provisions of section 153B, the normal limitation for completion of assessment expired on 31.03.2022. It was contended that the assessments admittedly came to be completed only on 24.09.2022, well beyond the said date. The ld. AR submitted that the sixth proviso to section 153B, inserted by the Finance Act, 2022, does not have the effect of extending limitation for assessment years prior to AY 2021-22. According to him, the plain language of the proviso refers only to “the assessment for the assessment year commencing on the 1st day of April, 2021”, and therefore, its operation is strictly confined to AY 2021-22 and cannot be expanded to earlier years forming part of the block. 22. On Explanation (xi) to section 153B, the ld. AR submitted that the said provision, though stated to be effective from 01.04.2021, is substantive in nature and cannot be applied retrospectively to searches conducted prior to that Printed from counselvise.com 12 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia date. Reliance was placed on the judgment of the Hon’ble Madras High Court in Agni Estates and Foundations (P.) Ltd. (supra), wherein it was held that Explanation (xi) cannot be invoked to extend limitation for assessment years where the statutory period had substantially expired prior to the insertion of the Explanation. The ld. AR submitted that the ratio of this judgment squarely applies to the present case, as the search was conducted before 01.04.2021 and the limitation for the relevant assessment years was to be computed under the old regime. 23. The ld. AR further relied on the decision of ITAT, Surat in case of Dhaval Bharatkumar Shah (supra) and subsequent dismissal of the MA filed by the revenue. The Tribunal following the decision in case of Agni Estates and Foundations (P.) Ltd. (supra), held that Explanation (xi)to section 153B could not be applied to extend limitation in respect of assessment years falling prior to AY 2021-22. The AR emphasized that the said decision was rendered by a coordinate Bench of this Tribunal and therefore constitutes a precedent having persuasive and binding force on grounds of judicial discipline, unless distinguished on facts or overruled by a higher forum. 24. The ld. AR also submitted that the decision in case of Dhaval Bharatkumar Shah (supra) was delivered by the ITAT, Surat and also emanates from the very same search action dated 21.10.2020, and therefore, stands on identical factual footing as the present appeals. According to the ld. AR, when a Coordinate Bench of the Tribunal has already examined the limitation issue arising from the Printed from counselvise.com 13 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia same search and has taken a view in favour of the assessee, principles of judicial consistency and certainty require that the same view be followed in the present cases. 25. The ld. AR further submitted that Explanation (xi)cannot be invoked to revive or resuscitate assessments which have already become barred by limitation. It was submitted that limitation provisions confer a valuable and substantive right on the assessee, and once such right accrues, it cannot be taken away except by clear and express legislative mandate. According to the ld. AR, neither the sixth proviso to section 153B nor Explanation (xi)to section 153B contains any language suggesting retrospective enlargement of limitation for assessment years prior to AY 2021-22. It was contended that the Revenue’s interpretation would amount to inserting words into the statute which the legislature has consciously not used. 26. Regarding the block assessment scheme u/s 153A, the ld. AR submitted that although assessments are framed pursuant to a common search, each assessment year retains its independent identity for the purpose of limitation. It was contended that section 153B prescribes time limits assessment-year wise and does not envisage a collective or rolling limitation merely because the assessments arise out of a single search. According to the ld. AR, the alleged “absurdity” pointed out by the revenue is a consequence of the statutory framework itself and cannot be remedied by judicial interpretation extending limitation beyond what is expressly provided by law. Printed from counselvise.com 14 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 27. In conclusion, the ld. AR submitted that the CIT(A) has correctly applied the binding judicial precedents and the settled principles governing limitation. It was argued that since the assessments were admittedly completed after 31.03.2022 and no legally permissible extension of limitation was available for the assessment years under consideration, the setting aside of the assessment orders is valid and does not call for any interference. The AR accordingly prayed that the appeals filed by the Revenue be dismissed and the orders of the CIT(A)be upheld. 28. In rejoinder, the ld. CIT-DR submitted that the arguments advanced by the ld. AR proceed on a selective reading of section 153B of the Act and overlook the structural changes brought about by the Finance Act, 2022. It was reiterated that the ld. AR’s attempt to confine the sixth proviso only to AY 2021-22 ignores the statutory placement of the proviso within section 153B of the Act, which governs limitation for completion of all assessments u/s 153A of the Act. The ld. CIT-DR submitted that once legislature consciously chose to amend the limitation provision itself, and not section 153A of the Act, the extension necessarily operates on the entire block of assessments arising from a search conducted during FY 2020-21. 