Think you're safe from scrutiny just because you're not being searched? Think again. Section 153C of the Income Tax Act empowers the Assessing Officer (AO) to dig deeper, even into the income of a person not directly searched, if any incriminating documents are found during a search on someone else.
This section is often misunderstood, yet extremely crucial in search & seizure proceedings. Let’s decode what Section 153C is & how it impacts you, with real-life logic & relatable examples.
🔍 What is Section 153C of the Income Tax Act?
Section 153C is part of the search & seizure assessment framework under Indian tax laws. While Section 153A focuses on assessments of the person searched, Section 153C deals with "any other person" whose documents, books of account, or assets are seized during such searches.
Put simply, if someone else is being searched, & your documents are found, you can also come under the scanner."
📂 What Triggers Section 153C?
The following can trigger a notice under Section 153C:
- Books of accounts or documents belonging to you are found during a search on another person.
- Assets that relate to you are seized.
- Loose papers or electronic data with your name or transactions involving you.
The AO must be satisfied—with recorded reasons—that these materials belong to or pertain to you. Only then can proceedings under section 153C be initiated.
🧑⚖️ Legal Empowerment of Assessing Officers
Section 153C is powerful. It is designed to empower the Assessing Officer to assess income based on documents that are:
- Seized or requisitioned, &
- Not belonging to the person searched, but to someone else.
Once the AO confirms the ownership or link, assessment proceedings can begin under Section 153C of the Income Tax Act 1961."
🔄 Section 153C vs 153A: The Key Difference
Let’s compare them quickly:
|
Criteria |
Section 153A |
Section 153C |
|
Applicability |
To the person who searched |
To any other person not searched |
|
Trigger |
Search u/s 132 or requisition u/s 132A |
Finding of material relating to another person |
|
AO’s Satisfaction Required? |
No |
Yes – mandatory to record satisfaction |
So if you're asking, "Section 153c vs 153a of Income Tax Act — what's the difference?" — now you know!
📚 Real-Life Example of Section 153C in Action
Let’s say the Income Tax Department conducts a raid on a builder, & during the search, they find documents that include payment details & property dealings related to a celebrity investor. Even though the celebrity wasn’t searched directly, the AO can now initiate proceedings under Section 153C against them using those documents.
That’s the real bite of this provision.
⏱️ Time Limits Under Section 153C
The AO can assess 6 assessment years immediately preceding the year in which the documents were received by the AO. For instance, if the documents are received in FY 2024-25, then the AO can go back & assess AY 2018–19 to AY 2023–24.
The time limit for completion is generally:
- 12 months from the end of the financial year in which books or assets are handed over to the AO of the other person.
These deadlines are very critical to ensure fairness & the timely disposal of tax matters.
🔒 Restrictions on the Assessing Officer
While the AO has broad powers under Section 153C, they are restricted from making enquiries beyond the scope of the seized documents. This means:
- No roving inquiries.
- Assessments must be limited to what the documents reveal.
- No speculative additions.
This provision restricts an assessing officer from enquiring beyond the documents seized, ensuring checks & balances.
🧾 Notice to Third Party? Yes.
Interestingly, Section 153C authorises notice to a third party of a search. That means you can receive a notice even though the IT Department never stepped into your office or home. If you're connected—even indirectly—you could be looped in.
💭 Why Section 153C Matters to You
- You may not even know you’re under the scanner—until a notice under section 153c arrives.
- It’s vital for business partners, relatives, or vendors who might be linked through shared transactions.
- Even innocent-looking documents like receipts or Excel sheets can become the basis of an assessment.
Understanding the scope of Section 153C is essential for business owners, consultants, professionals, & even salaried individuals dealing with high-value cash or property transactions.
At Callmyca.com, our expert CAs help decode & respond to notices under Section 153C. Whether you’re confused about time limits, document links, or want to defend your case, our professionals can handle it with ease. Don’t let a third-party search ruin your peace of mind. Book a free consultation now & protect yourself before it’s too late.
