MAHENDRABHAI KASTURCHAND SONI vs. INCOME TAX OFFICER, WARD 3(3)(3)

Facts

The petitioner, Mahendrabhai Kasturchand Soni, filed a writ application before the Gujarat High Court challenging notices issued under Section 153C of the Income Tax Act, 1961, for Assessment Years (AY) 2011-12 to 2012-13. The petitioner sought to quash these notices and stay further assessment proceedings. The respondent is the Income Tax Officer, Ward 3(3)(3). This case was heard along with a batch of similar writ applications that questioned the legality and validity of notices issued under Section 153C. A coordinate bench of the High Court had previously dealt with these issues.

Held

The High Court, following the decision of a coordinate bench in a batch of similar writ applications, allowed the petitions. The court held that writ applications challenging notices under Section 153C are maintainable. Regarding the applicability of the amended Section 153C, the court found that the amendment, effective from 01.06.2015, was prospective and would not apply to searches initiated before that date, as applying it retrospectively would affect substantive rights. On the issue of limitation, the court held that the existence of an alternative period of limitation under the statute meant the notices were not barred simply because the initial period had elapsed. Crucially, concerning the relevant assessment years under Section 153A, the court determined 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 04.09.2013, the relevant assessment years were 2013-14 to 2008-09. Notices issued for assessment years beyond this six-year period were held to be without jurisdiction. Consequently, the impugned notices under Section 153C and any consequential 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? 2. Whether Section 153C of the Act, as amended effective from 01.06.2015, 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 conducted? Assessee's Contentions: The petitioner sought to quash the notices under Section 153C, arguing they were illegal and invalid. The specific grounds for challenge were addressed by the coordinate bench's previous judgment. Revenue's Contentions: The revenue, represented by the Income Tax Officer, would have defended the issuance of the notices. However, the judgment does not explicitly record the revenue's arguments on the specific issues.