HARSHA RAJESH JHAVERI vs. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(1)

Facts

The assessee, Rajesh Nanubhai Jhaveri, filed multiple Special Civil Applications challenging notices issued under Section 153C of the Income Tax Act, 1961, and subsequent assessment orders. The notices were dated 02.11.2018 and 09.07.2018, and the assessment orders were dated 22.12.2018. The core of the dispute revolved around the validity of these proceedings initiated under Section 153C, particularly concerning the timing of the satisfaction note by the Assessing Officer and the assessment years covered. The assessee argued that the satisfaction note was recorded after a significant delay from the assessment order of the searched person and that notices were issued for assessment years beyond the permissible period. The High Court had previously dealt with similar issues in other writ applications.

Held

The High Court held that the writ applications were maintainable. Regarding the applicability of the amended Section 153C, the Court found that the legislature intended the amended provisions to apply prospectively from 01.06.2015, and applying them to searches prior to that date would affect substantive rights. On the issue of limitation, the Court held that if the statute provides an alternative period of limitation, the notices are not barred merely because the period in the first part has elapsed. 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 searches conducted on 04.12.2014, the relevant assessment year is 2015-16, making the six preceding years 2014-15 to 2009-10. Notices issued for assessment years beyond this period were held to be without jurisdiction. Consequently, the impugned notices and assessment orders were quashed and set aside.

Key Issues

1. Whether the writ applications challenging notices under Section 153C and assessment orders are maintainable? (Question of law) 2. Whether Section 153C of the Income Tax Act, 1961, as amended effective from 01.06.2015, is applicable to cases where the search was initiated prior to this date? (Question of law) 3. Whether the notices issued under Section 153C of the Act are barred by limitation, considering the provisions of the first proviso to Section 153C and Section 153A? (Question of mixed law and fact) 4. What are the relevant Assessment Years contemplated under Section 153A of the Act for issuing notices under Section 153C? (Question of law) Assessee's Contentions: - The satisfaction note under Section 153C was recorded more than a year after the assessment order of the searched person, contrary to the Supreme Court's decision in CIT-III v. Calcutta Knitwears and CBDT Circular No. 24 of 2015. - Notices were issued for assessment years (2009-10 to 2012-13) beyond the six years preceding the date of receipt of books of account (16.03.2018) as stipulated by the first proviso to Section 153C, indicating a non-application of mind. - Proceedings under Section 153C are invalid as the search took place prior to the amendment in Section 153C. - Objections raised by the assessee regarding the satisfaction note were not addressed before passing the assessment order. Revenue's Contentions: - Not recorded in the judgment.