SHRUTI BHAMASHA SHAH vs. ASST. COMMISSIONER OF THE INCOME TAX CIRCLE 2 (1)

Facts

The petitioner, Shruti Bhamasha Shah, filed a writ application challenging notices issued under Section 153C of the Income Tax Act, 1961, for Assessment Years (AY) 2009-10 to AY 2015-16. The respondent is the Assistant Commissioner of Income Tax. The petitioner sought to quash these notices and stay further assessment proceedings. This case is identical to a batch of writ applications previously heard by a coordinate bench, which were disposed of by a judgment and order dated April 2, 2019. The present High Court bench proposes to apply the same principles of law laid down in that prior judgment.

Held

The High Court, following the decision of a coordinate bench, held that the writ applications were maintainable. Regarding the applicability of the amended Section 153C, the court affirmed the coordinate bench's view that the amendments were prospective from June 1, 2015, and would not affect substantive rights for searches conducted prior to that date. On the issue of limitation, the court agreed that the existence of an alternative period of limitation under Section 153C meant the notices were not barred merely because the general period had elapsed. Crucially, concerning the relevant assessment years under Section 153A, the court held that the six assessment years preceding the assessment year relevant to the previous year of the search were the only ones that could be covered. For a search on September 4, 2013, the relevant AY was 2014-15, making AY 2008-09 to AY 2013-14 the covered period. For searches on December 4, 2014, and March 13, 2015, the relevant AY was 2015-16, covering AY 2009-10 to AY 2014-15. Notices issued beyond these periods were held to be without jurisdiction. Consequently, all impugned notices and any resultant assessment orders were quashed.

Key Issues

1. Whether the writ applications challenging notices under Section 153C of the Income Tax Act, 1961, are maintainable? 2. Whether Section 153C of the Act, as amended effective from June 1, 2015, is applicable to cases where the search was initiated prior to that date? 3. Whether the notices issued under Section 153C of the Act were barred by limitation? 4. What are the relevant Assessment Years contemplated under Section 153A of the Act in relation to a search? Assessee's Contentions: The petitioner sought to quash the notices under Section 153C, arguing they were issued without jurisdiction and were barred by limitation, and that the amended provisions of Section 153C should not apply retrospectively. The petitioner relied on the principles laid down in the coordinate bench's judgment. Revenue's Contentions: The judgment does not record specific contentions made by the revenue in this particular case, but it refers to the prior judgment of the coordinate bench which addressed these issues.