BHAVESH VINODRAI SHETH (AS LEGAL HEIR OF DECD. VINODRAI MANEKCHAND SHETH) vs. ASST. COMMISSIONER OF THE INCOME TAX CIRCLE 2 (1)

Facts

The petitioner, Bhavesh Vinodrai Sheth (as legal heir of the deceased Vinodrai Manekchand Sheth), filed a writ application challenging notices issued under Section 153C of the Income Tax Act, 1961. The notices pertained to Assessment Years (AY) 2009-10 to AY 2015-16. The petitioner sought to quash these notices and stay further assessment proceedings. This petition was identical to a batch of writ applications previously heard and disposed of by a coordinate bench of the High Court of Gujarat on April 2, 2019. The present bench proposed to apply the same principles of law laid down in the earlier judgment.

Held

The High Court held that the writ applications were maintainable. Regarding the applicability of the amended Section 153C, the Court ruled that the amended provisions, effective from June 1, 2015, were prospective and would not apply to searches initiated before that date, as applying them retrospectively would affect substantive rights. On the issue of limitation, the Court found that if the statute provides an alternative period of limitation, the expiry of the initial period does not automatically render the notices barred. Concerning the relevant assessment years under Section 153A, the Court clarified that the six assessment years preceding the assessment year relevant to the previous year of the search are to be considered. For a search on September 4, 2013, the relevant AYs are 2013-14 to 2008-09. For searches on December 4, 2014, and March 13, 2015, the relevant AYs are 2014-15 to 2009-10. Notices issued for assessment years beyond these six years were held to be without jurisdiction. Consequently, the impugned notices and any consequent assessment orders were quashed and set aside.

Key Issues

1. Whether the writ applications challenging notices under Section 153C of the Income Tax Act, 1961, were maintainable? The assessee argued for maintainability, while the revenue's contention is not explicitly recorded. 2. Whether Section 153C of the Act, as amended effective from June 1, 2015, would apply to cases where the search was initiated prior to that date? The assessee contended that the amended provisions should not affect substantive rights for pre-amendment searches. The revenue's argument is not recorded. 3. Whether the notices under Section 153C of the Act were barred by limitation? The assessee argued that the notices were beyond the prescribed limitation. The revenue's argument is not recorded. 4. What are the relevant Assessment Years contemplated under Section 153A of the Act in relation to notices issued under Section 153C? The assessee argued that the notices were issued for assessment years beyond the scope of Section 153A. The revenue's argument is not recorded.