What counts as the “initiation of search” for non-searched persons post-Finance Act, 2021?
The Madras High Court’s judgment in Shri Harigovind G. Ravindran HUF v. ACIT (2025) decisively addresses a critical issue under Section 153C of the Income-tax Act. The issue was “What counts as the “initiation of search” for non-searched persons post-Finance Act, 2021?”
The Court held that the relevant date is not when the search occurred, but when seized material is handed over to the Assessing Officer of the ‘other person,’ aligning with the logic applied in CIT v. Jasjit Singh (Supreme Court, 2023).
Key Takeaways:
1. The Finance Act, 2021, introduced a “sunset” for Sections 153A/153C, with search assessments restricted to those initiated before 1 April 2021.
2. The Court clarified that “initiation” for the non-searched person is the date the seized material is handed over—not the original search date.
3. In Shri Harigovind, since the material was handed over on 25.11.2022 (well after 1.4.2021), Section 153C did not apply, and consequential proceedings were quashed as unsustainable.
Judicial Reasoning That Shifts the Landscape:
1. Both the Madras High Court and the Supreme Court stressed statutory interpretation and legislative intent, favoring taxpayer protection and clarity.
The decision ensures there are no two different dates of search for the searched and non-searched person-ending years of controversy and compliance risks.
2. The legal fiction around Section 153C was strictly applied: Once Parliament draws a line, it must be respected; neither the department nor the courts can stretch this for the sake of revenue collection.
Now, if handover was after 31-03-2021, proceedings stand quashed, affecting large volumes from FY 2019-20/20-21 searches.
The copy of the order is as under:
