ANISHA GUPTA vs. ACIT CENTRAL CIRCLE-28 DELHI

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W.P.(C)/2686/2024HC DelhiDLHC01008308202429 May 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV3 pages
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What did the High Court hold?

The Delhi High Court allowed the writ petition and quashed the notice issued under Section 153C of the Income Tax Act, 1961, dated June 29, 2022, concerning AY 2016-2017. The Court held that the AY 2016-2017 fell outside the permissible window of six preceding AYs as per Section 153C. Crucially, the Court found that the Satisfaction Note recorded by the AO did not demonstrate that the escaped income was likely to exceed INR 50 lakhs, which is a prerequisite under the Fourth Proviso to Section 153A. The Court relied on its prior decision in Principal Commissioner of Income Tax Central – 1 vs. Ojjus Medicare Pvt. Ltd. The Court clarified that while the precondition of INR 50 lakhs is a sine qua non for initiating action for the extended block period, it can be satisfied cumulatively or in aggregate across relevant assessment years. The AO was left open to examine the issue afresh and draw proceedings if the escaped income is likely to exceed INR 50 lakhs, provided it is otherwise permissible in law.

What were the facts?

The petitioner, Anisha Gupta, filed a writ petition challenging a notice dated June 29, 2022, issued under Section 153C of the Income Tax Act, 1961, for Assessment Year (AY) 2016-2017. The challenge was based on the argument that the notice was issued beyond the permissible period. The Court noted an undisputed Satisfaction Note recorded by the jurisdictional Assessing Officer (AO) on June 23, 2022. This note indicated that the AY 2016-2017 fell outside the six preceding AYs allowed under Section 153C. Furthermore, the Satisfaction Note did not explicitly state that the escaped income was likely to exceed INR 50 lakhs, a threshold requirement under the Fourth Proviso to Section 153A of the Act.

What were the issues?

1. Whether the notice issued under Section 153C of the Income Tax Act, 1961, for AY 2016-2017 is invalid because it was issued beyond the prescribed time limit? 2. Whether the AO's Satisfaction Note adequately satisfied the conditions stipulated in the Fourth Proviso to Section 153A of the Income Tax Act, 1961, particularly regarding the likely amount of escaped income exceeding INR 50 lakhs? Assessee's Contentions: The assessee argued that the notice under Section 153C was invalid as AY 2016-2017 was beyond the six preceding AYs. The assessee also contended that the Satisfaction Note did not meet the threshold requirement of likely escaped income exceeding INR 50 lakhs. Revenue's Contentions: The judgment does not record specific contentions from the revenue. However, the existence of the notice under Section 153C implies the revenue's position that the assessment proceedings were validly initiated.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

$~42 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2686/2024 & CM APPL. 10974/2024

ANISHA GUPTA

..... Petitioner

Through: Mr.Gaurav Jain and

Mr.Shubham Gupta, Advs.

versus

ACIT CENTRAL CIRCLE-28 DELHI ..... Respondent

Through: Mr. Abhishek Maratha, Sr.SC

with Mr. Parth Semwal and

Ms. Nupur Sharma, Advs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON’BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

29.05.2024

1.

This writ petition has been preferred against the impugned notice dated 29 June 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Year [“AY”] 2016-2017 and all consequential proceedings. 2. Bearing in mind the undisputed fact that the Satisfaction Note recorded by the jurisdictional Assessing Officer ["AO"] of the petitioner, dated 23 June 2022, it is ex facie evident that the aforenoted AY would fall beyond the window of six preceding AYs’ as provided under Section 153C of the Act. 3. An ex facie perusal of the aforenoted Satisfaction Note indicates that the income which is alleged to have escaped assessment for the “relevant assessment year” does not exceed INR 50 lakhs. The 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 12:42:00

jurisdictional AO has also failed to record its satisfaction that the escaped income is likely to exceed INR 50 lakhs or more cumulatively for the “relevant assessment year”, and thereby fulfilling the threshold requirement as prescribed by the Fourth Proviso to Section 153A of the Act. 4. 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 Central – 1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC Online Del 2439]. The relevant paragraphs of the aforesaid decision read as under:- ““G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment. Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression “amounts to or is likely to amount”. The usage of the phrase “likely to” is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage.

H.However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture.

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 12:42:00

I.We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each “relevant assessment year” that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs.”

5.

Accordingly, and for reasons assigned in our decision in Ojjus Medicare Private Limited, while we allow the instant writ petition and quash the impugned notice issued under Section 153C of the Act dated 29 June 2022 insofar as it relates to AY 2016-2017, we leave it open to the jurisdictional AO to examine the issue afresh bearing in mind the observations appearing in paragraph 3 as noted above. 6. In case the jurisdictional AO be of the opinion that the income alleged to have escaped assessment is likely to exceed INR 50 lakhs in the “relevant assessment year”, it would be open to it to draw proceedings afresh, if otherwise permissible in law.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 29, 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 12:42:00

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