29. The ld. CIT-DR further submitted that the reliance placed by the learned AR on Dhaval Bharatkumar Shah (Supra) is misplaced. It was argued that while the said decision arose from the same search, the Tribunal therein did not examine the sixth proviso to section 153B, nor did it consider the Memorandum Printed from counselvise.com 15 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia Explaining the Finance Bill, 2022, Notes on Clauses, or Explanatory Notes to the Provisions of the Finance Act, 2022 as contained in Circular No.23/2022 (supra). According to the ld. CIT-DR, a decision rendered without considering a relevant statutory provisions or explanatory note cannot be treated as a precedent of an issue, which was neither argued nor adjudicated in that case. 30. The ld. CIT-DR also submitted that the argument of ld. AR that limitation had accrued as a vested right is misconceived. It was contended that limitation in search cases crystallize only upon application of the computation mechanism u/s 153B, including exclusions and extensions expressly provided by law. Where the computation itself arises after the effective date of an amendment, no vested right can be claimed contrary to the statutory mandate. It was, therefore, reiterated that the impugned assessment orders, having been completed on 24.09.2022, well within the recalibrated limitation period upto 30.09.2022, were legally valid. 31. We have heard both the parties and perused the materials available on record. We have also deliberated upon the decisions relied upon by both sides. We have also gone through the relevant provisions of the Act and the Circular No.23/2022 (F.No.370142/48/2022-TPL), dated 03.11.2022 (supra). The issue before us is the scope and ambit of the provisions of section 153B of the Act as amended by the Finance Act, 2022, in respect of searches conducted during the FY 2020-21. It may be stated, at the outset, that there is no dispute on facts, i.e., the date of search (21.10.2020), handing over of seized materials (13.10.2021) Printed from counselvise.com 16 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia and date of assessment orders (24.09.2022). Therefore, the controversy lies exclusively in the legal plane, namely, whether the assessments completed on 24.09.2022 fall within the limitation prescribed u/s 153B of the Act, when read along with the sixth proviso thereto and clause (xi) of Explanation of section 153B of the Act. 32. The CIT(A) has set aside the assessments on the ground that the limitation expired on 31.03.2022 and clause (xi) of Explanation of section 153B of the Act having been inserted with effect from 01.04.2021, could not be applied. In doing so, the CIT(A) has neither examined the sixth proviso to section 153B nor considered the legislative context in which both the proviso and clause (xi) of Explanation to section 153B of the Act were enacted. Such an approach, in our considered view, amounts to applying the statute in a truncated manner, divorced from its amended framework. 33. Section 153A of the Act envisages assessment of six years as a consequence of a search, while section 153B of the Act prescribes the time limit for completion of such assessments. Both provisions operate in tandem and cannot be read disjunctively. Any amendment to section 153B of the Act, therefore, directly impacts the limitation applicable to the entire block of assessments arising from a search. This structural relationship between sections 153A and 153B of the Act is fundamental and cannot be ignored while interpreting limitation provisions. Printed from counselvise.com 17 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 34. It is relevant to appreciate the legislative background surrounding the amendments made to section 153B of the Act by the Finance Act, 2022. These amendments were not introduced in isolation but were a direct response to the unprecedented disruption caused by the COVID-19 pandemic, which severely affected the functioning of the Investigation Wing, the movement of seized materials and appraisal reports, and the ability of jurisdictional AOs to receive and process such material within statutory timelines. The sixth proviso to section 153B of the Act was consciously inserted by legislature to deal with searches executed during FY 2020-21. The proviso extends the outer time limit for completion of assessment to 30.09.2022. Its placement within section 153B of the Act, and not in section 153A of the Act, clearly indicates that it was intended to recalibrate the limitation mechanism governing completion of all assessments arising from such searches. 35. The contention of the ld. AR that the sixth proviso applies only to AY 2021-22, based on the literal reference to “assessment for the assessment year commencing on 1st April, 2021” is not correct. A proviso cannot be read in isolation or divorced from the substantive section to which it is appended. When read contextually, the proviso identifies the trigger year of search, but the limitation so prescribed governs completion of assessments u/s 153A of the Act as a whole. Any other interpretation would defeat the very purpose of the proviso and render it otiose for preceding years of the same block period. Printed from counselvise.com 18 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 36. Coming to clause (xi) of Explanation to section 153B of the Act, the provision mandates exclusion of a period not exceeding 180 days between the date of initiation of search and the date of handing over of seized material to the AO. In the present case, the seized material was handed over on 13.10.2021, nearly one year after the search. Thus, the factual condition for application of clause (xi) of Explanation to section 153B of the Act stands fully satisfied. 37. The argument that clause (xi) of Explanation to section 153B of the Act is substantive and, therefore, inapplicable to searches conducted prior to 01.04.2021 does not hold good on the facts before us. Even assuming that the Explanation operates prospectively, what is material is the date on which the computation of limitation arises. In the present case, the seized material was handed over after 01.04.2021, the assessment proceedings were carried out thereafter, and the limitation was computed entirely in the post-amendment regime. Therefore, clause (xi) of Explanation to section 153B of the Act squarely governs the computation. 