VAIBHAV GARG vs. INCOME TAX OFFICER WARD 44(6), DELHI & ANR.

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W.P.(C)/1275/2024HC DelhiDLHC01002766202416 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 petitions. The Court found that the notices dated May 2, 2022, issued under Section 153C of the Income Tax Act, 1961, for AYs 2010-11 and 2011-12 were ex facie beyond the maximum ten-year window prescribed by the provision, as the Satisfaction Note was also dated May 2, 2022. 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 AY 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. The Court held that the block periods must be reckoned with reference to the date of receipt of documents by the AO, not the date of search. Consequently, the impugned notices and all consequential proceedings were quashed.

What were the facts?

The petitioner, Vaibhav Garg, filed two writ petitions challenging notices dated May 2, 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 challenge was that the Satisfaction Note by the jurisdictional Assessing Officer (AO) was dated May 2, 2022, which meant the AYs in question fell outside the ten-year window prescribed by Section 153C. The petitions sought to quash these notices and any consequential proceedings. The respondents were the Income Tax Officer, Ward 44(6), Delhi, and another authority.

What were the issues?

1. Whether notices issued under Section 153C of the Income Tax Act, 1961, for Assessment Years 2010-11 and 2011-12 are valid, given that the Satisfaction Note by the Assessing Officer was dated May 2, 2022, and the ten-year window prescribed by the provision has expired. Assessee's Contention: The petitioner argued that the AYs 2010-11 and 2011-12 fall outside the ten-year period stipulated under Section 153C, as the Satisfaction Note was dated May 2, 2022. Therefore, the notices issued are invalid. Revenue's Contention: The judgment does not record specific arguments made by the revenue on this point. However, the revenue was represented by Senior Standing Counsel and other counsel.

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) 1275/2024
W.P.(C) 1336/2024

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

$~66 & 67 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 1275/2024 & CM APPL. 5292/2024 (Stay)

VAIBHAV GARG

..... Petitioner

Through: Mr. Sumit Lalchandani, Mr.

Salil Kapoor, Mr. Shivam

Yadav, Mr. Vibhu Jain, Ms.

Ananya Kapoor and Mr. Tarun

Chanana, Advs.

versus

INCOME TAX OFFICER WARD 44(6), DELHI & ANR. ..... Respondents

Through: Mr. Puneet Rai, Sr.SC with Mr.

Rishabh Nangia, Mr. Nikhil

Jain and Mr. Ashvini Kumar,

SCs. 67 + W.P.(C) 1336/2024 & CM APPL. 5472/2024 (Stay)

VAIBHAV GARG ..... Petitioner

Through: Mr. Sumit Lalchandani, Mr.

Salil Kapoor, Mr. Shivam

Yadav, Mr. Vibhu Jain, Ms.

Ananya Kapoor and Mr. Tarun

Chanana, Advs.

versus

INCOME TAX OFFICER WARD 44-6, DELHI & ANR. ..... Respondents

Through: Mr. Puneet Rai, Sr.SC with Mr.

Rishabh Nangia, Mr. Nikhil

Jain and Mr. Ashvini Kumar,

SCs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV 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 21/05/2024 at 11:46:30

O R D E R %

16.05.2024

1.

These writ petitions have been preferred against the impugned notices dated 02 May 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years’ [“AYs”] 2010-11 [W.P.(C) 1275/2024], 2011-12 [W.P.(C) 1336/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that the Satisfaction Note recorded by the jurisdictional Assessing Officer [“AO”] was dated 02 May 2022, it is ex facie evident that the aforenoted AYs’ 2010-11 and 2011-12 would fall beyond the maximum window of ten years as prescribed under the aforenoted provision. 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 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 21/05/2024 at 11:46:30

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

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 16, 2024/p 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 21/05/2024 at 11:46:30

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