GALA INTERNATIONAL PVT LTD vs. ASSISTANT COMMISSIONER OF INCOME TAX

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W.P.(C)/338/2025HC DelhiDLHC01000379202513 January 2025Bench: HON'BLE THE ACTING CHIEF JUSTICE,HON'BLE MR. JUSTICE TUSHAR RAO GEDELA4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the impugned notices issued under Section 153C of the Income Tax Act, 1961, for AYs 2009-10 to 2012-13 are barred by limitation. The Court reasoned that the ten-year period of limitation must be reckoned from the end of the Assessment Year relevant to the financial year in which the satisfaction note is recorded and the documents are handed over by the AO of the searched person to the AO of the other person. The Court noted that the satisfaction note in question was dated 30.03.2024. Even if the satisfaction note dated 18.03.2023 (pertaining to other AYs) were considered, the notices would still be beyond the period of limitation. The Court relied on its earlier decision in The Principal Commissioner of Income Tax – Central-1 v. Ojjus Medicare Pvt. Ltd. (2024:DHC:2629-DB). Accordingly, the notices were set aside, and the petitions were allowed. No issue was expressly left undecided.

What were the facts?

The petitioner, Gala International Pvt Ltd, filed writ petitions challenging notices dated 31.03.2024 issued under Section 153C of the Income Tax Act, 1961, for Assessment Years (AYs) 2009-10 to 2012-13. These notices were issued based on a search conducted on Shri Sudhir Gulati and Smt. Ritu Gulati (Kochar Group) on 06.02.2019, where documents allegedly pertaining to the petitioner were seized. A satisfaction note dated 30.03.2024 was recorded by the AO of the searched persons and forwarded to the petitioner's AO, who then issued the impugned notices. The petitioner also mentioned similar notices for AYs 2013-14 to 2019-20, based on a separate satisfaction note dated 18.03.2023, for which assessments were completed without additions. The core of the challenge was the limitation period for issuing the Section 153C notices.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, for AYs 2009-10 to 2012-13, are barred by limitation? (Question of law) Assessee's Contention: The petitioner argued that the impugned notices are barred by limitation. They relied on the principle that the period of limitation for issuing such notices is to be reckoned from the end of the Assessment Year relevant to the financial year in which the satisfaction note is recorded and documents are handed over. They presented a tabular statement indicating that based on the satisfaction note dated 30.03.2024, the notices for the specified AYs would be beyond the ten-year limitation period. Revenue's Contention: The learned counsel for the Revenue fairly concurred with the tabular statement presented by the petitioner regarding the computation of the limitation period.

Which sections of the Income-tax Act were involved?

Section 153C,Section 132

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Heard together (4 matters)

W.P.(C) 338/2025
W.P.(C) 339/2025
W.P.(C) 341/2025
W.P.(C) 346/2025

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

$~104 to 107 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 338/2025 + W.P.(C) 339/2025 + W.P.(C) 341/2025 + W.P.(C) 346/2025 GALA INTERNATIONAL PVT LTD .....Petitioner Through: Ms Kavita Jha, Sr. Advocate with Mr Vaibhav Kulkarni, Ms A. Chisty and Mr Himanshu Aggarwal, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX .....Respondent Through: Mr Shlok Chandra with Ms Naincy Jain and Ms Madhavi Shukla, Advocates. CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE GIRISH KATHPALIA O R D E R % 13.01.2025 CM APPL. 1706/2025 in W.P.(C) 338/2025 CM APPL. 1709/2025 in W.P.(C) 339/2025 CM APPL. 1713/2025 in W.P.(C) 341/2025 CM APPL. 1727/2025 in W.P.(C) 346/2025 1. Exemption is allowed, subject to all just exceptions. 2. The applications are disposed of. W.P.(C) 338/2025 and CM APPL. 1705/2025 W.P.(C) 339/2025 and CM APPL. 1708/2025 W.P.(C) 341/2025 and CM APPL. 1712/2025 W.P.(C) 346/2025 and CM APPL. 1726/2025 3. Issue notice. The learned counsel appearing for the Revenue accepts 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 01/07/2025 at 19:24:16

notice. 4. The petitioner has filed the present petitions impugning notices dated 31.03.2024 issued under Section 153C of the Income Tax Act, 1961 (hereafter the Act) in respect of the Assessment Years (AYs) 2009-10 to 2012-13. The said notices indicate that a search under Section 132 of the Act was conducted in the premises of Shri. Sudhir Gulati and Smt. Ritu Gulati (Kochar Group) on 06.02.2019. It is alleged that during the course of the search, certain documents were seized and statements were recorded. Thereafter, the Assessing Officer (AO) of the said searched person recorded his satisfaction note that the documents seized contained information pertaining to the petitioner. The said satisfaction note dated 30.03.2024 was forwarded to the AO exercising jurisdiction in respect of the petitioner, who thereafter issued the notices under Section 153C of the Act, which are impugned in the present petitions. 5. The petitioner states that similar notices under Section 153C of the Act were also issued in respect of AYs 2013-14 to 2019-20 based on a separate satisfaction note recorded on 18.03.2023. However, the said notices are not the subject matter of challenge in these petitions. This court is informed that the assessments were completed pursuant to the said notices issued under Section 153C of the Act and no addition was made. 6. The principal question that arises for consideration is whether the impugned notices have been issued beyond the period of limitation. 7. Plainly, the impugned notices are barred by limitation. This is because the period of limitation of ten years is required to be reckoned from the end of the AY relevant to the financial year in which the satisfaction note is recorded and the documents/books of account/assets are handed over by 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 01/07/2025 at 19:24:16

AO of the searched person to the AO of the other person. This issue is covered by the earlier decision of this court in The Principal Commissioner of Income Tax – Central-1 v. Ojjus Medicare Pvt. Ltd.: Neutral Citation No.: 2024:DHC:2629-DB. 8. The period of limitation is required to be determined with reference to 30.03.2024, being the date of the satisfaction note. However, even if the date of the satisfaction note recorded in respect of AYs 2013-14 to AY 2019-20 is considered, the impugned notices would be beyond the period of limitation. 9. The learned Senior Counsel appearing for the petitioner has handed over a statement indicating the period of ten years that would be covered in respect of the satisfaction note dated 18.03.2023. The said tabular statement is set out below: “Assessment Year(s) Computation of 6 years AY 2022-23 1 AY 2021-22 2 AY 2020-21 3 AY 2019-20 4 AY 2018-19 5 AY 2017-18 6 AY 2016-17 7 AY 2015-16 8 AY 2014-15 9 AY 2013-14 10 Barred by Limitation 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 01/07/2025 at 19:24:16

AY 2012-13 - AY 2011-12 - AY 2010-11 - AY 2009-10 10. The learned counsel appearing for the Revenue fairly concurs with the said tabular statement. 11. In view of the above, we find merit in the contention that the impugned notices are unsustainable. Accordingly, the same are set aside. The petitions are allowed in the aforesaid terms. Pending applications are also disposed of. VIBHU BAKHRU, ACJ GIRISH KATHPALIA, J JANUARY 13, 2025/tr 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. The Order is downloaded from the DHC Server on 01/07/2025 at 19:24:16

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