SHYAM SUNDER TIBREWAL vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1)(2)

Facts

The writ-applicant, Shyam Sunder Tibrewal, challenged notices issued under Section 153C of the Income Tax Act, 1961, for Assessment Years (AY) 2009-10 to AY 2015-16. A search had taken place on December 4, 2014, prior to the amendment of Section 153C effective June 1, 2015. The petitioner argued that the Assessing Officer lacked jurisdiction as the seized documents, forming the basis for the satisfaction note, pertained to the petitioner but did not necessarily belong to them. The High Court had earlier granted interim relief, allowing the Assessing Officer to proceed but not pass a final order without court permission. A coordinate bench had previously dealt with similar petitions concerning the legality of Section 153C notices.

Held

The High Court, following the decision of a coordinate bench in similar writ applications, held that the amended provisions of Section 153C of the Income Tax Act, 1961, are prospective and would not apply to searches conducted prior to June 1, 2015, as doing so would affect substantive rights. Regarding limitation, the court held that if the statute provides an alternative period of limitation, the expiry of the initial period does not render the notices barred. On the relevant assessment years under Section 153A, the court clarified that for a search conducted on December 4, 2014, the relevant previous year is 2014-15, making AY 2015-16 the relevant assessment year. Therefore, the six preceding assessment years are AY 2014-15, 2013-14, 2012-13, 2011-12, 2010-11, and 2009-10. Notices issued for assessment years beyond this period were held to be without jurisdiction. Consequently, the impugned notices and any consequential assessment orders were quashed and set aside.

Key Issues

1. Whether the amended Section 153C of the Income Tax Act, 1961, applicable 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 of persons brought under Section 153C by the amendment if the search predates the amendment. The revenue's contention is not recorded. 2. Whether the notices issued under Section 153C of the Act were barred by limitation? The assessee argued that the limitation period had elapsed. The revenue's contention is not recorded. 3. What are the relevant Assessment Years contemplated under Section 153A of the Act in cases of search? The assessee argued that the notices were issued for assessment years beyond the six years contemplated. The revenue's contention is not recorded.