NAND KISHORE GARG vs. ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-32 DELHI & ANR.

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W.P.(C)/4074/2024HC DelhiDLHC01014078202405 July 2024Bench: HON'BLE MR. JUSTICE RAVINDER DUDEJA,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 September 30, 2022, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court found that the notices were issued beyond the maximum ten-year window prescribed by the Act. 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 clarified that for Section 153C assessments, the ten-year period for reckoning relevant assessment years is to be calculated from the date of receipt of books of accounts or documents by the jurisdictional AO, as stipulated by the First Proviso to Section 153C. The Court held that the notices issued for AYs 2010-11, 2011-12, and 2012-13 were indeed beyond this permissible period. The ratio decidendi is that the time limits for Section 153C assessments must be strictly adhered to, and the starting point for the ten-year block is crucial and defined by the First Proviso to Section 153C.

What were the facts?

The petitioner, Nand Kishore Garg, filed three writ petitions challenging notices dated September 30, 2022, issued under Section 153C of the Income Tax Act, 1961. These notices pertained to Assessment Years (AY) 2010-11, 2011-12, and 2012-13. The core of the challenge was that the notices were issued beyond the permissible time limits. The petitioner argued that the assessment years in question fell outside the ten-year window prescribed by the Act. The respondents are the Assistant Commissioner of Income Tax, Central Circle-32, Delhi, and another authority.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, dated September 30, 2022, for AY 2010-11, AY 2011-12, and AY 2012-13 are barred by limitation, considering the ten-year period prescribed for such assessments? Assessee's Contention: The petitioner contended that the notices were issued beyond the statutory time limit. The assessment years in question fall outside the maximum ten-year window allowed under the Act for issuing notices under Section 153C. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the issuance of the notices implies a belief that they were within the permissible period.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

W.P.(C) 4101/2024
W.P.(C) 4067/2024
W.P.(C) 4074/2024

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

$~3, 35 & 36 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4101/2024 & CM APPL. 16719/2024 (Interim Relief) NAND KISHORE GARG .....Petitioner Through: Mr. Ruchesh Sinha & Ms. Monalisa Maity, Advocates. versus ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-32 DELHI & ANR. ....Respondents Through: 35 + W.P.(C) 4067/2024 & CM APPL. 16630/2024 (Interim Relief) NAND KISHORE GARG .....Petitioner Through: Mr. Ruchesh Sinha & Ms. Monalisa Maity, Advocates. versus ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-32 DELHI & ANR. .....Respondents Through: 36 + W.P.(C) 4074/2024 & CM APPL. 16647/2024 (Interim Relief) NAND KISHORE GARG .....Petitioner Through: Mr. Ruchesh Sinha & Ms. Monalisa Maity, Advocates. versus ASSISSTANT COMMISSIONER OF INCOME TAX CENTAL CIRCLE-32 DELHI & ANR. .....Respondents Through: CORAM: HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA 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 19/07/2024 at 16:11:27

O R D E R %

05.07.2024 1. These writ petitions have been preferred against the impugned notice dated 30 September 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Year [“AY”] 2010-11 [W.P.(C) 4074/2024] AY 2011-12 [W.P.(C) 4101/2024], and AY 2012-13 [W.P.(C) 4067/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notices under Section 153C were dated 30 September 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 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. The Order is downloaded from the DHC Server on 19/07/2024 at 16:11:27

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 30 September 2022 issued under Section 153C of the Act and all consequential proceedings arising therefrom. YASHWANT VARMA, J. RAVINDER DUDEJA, J. JULY 5, 2024/sk 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 19/07/2024 at 16:11:27

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