DEEPALI DESIGNS AND EXHIBITS PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX

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W.P.(C)/10316/2023HC DelhiDLHC01030090202302 May 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petitions and quashed the impugned notices dated July 30, 2022, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court found that the Assessment Years (2013-14, 2010-11, 2012-13, and 2011-12) for which the notices were issued clearly fell beyond the maximum ten-year window prescribed by the Act. The Court relied on its previous decision 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 is reckoned from the 31st day of March of the Assessment Year relevant to the year of search, or in the case of a non-searched person, from the date of receipt of books of accounts, documents, or assets by the jurisdictional AO. Since the notices were dated July 30, 2022, and the relevant AYs were significantly older, they were held to be beyond the statutory limit. No issue was expressly left undecided.

What were the facts?

The petitioner, Deepali Designs and Exhibits Private Limited, filed four writ petitions before the Delhi High Court challenging notices issued under Section 153C of the Income Tax Act, 1961. The notices were dated July 30, 2022, and pertained to Assessment Years (AYs) 2013-14, 2010-11, 2012-13, and 2011-12. The revenue was represented by the Assistant Commissioner of Income Tax. The core of the challenge was that the assessment years in question fell outside the permissible time window for issuing such notices.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, dated July 30, 2022, for Assessment Years 2013-14, 2010-11, 2012-13, and 2011-12, are valid, considering the ten-year window prescribed by the Act? Assessee's Contention: The assessee argued that the Assessment Years for which the notices were issued fall beyond the maximum ten-year period allowed for issuing notices under Section 153C, making the notices invalid. Revenue's Contention: The judgment does not record specific arguments made by the revenue regarding the ten-year window. However, the revenue was represented by Senior Standing Counsel and Junior Standing Counsel, indicating their participation in opposing the writ petitions.

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) 10316/2023
W.P.(C) 10334/2023
W.P.(C) 10338/2023

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

$~61, 63, 67 & 68 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 10316/2023 & CM APPL 39910/2023

DEEPALI DESIGNS AND EXHIBITS PRIVATE LIMITED ..... Petitioner

Through: Mr. Raghvendra Singh,

Advocate

Versus

ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent

Through: Mr. Vipul Agrawal, Sr. SC

alongwith Mr. Gibran Naushad

and Ms. Sakashi Shairwal, Jr.

SCs. 63 + W.P.(C) 10334/2023 & CM APPL 40034/2023

DEEPALI DESIGNS AND EXHIBITS PRIVATE LIMITED ..... Petitioner

Through: Mr. Raghvendra Singh,

Advocate

Versus

ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent

Through: Mr. Vipul Agrawal, Sr. SC

alongwith Mr. Gibran Naushad

and Ms. Sakashi Shairwal, Jr.

SCs. 67 + W.P.(C) 10338/2023 & CM APPL 40042/2023

DEEPALI DESIGNS AND EXHIBITS PRIVATE LIMITED ..... Petitioner

Through: Mr. Raghvendra Singh,

Advocate

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 08/05/2024 at 12:48:17

Versus

ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent

Through: Mr. Vipul Agrawal, Sr. SC

alongwith Mr. Gibran Naushad

and Ms. Sakashi Shairwal, Jr.

SCs.

68 + W.P.(C) 10340/2023 & CM APPL 40044/2023

DEEPALI DESIGNS AND EXHIBITS PRIVATE LIMITED ..... Petitioner

Through: Mr. Raghvendra Singh,

Advocate

Versus

ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent

Through: Mr. Vipul Agrawal, Sr. SC

alongwith Mr. Gibran Naushad

and Ms. Sakashi Shairwal, Jr.

SCs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

02.05.2024

1.

These writ petitions have been preferred against the impugned notices dated 30 July 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years’ [“AYs”] 2013-14 [W.P.(C) 10316/2023], 2010-11 [W.P.(C) 10334/2023], 2012-13 [W.P.(C) 10338/2023] and 2011-12 [W.P.(C) 10340/2023] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notices under Section 153C were dated 30 July 2022, it is ex facie evident that 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 08/05/2024 at 12:48:17

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 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 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 08/05/2024 at 12:48:17

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 July 2022 issued under Section 153C of the Act and all consequential proceedings arising therefrom.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 2, 2024 p’ma 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 08/05/2024 at 12:48:17

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