38. The legislative intent behind amendments made to Section 153B of the Act stands further fortified by the Memorandum Explaining the Finance Bill, 2022, Notes on Clauses, and Explanatory Notes to the Provisions of the Finance Act, 2022, as contained in Circular No.23/2022 (supra). These notes unambiguously clarify that the amendment was introduced to ensure that delays in administrative handover of seized materials especially during this uncertain Covid-19 period do not prejudice the AO’s effective working time. Such Printed from counselvise.com 19 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia explanatory notes, though not controlling, are legitimate aids to statutory interpretation and cannot be brushed aside. 39. We now turn to the decisions relied upon by the ld. AR. In Agni Estates and Foundations (P.) Ltd. (Supra), where the Hon’ble Madras High Court was concerned with assessment years where limitation had substantially expired prior to 01.04.2021. The Court did not examine searches conducted during FY 2020-21, did not consider the sixth proviso to section 153B of the Act, and did not deal with delayed handover of seized material post-amendment. The ratio of that judgment, therefore, cannot be applied to the present case because the facts are distinguishable. 40. As regards the decision of the ITAT, Surat in Dhaval Bharatkumar Shah (Supra), there is no dispute that the assessment in the said case emanates from the same search action. However, it is equally important to note that the sixth proviso to section 153B of the Act, the Memorandum Explaining the Finance Bill, 2022, Notes on Clauses, and Explanatory Notes to the Provisions of the Finance Act, 2022, as contained in Circular No.23/2022 (supra) were not brought to the notice of the Bench nor they were independently examined in that decision. The relevant portion of the CBDT Circular has been extracted at para 18 of this order and hence, not repeated here. A decision rendered without considering a relevant statutory provisions cannot operate as a binding precedent on an issue which was neither argued nor adjudicated. Judicial consistency cannot override statutory mandate and perpetuate an error. At this juncture, it may be stated Printed from counselvise.com 20 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia that the Circular of the CBDT are legally binding on revenue and this binding character attaches to the Circulars even if they be found not in accordance with the correct interpretation of the statutory provisions, as held by the Hon’ble Supreme Court in case of Varghese vs. ITO, 131 ITR 597 (SC). Again the Hon’ble Supreme Court has taken similar view in case of State of Kerala vs. Kurian Abraham Pvt. Ltd., 303 ITR 284 (SC) that Circulars of the CBDT are binding on authorities. Useful reference may also be made to the decisions of the Hon’ble Supreme Court in case of Navnitlal C. Jhaveri vs. K K Sen, 56 ITR 198 (SC) and Pradip J. Mehta vs. CIT, 300 ITR 231 (SC). In view of the authoritative precedents discussed above, we are of the considered opinion that the decision of the Tribunal without considering the binding decisions of the Hon’ble Supreme Court cannot be a precedent, as claimed by the appellant. 41. The interpretation canvassed by the assessee also leads to an anomalous situation where AY 2021-22 could be assessed up to 30.09.2022, while the immediately preceding years forming part of the same search action, based on the same seized material, would stand time barred earlier. Section 153A of the Act embodies the principle of block reassessment, where six years are reopened as a unified package upon the execution of a search warrant u/s 132 of the Act. Section 153B of the Act governs the limitation for completing this unified block of assessments. The legislature recognized that the seized material is often voluminous and disorganized, requiring substantial processing time before becoming usable by the jurisdictional AO. Such fragmentation of search Printed from counselvise.com 21 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia assessments as canvassed by the ld. AR is antithetical to the concept of search assessment u/s 153A of the Act and would render the scheme unworkable. A harmonious construction of the provisions is, therefore, imperative. 42. In view of the foregoing analysis, we hold that the CIT(A) erred in law in annulling the assessments as time-barred by adopting a narrow and mechanical interpretation of section 153B of the Act, without considering the sixth proviso, clause (xi) of Explanation to section 153B of the Act and the legislative intent underlying their insertion. Accordingly, we are of the considered opinion that the order passed by the CIT(A) is not in accordance with law and is liable to be set aside. The same is, therefore, set aside. Since the CIT(A) has not adjudicated the additions on merits, we deem it appropriate, in the interest of justice, to restore the matters to his file for fresh adjudication on merits and in accordance with law, after affording reasonable and sufficient opportunity of being heard to the assessee. 43. In the result, the appeal in IT(SS)A No.17/SRT/2025 filed by the revenue is allowed for statistical purposes. IT(SS)A Nos.14 to 16, 18 & 19/SRT/2025: 44. The facts and grounds of these appeals are similar to those in IT(SS)A No.17/SRT/2025 (supra) decided above. Following the reasons given therein, the orders of CIT(A) are set aside and the matter is restored to his file for fresh adjudication on merits after giving reasonable and sufficient opportunity of hearing to the assessee. Printed from counselvise.com 22 IT(SS)A Nos.14 to 19/SRT/2025/AYs 2016-17, 2018-19 to 2020-21 Kusum Khandelia & Kaushalkumar N Khandelia 45. In the result, all appeals are allowed for statistical purposes. Orders are pronounced in accordance with Rule 34 of the ITAT Rules, 1963 on 07/01/2026. Sd/- Sd/- (T. R. SETHIL KUMAR) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 07/01/2026 SAMANTA (On tour Mumbai) Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat Printed from counselvise.com "