SAKSHAM COMMODITIES LIMITED vs. INCOME TAX OFFICER, WARD 22-1, NEW DELHI & ANR.

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W.P.(C)/93/2024HC DelhiDLHC01000057202428 May 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV3 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petitions. The Court held that the notices dated July 11, 2022, issued under Section 153C of the Income Tax Act, 1961, for AYs 2010-11 and 2011-12 were ex facie invalid. This was because the issuance date of July 11, 2022, fell beyond the maximum ten-year window prescribed by the Act for such notices. 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 the ten-year period for Section 153C assessments is reckoned from the end of the assessment year relevant to the date of receipt of books of accounts, documents, or assets by the jurisdictional AO, not the date of search. Consequently, the impugned notices and all consequential proceedings were quashed. No issue was expressly left undecided.

What were the facts?

The petitioner, Saksham Commodities Limited, filed two writ petitions challenging notices dated July 11, 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 revolves around the validity of these notices given the dates they were issued. The petitioner contended that the AYs in question fell outside the permissible time window for issuing such notices. The respondents, the Income Tax Officer and another authority, were represented by senior and junior counsel.

What were the issues?

1. Whether the notice dated July 11, 2022, issued under Section 153C of the Income Tax Act, 1961, for AY 2010-11 is valid, considering the ten-year limitation period prescribed by the Act? (Question of law) 2. Whether the notice dated July 11, 2022, issued under Section 153C of the Income Tax Act, 1961, for AY 2011-12 is valid, considering the ten-year limitation period prescribed by the Act? (Question of law) Assessee's Contention: The notices under Section 153C were issued beyond the maximum ten-year window prescribed by the Act, rendering them invalid. Revenue's Contention: The judgment does not record any specific contentions made by the revenue regarding the validity of the notices or the interpretation of the ten-year 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 (2 matters)

W.P.(C) 93/2024
W.P.(C) 96/2024

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

$~38 & 39 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 93/2024 & CM APPL. 407/2024

SAKSHAM COMMODITIES 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, NEW DELHI &

ANR.

..... Respondents

Through: Mr.Sunil Agarwal, Sr.SC with

Mr.Shivansh B.Pandya, Jr.SC

and Mr.Utkarsh Tiwari, Adv for

I.T.Dept. 39 + W.P.(C) 96/2024 & CM APPL. 415/2024

SAKSHAM COMMODITIES 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, NEW DELHI &

ANR.

..... Respondents

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

W.P.(C) 93/2024 & CM APPL. 407/2024 W.P.(C) 96/2024 & CM APPL. 415/2024 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 12:38:34

1.

These writ petitions have been preferred against the impugned notice dated 11 July 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years [“AYs”] 2010-11 in [W.P.(C) 93/2024] and 2011-12 [W.P.(C) 96/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notice under Section 153C of the Act was issued on 11 July 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. E. The reckoning of the six AYs’ would require one to firstly identify the FY in which the search was undertaken and which 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 12:38:34

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 notice dated 11 July 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 12:38:34

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