HAIER SMART HOME CO LTD vs. THE ASSISTANT COMMISSIONER OF INCOME TAX & ANR.

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W.P.(C)/7125/2025HC DelhiDLHC01032711202523 May 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA6 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the petition, holding that the impugned notice dated 31.08.2024, issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2015-16, was barred by limitation. The Court relied on its previous judgments in Dinesh Jindal v. Assistant Commissioner of Income Tax and Principal Commissioner of Income Tax- Central-1 v. Ojjus Medicare Pvt. Ltd. These decisions clarified that for the purpose of computing the limitation period for reopening assessments, particularly in search-related cases governed by Sections 153A and 153C, the starting point for reckoning the block of years is crucial. The Court emphasized that the First Proviso to Section 153C introduces a legal fiction where the commencement date for computing the six or ten-year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. In this case, the block of ten assessment years was reckoned from AY 2025-26, being the AY relevant to the financial year in which the impugned notice was issued. Consequently, AY 2015-16 fell outside this permissible period. The impugned notice was set aside as being time-barred.

What were the facts?

The petitioner, Haier Smart Home Co. Ltd. (HSHCL), filed a writ petition challenging a notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for Assessment Year (AY) 2015-16. The Revenue alleged that a search conducted on 27.03.2023 on Haier Appliances India Private Ltd. unearthed facts indicating HSHCL had a Permanent Establishment (PE) in India, justifying the reopening. The petitioner contended that the impugned notice was issued beyond the period of limitation. The Court referred to its previous decisions in Dinesh Jindal and Ojjus Medicare Pvt. Ltd. concerning the computation of limitation periods for reopening assessments, especially in cases involving searches and the applicability of Section 153C.

What were the issues?

1. Whether the notice dated 31.08.2024 issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2015-16 is barred by limitation, considering the search conducted on 27.03.2023 and the principles laid down in the First Proviso to Section 149(1) and Sections 153A/153C of the Act. Assessee's Contention: The impugned notice has been issued beyond the period of limitation. The petitioner relies on the principles established in Dinesh Jindal v. Assistant Commissioner of Income Tax and Principal Commissioner of Income Tax- Central-1 v. Ojjus Medicare Pvt. Ltd. to argue that the limitation period should be calculated based on specific dates of receipt of documents by the jurisdictional AO and the commencement of proceedings, not solely on the date of search. Revenue's Contention: The learned counsel for the Revenue concurred with the proposition that the issue is covered by earlier decisions of the Court, implying agreement with the assessee's stance on the limitation period.

Which sections of the Income-tax Act were involved?

Section 148,Section 149(1),Section 153A,Section 153C

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~36 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 7125/2025 & CM Nos.32164/2025 & 32165/2025 HAIER SMART HOME CO. LTD. .....Petitioner Through: Mr Deepak Chopra, Mr. Rohan Khare, Mr. Priyam Bhatnagar Advocates. Versus THE ASSISTANT COMMISSIONER OF INCOME TAX & ANR. .....Respondents Through: Mr. Sunil Aggarwal, Senior Standing Counsel, Shivansh Pandya, Viplav Acharya, Priya Sarkar, Junior standing counsel, Utkarsh Tiwari, Advocate. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 23.05.2025

1.

The petitioner has filed the present petition, inter alia, impugning the notice dated 31.08.2024 [the impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] seeking to reopen the assessment in respect of the Assessment Year [AY] 2015-16. 2. It is the petitioner’s case is that the impugned notice has been issued beyond the period of the limitation.

3.

On 27.03.2023, a search was conducted under Section 132 of the Act on Haier Appliances India Private Ltd. It is alleged that during the said search, facts have been unearthed which prove that Haier Smart Home Co. Limited [HSHCL] has a P.E. in India. Based on the said material, the Assessing Officer [AO] issued the impugned notice on 31.08.2024. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

4.

In Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Ors.: Neutral Citation No.:2024:DHC:4554-DB, this Court had considered a similar issue and observed as under:

“8. Undisputedly, and in terms of Section 153C(3) of the Act, any search if conducted after 01 April 2021, would cease to be regulated by that provision. Sub- section (3), in that sense, embodies a sunset clause insofar as the applicability of Section 153C is concerned. The First Proviso to Section 149(1), however, bids us to go back in a point of time, and to examine whether a reopening would sustain bearing in mind the timeframes as they stood embodied in Section 149(1)(b) or Section 153A and 153C, as the case may be. The First Proviso essentially requires us to undertake that consideration bearing in mind the timeframes which stood specified in Sections 149, 153A and 153C as they stood prior to the commencement of Finance Act, 2021. 9. Thus, an action of reassessment which comes to be initiated in relation to a search undertaken on or after 01 April 2021 would have to meet the foundational tests as specified in the First Proviso to Section 149(1). A reassessment action would thus have to not only satisfy the time frames constructed in terms of Section 149, but in a relevant case and which is concerned with a search, also those which would be applicable by virtue of the provisions of Section 153A and 153C.

10.

Undisputedly, and if the validity of the reassessment were to be tested on the anvil of Section 153C, the petitioner would be entitled to succeed for the following reasons. It is an undisputed fact that the proceedings under Section 148 commenced on the basis of the impugned notice dated 30 March 2023. This date would be of seminal importance since the period of six AYs’ or the “relevant assessment year” would have to be reckoned from the date when action This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

was initiated to reopen the assessment pertaining to AY 2013-14.”

5.

We also consider it apposite to refer to the decision in the case of Principal Commissioner of Income Tax- Central-1 v. Ojjus Medicare Pvt. Ltd.: Neutral Citation No.:2024:DHC:2629-DB, where this Court had explained the manner for calculating the block of six years and ten years for the purpose of computing the limitation for issuance of a notice under Section 153C of the Act read with Section 153A of the Act as under: “D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non- searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C (1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

E. The reckoning of the six AYs’ would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs’ would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs’ hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end of the assessment year”. This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology “immediately preceding” when it be in relation to the six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.”

6.

Bearing in mind the aforesaid principles, the block of ten assessment years is required to be reckoned from the AY 2025-26 being the assessment year relevant to the financial year in which the impugned notice under Section 148 was issued. A tabular statement setting out the block of ten years as set out in the petition is reproduced below: This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

Notice under section 148 issued on 31.08.2024, therefore, the relevant AY for computation of block assessment period would be AY 2025-26 No. of Year Assessment Year 1 2025-26 2 2024-25 3 2023-24 4 2022-23 5 2021-22 6 2020-21 7 2019-20 8 2018-19 9 2017-18 10 2016-17 Relevant AY under consideration -11 (time- barred) 2015-16

7.

Concededly, the issue involved in the present case is covered by the earlier decisions of this Court in Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Others: Neutral Citation: 2024: DHC:4554-DB, KAD Housing Private Limited v. Deputy Commissioner of Income Tax Central Circle-6, Delhi : Neutral Citation : 2024:DHC:8214- DB and Pankaj Jain v. Assistant Commissioner of Income Tax, Central Circle 3, Delhi & Anr. : Neutral Citation : 2025:DHC:157-DB.

8.

The learned counsel appearing for the Revenue concurs with the aforesaid proposition.

9.

In view of the above, the present petition is allowed. The impugned This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

notice is set aside as being barred by limitation.

10.

The petition is disposed of in the aforesaid terms. The pending application also stands disposed of. VIBHU BAKHRU, J TEJAS KARIA, J MAY 23, 2025 PB Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above.

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