SAKSHAM INVESTOR SERVICES PRIVATE LIMITED vs. INCOME TAX OFFICER, WARD 22-1 & ANR.

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W.P.(C)/16393/2023HC DelhiDLHC01054998202328 May 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA3 pages
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What did the High Court hold?

The Delhi High Court allowed the writ petitions and quashed the impugned notices dated August 10, 2022, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court found that the notices were ex facie beyond the maximum window of ten years prescribed for issuing them, given their dates and the relevant Assessment Years. The Court relied on its previous judgment in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd (2024 SCC OnLine Del 2439). The reasoning in Ojjus Medicare established that for Section 153C assessments concerning non-searched persons, the ten-year period is reckoned from the date of receipt of books of accounts, documents, or assets by the jurisdictional AO, not from the date of the search. This interpretation, supported by decisions in SSP Aviation, RRJ Securities, Jasjit Singh, and Vikram Sujitkumar Bhatia, settled the issue in favor of the petitioner. The Court reiterated that the ten-year period is to be reckoned from March 31 of the AY relevant to the year of search, as per Explanation 1 to Section 153A, which is applicable to the computation of the ten-year block under Section 153C.

What were the facts?

The assessee, Saksham Investor Services Private Limited, filed two writ petitions before the Delhi High Court challenging notices dated August 10, 2022, issued under Section 153C of the Income Tax Act, 1961. These notices pertained to Assessment Years (AYs) 2010-11 and 2011-12. The core of the dispute revolved around the validity of these notices, specifically concerning the time limitation prescribed for issuing them. The assessee contended that the notices were issued beyond the permissible time window. The Income Tax Officer, Ward 22-1 and another respondent (Income Tax Department) were the respondents.

What were the issues?

1. Whether the notices dated August 10, 2022, issued under Section 153C of the Income Tax Act, 1961, for AYs 2010-11 and 2011-12 are barred by limitation? (Question of law) Assessee's Contention: The assessee argued that the notices were issued beyond the maximum permissible time window of ten years as prescribed under Section 153C of the Act. They relied on the principle that the computation of the ten-year period should be reckoned from the date of receipt of books of accounts, documents, or assets by the jurisdictional AO, as interpreted in various High Court and Supreme Court judgments. Revenue's Contention: The revenue contended that the block periods should be reckoned with reference to the date of the search. They did not explicitly name any specific authorities or precedents in the provided text, but their argument was implicitly countered by the assessee's reliance on established case law.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 16393/2023
W.P.(C) 16611/2023

Read from the judgment's own cause title. This page is filed under one of them.

$~36 to 37 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 16393/2023 & CM APPLs. 65989/2023

SAKSHAM INVESTOR SERVICES PRIVATE LIMITED ..... Petitioner

Through: Mr.Sumit Lalchandani, Mr.Salil

Kapoor, Mr.Shivam Yadav,

Ms.Ananya Kapoor and

Mr.Tarun Chanana, Advs.

versus

INCOME TAX OFFICER, WARD 22-1 & ANR. ..... Respondents

Through: Mr.Sunil Agarwal, Sr.SC with

Mr.Shivansh B.Pandya, Jr.SC

and Mr.Utkarsh Tiwari, Adv for

I.T.Dept. 37 + W.P.(C) 16611/2023 & CM APPLs. 66863/2023

SAKSHAM INVESTOR SERVICES PRIVATE LIMITED ..... Petitioner

Through: Mr.Sumit Lalchandani, Mr.Salil

Kapoor, Mr.Shivam Yadav,

Ms.Ananya Kapoor and

Mr.Tarun Chanana, Advs.

versus

INCOME TAX OFFICER WARD 22 NEW DELHI & ANR. ..... Respondent

Through: Mr.Sunil Agarwal, Sr.SC with

Mr.Shivansh B.Pandya, Jr.SC

and Mr.Utkarsh Tiwari, Adv for

I.T.Dept.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

28.05.2024 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. The Order is downloaded from the DHC Server on 01/06/2024 at 12:38:39

CM APPL. 65990/2023 Exemption in W.P.(C) 16393/2023 CM APPL. 66864/2023 Exemption in W.P.(C) 16611/2023 1. Allowed, subject to all just exceptions. 2. Applications are disposed of. W.P.(C) 16393/2023 & CM APPLs. 65989/2023 W.P.(C) 16611/2023 & CM APPLs. 66863/2023

1.

These writ petitions have been preferred against the impugned notice dated 10 August 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years [“AYs”] 2010-11 [W.P.(C) 16393/2023], and 2011-12 [W.P.(C) 16611/2023] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notices under Section 153C are dated 10 August 2022, it is ex facie evident that the aforenoted AYs would fall beyond the maximum window of ten years as prescribed. 3. The issue in any case stands answered and covered in favour of the writ petitioner in light of the judgment rendered in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC OnLine Del 2439]. The relevant paragraphs of the aforesaid decision read 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 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. The Order is downloaded from the DHC Server on 01/06/2024 at 12:38:39

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. 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.” 4. Accordingly, and for reasons assigned in our decision in Ojjus Medicare, we allow the instant writ petitions and quash the impugned notices dated 10 August 2022 issued under Section 153C of the Act and all consequential proceedings arising therefrom.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 28, 2024/MJ 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. The Order is downloaded from the DHC Server on 01/06/2024 at 12:38:39

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