Section 153C of Income Tax Act, 1961: Assessment of Income of Any Other Person
Section 153C provided a mechanism for assessing a person other than the person searched when assets or documents discovered during a search or requisition related to that other person. It remains relevant to eligible historical search cases, although the law governing new searches has changed.
Meaning and scope of Section 153C
In the Income-tax Act, 1961, an Assessing Officer (AO) is the income-tax authority authorised to make an assessment. A search under section 132 involves statutory search and seizure powers; a requisition under section 132A involves taking possession of specified books, documents or assets from another authority.
Under section 153C(1), the AO must be satisfied that money, bullion, jewellery or another valuable article or thing seized or requisitioned belongs to a person other than the searched person, or that books or documents pertain to that other person or contain information relating to that person. These tests are not identical and must be applied to the relevant category of material.
The seized or requisitioned material must be handed over to the AO having jurisdiction over the other person. That AO must also be satisfied that it has a bearing on determining the other person's total income for the relevant assessment years before proceeding under section 153A.
Procedure under Section 153C(1)
- Identification of material: A search under section 132 or requisition under section 132A produces assets, books or documents connected with someone other than the searched person.
- Recording of satisfaction: The responsible AO must reach the statutory satisfaction on the basis of the seized or requisitioned material; the applicable judicial requirements for recording and timing of the satisfaction note must be considered.
- Transfer to jurisdictional AO: The relevant material is handed over to the AO responsible for the other person. Where the same AO has jurisdiction over both persons, the statutory satisfaction requirements still matter.
- Independent assessment relevance: The receiving AO must be satisfied that the material bears on the other person's income for the relevant years.
- Notice and assessment: Subject to the applicable law and limitation period, notice is issued and the income is assessed or reassessed in accordance with section 153A.
Assessment years covered: six years and possible extended years
Section 153C cross-referenced the framework in section 153A. That framework generally addressed six assessment years immediately preceding the assessment year relevant to the search year. For searches or requisitions within the period governed by the 2017 extension, certain additional relevant assessment years up to ten years could also be covered, subject to the statutory conditions, including the prescribed monetary threshold and evidence of escaped income represented by assets.
The extended ten-year reach was not automatic. It depended on the version of the law applicable to the particular search, the nature of the material and the requirements in section 153A. For an other-person case, the reference date for abatement of pending assessments is generally the date the jurisdictional AO receives the seized material, rather than the original search date.
Section 153C(2): Search-year assessment for the other person
Sub-section (2) dealt with cases where the other person's AO received seized or requisitioned material after the due date for filing the return for the assessment year relevant to the search year. It provided for notice and assessment of that year in the manner of section 153A where, before receipt of the material, any of the following applied:
- No return had been furnished and no notice under section 142(1) had been issued.
- A return had been furnished but no notice under section 143(2) had been served and the time to serve it had expired.
- An assessment or reassessment had already been made.
Which search assessment regime applies?
| Date of search or requisition | General framework |
|---|---|
| Before 1 April 2021 | Sections 153A, 153B, 153C and 153D may apply to eligible cases, subject to the version of the law and transitional rules. |
| 1 April 2021 to 31 August 2024 | Reassessment provisions under sections 147 to 151A, as applicable, rather than section 153C. |
| From 1 September 2024 | Chapter XIV-B block assessments; section 158BD addresses undisclosed income relating to an other person. |
| From 1 April 2026 | The Income-tax Act, 2025 governs according to its commencement and savings rules; section 295 deals with undisclosed income of an other person. |
Current other-person block assessment: Section 158BD and Section 295
For searches within the revived Chapter XIV-B regime, section 158BD concerns undisclosed income that belongs to, pertains to or relates to a person other than the searched or requisitioned person. It contemplates handing over relevant assets, documents, material or information to the jurisdictional AO, who proceeds under section 158BC.
Under the Income-tax Act, 2025, section 295 addresses undisclosed income of an other person. The Finance Act, 2026 changes to the scope of the other person's block period must be read with the enacted text, the date of the search and the applicable transitional provisions; older section 153C procedures should not be treated as the default procedure for a new search.
Time limits, approval and procedural safeguards
For historical section 153C assessments, section 153B governed the time available for completion, including special computation rules linked to the handover of seized material and permitted exclusions. Prior approval under section 153D was also relevant where applicable.
For Chapter XIV-B cases, the procedure and limitation rules arise principally under sections 158BC, 158BD and 158BE. A limitation calculation should account for the relevant quarter, notice date, statutory extensions and any exclusions instead of assuming a single deadline for all searches.
Illustrative example
During a qualifying historical search of Company A, officers seize documents that relate to unexplained receipts of Company B. Section 153C may permit proceedings against Company B only if the statutory satisfaction, handover, relevance and applicable assessment-year requirements are met. If the search was initiated after 31 March 2021, the AO cannot rely on section 153C merely because the documents concern Company B; the regime applicable to that search date must be used.
Frequently asked questions
Is Section 153C applicable to searches conducted in 2026?
No. Section 153C(3) excludes searches or requisitions initiated on or after 1 April 2021. For new searches, examine the applicable block-assessment legislation and transitional rules.
Is the other person necessarily accused of tax evasion?
No. The statutory satisfaction and evidence requirements must be met. Being mentioned in a seized document does not by itself establish undisclosed income or validate an assessment.
Can completed assessments be reopened automatically?
No. The correct statutory regime, applicable assessment years, material and satisfaction requirements, and relevant judicial principles must be examined. A valid search does not dispense with other legal safeguards.
Official law and further reading
- Income Tax Department - Section 153C, including subsection (3)
- Income Tax Department - Section 158BD
- Income Tax Department - Assessment and block assessment guidance
- Income Tax Department - Periods of limitation
- Income Tax Department - Budget 2026 legislative FAQs
- Income Tax Act, 1961 - LawDadi section index
Updated: 26 October 2026. This article is a general explanation. The statutory text, amendments, savings provisions and judicial decisions applicable to the facts of a particular case control.