The assessees are various business units under one group, which includes partnership firms and a proprietorship concern. The group is engaged in the business of gold ornaments and operates under different names.

The primary issue involved was whether the Assessing Officer was justified in reopening the assessments for the assessment years 2002-03 to 2007-08 under Section 153A of the Income Tax Act, based on incriminating material found during a search conducted on 21.08.2007, which pertained only to the assessment year 2008-09.

The revenue contended that the incriminating material found during the search operation for the assessment year 2008-09 justified the reopening of assessments for the earlier years (2002-03 to 2007-08).  That the suppression of income detected for the year 2008-09 could be presumed to extend to the earlier years as well.

The assessees argued that the search conducted under Section 132 of the Income Tax Act did not yield any incriminating material for the assessment years 2002-03 to 2007-08.  That the reopening of assessments for these years was unjustified and based merely on assumptions and estimations derived from the findings of the year 2008-09.

The Hon’ble Tribunal had allowed the appeals preferred by the Department for the assessment years 2002-03 to 2007-08, thereby upholding the reopening of assessments for these years based on the incriminating material found for the year 2008-09.

The Hon’ble High Court set aside the orders of the Hon’ble Tribunal, ruling that the reopening of assessments for the years 2002-03 to 2007-08 was not permissible in the absence of incriminating material specific to those years.  Further that the Assessing Officer could not use the material from the year 2008-09 to justify reopening assessments for earlier years unless such material directly related to those years.  Moreover, that the jurisdiction to reopen assessments under Section 153A must be based on incriminating material pertinent to each specific assessment year within the block period. (2002-03 to 2007-08 & 2008-09)