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In [2023] 458 ITR 437 (SC) the dispute was whether the taxpayers are required to preserve records beyond 6 years. More particularly this case was a search case and the assessee was a third party having connection with searched person when assessee contended that the period for which they were required to file returns for six preceding years , commenced only from the date the materials were forwarded to their AO. The Revenue, on the other hand, urged that the date (relatable to the period for which six years returns were to be filed by the assessee) was to be from the date when the search and seizure proceedings were conducted, in respect of the main assessee.

Reading out from section 153C the Supreme Court held that in no circumstance shall a taxpayer be expected to keep records beyond 6 years with so much so the period commences only from the date the materials are forwarded to the AO of the third-party assessee.

This six year period is lowered to 3 years now with exception only if there is a case of escaped assessment of fifty lakh rupees or more in which case records upto 10 years preceding may be tracked.



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